Economics and Legal Change in ATM

Specific challenge: Large parts of the European aviation and air traffic management industry are undergoing significant changes in their institutional and economic structures originating from evolving market pressures, the emergence of new market entrants and innovation in business models. A better understanding of the drivers, costs, benefits and impacts of changes throughout the ATM industry's value-chain is desirable.

This holistic perspective should particularly take account of passenger, societal and environmental perspectives to ensure a complete impact assessment. A particular challenge is to better understand the relative efficacy of changes driven by regulation compared with those that derived from natural or forced economic incentive. The balance between these is not fully understood and justifies fresh research initiatives.

An understanding of the aviation market challenges and dynamics should be used as the foundation for devising well-reasoned change scenarios for the ATM sector, exploring innovative opportunities for growth, driving value, shaping new businesses and designing operating models for the future, all with the purpose of delivering sustainable, resilient and high-performance ATM services at affordable costs.

Scope: The range of research that could be covered in this topic is broad and topics mentioned here are only indicative. Research proposals may target existing SES economic, regulatory and legal frameworks within the timeframes set-out in the Flightpath 2050 vision document.

Current methods used to analyse costs and benefits of proposed changes to ATM have a number of limitations as many impacts linked to business, societal or environmental points of view are not yet systematically factored in or monetised in a coherent manner. Also, interactions between interrelated changes are not fully considered. Multi-stakeholder and multi-criteria decision analyses may inform, in a more meaningful way, on suitable economic incentives or regulatory instruments balanced across different stakeholder groups.

Demand on the ATM system peaks at certain times of the day and in certain regions; a more homogeneous demand distribution better exploits existing capacity across the ATM system. Research could assess the degree to which economic incentives and variable pricing mechanisms can be used to support demand-capacity balancing. These instruments could also address environmental challenges in aviation, for example as part of future environmental schemes.

Technology is a significant driver for innovation towards maximising business value. This can include innovative ways for aligning technology investment and business needs, notably by promoting economies of scale through the utilisation of state-of-art technology developed in other industrial sectors or adoption of open rather than proprietary standards, to speed-up the diffusion and adoption of novel technologies, reduce R&I cycles or accelerate and lighten certification processes.

Lessons learned from other industries regarding liberalisation, privatization, unbundling in monopolistic and defragmentation in supra-national markets can be applied to the ATM sector. Potential areas of application could include analyses of some facets of the proposed SES legislation, or the ensuing performance scheme, to ascertain potential unintended effects: for example, the introduction of passenger rights regulations, which strengthen the position of passengers, may lead to flight cancellations that are less costly for airlines relative to maintaining delayed flights. Such indirect effects of regulations could be subject to further analysis building upon already existing WP-E projects results (e.g. POEM).

Expected impact: This research should support the ATM industry to better and more reactively adapt to changes in its business, operational and policy environment, enhancing business and service value, reducing the risks and significantly heighten the implementation success of its change programmes. In addition research in this topic has the potential to improve cost-efficiency of the ATM system through well-targeted economic and regulatory instruments.

Type of action: Research and Innovation Action (RIA).

Further conditions related to this topic are provided in the Technical Specification of the Call.