esa iris programme operation studies · the end users perspective the likelihood of the service...

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ESA Iris Programme Operation studies

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HERMES

•  Inmarsat Global Limited: Prime –  Satellite Operations Impact on System Design –  Strategic Analysis

•  AENA Internacional –  Regulatory

–  Timeline –  Responsibilities and Liabilities

•  ARINC –  Service Model –  Revenue Model

•  Helios –  Business Case –  Sensitivity Analysis

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OPERA

SITA: Prime

Overall Management

Service definition

Regulatory constraints

Financial impact and strategic analysis

SES-ASTRA

Definition of operations

Impact of the operations on the system design

Financial impact and strategic analysis

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SIRIO

•  TELESPAZIO: Prime - Satellite Service Provider Service model, Business case, Strategic Analysis

•  EGIS AVIA: ATM Consultancy Service Provision Analysis (Interoperability and standardisation), Certification and regulatory issues, Revenue Model

•  HISPASAT: Satellite Operator Engineering analyses, system verification and validation activities

•  NATS: ANSP consultancy Regulatory activities, service certification and validation. Interface to Regulators, Certification Issues.

•  TELESPAZIO France: Service Model, Business case support

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Panel session – List of topics

•  Hypotheses for the service model •  Business case/Financial analysis •  Technical constraints from an operator perspective •  Timing •  Global interoperability

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Key Issues for a viable Service Model

Preconditions to make viable the satellite service provision are:

•  ATM-dedicated satellite-based communication standard, widely recognised by Airline companies, airspace users and ANSPs’.

•  Profitability and bankability: A satisfactory profitability should be guaranteed for the

private shareholders, especially in a PPP approach with investments of the private sector

•  Market competition: Avoid a monopolistic framework that would have a negative impact

on service provision

The focus is on the end users needs to make sure that such a service is suitable for aviation in terms of:

•  Safety •  Operations •  Costs

End users requirements

Technical considerations

(e.g. coverage, capacity, service interoperability)

Economic viability

Inputs from SIRIO

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Value Chain: Roles and Actors

This is how the value chain for the provision of satellite-based communication services for aviation looks like:

Different grouping of value-chain roles can be studied:

SOW SOP SCSP ANSP AIRSPACE USERS CSP SGO

SSP



SSP

Satellite Owner

Satellite Operator

SatCom Service Provider

Satellite GES Operator

Air Navigation Service Provider

Comm. Service Provider

Inputs from SIRIO

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The End Users perspective

The likelihood of the service model implementation can be evaluated based on:

•  The impact of the regulatory framework and liabilities issues that has to be considered in terms of costs for the certified entity (ies)

•  The associated revenue model and business case, to show the viablity of the proposed service model scenarios and the services prices for the end users.

Inputs from SIRIO

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Regulatory framework vs Service Model

At least one the actors in the value chain must be certified. It is the responsibility of the certified “entity”:

–  to comply with the requirements of the Safety Assessment and of the Conformity Assessment processes

–  to manage alls the sub-contractors through: Contracts; Service Level Agreements; Systematic Safety Oversight (periodic audits; findings; corrective action plans; etc…); etc single certified Pan-European CSP

Examples of possible scenarios are:

–  single certified Pan-European CSP

•  The SSP (Satcom) , and mobility service CSP(s) are sub-contractors of the single certified Pan-European CSP

•  The certified Pan-European CSP carries the maximum liability but can pass it to the contracted SSP. In turn, the SSP can flow the liability up to the Satellite Operator.

–  Multiple certified CSPs separately for Satcom, Air/Ground com and Air/Air com

•  in this case the SSP needs to be certified as CSP by EASA for ATS provision

•  As certified CSP, the Satellite Service Provider carries the maximum liability but can flow it up to its contracted CSPs and up to the Satellite Operator.

Inputs from SIRIO

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Liability/costs implications wrt Service Model

•  Cost –  to set up to meet certification –  to maintain a certification standard –  of insurance –  Financial impact to customer

•  Liability issues –  No clarity on responsibility

•  Recommended way forward –  From an NSA perspective, use of a Data Service Provider by an ANSP should

represent use of a third party as a supplier of services.

–  There is an extant obligation in the Common requirements regulation for every ANSP to ensure the safety of the services provided by third parties because the ANSP is responsible for the end-to-end delivery of its activities

–  SLA should be developed with penalties and final liability as a function of total contract value between CSP and DSP

Inputs from OPERA

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Business Case - Overview

•  Process: –  A revenue model is constructed, taking into account:

•  Revenue model for the EATMS Communications Service •  Service Model for AOC and ATS services via satellite

–  The cost model is built upon: •  Capital costs (from Phase B studies) •  Operating costs (determined by Operator Study) •  Phasing of implementation

–  Sensitivity Analysis to be conducted on main revenue and cost risks

•  With the overall objectives of: –  Developing investment profiles for each entity in value chain –  Determining associated financial support to develop, procure and

operate full system

Inputs from HERMES

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Revenue Flows – ATS and AOC

•  ATS and AOC will have different revenue flows within the entities of the provision chain

•  ATS revenues will be considered on the basis that mandate for enhanced datalink services is promulgated as part of the regulatory roadmap for SESAR deployment. •  Revenue model depends on the final SESAR air-ground

communications architecture •  Expected to include a fee per member state to cover running costs

of the satcom system and a communication fee payable by the ANSP.

•  ANSP recovers the cost from the airline community by inclusion in the determined cost base used to calculate the unit rate.

Inputs from HERMES

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Single European Sky Charging principles

Regulation 550/04 (amended by 1070/09) on Air Navigation Service provision establishes the principles for ATS en-route charging:

•  Charges shall reflect the cost of air navigation services and facilities made available to airspace users

•  The cost to be shared among airspace users shall be the determined cost of providing air navigation services in relation to the facilities and services provided for and implemented under the ICAO Regional Air Navigation Plan, European Region

•  Transparency of the cost-base for charges shall be guaranteed

The ATM Master Plan considers Air/Ground Data link based on satellite as a key enabler required to complement the future terrestrial data link to provide service redundancy in view of the high availability requirements.

Even with a mandate and considering Air/Ground Satcom Data Link as dual link for Continental Airspace, the estimated overall ATS revenues is too low to allow having multiple A/G data link SATCOM service providers in open competition.

Business Case – ATS Revenue Inputs from HERMES

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Revenue model for AOC

•  AOC Business…. –  is highly competitive and depends on the prices for each

technology –  Single European Sky inputs expect to half the total ATM cost and to

increase capacity (handle 3 times the current traffic). •  Assumptions to build AOC revenue model

–  Cost of operating the satcom system fully paid by the future datalink mandate

–  In continental Europe, satcoms will compete as one of the available technologies for AOC, and will likely not have more than 25% of the continental traffic (for both legacy satcoms and the new one developed in Iris).

AOC revenue depends on prevailing market conditions for continental data link

Inputs from OPERA

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Effect of Mandate

•  Revenue flows for ATS services have a key dependency on the mandate for equipage –  Prior experience indicates that airspace users tend to equip with

new technology only when mandated and they tend to postpone the investment until the very last moment

•  Earlier, benefits led equipage, requires the benefits provided by supported services to be available to the first equipped aircraft. Pay back period would need to be in the order of 18 mo

–  The ATS revenue model will need to consider equipage levels before and after an SES mandate

•  Similarly for the first generation terrestrial Data Link Services (DLS) over VDL2/ATN (or equivalent), a mandate from EC has been issued for aircraft fit and Air Navigation service provision

•  Alternatively… the Galileo/EGNOS model: 100% public investment and a contract for system operation / service provision while the end users receive it for free

Inputs from HERMES

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Pre-Requisites For Private Investment

•  The attractiveness of providing operational service from a business opportunities’ point of view depends on the following key drivers: –  Risk Analysis and Allocation –  Definition of Roles & Responsibilities in Service Provision –  Financial Analysis: business case and in particular the

sensitivity analyses highlighting cut-off conditions

•  Investment criteria required by the debt markets: –  Pre-requisites for each entity in the value chain –  Certainty / Clarity around risk analysis and allocation –  Analysis of projected risks and returns for the prospective

borrower / issuer, i.e. is the arrangement “bankable”?

Inputs from HERMES

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Context of Public-Private Partnership

•  A PPP-structure is an attractive way of financing transport infrastructure, so long as the ‘user pays' principle is only applied once the benefits are available: –  You can not charge for crossing a bridge before it is built!

•  Given that limited public money will be available, it is important to address ways of: –  Reducing the overall cost –  Supporting the weakest link of the value chain

•  For Iris, this could mean: –  Supporting avionics costs from public funding (hence increasing the

revenue streams) –  Sharing the implementation cost with other users of the satellite (if

feasible) –  And even, looking at alternative means of securing the

construction, delivery and implementation funding.

Inputs from HERMES

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Pre-requisites for operators/service providers to be a candidate for a PPP

•  As a starting point, Inmarsat considers that efficient risk allocation is a key factor in the success of any PPP scheme. –  Risk mitigation can support risk allocation through insurance

arrangements, financial market instruments (e.g. hedging)and appropriate supervisory and monitoring mechanisms.

•  The overall return to the private investor is key to the risks it is prepared to shoulder and its incentive to provide the service required –  But it is important to recognise that there is a limit to the overall risk

a private company can shoulder – that limit is typically where insurability ends.

–  It is also important to recognise what risks the debt markets will be willing to take relative to equity investors – debt providers only ever get repaid, i.e. they do not take “equity risks” nor do they receive “equity rewards”

Inputs from HERMES

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A Few Thoughts to Risk Allocation

•  The best approach to risk allocation between the private and public partners in a PPP scheme is the identification of the party best placed to manage, control and bear the risk in question. –  In general, a private partner will bear risks related to the

construction, operation and maintenance phases, cost of finance (i.e. interest rate or foreign exchange rate changes) and insurable risks.

–  The public partner is more suitable to bear the risks that the private partner would be unlikely or unable to insure against, such as change in law or regulation

•  ANSP PPPs tend to mitigate risks related to regulatory risk in the air traffic sector, the imposition of security and counterterrorism measures, and “market” risk in terms of the number of flights paying for use

Inputs from HERMES

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Satellite Network Services Management

The Satellite Network Service Management activities are based on a quality flow

process in order to meet the requirements and the SLAs of the most demanding

Customers

The network functions are provided through the NMC (Network Management

Center) in accordance with the Telecommunication Management Network model

as a reference standard [FCAPS]:

•  Fault Management

•  Configuration Management

•  Accounting Management

•  Performance Management

•  Security Management

Inputs from SIRIO

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Customisation for Aeronautical Applications

The ATM Community is a very demanding customer

•  The process currently adopted should be tailored for the Aeronautical Applications:

–  Safety requirements

–  highly regulated environment

•  Relevant experience in Network Management of the Service Provider would be required

•  The ability to manage different technologies and services in order to meet strict requirements could be a key asset for the Service Provider

Inputs from SIRIO

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Operators feedback on System Options

SO1 – Information and Communication Security

SO2 – Transmission Security

SO3 – System Capacity

SO4 – End User Terminal Capability

The Operators point of view is essential for the assessment of the Options still open for the overall System Design, in order to take into consideration not only technical constraints but also other relevant aspects such as:

•  Service quality

•  Cost and complexity of Operations and maintenance

Key findings:

•  spectrum availability and the frequency coordination activity (filing)

•  by increasing processing and power functions on the ground segment would allow to simplify and reduce the prices for satellite terminals on board the aircraft

•  a balance of the system security vs. safety level required for aeronautical communications is needed

ANTARES

Inputs from SIRIO

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Operational constraints after SRD analysis

Operational complexity results from

–  system design requirements:

•  Timeline flexibility

•  Payload flexibility

•  Distributed Management Functions

•  Distributed Ground Earth Stations

–  Information and communication security requirements:

•  Access Procedures

•  Key distribution

•  Increased possibility for errors

Inputs from OPERA

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Equipment vendor relationships

•  While it is desirable to be able to select an equipment vendor on the basis of capability, and to allow competitive tendering for the provision of equipment, the long term costs for maintenance of the network inevitably have a major influence on the vendor selection process.

•  To minimise interoperability issues and testing costs, it is desirable that each distributed network elements, such as the GES, are provided by a single vendor, and this has the disadvantage of creating a sole-source supplier situation for all GES operators.

Inputs from HERMES

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Equipment vendor relationships

•  One operational model is for a single network operator to be responsible for all network infrastructure, and for that network operator to be responsible for provision of gateway and network management infrastructure. –  The network operator could provide service to GES operators for

provision and maintenance of the GES infrastructure, subcontracting with suppliers for elements of the GES infrastructure, and being responsible for all network administration and upgrades.

•  Alternative approaches exist, for instance GES equipment specifications may be mandated by the network operator, such that the equipment must conform to the communications standards with supplementary requirements for manageability –  GES operators establish direct relationships with equipment

providers.

Inputs from HERMES

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Timeline for the System Development and Operations

Timeline - Overview

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(time TBD)

(time TBD)

(time TBD)

(time TBD)

Inputs from HERMES

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Financial approach At the end of 2011 the procurement of the Iris subset (phase C/D/E1

contracts) should be launched considering both the ATM payload development and the satellite platform:

•  End of 2010 / Beginning of 2011 – Decision on the financial model and the assets to be financed (i.e.: Iris subset...)

–  Public

–  PPP

•  In case of private investment (e.g.: to cover the satellite platform and launch procurement) a consultation process should be launched in order to see interested parties

Main issues affecting the financial risk for the private investment should be mitigated on time:

•  Confidence on the revenues •  Confidence on the timeline to start recovering the investment •  Technological risks

Timeline - Constraints Inputs from HERMES

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User needs In order to launch the procurement of phase C/D/E1 there should be a clear

identification of the user needs resulting in a consolidated mission.

Inputs from SESAR programme (Work Packages 15.2.4 and 15.2.6) are “a must” and a precondition for the development:

•  User requirements for A/G data link needs to be updated (from COCR v2) and apportioned between terrestrial and satellite-based A/G data link

•  Decision on the final predictions to be considered for air traffic growth

•  Decision on system design issues (e.g.: dual link for A/G data link, polar coverage)

•  Development of OSED, SPR and INTEROP standards (at least as a draft version)

International cooperation: New Action Plan 30 to cooperate on the FCI (Future Communication Infrastructure) coordinated by FAA and Eurocontrol

Consolidated User Requirements for beginning of 2011 to ensure ANTARES may finish on time.

Timeline - Constraints Inputs from HERMES

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Standardisation A significant advance on standardisation should be achieved in the next

two years aligned with the System Critical Design Review (end of 2012): •  Update of existing AMS(R)S SARPs performance requirements by

including the stringent requirements applicable to the future services •  Communication Protocol Standard shall be baselined and incorporated

to the new ICAO standard (probably as a Technical Manual) as soon as possible considering the one defined in ANTARES

•  Consolidated OSED, SPR and INTEROP standards aligned with the Iris MRD/SRD should be available

Certification Development of Implementing Rules and Acceptable Means of

Compliance by EASA to be applied for the development and verification of paneuropean CNS/ATM systems is required before the System Critical Design Review... Not later than mid- 2012.

Timeline – Standardisation & Certification Inputs from HERMES

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World wide service

•  Global interoperability –  Worldwide service can only be ensured through

standardization of the communication system developed in Iris - proposed steps are :

• Adopt ICAO core SARPs (perfo) and produce Technical Manual (specific for Iris)

• Produce avionics standards through EUROCAE/RTCA - MOPS/MASP or SPR/OSED/INTEROP

• Produce ETSI specs for ground (radio) parts •  Ideally produce AEEC recommendations

Inputs from OPERA

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Global connectivity through SITA Inputs from OPERA

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Interoperability with other service providers

–  Need to ensure interoperability with other service providers • Ensure appropriate handover mechanisms are included

in the communications standard • Create a forum for interoperability testing • Create an interoperability testbed

Inputs from OPERA

esa iris programme operation studies · the end users perspective the likelihood of the service...

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