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47th CONFERENCE OF
DIRECTORS GENERAL OF CIVIL AVIATION
ASIA AND PACIFIC REGIONS
INFRASTRUCTURE MANAGEMENT PROGRAMME
(Presented by the International Civil Aviation Organization) INFORMATION PAPER
The purpose of this paper is to provide a description of ICAO’s policies and guidance material on airport and air navigation services charges and economics, and to brief the meeting on the outcome, and follow-up work, of the Conference on the Economics of Airports and Air Navigation Services (CEANS -2008). References:
Doc 7300, Convention on International Civil Aviation Doc 9908, Report of the Conference on the Economics of Airports and Air Navigation Services (CEANS) Doc 9562, Airport Economics Manual Doc 9161, Manual on Air Navigation Services Economics Doc 9082, ICAO’s Policies on Charges for Airports and Air Navigation Services Strategic Objectives: This Working Paper is Related to Strategic Objective D. ⎯ 47/IP/6/3
INFRASTRUCTURE MANAGEMENT PROGRAMME
INFRASTRUCTURE MANAGEMENT - OBJECTIVES
ICAO's activities in the Infrastructure Management field are based on the following Monitor compliance with Article 15 of the Convention on International Civil Aviation (Doc 7300) and application of ICAO recommended policies and practices in the area of cost recovery for airports and air navigation services. Monitor and report on the financial situation of airports and air navigation services and the impact of associated charges on users Develop and update ICAO's Policies on Charges for Airports and Air Navigation Services (Doc 9082) and prepare related manuals and other guidance material on airport and air navigation services economics and management, including organizational aspects and implementation of communications, navigation, and surveillance/air traffic management (CNS/ATM). Provide advice and develop guidance on cost recovery, financing and organizational arrangements for multinational air navigation facilities/services including CNS/ATM and on means of addressing safety oversight and reducing shortcomings in the air navigation field. Provide technical support within and outside ICAO, on issues related to airports and air navigation services management, cost-effectiveness and other economic and financial aspects of regional air navigation plans. 2. POLICIES
Article 15 of the Convention on International Civil Aviation
The basic policies established by ICAO in the area of airport and air navigation services charges are expressed in Article 15 of the Convention on International Civil Aviation (Doc 7300). Article 15 of the Convention sets out the following three basic principles: uniform conditions shall apply to the use of airport and air navigation facilities in a Contracting State by aircraft of all other Contracting States; the charges imposed by a Contracting State for the use of such airports or air navigation facilities shall not be higher for aircraft of other Contracting States than those paid by its national aircraft engaged in similar international operations; and no charge shall be imposed by any Contracting State solely for the right of transit over or entry into or exit from its territory of any aircraft of a Contracting State or persons or property thereon. While the first two of these principles do not appear to have given rise to misunderstandings, the third has in some instances been interpreted to mean that no charges are to be levied when an aircraft flies into, out of or over a State. That, however, is not the intent of this principle since all States are fully within their rights to recover the costs of the services they provide to aircraft operators through charges. The substance of this principle is in fact that a State should not charge solely for granting an authorization for a flight into, out of or over its territory. DGCA ⎯ 47/IP/6/3
Two other aspects are also addressed in Article 15. The first is that States shall publish all their airport and air navigation services charges, and also communicate them to ICAO. This information is collected by ICAO in the Tariffs for Airports and Air Navigation Services (Doc 7100), which lists the various airports and air navigation services charges applied in about 185 States (these data will shortly be available online). Article 15 also provides for ICAO, upon representation by an interested Contracting State, to review charges imposed and make recommendations thereon to the State or States concerned. ICAO's Policies on Charges for Airports and Air Navigation Services
Additional and more detailed policy guidance in the area of airport and air navigation services charges is provided in ICAO's Policies on Charges for Airports and Air Navigation Services
(Doc 9082). The contents of Doc 9082 has been revised periodically by the Council following major
international conferences on airport and air navigation services economics and management, the last
of which, the Conference on the Economics of Airports and Air Navigation Services (CEANS - see
Attachment), was held in Montréal from 15 to 20 September 2008, with amendments published when
required. However, the basic philosophy and principles expressed in the policies, that is fairness and
equity in the determination and sharing of airport and air navigation services costs, have remained
unchanged over the years.
The ICAO policies on charges differ in status from the Chicago Convention in that a Contracting State is not bound to adhere to policy' provisions and recommendations, unlike the articles of the Chicago Convention. However, since the recommendations in the ICAO policies have been developed by major international conferences, there is a strong moral obligation for States to ensure that their airports and air navigation services cost recovery practices conform to the policies and philosophy set out in the ICAO policies. This appears to be the general practice amongst ICAO Member States. An introductory section of the policies on charges addresses some issues which are common to airports and air navigation services: scope and proliferation of charges, organizational and managerial issues, economic oversight, economic performance and minimum reporting requirements, consultation with users, and other factors affecting the economic situation of airports and air navigation services. The policies on airport charges cover such subjects as the cost basis for airport charges, airport charging systems, pre-funding of projects, currency issues, landing charges, parking and hangar charges, passenger service charges, security charges, noise-related charges, emissions-related aircraft charges to address local air quality problems at or around airports, development of revenues from concessions, rental of premises and "free zones", and fuel concession fees. The policies on charges for air navigation services include the cost basis for air navigation services charges, allocation of costs of air navigation services among aeronautical users, charging systems, pre-funding of projects, currency issues, approach and aerodrome control charges, route air navigation services charges, and charges for air navigation services used by aircraft when not over the provider State. GUIDANCE MATERIAL FOR AIRPORTS AND AIR NAVIGATION SERVICES
In response to requests from States for guidance aimed at improving the efficiency and cost-effectiveness of their airport operations, ICAO has developed the Airport Economics Manual (Doc 9562) and the Manual on Air Navigation Services Economics (Doc 9161). The purpose of these Manuals is to provide practical guidance material for those responsible for airport and air navigation services management. They are based on the international policies and principles on airport and air navigation services cost recovery that States have developed through ICAO and they describe procedures and practices that are in conformity with them. ⎯ 47/IP/6/3
The guidance material in these Manuals is presented in seven chapters and several associated appendices, including glossaries of terms and abbreviations, as used in the Manual. ACTION BY THE CONFERENCE
The Conference is invited to note the information contained in the paper. DGCA ⎯ 47/IP/6/3
Attachment
Attachment
Conference on the Economics of Airports and Air Navigation Services (CEANS)
Montreal, 15-20 September 2008

1. Introduction

1.1
The Conference on the Economics of Airports and air Navigation Services (CEANS) was held in Montreal from 15 to 20 September 2008. There were 535 participants from 103 Contracting States and 17 international organizations. Eighty-seven working papers were tabled, of which 36 by the Secretariat, 29 by Contracting States, and 22 by international organizations. CEANS adopted 15 recommendations, of which 10 were related to additions and amendments to ICAO’s Policies on Charges for Airports and Air Navigation Services (Doc 9082). 1.2 The purpose and goals of CEANS were to: a) learn from the experiences of commercialization/privatization of airports and air navigation services providers; b) assess future
challenges such as the financial crisis, the environment and fuel shortages; c) bring cooperation
between parties to another, higher level; and d) achieve consensus on ways and means to optimize the
efficiency and cost-effectiveness in the provision of airport and air navigation services.
2. Agenda

2.1
The Agenda of CEANS was divided into four items: 1) Issues inter-related and common to airports and air navigation services involving interaction between States, providers and users. 2) Specific issues related to airport economics and management. 3) Specific issues related to air navigation services economics and management. 4) Implementation of ICAO’s policies on charges for airports and air navigation Agenda Item 1 covered the three most important topics: economic oversight, economic performance and consultation with users. 2.3 With respect to the first topic, CEANS reaffirmed that economic oversight is a State responsibility. The main purpose of economic oversight is to achieve a balance between the efforts of autonomous or private providers to obtain the optimal effects of commercialization or privatization and public objectives such as: a) minimizing the risk of potential abuse of dominant position or anti-competitive practices of airports and air navigation services providers; b) ensure that there is no discrimination and transparency in the application of charges; c) ensure that investments in capacity meet demand; d) protect the interests of users; and e) ensure that service providers consult with users and that they develop and implement performance management systems. 2.4 The second key topic was economic performance and minimum reporting requirements for airports and air navigation services providers. The Conference noted that performance management is an important management tool for providers, regulators and users. Appropriate performance management systems should include, as a minimum, four key performance areas (KPAs): safety, quality of service, productivity and cost-efficiency. Additional KPAs can be selected (such as the environment, capacity and security) according to the providers’ objectives and their particular circumstances. 2.5 The third inter-related topic was consultation with users. The Conference recommended that States, within their economic oversight responsibilities, ensure that a clearly defined, regular consultation process is established with users by their airports and air navigation DGCA ⎯ 47/IP/6/3
Attachment
services entities. The consultation process relate not only to changes in the structure or level of charges, but also to infrastructure planning, development and investments. 2.6 Under Agenda Items 2 and 3, the Conference adopted a number of “technical” • States should consider the establishment of autonomous entities to operate airports and air navigation services, and review the governance structure of their airports and air navigation services providers (ANSPs) by applying best practices of good corporate governance. • More flexibility should be given to airport operators with respect to setting • States should, where necessary, clearly define the methodology for determining what is a reasonable rate of return on assets for their service providers. • States should give due consideration to the results of ICAO’s studies and relevant guidance on slot allocation as well as international general and business aviation access to airports, at their discretion and in a flexible manner. • States should implement the global ATM operational concept through international cooperation as well as regional approaches. Regarding the fourth Agenda Item on the implementation of ICAO’s policies on charges, CEANS noted that while ICAO has developed comprehensive policies and guidance material
on charges for airports and air navigation services, States do not always fully observe them. This is
often due to a lack of awareness of and firm commitment by States to adhere to these policies. Against
this background, the Conference recommended that States should ensure that their airports and
ANSPs adhere to ICAO’s polices on charges, and that ICAO should take all relevant actions to ensure
widespread awareness and knowledge of the policies. Further, the Conference recommended that
ICAO should encourage States to include the main principles of Doc 9082, i.e. non-discrimination,
cost-relatedness, transparency and consultation with users, into national legislation, regulations or
policies, as well as in air services agreements.
3.
Actions recommended by CEANS
In summary, these CEANS recommendations asked for actions by: 1) Contracting States; 2) the ICAO Council (to amend the text of ICAO’s policies, Doc 9082); 3) ICAO Secretariat (mainly the revision and expansion of ICAO’s guidance material with the assistance of the Airport Economics Panel (AEP) and the Air Navigation Services Economics Panel (ANSEP); and 4) other actions for ICAO and the Council. 3.2 The first group of actions recommended by CEANS were directly addressed to Contracting States. In January 2009, the Secretary General dispatched a State letter (SD 38/1 09/2)to draw the attention of the States to the outcome of CEANS and the actions required, including the States’ responsibility and objectives of economic oversight, the implementation of performance management systems, the establishment of a clearly defined, regular consultation process with users, and the implementation of ICAO’s main policies on charges through national legislation and international agreements. 3.3 The second group of actions recommended by CEANS related to additions and amendments to Doc 9082. They affected mainly the policies on economic oversight, economic performance, consultation with users, governance issues (such as the adoption of best practices for good governance and the separation of regulatory and service provision functions), and some “technical” policies such as the aggregation of cost bases for setting charges, conditions for the application of differential charges, and incentives for providers and users. ⎯ 47/IP/6/3
Attachment
The third group of actions recommended by CEANS related to the revision and expansion of guidance material for topics such as governance/ownership/control, methodologies for the calculation of a reasonable rate of return of providers, categorization of services for ANSPs cost allocation and charges, role of aircraft weight in the charging formulae of ANSPs, and economic aspects of the global ATM operational concept. 3.5 Finally, the fourth group of actions recommended by CEANS were for ICAO and the Council on three issues: 1) ICAO/regional organizations to establish a dialogue on economic performance; 2) ICAO to take measures for a widespread awareness of the policies on charges; and 3) Council to address the issues related to slot allocation and night curfews (in November 2008, the Council approved that the Secretariat send a State letter to remind States of the existing guidance and to update the Template Air Services Agreement, as well as to continue monitoring the situation). 3.6 On 14 November 2008, at its 185th Session, the Council approved all the recommendations of CEANS, including the revisions to Doc 9082, which was published as the Eighth Edition in January 2009. 3.7 During 2009 and 2010, the Secretariat, with the assistance of AEP and ANSEP, has undertaken the work described in the third group of actions, i.e.: 1) the revision of the two economics manuals for airports and air navigation services, respectively (Doc 9562 and Doc 9161); and 2) the revision of Doc 9082 to improve its structure and readability. The revisions should be completed at the forthcoming Fourth Joint Meeting of AEP-ANSEP, planned for February 2011.

Source: http://test.mcaa.gov.mn/uploads/2011/iltgeluud/47-6-3-IP%20(ICAO)%20airport%20and%20air%20navigation%20services_ICAO.pdf