• A quickly developing technology

• Beginning to thrive in an industry that is “change averse” and where regulation can impede progress

• The technology has a lot to offer

• but there are barriers to be addressed

• Here are my reflections from listening to the discussions

• Capital intensive

• Below one million passengers are typically loss making

• A large number of EU airports are loss making for this reason

• Subsidy often required

• Air traffic service provision contributes a large proportion of costs

• Typically 20%-40%

• Staff cost typically 60% of ANSP cost base

• A relatively high cost but these roles are essential

• Therefore appealing business case for shared centres enabled by digital tower technology

• Market is picking up

• In many cases, conventional towers are ageing and are to be replaced

Scalability

Flexibility

Enhanced operational performance

Economies of Scale

Reduced operating cost

Cost Efficiency Economies of Scale

Access to new locationsIncreased Service Provision/Quality

• Position-enabled technology in 2001

• “Know-where” service

• Crude server application

• Sending position to phone

• Displayed as a dot in a square on the phone

• corresponding to a position within a grid square on a map

• Signed contracts for access to over 50,000 European paper maps

CC BY-SA

• That early application failed

• The technology was too crude and too slow

• No way of displaying map features

• Could enough map information ever be displayed on a phone?

• Very early days for phone location technology

• We began to understand the type of applications that might be attractive

• Finding restaurants

• Getting traffic advisories

• We expected real reservations about applications that would not be acceptable

• Finding people – surely no one would want to be tracked?

• As soon as technology became available – the market exploded!

• Service providers competed through innovation

• Being first to market was an advantage not a risk

Regulation and human factors issues did not prevent expansion

• Technology has gone through at least two generations

• Projectors to screens

• It is now ready for adoption

• Reservations exist but the attitude is positive

• Human factors

• Difficulties to achieve economies of scale

• Incomplete regulatory process

• Poor incentives for ANSPs to adopt a different approach

• Generation 1 early adopters identified

• Can they be the start of a market explosion?

Digital Towers are ready to fly!

• Long history of development brings us to a crucial two years

• This first generation of digital towers needs to be implemented on time

• (and to work acceptably)

• Build trust and a foundation for the expansion

• Barrier not really technology but regulatory and human factors

• Need rapid approvals process

• working to get the early adopters in place

• Regulators working closely with early adopter teams?

• This lays the foundation on which to start generation 2

Successful early adoption is crucial

• Early adopter transition

• helped by tailoring solution to current control environment

• Long term solutions

• More standard operations?

• Economies of scale

• Cross border services

• Special / bespoke operations will impede expansion in the long term?

Should there be convergence towards more common ways of working?

• There are a number of distinct markets

• Market 1: the one we already know about

• Every airport in the world that has some sort of ATS located in a conventional tower

• A hugely diverse market

• “Experts” often challenged to justify why a remote tower technology should replace a conventional tower

• How quickly will the question focus more on:

• Why would you ever build a new conventional tower?

• Is there a time in the future when there are no conventional towers?

• How quickly can the new future be assembled?

• is it set only by the retirement rate of tower assets (ie it will take a long time) ?

• or is there a compelling case for the process to be accelerated?

• (eg contingency, use of multimode, more flexible service impacts on rostering, limited opening hours, opportunity for reduced opex)

• How to handle complexities such as ANSP not owning tower?

• Is the current evidence for adoption of new digital towers already pushing the industry towards a digital tower only solution?

• Is there a hardcore element left that would never adopt a remote tower solution? And why?

Remote towers open up access small airports in the Amazon Basin

Remote towers enhance safety in region with poor existing infrastructure

• “What happens if we dream: – where will new air traffic services emerge where previously there was no chance of setting up a sustainable service?”

• Airports with tiny or no traffic levels and very basic ATS

• Airlines trying to establish services at new airports – bring their own ATS

Can digital tower costs be kept low enough to develop this market?

• These two potential markets have promise but also limitations likely to slow down adoption

• Conventional tower replacement – slow and limited by tower retirement rate unless other factors come into play

• Green field opportunities – but in regions where finances could be in doubt

• How can the adoption rate be increased in a mature market such as Europe?

• No surprise that early adopters are in UK and Scandinavia

• Traditional open markets

• Rest of Europe not as open

• generally resistant to change away from current ownership and service provision arrangements

• But European aviation is at a critical point….

• Downturn expectations

• Reduce cost

• Reduce training and recruitment

• Reduce investment

• Return to traffic growth

• Increase costs

• Restart recruitment and training programmes

• Increase investment

• The return to growth has been sudden

• And has left a performance gap

• Delays are up

• There are operational staff shortages

• The capacity crunch applies equally to airports

• The pressure is on to look at innovative solutions!

• Shortage of operational staff

• Airports look for opportunities to share services with other airports (utilising “wasted capacity”)

• Shortage of capacity

• New airports and new services at existing airports

• Airspace user concerns on business continuity

• New case for contingency

• Regulatory support towards early adopters

Re-visit business model built on confidence from success of early adopters

• Traditional service providers will have their hands full

• will need to focus its cost base on en-route / terminal operations

• Offers the chance to outsource the airport services

• allowing innovation to enter the market, existing services to be delivered more effectively and new services to be established

• The best model for opening up of the European market is uncertain

• Competition between suppliers with existing ANSP as customer

• Partnering between existing ANSP and new supplier/specialist ANSP

• Full competition for service

Outsourcing can let the airport sector grow

• A typical service provider

• Subject to economic regulation

• Built on long term monopoly position

• Long term relationship with suppliers

• System infrastructure based on high value assets with long depreciation times

• Regulatory period hampers innovation

• Unable to respond quickly to changes in demand

• Another typical service provider

• Not economically regulated

• Lower cost assets with shorter lifetimes

• Service oriented

• Competes in the market

• Needs to innovate to survive

• Has to respond quickly

• But must maintain essential standards

What type of service provider do we want and who are they?

• The market is ready to fly

• The next two years are crucial

• Early adopters mimic existing operations

• Standard working practices later to encourage service expansion and economies of scale?

• The business model needs to enable innovation

• Building new services once digital towers are established

• Need to encourage faster adoption rate

• A market re-structuring in Europe is possible on the back of the current increase in traffic

• Service providers should be innovative and expect to compete with each other

.29 Hercules WayAerospace BoulevardAeroParkFarnborough I HampshireGU14 6UU I UK Tel: +44 1252 451 651www.askhelios.com