Analysis of Cost-Effectiveness in the Provision of Air Navigation Services at Functional Air Blocks
Competition and Regulation in Network Industries, 20(4) : 305-318 (2019)
Laburpena
The Single European Sky (SES) legislation is intended to have a major impact on the fragmentation
in the European Air Traffic Management and Communications, Navigation and Surveillance (ATM/
CNS) system. A fundamental aspect of the SES initiative is functional airspace blocks (FABs), which
have the goal of reducing the inefficiencies—in terms of safety, capacity, and cost—that result from
the fragmentation of European airspace. FABs are seen as an explicit bottom-up first step toward
the ultimate integration of European airspace. In this article, we focus on the analysis of the
evolution of the cost-effectiveness in the provision of ATM/CNS services at FABs. We proceed in
two stages. First, we develop a theoretical framework that allows us to decompose the change in
cost-effectiveness of FABs into its basic sources. Second, we use stochastic frontier analysis
techniques to estimate the cost equations and decompose the change in the cost-effectiveness of
the nine European FABs into several components. Our analysis sheds light on (1) the drivers of
changes in the air navigation service providers (ANSPs) and FABs cost-effectiveness from 2006 to
2016, (2) the role that FABs play in enhancing cooperation between ANSPs to obtain operational
efficiency gains, and (3) the existence of economies of scale in the European ATM/CNS service
provision.