Periodic Reporting for period 2 - ITACA (Incentivising Technology Adoption for Accelerating Change in ATM)
Reporting period: 2021-05-01 to 2022-10-31
Technological change in ATM has historically developed at a slow pace. The reasons are multiple: the very demanding safety requirements, the coordination effort required to harmonise standards, the interdependencies between ground and airborne technologies, the monopolistic nature of air navigation service provision and the relatively small size of the global ATM market compared to other technology markets are among the factors that explain, at least in part, why ATM technological modernisation has traditionally followed a slow, evolutionary path. In recent years, growing traffic demand and new market entrants, such as commercial drone applications, are rapidly taking the ATM system to its limits, calling for disruptive solutions able to boost the performance of ATM operations. Emerging technologies, especially digitalisation and automation, have the potential to facilitate this urgently needed technological upgrade. However, technology evolution is a necessary but not sufficient condition: innovation is a complex phenomenon, which depends not only on the development of new technologies, but also on the existence of regulation and institutions able to facilitate and foster the implementation of such technologies.
The overall goal of the ITACA project is to accelerate the adoption and deployment of new technologies in ATM. The specific objectives of the project were the following:
1. Identify the main drivers and barriers for technological change in ATM and devise a set of policy measures and regulatory changes with the potential to lower such barriers and incentivise faster technology upgrade.
2. Develop an agent-based model of the R&I lifecycle enabling the representation of the complex decisions and interactions between ATM stakeholders and their impact on the development and implementation of new technologies.
3. Validate the behavioural assumptions of the agent-based model through a set of participatory simulation experiments involving the direct participation of ATM stakeholders.
4. Demonstrate and evaluate the potential of the newly developed methods and tools through a set of policy assessment exercises, analysing the impact of a variety of policies and regulatory changes aimed at accelerating technology change in ATM, with particular focus on the distributional effects of the proposed policies across ATM stakeholders and society at large.
5. Consolidate the methods, tools and lessons learnt delivered by the project into a coherent policy assessment framework and a set of policy recommendations, and provide guidelines for the future maintenance, evolution and use of the proposed framework.
The overall goal of the ITACA project is to accelerate the adoption and deployment of new technologies in ATM. The specific objectives of the project were the following:
1. Identify the main drivers and barriers for technological change in ATM and devise a set of policy measures and regulatory changes with the potential to lower such barriers and incentivise faster technology upgrade.
2. Develop an agent-based model of the R&I lifecycle enabling the representation of the complex decisions and interactions between ATM stakeholders and their impact on the development and implementation of new technologies.
3. Validate the behavioural assumptions of the agent-based model through a set of participatory simulation experiments involving the direct participation of ATM stakeholders.
4. Demonstrate and evaluate the potential of the newly developed methods and tools through a set of policy assessment exercises, analysing the impact of a variety of policies and regulatory changes aimed at accelerating technology change in ATM, with particular focus on the distributional effects of the proposed policies across ATM stakeholders and society at large.
5. Consolidate the methods, tools and lessons learnt delivered by the project into a coherent policy assessment framework and a set of policy recommendations, and provide guidelines for the future maintenance, evolution and use of the proposed framework.
The ITACA project started by identifying the main barriers for ATM technology adoption, which include: the complex implementation requirements in the aviation industry, the high cost of investment on the adopter side (e.g. ANSPs), the fragmentation of the market, and a culture which is reluctant to change.
ITACA then identified a number of policy measures aimed at tackling the identified barriers. Examples of the proposed measures are:
- Cost-plus pricing: ANSPs that have implemented certain technologies are allowed to charge an increased rate to the airspace users;
- Best-equipped best-served: ANSPs are allowed to provide a premium service to airlines using a particular technology;
- Subsidies: financial aid for the adopters;
- Mandates: sanctions on agents not implementing the technologies.
To enable a comprehensive impact assessment of the proposed policies, ITACA developed an agent‑based model that reproduces the ATM stakeholders’ decisions and interactions that drive the adoption of new technologies. The model includes the main stakeholders of the ATM ecosystem: regulatory bodies, technology providers, ANSPs, airlines and airports. To understand the behavioural drivers of ATM stakeholders (motivations, concerns, etc.) and calibrate the proposed model, ITACA performed a set of participatory simulation experiments with representatives of different ATM stakeholders, including airports, airlines and ANSPs. The results of these experiments were used to inform the behavioural assumptions of the model and confirm that the model behaves in a realistic manner.
Finally, once the model was validated, it was used to test different combinations of technologies and policy measures. First, ITACA investigated why some past technologies achieved high acceptance rates while others failed to live up to the expectations, and whether certain policy measures could have led to a different outcome. Then, the model was used to forecast the adoption of a set of new solutions under different policy scenarios. The results of these experiments led to the following conclusions:
- The need for a smart combination of policies: a combination of economic incentives (e.g. cost-plus pricing, subsidies) and enforcement through mandates provides the best results.
- The heterogeneous impact of a policy across stakeholders may lead to worse results than a do-nothing policy. A clear example is the best-equipped best-served policy: while it provides the right incentives for airlines, it can be detrimental for ANSPs.
- The importance of regulating ANSPs charges: the natural monopoly of ATM could lead to prohibitively large charges on airlines. However, a strict limitation may prevent ANSPs from recovering the cost of the investment.
- Enforcement works: a mandate for a proven technology can be a welfare improving solution, by reducing the uncertainty in a fractured and competitive market.
- Flexible charging regulation deserves consideration: the cost-plus pricing policy can provide significant benefits, especially combined with other policies such as best-equipped best-served or subsidies.
- There is no one-size-fits-all solution: if the technology is already delivering clear benefits, economic incentives will suffice to obtain the desired uptake.
- The importance of rigorous cost-benefit analysis: the outcome of a certain combination of policies is highly sensitive to the benefits and costs of the technology under study.
- The ‘master key’ stakeholder: when the main investor is not the main beneficiary, policies should focus on accelerating the adoption by this key stakeholder.
ITACA then identified a number of policy measures aimed at tackling the identified barriers. Examples of the proposed measures are:
- Cost-plus pricing: ANSPs that have implemented certain technologies are allowed to charge an increased rate to the airspace users;
- Best-equipped best-served: ANSPs are allowed to provide a premium service to airlines using a particular technology;
- Subsidies: financial aid for the adopters;
- Mandates: sanctions on agents not implementing the technologies.
To enable a comprehensive impact assessment of the proposed policies, ITACA developed an agent‑based model that reproduces the ATM stakeholders’ decisions and interactions that drive the adoption of new technologies. The model includes the main stakeholders of the ATM ecosystem: regulatory bodies, technology providers, ANSPs, airlines and airports. To understand the behavioural drivers of ATM stakeholders (motivations, concerns, etc.) and calibrate the proposed model, ITACA performed a set of participatory simulation experiments with representatives of different ATM stakeholders, including airports, airlines and ANSPs. The results of these experiments were used to inform the behavioural assumptions of the model and confirm that the model behaves in a realistic manner.
Finally, once the model was validated, it was used to test different combinations of technologies and policy measures. First, ITACA investigated why some past technologies achieved high acceptance rates while others failed to live up to the expectations, and whether certain policy measures could have led to a different outcome. Then, the model was used to forecast the adoption of a set of new solutions under different policy scenarios. The results of these experiments led to the following conclusions:
- The need for a smart combination of policies: a combination of economic incentives (e.g. cost-plus pricing, subsidies) and enforcement through mandates provides the best results.
- The heterogeneous impact of a policy across stakeholders may lead to worse results than a do-nothing policy. A clear example is the best-equipped best-served policy: while it provides the right incentives for airlines, it can be detrimental for ANSPs.
- The importance of regulating ANSPs charges: the natural monopoly of ATM could lead to prohibitively large charges on airlines. However, a strict limitation may prevent ANSPs from recovering the cost of the investment.
- Enforcement works: a mandate for a proven technology can be a welfare improving solution, by reducing the uncertainty in a fractured and competitive market.
- Flexible charging regulation deserves consideration: the cost-plus pricing policy can provide significant benefits, especially combined with other policies such as best-equipped best-served or subsidies.
- There is no one-size-fits-all solution: if the technology is already delivering clear benefits, economic incentives will suffice to obtain the desired uptake.
- The importance of rigorous cost-benefit analysis: the outcome of a certain combination of policies is highly sensitive to the benefits and costs of the technology under study.
- The ‘master key’ stakeholder: when the main investor is not the main beneficiary, policies should focus on accelerating the adoption by this key stakeholder.
ITACA has advanced the state of the art by proposing a Policy Assessment Framework supporting the design of measures and regulations intended to accelerate the adoption and deployment of new ATM technologies. The framework comprises a modelling toolset that represents the behaviour of the European ATM system, a methodology for the calibration and validation of this toolset through data driven modelling and participatory simulations, and a set of guidelines for the maintenance, evolution and use of the model.
The ITACA Policy Assessment Framework facilitates the provision of evidence-based recommendations on the most adequate policy approaches to facilitate technology uptake in ATM, hence contributing to the achievement of the ATM Master Plan performance ambitions.
The research activities proposed by ITACA entail a significant innovation potential and can open new market opportunities in several areas, including the design of innovative products and services that can be rapidly adopted and the development of strategic policy assessment and decision support tools for the aviation sector.
The ITACA Policy Assessment Framework facilitates the provision of evidence-based recommendations on the most adequate policy approaches to facilitate technology uptake in ATM, hence contributing to the achievement of the ATM Master Plan performance ambitions.
The research activities proposed by ITACA entail a significant innovation potential and can open new market opportunities in several areas, including the design of innovative products and services that can be rapidly adopted and the development of strategic policy assessment and decision support tools for the aviation sector.