Institutional reform of air navigation service provision in Nigeria and Indonesia

By Glen McDougall

Airneth Fellow Column
February 2009
By Glen McDougall

The world of air navigation service institutions is changing. Throughout the world, governments have been commercializing these entities. With varying degrees of liberalization, ranging from departmental units with budgetary autonomy to state owned enterprises, public-private partnerships and not-for-profit organizations, many countries have freed their air navigation service providers (ANSPs) from political priorities, civil service constraints, budgetary difficulties and the burden of fulfilling a broad spectrum of government driven initiatives such as employment and economic growth. As a result, these new organizations are better able to focus on their core business of improving aviation safety and providing better service to their customers – airlines, business aviation, recreational aircraft owners, and military & state aircraft.

This phenomenon has been studied and a thorough analysis showing the benefits that have been achieved is available in the report “Air Traffic Control Commercialization Policy: Has It Been Effective? This report studied the effects of various models of commercialization in ten developed countries. There is no doubt that developed countries, such as the Netherlands and Canada, have benefited from commercialization of ANSP services but what about less developed countries? Could the same principles apply to them and can the same benefits be expected?

Several less developed countries are in the process of reform of their air navigation institutions. This author, who produced the above-mentioned report on commercialization in developed countries, is involved with two such initiatives in Indonesia and Nigeria. Both countries have poor aviation safety records and have been the subject of action by the FAA to lower their safety ratings. The Indonesian and Nigerian governments are actively addressing the issues and in regard to ANS, recognize that reform of their ANSPs is important in improving aviation safety.

Currently ANS provision in Indonesia is divided between two regional airport authorities (East & West Indonesia) and the department responsible for civil aviation. The government has enacted a reform program for its aviation regulatory and infrastructure services in co-operation with the International Civil Aviation Organization (ICAO). With regard to ANS, the government is proposing to establish a single provider separate from the government regulator and from the two airport authorities. The purpose is to de-fragment this key safety function, separate the safety regulator from the service provider, retain revenue from user charges without cross-subsidy to other government operations, and enable a stronger focus on performance. The governance option being considered is a Public Service Unit (BLU) which has many similarities to the Independent Administrative Body (ZBO) model chosen in the Netherlands for its ANSP, LVNL. In Indonesia, Public Service Unit is a stand-alone organization within the public service with features that provide a measure of independence and financial self-sufficiency. 

A new Aviation Law has been passed that, inter alia, allows the ANSP to be established under the Minister of Transport as a separate, self funded, non-profit organisation. Under this Act, the regulator and the air navigation service provider will be separate, a move which provides proven safety advantages. To guide implementation, the Indonesian government has established a Civil Aviation Transformation Team and an Advisory Board of international experts to advise and assist in implementation of improved safety oversight capabilities and institutional reforms over the next two years. The Advisory Board, of which the author is a member, includes officials from ICAO, the FAA, the European Commission and other internationally recognized experts.

The Nigerian Airspace Management Agency, NAMA is an agency of government established in 1999. It is fully separated from the Nigerian Civil Aviation Authority, the safety and economic regulator. The enabling Act provides for a board of directors appointed by government, but the board is not operating at the moment and control comes directly from the Minister of Aviation. All employees are civil servants, and the agency acts as an arm of government.

NAMA has been unable to obtain adequate funding for its infrastructure renewal program and has been restricted by civil service practices in addressing over-staffing of overhead functions and remunerating professional staff to attract and retain qualified employees. These are key elements to improving aviation safety and efficiency. Consequently, NAMA has engaged the author through ICAO to study governance options that remove these impediments. The goal is to provide a structure that provides financial independence from the state budget, provides access to capital funds and gives management control of its resources, including staffing and remuneration.

The problems being experienced by the Indonesian and Nigerian ANSPs are of the same kind experienced by the developed countries. The lack of access to capital funds, de-fragmentation issues, budget uncertainties, restrictions of the civil service on employment and a focus on political issues rather than serving customers are common problems world-wide when air navigation is housed in a traditional government department.

From the evidence in the ATC Commercialization study, the best practice globally to enable high-performing ANSPs, whether government or privately owned, is:

  • financial autonomy from the state budget;
  • separate and effective safety oversight;
  • independent governance structure;
  • customer involvement.

The evidence from Indonesia and Nigeria indicates that the best practices and lessons learned in the developed world from commercializing air navigation service provision can be applied equally to ANS provision in the less developed countries. However, it must be remembered that structure is an enabler, not a solution. Structural reform is necessary but not sufficient for improving safety and efficiency– the management and staff of the newly reformed entities must build a corporate culture and internal systems that make safety paramount and service to customers a key part of their business ethos.

Category: news & columns, Glen McDougall, columns