20 Annual Report. M a a str i c ht U p p e r A re a C o ntro l C e ntre

Transcription

1 20 Annual Report 07 M a a str i c ht U p p e r A re a C o ntro l C e ntre

2 Fast facts Trend 2006/ 2007 Main targets set for 2007 Safety indicators Category A infringements A limit of 1 occurrence for each 100,000 Category B infringements movements Financial indicators Total fixed-assets at year end (Net book value) ( M) % Capital expenditure at year end ( M) % Total costs ( M) % Staff % Operating % Depreciation % Interest % Cost-efficiency indicators Total economic cost/flight-hour( ) * % < 289 Financial cost/flight-hour ( ) ** % < 223 Cost/km controlled ( ) % Productivity (composite flight hour per air traffic controller-hour on duty) % Movements % Service units % Punctuality (% flights on time) 95 % 99 % 98 % 96 % Average delay/flight (minutes) % < 0.5 Number of employees (31 December) % * Total economic cost per flight-hour: key performance indicator used for ATM cost-effectiveness (ACE) benchmarking. It is the sum of ATM/CNS provision costs and ATFM delay costs per composite flight-hour. ** Financial cost per flight-hour: ATM/CNS service provision cost per composite flight-hour.

3 Table of contents 04 EUROCONTROL Maastricht profile 08 MCG chairman s statement 09 Director General s statement 10 Director s statement highlights 12 Management report 12 Key results 17 Customers 18 Processes 19 People 21 Leading technological innovation 23 Business outlook 24 Financial accounts 27 Acronyms and abbreviations

4 A leading air navigation service provider in the core area of Europe, EUROCONTROL Maastricht ensures that effective crossborder air navigation services are provided in a dynamic and rapidly changing air transport marketplace. EUROCONTROL Maastricht (MUAC) provides seamless air navigation services in the upper airspace (above 24,500 feet) of Belgium, North-West Germany, Luxembourg and the Netherlands. It is a leader in air navigation service provision in the core area of Europe, ensuring that effective cross-border air navigation services are provided in a dynamic and rapidly changing air transport marketplace. The closest possible cooperation between civil and military air traffic is facilitated by having a Deutsche Flugsicherung (DFS) unit, which controls military operations over North-West Germany, located on the premises. Real-time radar and flight plan data is also exchanged with military partners in Belgium and the Netherlands. Committed to evolution through innovation, MUAC regularly participates in the development and validation of leading-edge air traffic management operational solutions for Europe. For over 35 years, this avant-garde regional integration programme has been playing a pivotal role in European functional airspace consolidation, taking due account of operational requirements and major traffic flows rather than territorial boundaries, and bringing with it excellent safety performance and traffic fluidity on top of notable economies of scale. MUAC is uniquely positioned to provide safe, costefficient and sustainable air navigation services in a large European airspace block, satisfying today s customer expectations and the growing demands for the future.

5 Eurocontrol Maastricht profile Corporate governance EUROCONTROL is an international organisation established under the EUROCONTROL Convention of 13 December 1960, subsequently amended on 12 February 1981 and revised on 27 June MUAC is operated on behalf of Belgium, Germany, Luxembourg and the Netherlands by EUROCONTROL on the basis of the Agreement relating to the Provision and Operation of Air Traffic Services and Facilities by EUROCON- TROL at the Maastricht Upper Area Control Centre (the Maastricht Agreement ), signed on 25 November A Maastricht Co-ordination Group was established to facilitate decision-making by determining a common position for the Four States in all matters relating to the operation of Air Traffic Services at MUAC. Day-to-day responsibility for operations has been delegated to the Director of MUAC by EUROCONTROL s Director General. Each of the Four Member States retains its regulatory competence. Mission and vision MUAC provides safe, customer-oriented and costefficient air navigation services on an equal and fair basis to its customers in the upper airspace of Belgium, Germany, Luxembourg and the Netherlands. It also validates innovative Air Traffic Management operational solutions. Its vision is to be the leading air navigation service provider operating in a large European airspace block. Certificates In line with Single European Sky legislation, MUAC holds the certificate for the provision of air navigation services in the European Community. The certificate was granted by the Netherlands Transport and Water Management Inspectorate and Directorate General for Civil Aviation and Freight Transport. MUAC also holds ISO 9001:2000 certification for the provision of air traffic services, the procurement and maintenance of technical systems and the provision of professional training. Audit Board Eurocontrol Permanent Commission Ministers of Transport and Defence Provisional Council Directors General of Civil Aviation and their military counterparts Eurocontrol Agency Director General Maastricht Upper Area Control Centre Director MUAC Maastricht Co-ordination Group Senior Officials from the Four States

6 Management Director General of EUROCONTROL David MCMILLAN MUAC Executive Management Karl-Heinz KLOOS Director Harald MATTHES Head of Operations Peter NAETS Head of Engineering Onno REITSMA Head of Human Resources, Finance and General Services Herman BARET Head of Programme Management Unit

7 Maastricht Co-ordination Group Belgium Maurits DE CLIPPEL André VAN HOVE Jacques GERKENS Maj. Dirk De SMEDT Jan COTTYN Federal Public Service for Mobility and Transport Federal Public Service for Mobility and Transport Federal Public Service for Mobility and Transport Belgian Armed Forces Air Component Belgocontrol Germany Wolf LIEDHEGENER Col. Hans-Dieter POTH Lt. Col. Osman SAAFAN Frank BRENNER Federal Ministry for Transport, Building and Urban Development Federal Ministry of Defence Federal Ministry of Defence DFS Deutsche Flugsicherung GmbH Luxembourg Claude WALTZING Ender ÜLCÜN Gilbert MEYER Ministry of Transport, Directorate of Civil Aviation Ministry of Transport, Directorate of Civil Aviation Air Navigation Services Luxembourg Netherlands Theo ZANDSTRA Ministry of Transport, Public Works and Water Management Chairman of the Maastricht Co-ordination Group during 2007 Lt. Col. John VAN BOMMEL Royal Netherlands Air Force Andries VERBURGT Luchtverkeersleiding Nederland, LVNL 7

8 MCG chairman s statement The Maastricht Co-ordination Group is pleased to report that MUAC performed well throughout This strong performance was recorded during yet another year of rising traffic levels. The certification of MUAC for the provision of air navigation services in the European Community was followed up by continued progress in the work to establish a common regulatory framework in line with the Centre s international cross-border character. The results so far are a testament to the efforts of the joint Four-State National Supervisory Authority. In the course of 2007, working arrangements between the four National Supervisory Authorities were defined, which will ensure regulatory oversight for all relevant activities. I welcome their efforts and look forward to similar high levels of commitment in the future. The Four States are currently preparing for this future by laying down the foundations, in their respective national legislation, to pave the way for the designation of MUAC as the air navigation service provider in the upper airspace of the Amsterdam Flight Information Region as well as the Brussels and Hannover Upper Information Regions. This vital task, of course, is being carried out in harmony with the Single European Sky legislation and the provisions of the Maastricht Agreement. Preparations for the Single European Sky continued with notable progress being made on the feasibility study into the creation of the Europe Central Functional Airspace Block (FAB EC), which will play a major part in the defragmentation of Europe s airspace. The study is a joint effort between Belgium, France, Germany, Luxembourg, the Netherlands and Switzerland and the civil and military air navigation service providers of these States. It aims to develop integrated cooperative solutions for a safer, more effective and sustainable air traffic management framework in the core area of Europe. The adoption, by all partners civil and military - of a common vision towards performance-driven air navigation services was, without doubt, the most notable achievement of the year. Following the expected positive results of the feasibility study in the summer of 2008, an implementation roadmap will be agreed by the participating States. I am confident that MUAC s experience of cross-border service provision will be a firm basis for the implementation of this major European development. It is a great pleasure for me to be able to thank the staff, on behalf of the Maastricht Co-ordination Group, for their relentless hard work and professionalism over the year. I would also like to extend my gratitude to the Director General of EUROCONTROL and the MUAC s executive management team for their support. My thanks too must go to the Maastricht Co-ordination Group itself, who have made it an honour and privilege to serve as their Chairman during I have every confidence that MUAC will remain a leading performance-driven European ANS provider, in line with the expectations of the Member States. Theo Zandstra Chairman of the Maastricht Co-ordination Group

9 Director General s statement Breaching the 10 million flights per year mark in Europe puts great emphasis on the need for all stakeholders to work together to meet the demands that this increased level of traffic imposes on the system. The pan-european network must be managed more efficiently so that optimum levels of operations are possible. Likewise, at the local level the air navigation service providers must continue to play their part so that, together, we meet the future capacity demands whilst enhancing safety and reducing the effect aviation has on the environment. The fact that some 15% of overall European traffic passes through the MUAC airspace, and that it is located in the heart of the core area of the continent, makes it a crucial part of the European ATM network and highlights the need for it to deliver the highest possible performance levels. It is therefore a pleasure for me to be able to report that MUAC has once again recorded performance levels which place it in the leading group of European service providers, according to the Performance Review Commission s benchmark reports. In 2007, EUROCONTROL Maastricht celebrated its 35th anniversary of multi-national air navigation service provision. Its cross-border concept is, in many ways, a precursor of the vision encapsulated within the Single European Sky programme and is a model for the partnership approach necessary to build a consolidated European system, in particular with the creation of functional airspace blocks. An increasingly business-minded, performance-oriented approach has been adopted, largely thanks to the professionalism and dedication of all employees. I am in no doubt that the progress made so far will continue and that EUROCONTROL Maastricht will go on to meet its customers needs in the responsive, efficient and cost effective manner that it has made its watchword. David McMillan Director General of EUROCONTROL MUAC has worked hard and in a variety of ways to achieve the key targets set for the European air traffic management system in With Europe currently experiencing traffic peaks of over 4,000 flights an hour and with this figure growing by an average of 5% each year, the pressure on ANS providers to keep delay figures down has never been greater. Although delays increased, compared to 2006, MUAC did much to contain them, so that by the end of 2007, total delays recorded were well below the European target of 1 minute en-route air traffic flow management delay. At the same time, considerable efforts were made to ensure that, wherever possible, the most efficient routes were offered to all aircraft to reduce fuel-burn and thereby contain CO2 emissions. Throughout the past year, MUAC demonstrated positive trends in an already high level of safety maturity in line with the European Safety Programme. Finally, the cost reduction trend started in 2003 was maintained, with ANS costs reduced by an impressive 21% over the past four years.

10 Director s statement In 2007, air traffic in our airspace remained buoyant, growing by a further 5.1% compared to These continued high levels of expansion have meant that we have had to respond dynamically to the growing market conditions. Safety trends developed favourably despite the larger volumes of air traffic, and progress in implementing a working environment in line with the Just Culture model was robust - further evidence that we remain on track to becoming a strong learning organisation. For the fourth consecutive year, the cost per kilometre controlled remained on a downward trend, producing an overall 21% reduction since Higher delays however have had an effect on some of our financial indicators. Even though we went slightly beyond the target for the year, punctuality was maintained, with 96% of flights on time. It should be noted, however, that structural problems in certain parts of our airspace have had, and are expected to continue to have, a strong impact on our capacity. It was necessary to make an adjustment to the 2007 budget in order to introduce a new professional scale for operational staff and a financial amendment to the taxation of ancillary remuneration. A flat-rate shift allowance was also implemented in 2007, with a retroactive effect on Continued infrastructure investments were made throughout the year with the implementation of a number of technical developments. Not least of these were the preparations for the introduction of our state-of-the-art flight data processing system. Some delay was experienced during the implementation phase making it necessary to postpone the system s introduction to the end of 2008 in order to minimise the disturbance to our customers due to capacity restrictions. Last year, we reached an agreement in principle with our staff representatives on new working conditions for operational staff, which provides for greater flexibility in meeting increasing traffic demand. At the same time, solutions aimed at progressively reducing working time for operational staff will be implemented to counter fatigue in the face of increasingly challenging traffic pressure. Concerning the implementation of the Single European Sky, over forty of our experts worked tirelessly on various Functional Airspace Block Europe Central (FAB EC) feasibility study work groups during the year, with a result that the project progressed well, reflecting our commitment to this major development in Europe s ATM network. Once again, it remains for me to express my gratitude to our employees, whose professionalism and dedication have ensured that 2007 was another successful business year. I look forward to the future with renewed vigour and with the confidence that together we are ready to face the challenge of driving MUAC ever forward. Dialogue with our customers was enhanced during 2007 in an effort to capture their requirements in a more precise way and to provide them with key information about our performance and our future strategies. This is an important area and we will continue to develop the privileged relationship we enjoy with our customers by introducing further new initiatives. Karl-Heinz Kloos Director, MUAC 10

11 2007 highlights Safer, efficient service in a record year of traffic January As traffic volumes continue to rise, the new state-ofthe-art short-term conflict alert system goes operational. March Mode S elementary surveillance becomes operational at MUAC. June For the fourth year in a row the ATM Cost-Effectiveness (ACE) Benchmarking Report confirms MUAC as a top performer among European air navigation service providers. July The new weather data processing system offering an enhanced ready-to-use precipitation picture begins operations. The service is backed by a network of dedicated meteorological radars which are checked for accuracy on a daily basis by weather experts. August September For the first time since the service began, more than 2,000 data link messages are exchanged in a one-month period. Every day, more than 100 aircraft log into the data link system. 14 September is the busiest day of the year, with 4,955 flights. October The plenary customer consultation meeting welcomes some twenty airline representatives, together with representatives from IATA and AEA. December Flights controlled in one year exceed the 1.5 million mark for the first time. An agreement in principle is reached on new socially acceptable and cost-effective working conditions for operational staff. The agreement provides for greater flexibility in meeting increasing traffic demand and for relief measures to counter fatigue in the face of traffic pressure. The one millionth flight of the year was recorded 11 days earlier than Ryanair flight 3006 from London en route to Rome was guided through the Brussels sectors on Sunday, 26 August 2007 at 12:16 UTC. 11

12 Management report Traffic trends Between 1997 and 2007, air traffic in the MUAC airspace increased by more than 50%. 1991: First Gulf war 1995: Division flight level raised to 245 (Belgium) 2002: Aftermath of 11th September , , , , , , , ,252 1,058,091 1,110,248 1,184,739 1,197,512 1,182,601 1,243,794 1,296,979 1,386,085 1,465,963 1,540, Delay 2,500,000 Traffic 1,500,000 2,000,000 1,400,000 1,847,257 2,490, , , , , , ,638 1,500,000 1,300,000 1,000,000 1,200, ,000 1,100,000 1,184,739 1,197, 512 1,182,601 1,243,794 1,296,979 1,386,085 1,465,963 1,540, Traffic and delay trends For the fifth consecutive year, traffic continued to grow at rates in excess of 5% annually. Since 2000, overall traffic has grown by more than 30%, and delays have gone down by close to 50%. In the same period, the total economic cost per flight-hour controlled decreased by 37%. 12

13 Key results Traffic demand on the increase, 1.5 million mark hit for the first time Growing market conditions translated into demand for air travel exceeding all growth predictions in We responded dynamically to that demand by maintaining good punctuality levels, while once again improving our safety performance. procedures, resulted in capacity gains, as did the integration of new sector suites and better targeted exploitation of elementary airspace volumes, which matched demand profiles with greater accuracy. Furthermore, improvements to the ATS route network and the development of a more capable operational management layer should also be credited with our enhanced performance, as indeed, should the new short-term conflict alert system, which began operations at the beginning of the year. BRUssels UIR 25% Air traffic demand in our airspace exceeded all growth predictions in 2007, with a total number of 1,540,708 flights controlled. The 1.5 million mark was hit for the first time ever on 19th December The additional 75,000 flights in 2007 resulted in an annual rise in traffic of 5.1% over Natural growth in the industry, in particular low-cost airlines and business aviation, accounts for the traffic increase. A new daily traffic record was hit on 14 September 2007, with 4,955 flights processed safely, a 3 % increase on the previous year s busiest day. The average traffic volume during the summer season (May-October) amounted to 4,530 flights per day. We achieved a high level of punctuality once again with 96% of flights on time and our average en-route delay was 0.6 minute (or 38 seconds) per flight. During the period from May-July in particular, delays increased due to high traffic demand, adverse and unusual weather conditions, internal adjustments to our staff working times and structural problems experienced in parts of our airspace. Although sector hours delivered increased productivity, roughly in line with traffic demand, a capacity shortfall occurred during this period. Over the year, we successfully developed and implemented several capacity-enhancing projects. In particular, the improved assessment of sector workload and traffic complexity by our Tactical Capacity Management team and a better operational interface between civil and military users made a significant contribution. In addition, a more efficient Central Flow Management Unit and airspace management, together with the continued training of staff on tactical traffic management tools and AMSterdam FIR 30% Hannover UIR 45% Service units 2007 Breakdown of service units in the Amsterdam FIR, Brussels UIR and Hannover UIR respectively. Service units increased by 5.2 % over Strong performance, competitive services Delivering first-class services at the lowest possible cost to our customers is one of our key business objectives. Since 2000, the total economic cost per flight-hour has decreased by 37% whilst traffic volumes have risen by over 30%. Delivering first-class services at the lowest possible cost to our customers is one of our key business objectives and, since 2000, the total economic cost per flight-hour controlled has decreased by 37% whilst traffic volumes have risen by over 30%. In spite of the stable air navigation service provision costs for larger volumes of air traffic, the total economic cost per flight-hour increased by 15.1% from 255 in 2006 to 294 in The financial cost 13

14 Management report Total economic cost per flight-hour ( ) - trend The total economic cost per flight-hour controlled is a standard key performance indicator used in the ATM Cost- Effectiveness (ACE) benchmarking reports, produced by the Performance Review Commission. It is the sum of ATM/CNS costs (or financial cost) and ATFM delay costs per composite flight-hour n Cost for delay n Financial cost n Total economic cost Cost per kilometre controlled ( ) - trend (eur 2005) Over the period , the cost per kilometre controlled went down by 3% on average per annum. Since 2003, it has gone down by 21%. n Cost/KM(EUR2005) n PC Notional target (-3%) %

15 per flight-hour was however, stable at 215. It is therefore clear that the increase in the total economic cost is a consequence of the capacity constraints experienced during the summer period. Over the period , we were successful in meeting the EUROCONTROL Provisional Council s longterm notional target of reducing the cost per kilometre controlled by 3% on average per year by enhancing cost awareness at all levels of our activities through a comprehensive cost-efficiency programme. Throughout the year we focused on optimising efficiency and controlling costs by improving our support processes, integrating technical systems and increasing automation. We systematically renegotiated support and maintenance contracts and, where possible, we sought to collaborate with other air navigation service providers. Furthermore we implemented more competitive tendering processes. In 2007, meeting the total economic cost per flight-hour target became increasingly challenging. Although we have been successful in cutting down the cost per kilometre controlled by 21% since 2003, our summer 2007 results clearly indicate that we are now operating at the limits of our capacity. New capacity initiatives, supported by strong technology, are, therefore, required to keep up with traffic evolution. As in previous years, keeping our cost increases below the level of traffic growth was a specific objective for The overall results for the year show a 5.1% increase in air traffic, representing a 5.6% increase in flight-hours controlled, which was offset by an increase in costs of 6%. However, the 2007 cost-base includes retroactive staff expenditure of 2.4 million, resulting from an agreement on flat-rate shift allowances and the ILOAT judgment on the taxation of ancillary remuneration. After re-allocation of these retroactive payments, the results for the 2006 cost-base (+ 4.4%) and the 2007 cost-base (+3.4%) remain well below the registered traffic increases of 5.8% and 5.1% for the two successive years. Total staff and operating costs increased, in nominal terms, by 5.4 % and 4.7 % in 2006 and 2007 respectively. Depreciation and interest in 2007 dropped back to below 2003 levels, at 14 million after the implementation of a new operator input and display system. No exceptional depreciations were noted in Trend 2006/2007 Total costs ( M) % Staff % Operating % Depreciation % Interest % Cost-base (M ) Top performance confirmed for the fourth consecutive year The 2005 ATM Cost-Effectiveness (ACE) benchmarking report, published in June 2007, placed us among the top performing European air navigation service providers for the fourth consecutive year. The benchmark established, once again, that we operated cost-effectively, with the highest air traffic controller productivity rates among a group of 35 European air navigation service providers. The 2006 ACE benchmarking report and the above-listed results for 2007, will confirm this position. 15

16 Management report Safety improves Safety trends developed favourably despite the larger volumes of air traffic, and progress in implementing a working environment in line with the Just Culture model was robust. The efforts we have invested, over the past years, to improve safety are starting to bear fruit and highlight our unremitting commitment to this priority area. Our safety performance is assessed continuously and an annual safety report is generated, which compares the overall safety performance to the pre-set targets and makes recommendations to ensure that these targets are attained. Occurrence reporting There was a marked improvement in safety trends in 2007 and, for the fourth consecutive year, not a single Severity of separation infringements with muac contribution ( ) Severity classification A and B 8 A Serious incident (the risk classification of an aircraft proximity in which there was a serious risk of collision). B Major incident (the risk classification of an aircraft proximity in which the safety of the aircraft may have been compromised) serious incident (Category A) was recorded. Furthermore, the number of Category B incidents (major incidents) decreased, from 8 in 2006 to 3 in This significant improvement is mainly due to the implementation of an enhanced short-term conflict alert system, and improvements in the process for incorporating recommendations resulting from operational incident investigations. It should however, be seen in the context of the continuous year-on-year increases to our traffic levels. Managing the safety impact of changes In 2007, all major and minor changes were systematically assessed for their safety implications. These included three major changes to our ATM system: the introduction of an improved short-term conflict alert logic, a new weather data processing system, and new surveillance input monitoring equipment. The associated safety deliverables have also been developed and approved for each of these projects. In addition, several modifications were made to prepare for the new flight data processing system and the required safety assurance was incorporated into the system s safety deliverables. Towards strong safety culture As part of our continued attempts to embed a robust safety culture at all staff levels, numerous safety management training courses were delivered in The most significant of these included a safety course for all senior managers as well as level 2 safety risk management courses and introductory courses to safety management. In addition, a number of our employees continued their studies for a Certificate in Safety Critical System Engineering at the University of York. 6 Just culture The concept of a just culture was further developed, 4 with amongst other things, the expansion of the Voluntary 3 and Confidential Reporting of Safety Issues programme. 2 Initially introduced in 2006, this programme allows the staff to report issues that may have a direct or indirect impact on safety in total confidence and without the risk of recrimination. 16

17 Customers Good relations and effective communication form the backbone of a truly productive partnership. Dialogue with our customers was enhanced during 2007 in an effort to capture their requirements in a more precise way and to provide them with key information about our performance and our future strategies. Our customers are our partners as well as our raison d être, and we are therefore committed to providing them with the highest standards of service at the best possible price. We are aware that they operate in an increasingly challenging marketplace and we are doing everything we can to support them. Partnership Good relations and effective communication form the backbone of a truly productive partnership. They allow us to continuously and dynamically tailor our services to our customers requirements. In October 2007, some 20 airline representatives, together with representatives from the International Air Transport Association (IATA) and the Association of European Airlines (AEA) participated in the annual plenary customer consultation meeting. The participants were shown a series of presentations to keep them abreast of important issues, such as safety, the operational performance, the capacity plan for 2008 and beyond, as well as technical developments that are in the pipeline and which may impact on our services. We also presented them with information on cost-effectiveness trends, financial business objectives and the progress of the FAB Europe Central feasibility study. In addition to the formal consultative framework, we continued to strengthen the good relations we enjoy with our customers through other activities. Throughout the year we arranged for experts to visit our airline customers and for them to spend time at our facilities. This valuable process not only allows us to understand their needs more precisely, it also helps to promote mutual understanding. It is an excellent way for us to discuss specific issues and establish and maintain useful points of contact. We also attended the International Air Carriers Association (IACA) conference in 2007 and presented a summary of our summer performance, which included information on traffic volumes, the weather and our staff roster arrangements. More direct routes save fuel and curb gas emissions Making more direct routes available to the customers has a beneficial effect on both profitability and the environment. Not only do more efficient routes reduce congestion, they also help to decrease harmful emissions by lessening fuel-burn. This is all part of our philosophy of offering airlines the most direct routes across our airspace whenever possible. In this way, we play our part in helping to reduce greenhouse gas emissions as well as fuel bills. Building the future together A far-reaching consultation process was kicked off at the beginning of the year as part of the FAB Europe Central feasibility study. The first customer consultation workshop was held in January 2007 to gather airline views, at an early stage, on a number of topics dealing with the operational issues which are under consideration as part of the study. A second customer consultation workshop was held in February This complemented a number of additional bilateral and plenary consultation initiatives undertaken during 2007 by the air navigation service provider organisations participating in the feasibility study. 17

18 Management report Processes By harmonising all of our objectives, processes and capabilities across the entire spectrum of the organisation, we are able to guarantee the best use of our resources. Management system Our process-driven management system is ISO 9001 certified and is designed to define how our service provision should be applied to meet the needs of our customers and stakeholders. By harmonising all of our objectives, processes and capabilities across the entire spectrum of MUAC, we are able to guarantee the best use of our resources. This efficient use of manpower and infrastructure meant that throughout 2007 we delivered services effectively and therefore, met most of our business targets. Furthermore, the management system includes a systematic approach to continuous improvement by combining various methodologies such as internal auditing, self-assessments, risk management and customer surveys. Social responsibility We want to balance social, economic and environmental objectives in order to secure the well-being of present and future generations. This means that, on top of providing a safe and high quality service, we also look for ways to add value to society. Accordingly, we have identified several key priority areas of social responsibility. Towards more sustainable aviation Although combating climate change is a responsibility shared by all, we must play a leading role in addressing this issue from an air traffic management standpoint. Obviously, flight efficiency is a crucial aspect with regards to aviation s impact on the environment and therefore, a vital step along the way to a more sustainable aviation industry. Our contribution to optimal environmental operations is as follows: We offer direct routes whenever possible. We look for the most fuel-efficient solutions when rerouting flights to avoid congested areas. We frequently reorganise the route network to make it more efficient. Together with our partners, we have created new conditional routes in military airspace to shorten flight distances. We are also expecting more environmental benefits once the new trajectory-based flight data processing system goes live and begins to make more environmentally responsible routes available. Supporting educational and research programmes Our internship programme is recognition of the high priority we place on maintaining good relationships with universities, research institutes and other educational institutions. In 2007, several students gained valuable experience as a result of the training they received in the different areas of the organisation. Over the past year we were happy to be able to assist the Japanese authorities with their national short-term overseas fellowship programme by welcoming an operational expert who conducted research in an ATM-related subject. We regularly provide support to researchers for a wide range of projects. 18

19 In a bid to foster and maintain good relations with the local community and those who represent it, in particular schools and universities, we welcomed numerous guests to our premises and provided education-centred events on air traffic management. Media relations As part of our objective to promote interest in aviation, and careers in air navigation, we provided support to journalists from the general press for the production of written articles and audio visual programmes. In addition, we cooperated with the trade press to gain positive coverage by, for example, highlighting our contribution to a thriving aviation industry. Managing risk Risk management is a never-ending and dynamic element of air navigation service provision. It enables an organisation to identify changing internal and external conditions and respond to them. We therefore regularly assess potential risk scenarios and their likely impacts so that we can mitigate them in an appropriate way. Moreover, a thorough and systematic risk assessment precedes every modification to our technical and operational domains. In 2007, a contingency plan - fully compliant with Single European Sky legislation - was developed, addressing emergency actions as well as the establishment of service continuity under contingency conditions. People The strategic decision to implement competency management processes was taken in order to provide a roadmap towards ever more excellent performance. The objective is to develop staff competencies as a foundation for delivering a safe and high quality service to our customers. Highly qualified and enthusiastic employees are a key to a successful business and that is why we strive to be an employer of choice by maintaining a work place which is on the one hand attractive, and on the other, represents the very leading-edge of technological environments. Stronger competency management Improvements in safety and performance standards rely heavily on improved staff competence. Competency management is therefore a highly effective Human Resource tool which allows us to identify and develop the strategic competencies that will enable the organisation to achieve its current and long-term goals. In particular, it produces a better understanding of jobs, profiles, requirements and expectations as well as a common language to facilitate this understanding. The strategic decision to implement competency management processes was taken in order to provide a roadmap towards ever more excellent performance. In this respect, there is a clear link with the safety requirements within the Single European Sky and the quality requirements embedded in the ISO 9001 certification. 19

20 Management report Following up on staff satisfaction Following the last staff satisfaction survey, which was completed in 2006, an initiative aimed at involving our second-tier management more closely in efforts to improve overall staff satisfaction levels has been undertaken. We have created a new forum, composed of some 30 managers, which mandate is to ensure that all staff will gain a more detailed insight into strategic issues and thereby, be in a better position to actively contribute to helping MUAC achieve its business objectives. Fostering dialogue In December 2007, an agreement in principle was reached with staff representatives, to enhance operational staff working conditions in order to help MUAC cope, in a flexible and sustainable fashion, with increasing traffic and its associated pressures. New working conditions foresee a reduction in working time, more flexible allocation of shifts and an appropriate balance between service requirements and health and safety considerations. This agreement in principle is currently being transferred into an implementation master plan pending formal approval by the Agency s executive bodies. The election of a Staff Committee for servants was one of the year s most memorable events. It should be noted that the new committee played a significant role in ensuring an ongoing exchange of information and views on various topics of interest to staff via the regular meetings held with the Management. Continued high productivity The latest ACE benchmarking report reconfirmed that we continue to record very high productivity rates for each air traffic controller compared with all the European air navigation service providers surveyed. Once again, air traffic controllers, working to rigorous safety levels with highly reliable and effective technical systems, managed to increase traffic volumes. In 2007, controller productivity increased by 6.7% over (31 December) Breakdown of staff in the different core business units Directorate Operational staff Air traffic controllers Engineering Programme management Human resources, finance and general services Breakdown of air traffic controllers per sector group Recruitment and retirements Total Delta/Coastal Hannover Brussels Total Retirements Resignations Transferts to other Eurocontrol units Recruitments (except air traffic controllers) Newly qualified air traffic controllers Student air traffic controllers

21 Leading technological innovation Increasing demand and enhanced service provision call for inventiveness, new airspace management principles, enhanced civil and military cooperation and a technical infrastructure that constantly performs better. This is why we are committed to innovation. The driving force behind our sustained performance is generated by the dedication of our employees as well as high performing systems has seen a notable improvement in our safety trends as a direct result of the implementation of new technology. Increasing demand and enhanced service provision call for ingenuity, new airspace management principles, enhanced civil and military cooperation and a technical infrastructure that constantly performs better. This is why we are committed to innovation. Flying more efficiently We are an integral part of the European and regional ATM network. It is therefore paramount that we collaborate as closely as we can with our neighbouring civil and military partners in order to optimise airspace design and management. Only by doing this can we secure the capacity needed to safely accommodate ever increasing traffic. Accordingly, initiatives such as the FAB EC have enabled us to invest significantly in the area s future airspace design as we look for the best solutions for meeting customer needs in a proactive and unbiased way. In a bid to increase the overall capacity in the common interface area between Amsterdam ACC, Langen ACC and MUAC, airspace re-organisation proposals (referred to as AMRUFRA, Amsterdam-Ruhr-Frankfurt) were defined in collaboration with LVNL, DFS and the Dutch and German military authorities. This new structure was validated through real-time simulation at the EUROCON- TROL Experimental Centre in Brétigny in the course of Improvements to the European ATS Route Network (ARN) version 5 were finished and preparation for ARN version 6 has started under the aegis of the Route Network Development Sub Group. Moreover, in anticipation of strong traffic growth in the Hannover Sector group, the Ruhr High sector was introduced as a stand alone sector. The civil/military partnership Throughout 2007, considerable progress was made by the military authorities in the Four States in the development and validation of more flexible airspace planning and allocation procedures, as well as tools to extend the Flexible Use of Airspace concept. Methods for the creation and use of adjustable lateral and vertical limits of required airspace structures were also developed. An example of this approach was the introduction - in cooperation with our military partners of two new Conditional ATS routes (UZ 301 and UZ 302) in the Dutch FIR, offering shorter routes for East-West traffic flows. We also contributed to the introduction of the North Sea military Cross Border Area Sea Area 1 between Dutch and German airspace. Military requirements, like civil requirements, are forever changing. The upper limit of the military training area TRA 302 was raised in coordination with the DFS in anticipation of the arrival of the Eurofighter in Germany. We also actively supported better use of the airspace by participating in the development of airspace management concepts and tools in Belgium and Germany. Driving forward innovative thinking In 2007, several technical upgrades were carried out to support our services. These included, inter alia, a new short-term conflict alert system, a new weather radar data processing system as well as upgrades to our surveillance capability with the deployment of new Mode S-compliant systems. Thorough preparations for the implementation of the new flight data processing system, originally planned for the end of 2007, went ahead throughout the year. However, in order to improve the robustness, performance and supportability of the system, we decided 21

22 Management report to delay its deployment to the end of 2008 to minimise disturbance to our customers. The new system is at the forefront of the technical challenge to deliver a safer, more efficient and environmentally responsible ATM system and provides a leading-edge technology base for an effective trans-national functional airspace block. We will progressively extend its functionality to achieve full compliance with interoperability specifications. Our air traffic controllers have communicated with aircraft using Controller-Pilot Data Link Communications (CPDLC) on a daily basis for over a decade. The main benefits of this system are reduced voice congestion, less chance of being misunderstood and increased controller and crew efficiency. CPDLC will increase system capacity by 11% once 75% of aircraft are equipped with the necessary systems to operate it. We are committed to support continued CPDLC deployment in Europe by acting as a catalyst in line with EUROCONTROL s Link programme and will therefore be embarking on a new validation programme for enhanced data link operations. In 2007, there were 30,000 logons by 38 different airlines who exchanged an average of 230 CPDLC messages with us every day, representing a healthy growth of CPDLC usage of 43 % over Altogether, it has been estimated that close to 170 hours of voice communication time was saved thanks to CPDLC usage during In February 2007 EUROCONTROL and Deutsche Flugsicherung GmbH (DFS) signed a contract with the Sofreavia/ Sita consortium to supply a new controller-pilot data link communications front-end processor system, to support controller-pilot data link communications. This joint procurement brings economies of scale, improved interoperability and meets the objective of providing cost-efficient services to our customers. The new data link front-end processor will become available in the autumn of Hot house for new technology We continue to play a vital role in the development of European ATM technology, procedures and concepts by validating live technology projects designed to reinforce safety, capacity and efficiency-enhancing programmes across the European network. In 2007, despite resources being predominantly focused on the development of the new flight data processing system, we were able to contribute to the following activities: ASM/ATFCM trials aimed at optimising the shared use of airspace through the activation of specific routeing scenarios. This activity was conducted in the context of the Dynamic Management of the European Airspace Network (DMEAN) programme, a medium-term framework project providing a more structured and integrated approach to a better organisation and management of the entire ECAC airspace. the Human Factors Case methodology developed by EUROCONTROL and trialled for the first time for an air navigation service provider project as part of the new flight data processing system project. Future activities to validate ATM improvements within our operational environment are set to intensify as major projects, such as the Cooperative Network Design and the Single European Sky ATM Research (SESAR) programmes, begin to gather speed. 22

23 Business outlook Air traffic in Europe is expected to continue to expand, boosted by the continued growth of the air transport sector, globalisation and new business opportunities arising from the US-EU open skies agreement. Partnership, fundamental network solutions and technical innovation will be the key drivers to meet increasing demand. Growing market conditions The European economy and air transport market continued to accelerate in 2007 in spite of financial pressure on the airlines brought about by rising fuel prices, increased security costs, a competitive marketplace and economic uncertainty in the US. Economists predict that the European economy will continue to grow, albeit at a slower pace than in the past few years. Over the next five years, air traffic in Europe is expected to expand at a rate of close to 4% annually, boosted by the continued growth of the air transport sector, globalisation and new business opportunities arising from the US-EU open skies agreement. Sustained services Closer to home, our analysts predict that baseline traffic growth in our airspace will be around 4% over each of the next five years. This growth will inevitably impact on the available capacity and will be a major driver for network expansion and the optimum use of airspace. The strategy, therefore, is to attempt to match anticipated demand with delivered capacity by concentrating, in particular, on effective manpower planning and air traffic flow and capacity management processes as well as on support tools and technology. However, more fundamental network solutions in and beyond our own airspace will have to be deployed to address structural problems and increasing capacity requirements. The FAB EC initiative has considerable potential to satisfy this requirement. The environmental challenge Global warming is one of the most long-standing challenges for mankind, for which we all share a responsibility. We therefore aim to contribute towards the reduction of aviation s environmental footprint for the en-route phase of flights through the deployment of new technology, which will facilitate the systematic use of shorter air routes. On a more collective basis, we will, together with our partners, put in place a more efficient airspace structure in the core area of Europe that will support the FAB EC s strategic objectives of improving routes and flight profiles and shortening distances flown. Driving innovation In a changing and increasingly challenging air transport marketplace, opportunities for innovation will have a significant impact on the performance of air navigation service providers and the aviation industry in general. With FAB EC and the Single European Sky ATM Research (SESAR) programme driving the evolution of the industry, we will contribute to the development of a comprehensive set of new solutions towards a more efficient and sustainable industry by utilising our expertise, harnessing our capabilities and sharing our know-how. International partnerships The development of a fast-growing industry hinges on international partnerships and cooperation. The European ATM environment is currently going through significant changes, supported by a strong European legislative framework. The objective is to have a seamless network that responds in a flexible and sustainable manner to customer needs. In line with the ambitions of the Single European Sky, the FAB EC is a major milestone for the consolidation of ATM in the upper and lower airspace of the core European area. Together with our civil and military partners in Belgium, France, Germany, Luxembourg, the Netherlands and Switzerland, we are in the final stages of completing the feasibility study. Subject to the States decision to proceed with the creation of the FAB, the implementation phase will be soon launched. The impact of FAB EC in terms of safety, capacity, efficiency, cost-effectiveness and environmental sustainability is expected to be considerable. We will therefore continue to actively drive this process. 23

24 Financial accounts Annual accounts EUROCONTROL produces annual accounts which provide a consolidated view of the Agency s financial performance. In line with the applicable financial regulations, the specific performance of MUAC is identified in Part III of the Agency s accounts. This report includes an excerpt of the data available in the Agency s Annual Accounts in order to present a reference Balance Sheet and Statement of Financial Performance for MUAC. The Agency s annual accounts are produced in accordance with the principle of a true and fair view. The Agency s accounts, including Part III, which relates to MUAC, are audited by the Audit Board with the assistance of external consultant auditors. The Annual Accounts, including the auditor s opinion, are subsequently submitted to the Commission via the Provisional Council. The Commission gives a final ruling on the Accounts and decides on the discharge to be given to the Director General in respect of his financial and accounting management. The figures presented in this report are therefore subject to the approval of the Audit Board and the Provisional Council, which is expected in the summer of Accounting principles and general notes on accounting matters The main accounting principles, underlying the present financial statements, are set out below. The financial statements with regard to expenditure and receipts are on a modified cash basis, and based on the provisions of the Financial Regulations of the Agency and their Rules of Application. The Agency s policy regarding fixed assets is based on the revised Director General Decision XI/7(2004), dated 28/6/2004. Fixed assets are entered at their historic value and amortised over their useful lifetimes, in accordance with amortisation rates, which apply equally to the calculation of the investment costs to be recovered from the airspace users through the EUROCONTROL part of the cost-base (based on ICAO rules adopted by the Permanent Commission). As at the end of 2005, intangible assets related to programmes or activities to improve safety, capacity, efficiency and environment aspects of air navigation. This expenditure was considered to represent future economic benefits for the air navigation community and was therefore capitalised in the Agency s accounts, in accordance with Article 6 of its Financial Regulations. Following a decision of the Provisional Council in November 2004, the Agency applies IAS 38 and, as of 1 January 2006, capitalises only intangible assets that comply fully with this standard. Following this principle, only computer software for which EUROCONTROL owns intellectual property rights are capitalised. Concerning operating expenditure, contributions from the Four Member States participating in MUAC are calculated on the basis of an agreed cost-sharing formula. At year end, the over/under payment of contributions is calculated by comparing the level of expenditure to the level of contributions paid. In accordance with Article 23 of the Financial Regulations, any over/under payments of contributions are deducted from/added to contributions for the subsequent year. Concerning investments, a mechanism for pre-financing investments by the Agency is in place, ensuring that investments are fully financed with bank loans. Therefore, in the Balance Sheet, the residual value of fixed assets is fully compensated by an equivalent amount of loans. In the Statement of Financial Performance, the forecast amortisation charge for the year is balanced by contributions from the Four States. The difference between the forecast amortisation and the actual amortisation will be added/deducted in the budgeted contributions for the year N+2. With Measure Nr. 06/118 (April 2006), the Commission amended the Agency s Financial Regulations and Rules of Application to take into account the implementation of International Accounting Standards (IAS) as of the 2007 budget exercise. 24

25 Balance sheet Assets Fixed Assets Intangible assets 3,017, ,223, Other non-physical assets , Buildings 10,404, ,072, Installations 5,416, ,243, Equipment 32,769, ,438, Vehicles 34, Work in progress 33,860, ,922, Total Fixed assets 85,503, ,068, Current Assets Stocks ,185, Deferred charges 7,940, ,604, Accrued income 757, , Intercompany receivables 3,491, ,413, Other debtors 761, Total debtors 12,950, ,241, Total Current assets 12,950, ,427, Overall Total 98,454, ,496, liabilities current liabilities Contributions to be reimbursed to Member States 3,648, ,413, Accrued charges 2,182, ,092, Deferred income 2,740, ,833, Total current liabilities 8,571, ,339, Other liabilities Loans > 1 year 85,503, ,068, Stocks eurocontrol Maastricht belonging to the 4 States ,185, Total other liabilities 85,503, ,254, Financial position Carried forward from previous year 5,902, Result of the year -1,523, ,902, Total Financial position 4,379, ,902, Overall Total 98,454, ,496,

26 Financial accounts Statement of financial Performance Income GAT OAT Total GAT OAT Total Member State contributions 104,570, ,902, Member State contributions PBO 113, Internal Tax 26,953, ,597, Total income 131,636, ,500, Costs Remunerations -96,870, ,512, ,382, ,537, ,102, ,639, Staff-related costs: training and travel costs -1,752, , ,816, ,566, , ,621, Receipts related to remunerations 650, , , , , , Staff costs -97,972, ,552, ,524, ,645, ,140, ,786, Pensions -109, , , External assistance -4,475, , ,638, ,968, , ,107, Accommodation -2,571, , ,664, ,221, , ,299, Communications -1,185, , ,228, ,117, , ,156, Data processing -2,220, , ,300, ,042, , ,114, General administration -230, , , , , , Finance & Insurance -533, , , , , , Unrecoverable VAT -4, , , , Miscellaneous receipts 79, , , , , , Operating costs -11,142, , ,546, ,043, , ,395, Depreciation costs -11,959, ,308, ,267, ,967, ,638, ,605, Interest Paid -2,227, , ,471, ,804, , ,001, Total Costs -123,411, ,511, ,922, ,461, ,328, ,789, Extra budgetary transactions -4,237, ,191, Overall Total -1,523, ,902,

27 Acronyms and abbreviations A ACC Area Control Center ACE ATM Cost-Effectiveness AEA Association of European Airlines ANS Air Navigation Services ATC Air Traffic Control ATFM Air Traffic Flow Management ATM Air Traffic Management ATM/CNS Air Traffic Management/Communications, Navigation, Surveillance ATS Air Traffic Services C CPDLC Controller-Pilot Data Link Communications I IAS IATA ILOAT ISO L LVNL M MCG MUAC International Accounting Standard International Air Transport Association International Labour Organisation Administrative Tribunal International Standards Organisation Luchtverkeersleiding Nederland Maastricht Co-ordination Group EUROCONTROL Maastricht Upper Area Control Centre D DFS DMEAN Deutsche Flugsicherung Dynamic Management of the European Airspace Network O OAT S Operational Air Traffic (military) F FAB FAB EC FDPS FIR G GAT Functional Airspace Block Functional Airspace Block Europe Central Flight Data Processing System Flight Information Region General Air Traffic SES SESAR U UAC UIR V Single European Sky Single European Sky ATM Research Upper Area Control Centre Upper Information Region VAT Value Added Tax 27