Following the usual approach of the Florence School of Regulation, stakeholders and academics will join the 9th Florence Air Forum and actively debate the most important topics in the field of air transport. On this occasion, the discussion will revolve around performance regulation and the Single European Sky performance scheme in particular.
The Performance Scheme is the European Commission’s most important tool to tackle the inefficiencies of European Air Traffic Management (ATM). The Single European Sky (SES) is still in gridlock, yet the need to improve performance is recognized by all Member States.
The Performance Scheme is a regulatory mechanism that defines EU wide targets for the improvement of ATM efficiency. In cooperation with the European Commission, Member States translate these targets into binding national performance targets or Functional Airspace Block level targets.
In spite of its complex governance procedures, the Performance Scheme has been relatively successful in bringing down costs of Air Navigation Service Providers (ANSP) and setting incentives for investments. Still, unit costs for the provision of Air Navigation Services in Europe remain 35% higher than in the US. The Performance Scheme focuses on four key performance areas: safety, environment, airspace capacity, and cost efficiency. The targets are set for fixed Reference Periods. The second Reference Period (RP) (2015-2019) is drawing to a close and, given the complexities of setting up the performance targets, preparations for RP3 have already begun. A Commission implementing decision will set the EU-wide targets for the RP3.
The 9th Florence Air Forum will discuss the most relevant aspects of the Performance Scheme including how it could be developed further.
From a theoretical point of view, in network industries with monopolistic infrastructures such as ATM performance improvements can be achieved in different ways. For instance, the experiences of other sectors with similar instruments such as price caps and revenue caps allow drawing some relevant conclusions for the ATM sector.
Furthermore, the Performance Scheme’s target setting process itself could also be revised. National regulators may need to be strengthened in order to enforce the EU-wide targets. Conversely, EU-level targets could be broken down further at the local level.
The discussion of these topics will be structured around 4 questions:
- Principles of economic regulation: what can we learn from the theory? What can we learn from other sectors?
- The SES Performance Scheme: can it be improved?
- The Charging Scheme: how to incentivize efficiency?
- Setting the targets for RP3: how can we make the process simpler?