Air Canada. American. British Airways. Canadian. Comair

1
C/AFT Air Traffic Service Performance Focus Group
Report
All Airline Meeting
Toulouse, France October 13, 1999
2
Phase 2 Mission Statement

• To promote airline participation in providing
  input to the FAA as they develop their cost
  accounting system. The value of the activity is
  through participation and not necessarily the
  report at the end of the period.
• To provide high level structure of common
  costing principles and measures to all ATS
  providers worldwide. These will include
  definitions of products, services and consumers.
• To ensure that data collection is coordinated
  between performance measures and that the cost
  requirements are adequate to support future ATS
  performance analyses and decisions (investment,
  best practices, etc.).
• To develop a structure to be able to identify
  major ATS cost drivers, to the extent possible.

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Phase 2 Organization

• ATSP Focus Group Leader
• Phase 2 Project Manager
• Phase 2 Technical Unit (FGU)
• FGU Advisors
• Cooperating Agencies

• Russell Chew - American
• Phil Roberts - R2A
• Alan Sbarra, Unit Leader - R2A
• Cal Peterson - American
• Louis Beardsworth - British Airways
• Steve Rayborn - Comair
• Brad Unnasch - United
• Dot Etheridge, Programs Mgr - FAA Retired
• Monica Alcabin, Phase 1 Leader - Boeing
• US Federal Aviation Administration
• Eurocontrol, PRC/PRU
• Nav Canada
• UK Nats

4
Current Phase 2 Membership

• Northwest
• Qantas
• Southwest
• United

• Air Canada
• American
• British Airways
• Canadian
• Comair

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Airline Performance Measures
6
Airline Performance Measures
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Airline Cost Accounts
Flying Operations Flight personnel Fuel
oil Aircraft ownership Other Flying
Operations Maintenance Passenger
Service Marketing Sales Reservations Aircraft
Traffic Servicing Aircraft Servicing General
Administrative Ground Amortization Depreciation
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Airline Operational Data
Miles flown Aircraft departures Block
hours Enplaned passengers Passenger miles
flown Seat miles flown Passenger load
factor Enplaned cargo tons Revenue ton
miles Available ton miles Aircraft
utilization Number of employees
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Comparison of Global ATS Providers Unit Costs
US Cents Per Minute
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ARTCC System Report
Actual Versus Budget
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ARTCC System Report
Budget vs. Actual Unit Cost per Minute
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Site Managers Report
XXX ARTCC Percent of Total Cost by Aircraft
Classification
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XXX ARTCC Total Costs Distributed by
Miles Flown Unit
Time in S pace Unit
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ATS Provider Cost Performance

• Comparison of Unit Costs in total and by
  function between FAA Sites
• Comparison of Unit Costs in total and by
  function between FAA Sites and Sites of Other ATS
  Providers

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We Must Avoid Being Controlled by Legacy Systems

• Building Activity Based Cost Accounting Systems
  must not be limited by currently available data.
• By keeping a Vision clearly in mind, we will
  avoid the legacy system trap.
• For example, we have the tools to substitute for
  lack of appropriate activity data and cost
  granularity as we build toward this Vision.

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Need for Common Definitions

• Users
• Air Traffic Services - Products
• - Activities

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Customer Groupings by Cruise Speed
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Air Traffic Control Customers by Aircraft Weight
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Air Traffic ControlServices, Products
Activities

• Service Flight Departure
• Product Takeoff Clearance
• Activity Communications

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Definitions Feedback

• Time in Space is an important metric
• FSS services not used by most airlines
• IFR/VFR is an important differentiator
• RJ Issues
• Other metrics Time of Day, Location
• General product feedback (Northwest)

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Phase 2 Meetings

• April
• First meetings with FAA Financial Off. (2)
• May
• Second meeting with Eurocontrol (PRU)
• PeopleSoft Meeting
• Meeting with Doug Andrew John Perry
• June
• First meetings with FAA Capacity Off. (2)
• Third meeting with Eurocontrol
• Informal Meeting with FAA Financial Off.
• Dallas ATSP FG meeting

• July
• FAA Capacity Office Meeting
• FAA Cost Conference
• First meeting with UK Nats
• August
• ATSP FG meeting Seattle
• Nav Canada presentation
• September
• Meeting with new FAA CFO
• Second meeting with UK Nats

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FAA Cost Conference

• July 29, 1999
• October 1, 1999 overflight fees begin
• Two Purposes for CAS
• Information to improve management of FAA
• Cost data to support overflight fees

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FAA Cost of Enroute Oceanic Services
Fiscal Year 1998 (in thousands of US Dollars)
Cost Element Enroute Oceanic Air Traffic
Operations 963,586 19,258 Airway Facilities
Operations 373,336 27,299 Overhead
Allocations 271,646 5,676 Capital
Investment 455,668 27,579 Other Costs
327,419 1,574 Total Cost
2,391,656 81,386
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FAA Enroute/Oceanic Cost Pools

• Enroute
• 2.4 billion FY98 vs. 2.6 billion FY95
• 7.8 decrease
• Oceanic
• 81.4 million FY98 vs. 192.1 million FY95
• 57.6 decrease
• Not broken out by site
• Appear to be differences in common costs

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Domestic EnrouteCost per Activity

• FAA Cost Conference average cost per activity
  39.61
• R2A statistical model using FAA data shows cost
  per
• Over of 34.25
• Departure or arrival of 41.31
• Does not include capital investment or other costs

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Average Cost Per Activity Vs. Cost Per
Departure/Arrival and Per Over
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Cost Pool Impact

• Cost pool difference between FAAs average cost
  per activity of 39.61 and R2As estimate of
  34.25 per overflight translates into 52.3
  million
• Based on estimated FY98 overflight activity

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Comparisons FY98 vs. FY95(Excluding Common Costs)

• FAA average cost per activity
• 39.61 vs. 43.13 (8.2 decrease)
• R2A cost per activity
• Departures/arrivals 41.31 vs. 46.18
• (10.5 decrease)
• Overs 34.25 vs. 33.51 (2.2 increase)

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Fully Allocated Costs

• Cost per departure/arrival down 13.0
• 61.41 FY98 vs. 70.58 FY95
• Cost per overflight down 2.9
• 50.93 FY98 vs. 52.45 FY95

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Comparisons FY98 vs. FY95

• Departures/arrivals up 3.7
• Overflights up 3.5

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R2A Statistical Analysis

• Modeled by site based on FAA charts
• Used FY95 ratios when FY98 data not available
• R-squared statistic of 0.98

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Usage of R2A Statistical Model

• Provides reliable cost estimates when data is
  incomplete
• Provides reality check for cost allocations
• Provides cost breakdown by site

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Currently, Opportunities For Cost Comparisons Are
Limited
US FAA

• Enroute/Oceanic included in CAS (Terminal next)
• Costs organized by site
• Enroute and Terminal Areas will be separate
• ?? coded activities
• No known cost model
• System under development

A Need to Move Toward Commonality
34
Currently, Opportunities For Cost Comparisons Are
Limited
Nav Canada

• Entire system included in CAS
• Costs organized partially by site, totals
  national
• Enroute and Terminal Areas are combined
• 414 coded activities
• Cost model linked to General Ledger
• System continues to evolve

A Need to Move Toward Commonality
35
Currently, Opportunities For Cost Comparisons Are
Limited
Airservices Australia

• Entire ATC system included in CAS
• Costs organized into Terminal, Enroute, Oceanic
• 14 key activities
• Cost model not linked to General Ledger
• Cost model run but once yearly
• System continues to evolve

A Need to Move Toward Commonality
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Currently, Opportunities For Cost Comparisons Are
Limited
DFS (Germany)

• Costs organized nationally (not site based)
• 1,500 coded activities
• Cost model linked to General Ledger
• Cost model run monthly

A Need to Move Toward Commonality
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Going Forward
Potential Structure

• Overs Cost Validation of FAA Proposal
• Terminal Issues to address
• A Site Definitions
• B Cost Organization, activities, coding for GL
• C Output Philosophy - transparent, flexible,
  manageable
• D Outcome - promote efficiency, benchmarking,
  site competition
• Transfer to Enroute/Oceanic
• A Review FAA Phase II detailed management
  information
• B Use Terminal Area discoveries to adjust
  Enroute/Oceanic

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Going Forward
Potential Structure

• Procedural Steps
• A Get FAA sites definition, compare with
  NavCanada, develop C/AFT recommended site set
• B Obtain FAA dictionaries for Products
  Activities, benchmark DFS, reality check with Nav
  Canada, develop core unit cost indices.
• C Create output guidelines for development
• D Develop application principles, ATS management
  to support principles and outcome function

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Going Forward
Working Group - 7 Members

• FAA
• Finance Office 1
• Capacity Office 1
• Arthur Anderson 1
• C/AFT
• Airlines 2
• R2A 1
• Boeing 1

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Going Forward
Initial Timeline

• September - October
• Buy-in from new FAA CFO
• Working Group Formation, initial meetings
• Overs Cost Analysis - new data
• Terminal Site definitions from Working Group
• Progress briefing - Toulouse

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Going Forward
Initial Timeline

• November - January
• Benchmarking, DFS, UK Nats, Nav Canada
• Initial high level recommendations for Terminal
  Area accounting system inputs
• FAA activity, site data review/feedback
• Briefing to January C/AFT meeting

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Going Forward
Initial Timeline

• February - June
• Ongoing benchmarking DFS, NavCanada, UK Nats
• Involvement of other ATS providers
• Review Enroute based on Terminal Area progress
• Work Group meetings with FAA (continuing)
• Time and motion analyses (initial activity)

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C/AFT Air Traffic Service Performance Focus Group
Report
All Airline Meeting
Toulouse, France October 13, 1999