As with many other sectors, Air Traffic Management (ATM) is in the middle of a wider trend of digitalisation and service-oriented design. Many of the old barriers to change, for example the need to own ground assets and base yourself nearby (due to communication limitations), are being swept away. Quality data is now the key asset. Gathering and sharing that data, and using it intelligently by adding value through integration and processing, becomes a key differentiator and opportunity.
We live in interesting times. For the aviation industry, the decrease in demand, still at 50% of the equivalent period last year across the European network, has led to immediate survival reactions. But given the pace of recovery, with IATA only forecasting 2024 for a return to pre-Covid norms, the fundamental business models of aviation are being challenged, including ownership, agility and structure.
The Airspace Architecture Study explored the need for capacity and scalability. Indeed, the requirement on the industry to scale well, up and down, has been demonstrated through the pandemic, with service providers needing to keep costs under control in times of fluctuating demand. Although the need for on-demand capacity has moved to post-2025, achieving this milestone still requires action now, and we have a window of opportunity whilst capacity margins exist to be able to enact industry-wide change. Whilst digitalisation offers the tools, the framework for ATM service provision must also evolve.
A key enabler of the concepts for capacity and scalability is a service-oriented industry structure, both in terms of functional architecture and relationships between providers. The emerging concept of the ATM Data Service Provider (ADSP) recognises this, enabling existing air navigation service providers to outsource much of their operational data services. Virtual Centres are created, with potentially virtualisation of air traffic services and the data processing supporting them. These then enable new concepts of capacity-on-demand, with ATC capacity delivered by the best placed cross-border provider, with potential benefits of flexibility, cost-effective capacity, and potential reduced emissions through more efficient 3D flight trajectories being consistently delivered.
There is intense interest in ADSPs, evidenced by the 250 or so participants who joined the recent online ADSP workshop with the European Commission DG-MOV, which we helped facilitate. When polled on their specific area of interest, the most popular answer was that air navigation service providers are considering setting up an ADSP. What are the likely drivers for these levels of interest?
Cost. Horizontally integrated ADSPs, serving multiple customers, should bring economies of scale. Even with transition and new operational costs (e.g. enhanced communications), the benefits look attractive. Further cost drivers exist if ADSPs operate in a market environment, requiring competitive pricing and innovation. For current national air navigation service providers, there are potential long-term savings available through outsourcing that spur their interest.
External positioning. And related to this, FOMO. For those not 'au fait' with the latest slang, FOMO is the "Fear Of Missing Out". Air navigation service providers are seeking potential new revenue, and there may be first-mover advantages in the data services domain. The increasing amount of conversation on the topic leads to the worry that if something is not done, others will gain supplier power and some organisations will 'miss the boat'. Both attacking and defensive competitive positioning are being considered.
Internal positioning. Personally, I am passionate about the need for strategic alignment in an organisation. An interesting aspect of the ADSP opportunity is that it appeals to those air navigation service providers who are strategically targeting innovation and staff development/retention. ADSPs can help drive a culture that links a passion for aviation with a fascination around data science and its impact on human actors (the controllers) and the wider safety-critical system.
Of course, other drivers exist such as the potential to improve network-level capacity and resilience, reduce ATM-derived emissions, and catalyse ancillary services such as drone data services. But until these have a direct effect on the executive decision making of air navigation service providers, they feel less influential than the drivers identified above.
What is required is a fundamental business transformation, similar in nature to the IT outsourcing that other safety or security critical industries have gone through, particularly in the EU single market. It will take the involvement of all stakeholders. For that to happen, each local stakeholder's needs, desires and constraints must first be understood, including Member States and national supervisory authorities, military, air navigation service providers, staff and industry suppliers. We will explore more of this in future articles.
ADSPs therefore have the potential to bring cost benefits, enable increased flexibility of capacity provision, and drive innovation. They also incentivise competitive positioning, something that may spur defensive or attacking positioning from various European players.
Are you behind the drive for ADSPs? The position you take will need to be informed by a specific cost-benefit case, taking into account all local stakeholders, drivers and constraints. The appetite for change exists, who will move first?
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