'Is a blip just a blip?' Air Traffic Controller Workload and Revenue Generation

By Glen McDougall

Airneth Column
November 2009
By Glen McDougall

When assessing the workload of controllers, some say ‘a blip is a blip’, meaning that each aircraft ‘blip’ that appears on a controller’s display generates a similar amount of controller workload. Of course, there are differences between aircraft types that affect control tactics such as wake turbulence, speed differences and capabilities of the aircraft to maintain an accurate navigational position (RNP), all affecting separation criteria and vectoring. Congestion is also a major determinant of workload: the more blips in a given sector, the more workload for the controller. These are all technical factors that are part of a controller’s job.

For tower controllers, the same can be said of aircraft “an aircraft is just an aircraft” and the same can be said of navigation aids, communications facilities and surveillance equipment, including the computer systems that process flight and radar data. Whether the aircraft using these air navigation services is large or small, the impact on the system is immaterial. So when users pay for ANS, they should all pay the same amount for the same flight, right? Not so: when it comes to paying for these services, the economics of revenue generation depend on an entirely different set of factors.

Perhaps nothing is more vital to the economics of ANS than revenue generation. The revenue the ANSP earns pays the salaries of controllers and others, covers all operational costs such as electricity and maintenance, and covers debt payments for the purchase of modern equipment and facilities. In most countries in the world, air navigation services, including air traffic control, are paid for by those who use the services – airlines and commercial aviation customers, businesses with aircraft fleets and general aviation including recreational aircraft operators. The exception is the United States which still depends on taxes such as the air ticket tax and fuel taxes to fund its air navigation activities. For everyone else, ANSPs have developed a system of user fees to provide the revenue necessary to fund the air navigation system, usually following ICAO Policies. These generally do not follow the ‘blip is a blip’ concept.

There are controversies surrounding the application of user fees, particularly concerning an aircraft weight component of the charge which means that heavier aircraft pay more than a lighter aircraft over the same route or landing at the same airport. There is also disagreement on the principle of cost recovery, embedded in the ICAO policy (Doc 9082) which seems out of step for the new commercialized ANSPs where business-type pricing would be expected. 

For those not familiar with the way in which user fees are determined, a few words of explanation. For most countries, user fees are based on aircraft weight and distance flown multiplied by a Unit Rate. Each ANSP publishes Unit Rates which reflect the charges that most customers have to pay, often with exceptions for light aircraft. The cost base of the ANSP is projected for the upcoming year, as are flight movements by weight of aircraft and distance flown. Calculations are done that estimate the Unit Rate based on this forecast aviation activity and cost of service, which can be broken down to en route and terminal portions. When the year actually unfolds, ANSP costs and aviation activity are different than the estimate and the surplus or deficit in fees collected over costs is forwarded to a future year’s calculation of fees. 

The weight factor used for aircraft charging is based on the maximum take-off weight of the aircraft and, according to ICAO principles, charges must be less than proportional to the weight. This means ANSPs will often use a proportion of weight such as the square root in the charging formula. The fees are normally separated to reflect the ANSP’s cost of providing different services. For example, there are separate en-route and terminal fees plus other fees for oceanic services. A typical en-route charge is published as the Rate times the weight factor times the distance flown. Terminal charges have different rates, may have different weight factors and do not have a distance factor.

As an example, the published NAV CANADA en-route rate for 2008 is 0.03445 and the weight factor is 0.5 (the square root). The en route fee in 2008 for an Airbus 319 weighing 75 metric tonnes flying from Calgary to Vancouver, a distance of 555 km outside terminal airspace, is $166 CDN (rate times square root of weight times distance). The en route fee for an Embraer 190 with MTOW of 51 metric tonnes flying the same route is $137. When the terminal fees are added for the flight, which use a different formula, the total is $921 for the Airbus and $692 for the Embraer, or about 33% more for the Airbus.

When, for charging user fees, ‘a blip is not just a blip’, what justifies the difference? The economic term is ‘value of service’. The Airbus can carry more than the Embraer, and the value to the operator is higher. As passenger aircraft, the typical seat arrangements are 124 for the A319 and 98 for the E190, about a 26% greater capacity for the Airbus. This is not precisely the same proportion as the fee difference, but indicates the principle behind the weight factor. Aircraft weight is seen as a simple means of approximating value of service.

Airlines also include value of service in their pricing. As we all know from purchasing airline tickets, a ‘seat is not a seat’ even in the same cabin on the same flight, although the airline cost per passenger is essentially the same in a given class such as economy. Prices can vary depending on time purchased, duration of stay, available ‘seat sales’ and so on. This is ‘yield management’ and is practiced by the airlines to maximize revenue per flight while attempting to fill the aircraft. 

So, given that this is industry practice, why is this controversial for an ANSP? This is where another misunderstood issue comes in to play, that of cost recovery. The cost recovery philosophy has been crucial at ICAO to encourage countries to develop financially independent entities for ANS, but some customers have argued that this principle must be applied to every flight individually. They argue that since the COST does not change perceptibly for the ANSP, all aircraft should pay the same fee for a given flight, no matter the size of the aircraft. However, ANSPs world-wide, with ICAO acceptance, treat cost recovery as meaning that in total, the ANSP recovers all costs for a given service (e.g. en route and terminal). They then distribute this among users, most using the weight factor as a form of capturing the value of service, i.e. those who derive more value from a flight are asked to pay more.

ICAO recently re-confirmed that the value of service principle is still relevant. At the Conference on the Economics of Airports and Air Navigation Services (CEANS) held in Montreal in September 2008, member states agreed that aircraft weight may (not must) be taken into account for route, approach and terminal charges. Under Route Charges, the revised ICAO Document states: “This weight scale should take into account, less than proportionately, the relative productive capacities of the different aircraft types concerned.” 

While the economic principle of value pricing continues, there is pressure to develop more innovative types of pricing that consider other factors. Within the umbrella of either total cost recovery, or pricing limits set by an economic regulator as in the UK or Australia, a more commercialized approach to individual charges can be considered, still consistent with ICAO policy. For example, weight might not be the best approximation of value of service and some different, more precise factor could be developed. Pricing incentives may be needed to encourage equipage, reward good environmental practices, or reduce congestion Charges may need to be location-specific and service-specific rather than system-wide to eliminate cross-subsidies. Flexibility may be necessary to allow performance rewards and penalties to be included in a service level agreement worked out with customers. Some of these principles are already implemented and there are likely to be more innovations in future.

In summary, the link between controller workload and the economics of revenue generation are nebulous indeed. The ‘value of service’ economic principle is embedded in the route and terminal charges you have today, but there is significant room for improvement to respond to current issues. Even more tenuous is the tendency for rates to increase when traffic volume, and hence workload, decreases during an economic downturn as we are experiencing - but that is another story! 

This article was first published in the March 2009 edition of The Controller, the journal of the International Air Traffic Controllers’ Associations (IFATCA)

Category: news & columns, Glen McDougall, columns