How challenging is it to cost-effectively match capacity with demand?

A long-term analysis of Air Navigation Services (ANS) provision costs (green line), flight hours controlled (blue line) and en-route air traffic flow management (ATFM) delays (bars) shows some interesting trends and different cycles – even before the COVID-19 pandemic hit in 2020.

Between 2003 and 2008, robust traffic growth outpaced the increases in en-route costs, leading to a continuous reduction in en-route unit costs (red line), while ATFM delays started to rise again. The financial crisis led to a notable traffic dip in 2009 and an increase in unit costs for the first time since 2003, as the cost containment measures taken by air navigation service providers (ANSPs) only really showed effect as of 2010.

The implementation of the Single European Sky performance scheme in 2012 introduced binding performance targets and maintained a strong focus on cost management, resulting in an almost flat en-route cost base between 2012 and 2019. While cost efficiency performance improved in a context of strong traffic growth, capacity planning and deployment issues started to surface, mainly because of lower recruitment and delayed projects in some area control centres. As a result, ATFM delays first rose gradually, and then soared in 2018/19.

Following the COVID-19 outbreak in March 2020, ANSPs experienced an unprecedented drop in demand requiring them to downscale operations as quickly as possible, while still ensuring a safe and reliable service to those flights still operating. Many ANSPs implemented measures in response to the traffic downturn, but these could not prevent a massive increase in unit costs in 2020 and 2021.

With traffic starting to recover in 2021, unit costs decreased again, but it became clear that many of the capacity problems already observed in 2018/19 had not been resolved. The ATM network was not ready to support the required demand levels. Additionally, the war in Ukraine and the resulting changes in traffic flows had a direct operational and economic impact in 2022 and 2023, in particular on adjacent States.

This analysis highlights the importance of having a balanced approach to ATM performance management in Europe, taking all performance areas into account. Cost efficiency gains can quickly be erased by capacity shortfalls because of the disproportionally high delay costs. In 2023, ATFM en-route delay costs were estimated to have reached almost one quarter of the total en-route ANS provision costs.

European ATM will continue to be challenged to cost-effectively match capacity with demand, while at the same time preparing for the future in terms of safety, technological transformation, and environmental sustainability.

You can learn more about the performance of European ATM and the challenges ahead in the latest  Performance Review Report.