Civil Aviation Agency of Latvia

Transcription

1 Civil Aviation Agency of Latvia Reference period One:

2 Document approval The Republic of Latvia is submitting this performance plan for air navigation services prepared by the Latvia s State Agency Civil Aviation Agency in accordance with the Single European Sky Performance Scheme Regulation. According to the law On Aviation the Civil Aviation Agency of Latvia is empowered to provide of the execution of the plan detailed in this document. Authority Name and Signature Date The State Agency Civil Māris Čerņonoks, Acting Director Aviation Agency Document change record The following table records the complete history of this document Edition number Edition Date Reason for change Draft First draft Draft Updated draft Draft Updated draft following further discussion with PRU Draft Draft for Consultation Draft Updated draft after Consultation Draft Updated with additional information on sensitivity analysis National Performance plan for Latvia_RP1 Page 1 of 32

3 Contents 1. Introduction The situation The national political and social context and it implication towards RP Status of aviation safety Latvia s institutional context for ANS provision Stakeholder consultation National/FAB performance targets and alert thresholds Performance targets and alert thresholds for RP Consistency with EU-Wide targets Safety Capacity...13 Planning Period Environment Cost efficiency Interdependencies between targets Carry-overs from the years before RP Parameters for risk sharing and incentives Cost-efficiency...19 The parameters for traffic risk sharing include: Contribution of each accountable entity The State Joint Stock Company Latvijas gaisa Satiksme (ANSP-share in the national targets and individual binding performance targets Incentive mechanisms to be applied on LGS to encourage targets to be met over the reference period The State limited Liability Company "Latvian Environment, Geology and Meteorology Centre (LEGMC- MET provider)-share in the national targets and individual binding performance targets Incentive mechanisms to be applied on LEGMC to encourage targets to be met over the reference period The Civil Aviation Agency of Latvia (NSA) share in the national targets and individual binding performance targets Incentive mechanisms to be applied on Civil Aviation Agency to encourage targets to be met over the reference period Civil-military dimension of the plan Performance of the FUA application Analysis of sensitivity and comparison with the previous performance plan Sensitivity to external assumptions National Alert mechanism Comparison with previous performance plan Implementation of the performance plan...30 Annex A Reporting tables...31 Annex B- Agenda for Stakeholder consultations...31 Annex C- Table of Investments...31 National Performance plan for Latvia_RP1 Page 2 of 32

4 1. Introduction 1.1 The situation The performance plan is drafted according to Commission Regulation (EU) N 691/2010 of 29 July 2010 laying down a performance scheme for air navigation services and network functions and amending Regulation (EC) N 2096/2005 laying down common requirements for the provision of air navigation services ( hereinafter Commission Regulation (EU) N 691/2010) The Article 10 of Commission Regulation (EU) N 691/2010 requires National Supervisory Authorities to draft a performance plan containing appropriate targets consistent with the European Union wide performance targets and the assessment criteria set out of the Annex III of the of Commission Regulation (EU) N 691/2010. The plans must also explain how the targets will be achieved and the associated monitoring mechanisms should be described. The National performance plan of Latvia will be drafted by the State Agency Civil Aviation Agency of Latvia (hereinafter- Civil Aviation Agency of Latvia) and will be submitted at the national level. The national performance plan covering the scope of the reference period one starting form 1, January, 2012 to 31, December, 2014 and has been prepared in accordance with Commission Regulation (EU) N 691/2010 and the appropriate guidance material for national/fab performance plans issued by Performance Review Body in 23 February The national performance plan covers Riga Flight information region. The main accountable entities covered by the performance plan are: Ministry of Transport of Latvia, Air Transport department, The State Agency Civil Aviation Agency of Latvia ; State Joint Stock Company Latvijas Gaisa Satiksme as Air Navigation Service Provider; State limited liability company "Latvian Environment, Geology and Meteorology Centre" as MET provider. Both of providers are certified and designated according to Regulation (EC) N 1070/2009 of the European Parliament and of the Council of 21 October 2009 amending Regulations (EC) N 549/2004, (EC) N 550/2004, (EC) N 551/2004 and (EC) N 552/2004 in order to improve the performance and sustainability of the European aviation system Overall assumptions for Reference Period One It is necessary to present the context to which particular plan applies and also the assumptions that have been made during it development. The following assumptions have been detected: The general economic situation and financial crisis in Latvia; The national political and social context and its implication towards RP 1 National Performance plan for Latvia_RP1 Page 3 of 32

5 Economic assumptions The general economic situation in Europe and in international arena as a whole will affect respective traffic volumes, as well as will influence en-route traffic trends in Latvia. For Latvia most crucial part is inflation rate projections as it has been a reality that within one year time period IMF projections were very different form actual inflation rate increase by now. The following table provides an overview of relevant assumptions regarding the number of economic parameters, as well as main assumptions on traffic Assumptions on economic background and traffic Table A 2007A 2008A 2009A 2010* 2011F 2012F 2013F 2014F Economic background GDP (billions LVL) Real GDP growth (%) Inflation rate (CPI) Traffic evolution Service units ( 000) Service unit growth (%) * A mix of Actual/Forecast data as of preparation of the Plan. National Performance plan for Latvia_RP1 Page 4 of 32

6 1) Real GDP Growth -for the GDP Growth Latvia used IMF projections, which shows a recovery of what was the deepest recession in Europe. 2) Inflation rate Latvia used IMF projections for the inflation rate to be used in Performance plan, however there are doubts on whether the inflation rate will match the pattern indicated. One of the ways to demonstrate the differences between the IMF projections and actual data, we used April s estimates on the outcome of each year. The results are as follows: Inflation difference on IMF projections and actual data Table 2 Year April s Estimate (%) (3.7) Actual result (%) (1.1) Difference (understatement)/overstatement(%) (0.1) (2.8) (0.1) (0.2) (2.6) Taking into account data shown on Table 2 the conclusion can be withdrawn that each year in last 5 years there was a consecutive understatement of the inflation (1.2% on average). Differences on the n-1 April s estimates on the n year s inflation are even more imprecise. The spread is from an overstatement of 5.6% up to the understatement of 8.9% with an average value of understatement of 2.1%. Latest available data shows that CPI is again rising, mainly due to increase of excise duty, VAT and other taxes. CPI from 2008 is illustrated in the chart below I 2008 III 2008 V 2008 VII 2008 IX 2008 XI 2008 I 2009 III 2009 V 2009 VII 2009 IX 2009 XI 2009 I 2010 III 2010 V 2010 VII 2010 IX 2010 XI 2010 I 2011 III ) Service units- the traffic forecast used is EUROCONTROL Short- and Medium- Term Forecast of Service Units: February 2011 Update base scenario. There are slight variations between the currently used Service Units forecast and previously submitted to the Enlarged Committee for its 91 st Session. The differences are accumulated in the Table below: National Performance plan for Latvia_RP1 Page 5 of 32 CPI

7 Variation between Service units Table F 2012F 2013F 2014F Submitted to 91 st Session ( 000) Used in Performance Plan ( 000) Variation (%) ) Income Structure Latvian ANSP is very strongly dependent on several large Clients. In the year % of all revenues were generated by 10 largest Clients. The largest Client is national air carrier Air Baltic which generated 18.5% of total revenues and accounted for 24.0% of all flights in Riga FIR. The insolvency of the national air carrier would trigger enormous pressure on the cash flow of the National ANSP. National air carrier had been a main driver of the rapid air navigation service increase over the last few years The national political and social context and it implication towards RP1 Taking into account inflation rate development and indifferences between different projections, as well as latest government s measures and political developments in taxation policy - of rising different taxes, as well as price increase on public utilities (such as electricity, gas etc.) the assumption is that to fulfill more stringent fiscal policy and to increase public budget, the new political measures could be taken within , which could have an extra impact on inflation rate and possible increase. On the social context it should be taken into account an average salary level of ANSP technical and operational staff, that it has been three time lower than on average within North European countries, nevertheless that living standard is reaching that of North European countries Status of aviation safety The Aviation State Safety Programme is under development and it has been foreseen to finish the document in The State Safety Programme will be completed in co-ordination with EASA Safety Plan before As part of its supervisory function, the Latvian NSA monitors the performance of ATM specific occurrences and particularly specific technical events on an ongoing basis and this activity will continue during RP Latvia s institutional context for ANS provision According to the Law On Aviation the Air Transport Department of the Ministry of Transport (hereinafter Air Transport Department) and the State agency Civil Aviation Agency (hereinafter Civil Aviation Agency) shall National Performance plan for Latvia_RP1 Page 6 of 32

8 implement State policy and administration in the field of utilisation of the airspace of the Republic of Latvia and civil aviation operations. Those two institutions also has been nominated to perform NSA tasks according to the Article 4 of Framework Regulation (EC) No 549/ Air Transport department of the Ministry of Transport as NSA is responsible for policy issues and the economic regulation and Civil Aviation Agency as NSA is responsible for safety, operational aspects, certification, licensing and supervision issues. The institutional context for the provision of ANS in Latvia as covered by this plan is as follows: Air Transport Department Is a responsible for ensuring aviation policy and is one of the departments under Ministry of transport Air Transport department is responsible for 1)development of a prospective development programmes and draft conceptions for civil aviation; 2) issuing licences for performing commercial activities in the field of air traffic services; 3) to develop agreements in the field of international flights and carriage by air, participate in the entering into of such agreements or enter into such agreements independently, as authorised by the Cabinet of the Republic of Latvia; 4)co-operate with representatives of governments and authorised aviation authorities of other states, as well as with international civil aviation organisations regarding issues relating to the utilisation of airspace and the development of civil aviation operations; 5) request the information necessary for the fulfillment of the functions thereof from legal persons and natural persons whose activities are related to the utilisation of airspace and the operation of civil aviation facilities; 6)and issue permits to perform carriage of passengers, baggage and cargo, as well as aerial work. The Civil Aviation Agency shall: LCAA is an entity established under the Ministry of Transport and it: 1) perform State supervision of the utilisation of the airspace of the Republic of Latvia and civil aviation operations; 2) prohibit activities related to the utilisation of airspace or operation of civil aircraft, aerodromes and other civil aviation objects of the Republic of Latvia if the provisions of Law on Aviation and regulatory enactments issued pursuant thereof are violated, as well as activities that endanger the safety of an aircraft flight; 3) develop measures to guarantee the safety of aircraft flights and civil aviation security, as well as supervise the operations of the Aviation Search and Rescue Service; 4) request the information necessary for the fulfillment of the functions thereof from legal persons and natural persons whose activities are related to the utilisation of airspace and the operation of civil aviation facilities; 5) prepare regulatory enactments regulating civil aviation operations; 6) co-operate with the authorised aviation authorities of governments of other states in the field of the utilisation of the airspace of the Republic of Latvia and State supervision of civil aviation operations, and aircraft search and rescue; 7) investigate civil incidents in cases when such investigations are not performed by the National Performance plan for Latvia_RP1 Page 7 of 32

9 Transport Accident and Incident Investigation Bureau in conformity with Law on Aviation. The State Joint Stock Company Latvijas gaisa Satiksme (hereinafter LGS) is the sole air navigation service provider, is a State Enterprise. LGS was founded in 1991 with 100% state ownership. On the 12th June 1997 the enterprise changed its legal status and became a State Joint Stock Company. LGS is under the supervision of the Ministry of Transport. LGS is completely separated and independent from LCAA. There is a clear organisational separation between LCAA and LGS. LGS provides air traffic control to all military flights that operate as GAT. There is no separate military ATC unit; therefore there is no provision of military ATM services to civil aircraft in Latvia. LGS provides all services related to ATM. The Search and Rescue Coordination Centre is in LGS. CNS/ATM systems comprising advanced data links, radar stations, navigational aids, data and voice communication systems are owned and maintained by LGS. State limited Liability Company "Latvian Environment, Geology and Meteorology Centre"(hereinafter- LEGMC) is certified and designated MET provider for meteorological forecasts of Riga FIR to meet Latvia s obligations under ICAO Annex 3. LEGMC is under supervision of the Ministry of Environmental Protection and Regional Development (MEPRD). LEGMC as 100% state owned enterprise provides several defined services to the state. Besides providing the meteorological services, LEGMC carries out number of functions defined in the normative acts as well as tasks set by the state administration in accordance with a purpose of establishment of the company: 1) creation and development of an united environment information system; 2) carrying out environmental, geological, hydrological, meteorological observations and provide corresponding results within frameworks of international, national, and regional projects and programs; to ensure collection, storage, systematization and supplementation of geological, hydrological and meteorological data along with data of environmental quality; 3) evaluation of environmental quality, condition of natural resources, tendencies, forecasts and risk factors and to prepare national environmental reports and statements; 4) provision of environmental, geological, hydrological, and meteorological information to the society, state and municipal institutions as well as to the European Union institutions and international organizations; 5) elaboration weather, hydrological and other specialized forecasts; 6) evaluation of mineral resources in the territory of Latvia; 7) management of the Latvian State Geologic Fund and the borehole core and standard sample storage; 8) management of radioactive waste, to manage radioactive waste disposal site Radons, Salaspils research reactor, state owned objects of hazardous waste recycling, hazardous waste incineration equipment, hazardous waste polygons along with other state owned objects and equipment related to National Performance plan for Latvia_RP1 Page 8 of 32

10 management of hazardous waste; 9) decontaminating of contaminated territories, vehicles and other objects after radioactivity accidents; 10) caring out dismantling and disposal of Salaspils research reactor. There is an agreement between LEGMC and MEPRD where all tasks with allocated budget is listed. Main objectives of the centre: 1)collect and process environmental information; 2)carry out environmental monitoring and inform the society on the environmental situation; 3) ensure the geologic supervision of earth entrails resources and rational use of the earth entrails Stakeholder consultation This section provides information of the stakeholder consultation activities which CAA has been conducting in support of the development of national performance plan. The stakeholder consultation took place on 17, May, 2011 in Riga at Civil Aviation Agency premises, all involved parties has been participate in this consultation process. There has been constructive dialogue with users and questions or comments raised within the consultation process has been clarified or answered during consultation. After consultation meeting there has been made additional changes within performance plan according to users comments and reactions received. An agenda of consultation meeting has been annexed. National Performance plan for Latvia_RP1 Page 9 of 32

11 2. National/FAB performance targets and alert thresholds This section sets out national performance targets for Air Navigation Service Provider for RP1. National performance targets are set for two of the four KPAs- capacity and cost- efficiency for en-route. The appropriate safety performance indicators set for RP1, as there is not set safety target for RP1. Those indicators will be monitored during RP1. Indicators and targets set for RP1 Table 4 KPA Local KPIs for target setting in RP1 Status LV Safety Effectiveness of safety management ( maturity ) Application of severity classification scheme Separation infringements Runway incursions ATM special technical events Application of Just Culture Optional Optional Optional Optional Optional Optional Capacity Costefficiency Minutes of en-route ATFM delay per flight Mandatory X ATFM airport delays Optional Additional time in taxi-out phase Optional Additional time in arrival sequencing/merging Optional area Determined Unit Rate for en-route ANS Mandatory X 2.1. Performance targets and alert thresholds for RP1 Performance targets and alert thresholds for RP1 Table 5 KPA KPI National targets National Thresholds (a) Safety N/A (b) Capacity (c)environment (d)costefficiency En-route ATFM delay (minutes per flight) Determined en-route unit rate (2009 prices in national currency) N/A 20,23 19,43 18,94 A deviation over a calendar year by at least 10% of the actual traffic recorded by the PRB versus the traffic forecasts National Performance plan for Latvia_RP1 Page 10 of 32

12 or insolvency of the national air carrier (a) Safety targets and threshold No safety targets proposed for RP1 (b) Capacity target and threshold The mandatory capacity KPI for RP1 is the en route delay per flight (in minutes) defined as the difference between the take-off time requested by the aircraft operator in the last submitted flight plan and the calculated take-off time allocated by the central unit of ATFM. EU wide target for 2014 is to achieve 0.5 minutes average en-route ATFM delay per flight for the whole year and for all causes. National performance targets are expected to be consistent with this target, Eurocontrol have provided reference figures for individuals ANSPs, which indicate values at national level that would be considered consistent with EU targets. Considering Eurocontrol figures, Latvia adopts 0.05 minutes average en-route ATFM delay per flight for 2014 and for all causes. For year 2012 it will be indicated 0.02 minutes average en-route ATFM delay per flight and respectively for year 2013, 0.04 minutes Capacity targets and thresholds Table 6 Capacity KPI National target Minutes of en- route ATFM delay per flight No formal alert threshold is proposed for Latvia s capacity performance KPI mechanism for RP1. (c) Environment target and threshold There is currently no mandatory environment target defined in Commission Regulation (EU) N 691/2010 for RP1. Therefore Latvia does not propose to adopt any optional environment target for RP1. The EU wide target is the average horizontal en route flight efficiency. There are planned activities within NEFAB to improve horizontal en route flight efficiency and Latvia foreseen attached benefits for this target only in FAB framework for RP2. (d) Cost-efficiency target and threshold National Performance plan for Latvia_RP1 Page 11 of 32

13 The mandatory cost-efficiency target for RP1 is the determined unit-rate for en route air navigation services defined as: (a) the indicator is the result of the ratio between the determined costs and the forecast traffic expressed in total service units contained in the performance plans in accordance with Article 10(3) (a) and (b) of the Performance Scheme Regulation; (b) the indicator is expressed in national currency and in real terms; (c) the indicator is provided for each year of the reference period. The EU wide target for cost-efficiency is a reduction of the average European Union- wide determined unit rate for en route air navigation services from Euros in 2011 to Euros in 2014 (expressed in real terms, Euros 2009). This target represents a reduction of the average determined unit rate by 3.5 % per annum. From determined costs in real terms and the relevant traffic forecast Latvia has adopted values for the determined unit rate set out in Table 7 below as its costefficiency target for RP1. This target represents a reduction of 2,9 % per annum. Cost efficiency target and thresholds Table 7 Cost efficiency KPI National target National threshold Determined unit rate for en-route (in national currency at 2009 prices) ,23 19,43 18,94 A deviation over a calendar year by at least 10% of the actual traffic recorded by the PRB versus the traffic forecasts or insolvency of the national air carrier 2.2. Consistency with EU-Wide targets This section sets out the justification of the Latvia s targets and their consistency with EU- wide targets Safety As indicated Latvia does not propose to adopt any optional safety target for RP1, but as it has been foreseen in Commission Regulation (EU) N 691/2010 monitor and publish ANSPs performance against proposed indicators as required. (a) Effectiveness of safety management National Performance plan for Latvia_RP1 Page 12 of 32

14 The effectiveness of safety management based on safety maturity studies has been defined at European level. (b) Application of the severity classification of the Risk Analysis Tool (RAT) The Risk Analysis tool has been used by Latvian ANSP and when the European methodology for measurement of the level of application of the RAT will be developed at EU level this will be developed further. (C) Reporting of just culture In the spirit of so-called just culture punishment is hardly a solution to achieve continuous improvement of aviation safety. Just culture is basically a system that includes a series of organizational processes, procedures and policies that aim to achieve a specific outcome - the identification of hazards. Safety and just culture have become broadly accepted in the aviation environment. NSA is in charge of occurrence reporting system, which contains occurrences from different stakeholders of aviation industry. We notice that reporting culture is developing in Latvia, hopefully because we are becoming a trusted organisation by following a general principle that no action will be taken against anyone who discloses a safety concern through the hazard reporting system, unless such disclosure indicates, beyond any reasonable doubt, an illegal act, gross negligence, or a deliberate or willful disregard of regulations or procedure. NSA has fully implemented EU regulations in relation to occurrence reporting and follows Eurocontrol guidance s in this respect Capacity Latvia s performance with respect to the capacity KPI for RP1 of the en route ATFM delay per flight has been zero minutes for years 2008, 2009 and As set in the LSSIP for Latvia , with current plans in place capacity of Riga ACC was calculated with ACCESS at 65, focusing on the summer season to reflect the most demanding period of the year from a capacity perspective for summer of The average peak 3 hour demand was 42 and the peak 1 hour demand was 47 flights during the measured period, indicating that the ACC offered sufficient capacity to meet the demand with spare capacity in the system. No problems are foreseen for Riga ACC during the planning period. The STATFOR medium-term forecast (MTF) predicts an average annual traffic growth between 3.6% and 6.6% throughout the planning cycle, with a baseline growth of 5.1%. Latvia sets its capacity target at the level of the reference value of 0.05 minutes en-route ATFM delay per flight as it has been provided by EUROCONTROL, and, thus Latvia is consistent with EU-wide target. National Performance plan for Latvia_RP1 Page 13 of 32

15 Planning Period En route delay actual performance and EU delay breakdown The planning period includes the first SES reference period (2012 to 2014) of the performance regulation. As a result, the following EU en-route delay targets were considered: For minutes average en-route ATFM delay per flight for the full year and for all causes, as adopted by the European Commission For 2012 and and 0.6 minutes, respectively, average en-route ATFM delay per flight for the full year and for all causes, as recommended by the PRB The SES II Performance Scheme requires that the capacity targets of National/FAB Performance Plans shall be assessed for consistency with the European-wide performance targets. This assessment shall be based on reference values provided by EUROCONTROL s capacity planning process (Regulation 691/2010, Annex III, paragraph 4). The EU en-route delay target was broken down at ANSP and ACC level by EUROCONTROL. The en-route delay performance ( ) and the EU delay breakdown for the period 2012 to 2014 are presented in the figure below. Various ATM system improvements (Arrival Manager implementation is planned for 2011; Additional APP sector is planned for 2012; Implementation of RNAV-1 within Riga TMA is planned as well.) No problems are foreseen for Riga ACC during the planning period The planning is focusing on the Summer season to reflect the most demanding period of the year from a capacity perspective. This keeps consistency with the previous planning cycles. EVRRCTA Summer en-route ATFM delay breakdown * 0.02** 0.03** 0.05** 0.15** *to meet the PC Summer delay target at European level, 1 min per flight in 2011 **to meet the EU Yearly delay target at European level: 0.7 min per flight in 2012 (1 min/flight Summer season 0.3 min/flight Winter season) 0.6 min per flight in 2013 (0.85 min/flight Summer season 0.3 min/flight Winter season) 0.5 min per flight in 2014 (0.7 min/flight Summer season 0.3 min/flight Winter season) Detailed overview of capacity targets Table 8 LGS/Riga 2009A 2010A 2011F 2012F 2013F 2014T En-route ATFM delay prior to RP1 (en-route ATFM delay minutes per flight) for the ANSP National Performance plan for Latvia_RP1 Page 14 of 32

16 Reference value from the capacity planning process of EUROCONTROL (en-route ATFM delay minutes per flight) for the ANSP % n/n-1 En-route ATFM delay per flight (minutes per flight) for the ANSP % n/n-1 Difference between the ANSP contribution and the reference value for the ANSP Table 8 : Detailed overview of capacity targets Environment For the fist RP1 of the performance scheme there will not be a mandatory national environment targets. Nevertheless, Latvia consider that the best way to compliment to EU-wide environment target reducing the average horizontal en route flight efficiency by -0.75% of a point can be most effectively reached via NEFAB framework and different activities foreseen within FAB project, within NEFAB initiative framework Latvia will start to work on FRA development process Cost efficiency Latvian Cost-efficiency target of 2,9 per cent reduction per annum on average in Reference Period 1, is lower than the European-wide target. However, historically, the Latvian en-route unit rate is well below the European average and is among the lowest in the European Union. It should be taken into account that COMMISSION DECISION of 21 February 2011setting the European Union-wide performance targets and alert thresholds for the provision of air navigation services for the years 2012 to 2014 point 11 states that It should take into account local context, in particular for States with low unit rates or under the European Support Mechanism, such as cost containment measures already undertaken, planned costs for specific programmes to gain performance improvements in dedicated performance fields, and specificities including achievements as well as failures. In application of Article 13(1) of Regulation (EU) No 691/2010, it should take appropriate account of the evolution of the context that may have occurred between the date of adoption of the European Union-wide targets and the date of the assessment. The assessment should also take into account the progress already made by Member States since the adoption of Regulation (EC)No 1070/2009 of the European Parliament and of the Council in the various key performance areas and in particular the costefficiency area. Latvia is one of the countries with lowest rate in EU area, the unit- rate has not been even rapidly increase during high economic growth, National Performance plan for Latvia_RP1 Page 15 of 32

17 when living standarts and overall salary level in Latvia increase drastically, ANSP was able to combine efficiency and cost control mechanism in place. It should be taken into account those circumstance and efforts by country over a long period to manage their costs and to maintain high quality of safety and services provided. However, there still there are ongoing efforts by the management of all accountable entities to maintain and improve the costefficiency wherever possible. En-route Service Units Forecast Latvia has calculated the service units forecast internally and the estimation did not differ materially from the EUROCONTROL STRATFOR February 2011 forecast, hence the latter is used for the target setting process. The Service-unit forecasts are shown in the next table: Service units forecasts Table Service Units Variation, % N/A 4,2 4,3 4,7 Nevertheless Latvia wishes to underline that the precision of the above mentioned forecast has a high level of reliance on an assumption of moderate growth of national carrier. Determined en-route ANS cost in nominal terms Determined en-route ANS cost in nominal terms Table 10 Entity 2011 F 2012 F 2013 F 2014F LGS (ANSP) 11,905 12,509 12,721 13,194 Variation, % 5,1 1,7 3,7 State Costs 1,855 1,928 1,964 2,019 Variation, % 4,0 1,8 2,8 LVĢMC (MET) Variation, % 75,4 12,0 12,0 Total costs in nominal terms 13,903 14,688 14,965 15,528 Variation, % 5,7 1,9 3,8 In year 2010 Latvia s cost base was assessed by CRCO whether it complies with EC Regulations on the allocation of the en-route cost base. As a result of the review the cost allocation principles were reviewed and changed. These changes were not applied retrospectively, since they could lead to misinterpretations of the figures as well as they were not in line with the applicable regulations in Latvia. Generally Latvia s 2011 estimates are close to the one s reported to the Enlarged Committee for it s 91 st Session. However there are slight changes National Performance plan for Latvia_RP1 Page 16 of 32

18 which mainly occur in Depreciation costs and Cost of Capital due to the following reasons: Investment plans were aligned in order to meet the European requirements; FAB activities revised, TEN-T funding application denial; Calculation of Cost of Capital was changed in order to illustrate the increased amount of risk incurred by ANSP. ANS en-route costs in nominal terms can be presented in the following way: ANS en-route costs in nominal terms Table F 2012 F 2013 F 2014 F Thousands of Latvian Lats Staff 6,820 7,195 7,564 7,943 Other operating costs 3,567 3,481 3,330 3,598 Depreciation 2,604 3,028 3,247 3,321 Cost of Capital Exceptional items Total Costs 13,903 14,688 14,965 15,528 Variation, % N/A 5,7 1,9 3,8 There is a substantial increase of the costs projected over the reference period: Staff costs increase mainly due to increased headcounts due to FAB activities and the deployment of new ATCOs; Staff costs also increase due to increases of salaries projected; Other operating costs are to remain stable, except FAB activities; Depreciation increases substantially due to the fact that investment plans are re-aligned with the EU requirements; As a result cost of capital will increase and fall in later periods due to smaller risk is anticipated. Determined en-route ANS cost in real terms The inflation index calculation is given in the table below: The inflation index Table Inflation/(deflation), % Inflation Index (2009 = 100) As a result of this calculation the determined en-route ANS costs in real terms can be calculated: Determined en-route ANS costs in real terms Table National Performance plan for Latvia_RP1 Page 17 of 32

19 Total ANS Costs in nominal terms 13,903 14,688 14,965 15,528 Inflation Index (2009 = 100) Total determined costs in real 2009 terms 13,643 14,178 14,204 14,491 Based on the total determined costs in real 2009 terms and the service unit forecast, the real en-route determined unit rate is calculated and presented in the table below: Real en-route determined unit rate Table Total determined costs in real ,643 14,178 14,204 14,491 terms Service Units Real en-route determined unit rate 20,68 20,23 19,43 18,94 Variation, % N/A (0.2) (4.0) (2.5) LVL/EUR Rate Real en-route determined unit rate, EUR EU Wide Target N/A Terminal ANS Costs in nominal terms Table 15 Entity 2011 F 2012 F 2013 F 2014F Thousands of Latvian Lats LGS (ANSP) 5,232 5,312 5,383 5,727 Variation, % N/A 1,5 1,3 6,4 State Costs Variation, % N/A 1,7 3,4 3,8 LVĢMC (MET) Variation, % N/A 75,8 11,8 12,3 Total costs in nominal terms 5,722 5,874 5,977 6,359 Variation, % N/A 2,7 1,6 3,7 2011F 2012F 2013F 2014F Total Costs 5,722 5,874 5,977 6,359 Income from Other Sources Total NET Costs 5, Service Units 34,500 35,277 37,000 38,900 Unit Rate in Nominal Terms 164,05 164,67 159,70 161, Interdependencies between targets Taking into account that safety should not be compromise at any circumstances, the capacity target and cost-efficiency target can not be focused, National Performance plan for Latvia_RP1 Page 18 of 32

20 there should be find a balance between those areas. Taking into account that targets proposed by Latvia for capacity and cost-efficiency are consistent with EU-wide targets, therefore no additional trade-offs between those targets and safety KPI being proposed Carry-overs from the years before RP1 There is not carry overs of LGS the years before RP1 that are relevant to the period covered by RP Parameters for risk sharing and incentives No incentive schemes are proposed for capacity, safety and environmental KPIs in RP1. No incentives scheme proposed for airspace users for RP1. Incentive for cost-efficiency are defined in Commission Regulation (EU) N 1191/2010 of 16 December 2010 amending Regulation (EC) N 1794/2006 laying down a common charging scheme for air navigation services Article 11a. Presentation of the incentive schemes for RP1 Table 16 KPA Incentive schemes applied on LGS at national level for RP1 (a) Safety n/a (b) Capacity (c)environment (d) Cost-efficiency n/a n/a Risk-sharing mechanism as per Article 11a of Common Charging Scheme Regulation Cost-efficiency The parameters for traffic risk sharing include: As defined in Article 11a (4) of the Common Charging Scheme Regulationwhen over a given, the actual number of service units exceeds the forecast established at the beginning of the reference period by more than 2%, 70% of the additional revenue obtained by LGS in excess of 2% of the difference between actual service units and the forecast with regard to determined costs shall be returned to airspace users As defined in Article 11a (4) of the Common Charging Scheme Regulation when over a given year, the actual number of service units falls below the forecast established at the beginning of the reference period by more than 2%, 70% of the loss in revenue incurred by LGS in excess of 2% of the difference between the actual service units and the forecast with regard to determined costs shall be born by the airspace users. National Performance plan for Latvia_RP1 Page 19 of 32

21 The determined costs established in relation to: Costs of relevant national authorities; The determined costs of State limited Liability Company "Latvian Environment, Geology and Meteorology Centre". As far as the cost risk sharing is concerned, a Member State wishing to exclude any costs from cost risk-sharing must specify list of uncontrollable cost factors from the 5 items below, as provided in Article 11a (8) of the Common Charging Scheme Regulation: (i) unforeseen changes in national pension regulations and pension accounting regulations; (ii) unforeseen changes in to national taxation law; (iii) unforeseen and new cost items not covered in the national performance plan but required by law; (iv) unforeseen changes in costs or revenues stemming from international agreements; (v) significant changes in interest rates on loans. Taking into account still economic situation uncertainty in the country it has been proposed that in such circumstances all five of above mentioned exceptions should be allowed for in Latvia. National Performance plan for Latvia_RP1 Page 20 of 32

22 3. Contribution of each accountable entity Accountable entities in relation to the National Performance Plan for Latvia are: The State Joint Stock Company Latvijas gaisa Satiksme as ANSP The State limited Liability Company "Latvian Environment, Geology and Meteorology Centre as MET provider The Civil Aviation Agency of Latvia as NSA 3.1. The State Joint Stock Company Latvijas gaisa Satiksme (ANSPshare in the national targets and individual binding performance targets (a) Safety No safety targets will be set for RP 1. To maintain high level of safety and to work on continues safety improvements will prevail, a although proposed indicators a) Effectiveness of safety management; (b) Application of the severity classification of the Risk Analysis Tool (RAT); (C) Reporting of just culture will be monitor constantly. (b) Capacity LGS will be the only entity accountable for the meeting of capacity targets Environment No targets will be set for environment for RP1 (d) Cost- efficiency Determined en route ANS costs Details of LGS determined en route costs are provided in the Reporting tables in Annex A of this document. Determined en route ANS costs for LGS Table 17 LGS (ANSP ) 2011 F 2012 D 2013 D 2014 D Staff 6,034 6,359 6,685 7,013 Other operating costs 2,374 2,205 2,040 2,280 Depreciation 2,590 2,973 3,185 3,252 Cost of capital Exceptional items Total en-route costs 11,905 12,509 12,721 13,194 National Performance plan for Latvia_RP1 Page 21 of 32

23 Determined en route ANS costs for LGS by service Table 18 LGS (ANSP) 2011 F 2012 D 2013 D 2014 D Air Traffic Management 6,723 7,258 7,383 7,696 Communication 1,202 1,454 1,437 1,639 Navigation 1,046 1,035 1,093 1,124 Surveillance 1,757 1,598 1,622 1,458 Search and rescue Aeronautical Information Meteorological services Supervision costs Other State costs Total costs 11,905 12,509 12,721 13,194 Terminal ANS costs LGS is the entity that is accountable for terminal costs for this performance plan. Terminal ANS costs for LGS in nominal terms Table 19 LGS(ANSP) 2011 F 2012 D 2013 D 2014 D Staff 2, Other operating costs 1, Depreciation 1, Cost of capital Exceptional items Total terminal costs 5,232 5, 312 5, 383 5,727 Return on equity The return on equity used to estimate the cost of capital for LGS is set out in Table below: 2011 F 2012 F 2013 F 2014 F Return on equity, % 7,77 6,85 5,85 5,00 Average interest on debts, % 5,19 6,00 6,00 0,00 Return on equity is tied to the Long-Term government bond yields. Return on equity is falling during the Reference Period 1 mainly due to the fact that the government bonds are expected to fall, since the risk of the country will be minimizing. Currently ANSP has entered into one Long-Term debt agreement. This agreement was concluded with an interest Rate of 3M EURIBOR + 3% Fixed National Performance plan for Latvia_RP1 Page 22 of 32

24 Rate. The agreement will expire in 2014, when the principal amount will be repaid in full. The EURIBOR interest rates are expected to grow in near future. Investments The investments planned by LGS in time period is as follows : Project Domain Objective Modernization of Automated ATC System (ATRACC) PBN Implementation A-SMGCS Modernization Modernization of VHF in Riga FIR ANOF Plus project ATM ATM Safety, Capacity Capacity, environment Planned start date Planned end date Planned total CAPEX Ls 3.8M ATM/SUR Safety, capacity COM COM Safety, Com availability Safety, COM availability Ls 2.8M Ls 0.7M Ls 1.0 M Ls 1.0 M Incentive mechanisms to be applied on LGS to encourage targets to be met over the reference period No incentive mechanism will be applied to the LGS in relation to safety, capacity and environment. The only indicative mechanism that will be applied to LGS is for cost-efficiency target, which compromise the risk- sharing mechanism defined in Commission regulation (EC) No 1794/2006, amended by Commission Regulation (EU) No 1191/2010 and has been described in Section No other incentive mechanism being proposed The State limited Liability Company "Latvian Environment, Geology and Meteorology Centre (LEGMC- MET provider)-share in the national targets and individual binding performance targets LEGMC is accountable only for cost-efficiency target. Cost calculation for years 2010 and 2011 was based on non-flexible price list that had to be used for price calculation in State agencies. These costs did not covered real expenses for aviation services. Therefore, for year 2012 and following years real expenses are calculated. The following methodology for price calculation for years is applied: National Performance plan for Latvia_RP1 Page 23 of 32

25 1. Yearly amount of all products that uses meteorological observations are counted. That includes different products: starting of observation value up to use those values into forecasts, statistics and etc. 2. Detailed calculations of direct expenses of these products were done. 3. Proportion between direct aviation and non aviation direct expenses were founds and that shows that for year 2012 this proportion is - 63% for aviation services, 37% for other meteorological services 4. Assumption was made that respectively 63% from the expenses of meteorological observations was considered to be used for aviation MET services. 5. Meteorological observation stations whose expenses are covered by governmental assignments are not included in calculation of expenses for aviation meteorology. (d) Cost efficiency In this part will presented he financial costs for LEGMC for the period covered by RP1. Determined aviation costs for LEGMC Table 20 LEGMC 2011 F 2012 D 2013 D 2014 D Staff Other operating costs Depreciation Cost of capital Total aviation costs Determined en route costs for LEGMC Table 21 LEGMC 2011 F 2012 D 2013 D 2014 D Staff Other operating costs Depreciation Cost of capital Total en route costs Determined Terminal costs for LEGMC Table 22 LEGMC 2011 F 2012 D 2013 D 2014 D Staff Other operating costs Depreciation Cost of capital Total terminal costs Return on equity National Performance plan for Latvia_RP1 Page 24 of 32

26 As described above determined costs for LEGMC do not include any allowance for the return on equity. Investments Capital investments that are planned are following: o computer hardware replacement, o Procurement of spare parts (Gematronik) o Office replacement Incentive mechanisms to be applied on LEGMC to encourage targets to be met over the reference period No indicative mechanism will be applied to LEGMC; no traffic risk sharing will be applied to LEGMC 3.3. The Civil Aviation Agency of Latvia (NSA) share in the national targets and individual binding performance targets (a)safety NSA has a responsibility to monitor safety indicators of ANSP, as well as to perform safety oversight of ANSP activities according to EU legislation requirements to ensure high level of safety is maintain. The NSA also according to Section 6 will produce an annual progress report how those indicators been met by ANSP. (b)capacity (c) environment The NSA has do not have accountability for the provision of capacity or environmental performance, NSA will follow how capacity targets will be fulfilled in accordance with Section 6 implementation of the performance plan (D)Cost efficiency Determined en route ANS costs Details of the NSAs determined en route costs are provided in the Reporting Tables included Annex A of this document. Summary of there tables provided below Determined en route ANS costs for CAA (NSA) by nature Table 23 CAA-NSA 2011 F 2012 D 2013 D 2014 D Staff Other operating costs 1,161 1,216 1,224 1,244 Depreciation Cost of capital National Performance plan for Latvia_RP1 Page 25 of 32

27 Total en route costs 1,855 1,928 1,964 2,019 Determined en route ANS costs for CAA (NSA ) by service Table 24 CAA-NSA 2011 F 2012 D 2013 D 2014 D Search & Rescue Supervision costs ,000 Other State costs Total costs 1,855 1,928 1,964 2,019 Terminal ANS costs NSA has no responsibility for the economic regulation of terminal costs in RP1 Return on equity and Investments NSA is not responsible for any investments for RP Incentive mechanisms to be applied on Civil Aviation Agency to encourage targets to be met over the reference period No incentive mechanisms will be applied to the NSA National Performance plan for Latvia_RP1 Page 26 of 32

28 4. Civil-military dimension of the plan There is no Military NSA in Latvia and military do not provide service to civil airspace users, air-policing functions are performed by NATO, based on the mutual letter of agreement. 4.1 Performance of the FUA application In May 2006, first cooperation agreement on aviation matters was signed between the Ministry of Transport and Ministry of Defence, which laid path to the rest of the cooperation activities in aviation matters, including implementation of FUA. In order to support integration into Single European Sky, State level policy document for FUA implementation was developed by the Ministry of Transport and Ministry of Defense for time period , setting accession into Eurocontrol as one of the key requirements for full FUA implementation to facilitate effective airspace use data exchange. Absence of national military ATM component and absence of need for national military designated training areas created a situation where new requests for airspace structures for NATO military activities since 2004 were facilitated in accordance with basic FUA principles. Civil ATC provides air traffic services to military and state GAT within Riga FIR. OAT and GAT activities are not allowed to take place in one airspace. In general, FUA principles are also applied to the general civil aviation sports activities in temporary reserved areas. In May 2011, Cabinet of Ministers adopted regulation Airspace management, airspace structure and airspace changes, through which Latvia formally designates the responsible entities for each FUA level. And elaborates on specific functions at each FUA level. Previous Regulation No 966, adopted in December 2006, set only general requirements for airspace use in accordance with FUA requirements. The following is an overview of the responsible entities for the three FUA levels in accordance with Regulation EC 2150/2006 and Eurocontrol guidance material: FUA level 1 State agency Civil aviation agency. Strategic airspace management aspects which are of interest to the military are managed in consultation with civilmilitary airspace planning and coordination group of experts comprised of the representatives from National Armed Forces, Ministry of Defence, Ministry of Transport and Civil Aviation Agency. Civilmilitary airspace planning and coordination group of experts is headed by a person designated by the Ministry of transport, and it convenes at least once a year. The meeting can be initiated by any of the Civilmilitary airspace planning group expert. National Performance plan for Latvia_RP1 Page 27 of 32