Learning from other industries
Since 2013 the number of competitions that have been run across the EU for ATM services stands at only 36 – which, considering the thousands of airports requiring ATM services, is a staggeringly low number. Regulatory considerations play a part in this, but as the EU is keen to ensure competition, it could mean the landscape is ripe for change. According to Helios' Garyth Lofthouse, both Sweden and Germany have reported savings of 30-40% following commercialization or privatization of ANS.
As technology becomes an integral part of service delivery, the ATM sector can learn from other industries in how procurements are run (and how suppliers respond to them), and what a 'win-win' contract looks like. Lessons can be learnt from industries which are already mature in running competitions and using technology as part of the service, such as nuclear, IT, financial services and PPP/PFI, and from projects within these industries that have both been success stories and those that haven't.
The best competitions are those where as much preparation goes into the planning of them as their execution and there are a number of factors that will help competition in ATM grow:
- Ensuring best practice in the procurement of ATM services. Some airports are obliged to comply with EU regulations ensuring transparency and equal treatment but even where this is not a legal requirement, there is a real benefit in carrying out such a process; it will demonstrate value for money and give bidders a real sense that they have a chance of winning the contract by submitting their best bid.
- Future-proofing the service as far as possible. As technology becomes an integral part of service delivery, problems can arise if future technological advancements have not been anticipated in the requirements or the solution. As much flexibility as possible should be built in to the procurement and the contract itself to ensure the benefits of any future developments can be realised.
- Getting transition right. New providers can be put off by how entrenched in an organisation an incumbent provider appears to be. Ensuring that incumbents are not given an unfair advantage will have the effect of opening the market up. Including provisions requiring incumbents to provide support at the end of the contract period can help mitigate this risk.
- Identifying the right partner. In many cases, the underlying service is of secondary importance to the overall relationship between airport and ANSP. Ensuring a genuine spirit of partnership, and reflecting this in the contract and working arrangements, will inherently attract the market and have practical operational benefits.
In competitions, there is no one size fits all. The ATM market is at an early stage in its procurement lifecycle and to ensure effective competitions are run, it should take full advantage of the lessons from other industries. But as a first step, airports should assess their current relationship with their ANS provider and their readiness for competitive tendering.
"Helios often need to provide legal expertise to our clients and in such circumstances we often work with law firm Bird & Bird. We recently welcomed Lucy and Chris from Bird & Bird to speak on contracts at a special seminar we held on 'Competition in ATM". James Hanson, Director.