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THE CONVERSATION
This article was originally published in The Conversation, an independent source of non-profit news, analysis and commentary from academic experts. rice field. Disclosure information is available on the original site.
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Author: Geraint Harvey, DANCAP Private Equity Chair, Human Organization, Western University. Huw Thomas, Lecturer of Jobs, Employment, Organization&Public Policy at Bristol University, and Peter Turnbull, Professor of Business Administration at Bristol University
Commercial Aviation is Important World To the economy. In 2019, it supported more than 65 million jobs and had a global economic impact of US $ 2.7 trillion. The COVID-19 pandemic, unlike other crises in terms of both depth and duration, has hit the aviation industry more than most sectors.
In 2020, the world economy shrank by more than 3%. This is enough to cause a serious reduction in air transport. The recession was exacerbated by the closure of borders and strict quarantine procedures by governments around the world.
As a result, the airline experienced a record-breaking year in 2020, with passenger numbers down 60% compared to 2019. Total passenger revenues fell 69% and net losses were higher than in the United States. 126 billion dollars.
Traffic disruption was reflected in the number of flights processed by the aeronautical navigation service provider. These service providers are responsible for the safety of flights departing and arriving from the airport and in transit. In North America, losses exceeded US $ 448 million in 2020.
Our international team, based in the United Kingdom, Ireland and Canada, has been investigating the impact of pandemics and financing of air navigation services for two years. Aviation industry. Our full report finds that the COVID-19 pandemic is having a serious impact on aviation navigation service providers and raises concerns about the industry's current financial model.
Current airline "user payment" model
Aviation navigation service providers, like street lights, are public and serve the benefit of all. It is a profit. Therefore, it cannot prevent people or clients from using the service. It also means that even if a product or service is consumed, it will be available to others.
Nevertheless, many aviation navigation service providers have a "user-paid" model because the airline and its passengers are the most direct recipients of aviation navigation services. I have adopted it. The user payment model is an approach to financing that pays the full cost of the goods or services that the customer consumes.
For the user payment model of aviation navigation services, pricing is usually determined by the cost plus system. The calculation is determined by the cost of the aviation navigation service provider divided by the traffic of the airline, plus the markup that allows the service provider to make a small profit. This model does not reward performance. Otherwise, pricing is determined by a pure price cap, which regulators set prices and give aviation navigation service providers an incentive to reduce costs.
The purpose of these models is to make aviation navigation service providers more efficient, but in the absence of competition (service providers are a natural monopoly), this system is It doesn't work as intended. Some even point out the dangers of commercialization of aviation navigation service providers.
Labor Challenges
These models, like those created by Pandemic, have proven to be inadequate in the face of crisis. increase. As a result, labor costs have been reduced, leading to reductions in unemployment, job freezes and training. While these measures can lead to cost savings in the short term, they also cause problems for the organization when passengers return and traffic increases.
Many airlines face problems in servicing returning passengers as a direct result of the reductions made in response to the pandemic, flight cancellations and turmoil at the airport. It led to.
In some European aviation navigation service providers, the age profile of the workforce also complicates the matter. As traffic returns to pre-pandemic levels, a significant number of air traffic controllers are approaching retirement.
Training new air traffic controllers is a long process, so stopping hiring and reducing staff in these situations is disastrous. In fact, the increase in traffic delays across Europe before the pandemic was due to a decrease in the number of trainees for air traffic controllers.
Problems with the "user payment" model in aviation navigation
There is a fundamental problem with the user payment model in aviation navigation that is hindering the industry's recovery. .. The current crisis. The problem is this: As the aviation industry begins to recover from the pandemic, airlines are expected to pay more for aviation navigation services when they can't afford it.
At the same time, aviation navigation service providers invest more in their skills and equipment while trying to recover lost and deferred income from exhausted cash reserves. Is expected. To clarify this point, we only need to point out the case of WestJet and NAVCANADA.
NAV CANADA could have raised prices by 42% to cover all financial needs, but WestJet CEO described the price increase as "scandalous" and Canada. I appealed to the Canadian Department of Transportation, the national transport regulator of. The agency agreed with NAVCANADA and dismissed WestJet's complaint, raising prices by almost 30%. The
pandemic definitely shows that the user payment system for aeronautical navigation services is not sufficiently resilient or sustainable. A similar approach is perfectly feasible for air navigation services, just as the country's road network is usually covered by general taxes and road tolls. General taxation allows aviation navigation service providers to fund the lowest levels of service and staffing.
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Geraint Harvey is funded by the International Transport Workers ’Federation.
Huw Thomas is funded by the International Transport Workers' Federation and the European Transport Workers' Federation.
Peter Turnbull's work on air traffic management received financial support from the International Federation of Transport Workers (ITF).
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This article has been republished by The Conversation under the Creative Commons license. Disclosure information is available on the original site. Read the original article:
https://theconversation.com/air-traffic-control-funding-model-ravage https://theconversation.com/air-traffic-control-fundi