Oct 2011 Presentation BC RTWR

1. 1 1
Dr Anders Adrem
Partner and Country Manager for Sweden, Quartz+Co
Managing Partner, Kihlstedt & Partners
Booz Allen Hamilton, European Aviation Leadership Team and Nordic Leadership Team
PhD in Finance & Accounting, School of Economics and Management, Lund University Sweden












+ international network
Nordic Aviation Relations
Experiences and education
Dr Anders Adrem

2. www.quartzco.com
DENMARK
Ryesgade 3A
2200 Copenhagen
T: [phone]
NORWAY
Inkognitogata 35
0256 Oslo
T: [phone]
SWEDEN
Birger Jarlsgatan 7
111 45 Stockholm
T: [phone]
Business Case Remote Towers
DR. ANDERS ADREM, QUARTZ+CO
October, 5
th
2011

3. 3 3
Target /vision
•Regulatory and technologically integrated European airspace
•Key success factors: increased capacity, improved safety,
reduced environmental impact and better cost efficiency

Single European Sky key development driver of European air
traffic
Background
•Serious delays in European air traffic
•Increasing congestion of European airspace
•Significantly higher ATM unit costs than the US
Legislative package SES I
•Establishment of a common European regulator
•Definition of airspace as a cross-border resource
•Focus on introduction of new technology supporting vision
Legislative package SES II
•Introduction of a "Performance scheme"
•Acceleration of Functional Air Blocks (FABs)
•Strengthening of central network management systems
European Commission adopts proposal for SES,
with endorsement from Norway and Switzerland
SESAR established and definition phase initiated
Delivery of SESAR ATM-master plan
SES II enters into force end of 2009
Both performance scheme and establishment
of FABs operational
End of first reference period (2012-2014)
Start of second reference period
1999
2001
2004
2006
2008
2009
2012
2014
2015
2015
-25

4. 4 4
SESAR has set ambitious targets; the industry is entering into
a take-off phase towards full implementation
DEFINITION

Resulted in the
European ATM
Master Plan
DEVELOPMENT

Results in new
Standards, new
operational procedures,
new technologies and
pre-industrial
components
DEPLOYMENT

Implements the
results of the
development
phase, delivers
the performance
increase
2006-08
EUR 60 million
2009-14
EUR 2.1 billion
2015-25
EUR 25-30 billion
3 phases
VISION / TARGET

Ongoing Full
implementation
Enabling EU skies
to handle 3 times
more traffic
Improving safety
by a factor of 10
Reducing
environmental impact
per flight by 10%
Cutting ATM
costs by 50%
1. 2.
3. 4.

5. 5 5
SES and SESAR JU will redefine the industry logic – new
constellations will emerge
From national monopolies
and national ANS providers
To international co-
operation and consolidation
National
monopolies and
national ANS
providers
En-route
Towers
CNS
Other services,
new services
•Economical regulation of en-route service
•International co-operation (FABs)
•Realising full potential will require close
co-operation and international consolidation
Regional co-
operation and
consolidation
Competition,
new players
and new
coalitions
Co-operation with
other ANSPs and
the industry
•Deregulation and competition for tower services
•New players (private) and new coalitions
•Remote towers potential game changer
•Technological progress and digitalisation
is redefining the service portfolio
•Unbundling of current services, new providers
(e.g. Telecom providers)
•Redefinition of service portfolio
–future core competences/services
–insourcing/outsourcing
•International co-operation, including industry
Unbundling Rebundling What is/will happen?

6. 6 6
Trend towards deregulation in Europe – yet only a few countries
has deregulated the TWR business but the path forward is clear
Fully deregulated
Semi-deregulated
Deregulation process ongoing
The UK
•TWR market deregulated
•NATS main operator of
international airports
•Local and regional airports
mainly operated by airports
themselves
Switzerland
•Deregulation process ongoing
•Draft bill propose main airports
continue to be served by
Skyguide
Spain
•Local and regional airports
deregulated 2010
•Concession for first batch of 13
airports awarded non-state
ANSPs in 2011 (mainly NATS)
•No time given for deregulation
of international airports
Sweden
•Fully deregulated 2010
•ACR took over operation of
three local/regional airports
2011
•Tower services at the largest
airports currently up for tender
•All Swedish airports will have
been up for tender 2013
Denmark
•TWR market never been
regulated
•Naviair only operator of ATC
services in Denmark
Germany
•Local and regional airports
deregulated 2007
•Local and regional airports
mainly operated by DFS Tower
Company and Austro Control
•International airports, monopoly
operated by DFS

7. 7 7
AFIS ATC
Local and Regional Towers – the unit cost challenge
Expected development of unit costs
ILLUSTRATIVE
Increased
unit costs
+10 years 20XX
Expected development of unit costs
20XX
Increased
unit costs
+10 years

8. 8 8
+10 years 20XX
Why Remote Towers?
INDEX
"As is"
"As is"
Remote
TWR
Remote Towers offer a substantially
lower cost level vis-à-vis operations
"as is"
Moreover, Remote Towers offer a number
of qualitative benefits
•More varied and stimulating tasks, distributed work
•Better environment for competence development;
knowledge sharing and working colleagues
•Less dependency on few employees and easier to
replace personnel
•No/less“oncall”dutyandlessweekendhours
•Increased competitiveness through cost efficiency
•Possibility to create unique advantages and take
advantage of the deregulation of TWR services
•Lower investment costs (ref. traditional TWR)
•Better cost control
•Contribute to maintaining the small airfields
Personnel
•Lower operation costs, lower prices / tariffs
•Increased operation stability
•Increased flexibility
•Improved safety
Customers
ANSP

9. 9 9
Contemporary models for investment
decisions are perceived intangible
and unreliable
Quartz+Co uses a scenario based business
case approach to evaluate the benefits
of Remote Towers
Why use a business case approach?
Cost-Benefit analysis and Net Present Value
analysis are commonly used for making
investmentdecisions…
…however,thesemethodsareperceived
intangible and unreliable due to a number
of reasons
•Often based on unrealistic assumptions
•Results intangible and hard to relate
to operations
•Hard to visualise actual impact on P&L
and Balance Sheet
…whichentailanumberofbenefits
•Results are based on real operational data
•Clarify effects on P&L, Balance Sheet and
Cash Flow Statement vis-à-vis "as is"
•Show the full impact of the investment
Business case approach is based on an
analysis of Income Statement, Balance Sheet
andCashFlowStatement…
Income
Stat.
Balance
Sheet
Cash
flow

10. 10 10
Operating conditions – traffic situation/development
"As is"

Estimated development
"as is"
- Operating costs
- Investments
- Cash flows
1
2
Key results – comparison "as is" vs Remote TWR 4
Sensitivity and risk analysis 5
Transition costs and high-level roadmap 6
Business case methodology
Remote TWR
3
Technology
Airport specific
Remote Central
Working station
and positions
Scenarios
Operations
Manning (operating
personnel)
Other functions
Operating concept
a b
Estimated development – Remote TWR
c

11. 11 11
Remote TWR operating concept – key principles for business case
Central
Work groups
Work stations
(sectors)
Work positions
Operational
personnel
The need for operational personnel and the dimensioning of technical
components are conditional to the operational prerequisites/conditions
•Information from the air field is transferred
to a central
•The central may contain one or several
work groups
•Each work group is dedicated to a number
of specific airfields
•A work group may have access to one or
several work stations from which the tower
duty is performed
•A work station may have one or several
positions
•The number of manned positions vary
through the day and night

12. 12 12
Remote TWR operating concept – Technology set-up

Technology scenarios

Different technology scenarios is used and assessed
Main scenarios
I. Visual/cameras, AWOS & ATIS (AFIS)

II. Visual/Cameras, AWOS & ATIS, MLAT and ADS-B (AFIS, ATC)

13. 13 13
3
Openinghours
A B C D
D
C
B
A
Sum
Examplefrom ATC Group A; Annualaircraftmovementsand openinghours
Group A
Aircraftmovements2009
Weekdays: X
Saturday: X
Sunday: X
Weekdays: X
Saturday: X
Sunday: X
Weekdays: X
Saturday: X
Sunday: X
Weekdays: X
Saturday: X
Sunday: X
4
121110987654321 28272625242322212019181716151413
87654321 2827262524232221 3130299 11 1410 151213 1617181920
DCBA
January
February
Monthlyaircraftmovements(2009)
Aircraftmovementsper day
Examplefrom ATC Group A; Monthlyaircraftmovements
Deep dive
Example of output of analysis (1/2)
ILLUSTRATIVE

14. 14 14
Example of output of analysis (2/2)
7
20
21
10
19
15
16
23
17
22
18
11
12
13
14
6
1
0
7
5
8
9
4
2
3
23
10
22
11
21
12
20
13
19
14
18
15
17
16
8
7
6
5
9
0
4
3
2
1
SUM SUM
Onsdag 28. januar 2009
10:00
12:00
11:00
11:30
11:45
11:15
10:30
10:45
10:15
10:04
10:06
10:16
10:25
10:28
10:31
10:45
10:54
11:01
11:04
11:05
10:12
11:07
11:19
11:22
11:50
10:22
10:46
11:34
10:00
10:04
10:24
10:25
10:26
10:30
10:31
10:42
10:44
10:50
11:15
11:17
11:28
11:30
11:31
11:41
11:47
11:50
Detailed flight pattern for 2 hours with high concurrency
Aircraft movements spread through the day
Number of aircraft movements per hour
Examplefrom ATC Group A; Aircraft movements spread through the day
Wednesday28. January2009
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
SUM SUM
Aircraft movements spread through the day
22
23
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
Potentialschedule
05:00
13:00
07:00
22:00
07:00
15:00
07:00
15:00
07:00
15:00
15:00
23:00
15:00
23:00
15:00
22:00
1:4
2:4
4:4
3:4
1:4
64 h
Examplefrom ATC Group A; Potential schedule
ILLUSTRATIVE

15. 15 15
Further analyses confirm the case study estimates on cost
efficiency potential
Potential
Density
30% to 60% Potential
Rationale
•Low air traffic density together with limited opening hours at smallest airports
result in unproductive ATCO time
•When the number of air movements increase, so does the need for multiple
ATCOs at the individual tower and the potential for reduction by multiple
airport approach increases
•High density airports with higher complexity reduces the potential of multiple
airport approach
The efficiency potential varies depending on airport density
ILLUSTRATIVE
Air movements 1,000-5,000 5,000-12,000 12,000-20,000 20,000-50,000

16. 16 16
Business case study – set-up
Set-up of study
•Information gathering and systematisation
•Analysis
•First results and main implications
•Potentially complementary analysis
•Final outcome, results and key conclusions
•Key questions/issues to address
in the continuing work
•High-level roadmap going forward
Timeline*
•Small team approximately 8-12 weeks
•Broader involvement at about 12-16 weeks
Dr. Anders Adrem
Partner, Country manager Sweden
Quartz+Co

M: [phone]
E: [email protected]
W: www.quartzco.com
* Depends on number of airports included, information available etc.)