Transcript Building a Business Case for CNS/ATM Implementation in the ASECNA Region of Africa World-Wide CNS/ATM Systems Implementation Conference May, 1998 Presented by Dr.

Building a Business Case
for CNS/ATM
Implementation in the
ASECNA Region of Africa
World-Wide CNS/ATM Systems
Implementation Conference
May, 1998
Presented by Dr. Upali Wickrama
Chief, Forecasting and Economic Planning, ICAO
ASECNA Background
Stakeholder Relationship
ASECNA
Current Capabilities
ASECNA
Future Plans
ASECNA
Business Case
ASECNA
General Information
16 Member states
 16 million sq. km of area
 25 Major international
airports
 160,000 Flights
 5 Millions passengers
 5,000 Staff
 100 Airports (regional &

domestic
Total Revenues
1994
1996
86.0%
83.0%
4.0%
4.0%
10.0%
13.0%
User charges
Others
Subsidies
Distribution of User
Charges
1996
1994
US $127 m
US $106 m
86%
90%
10%
En-route charges
Landing and other charges
14%
Total Expenses
1994
1996
38.0%
16.0%
29.0%
21.0%
41.0%
Personnel
Others
55.0%
Amortization
Implementation Plan
Economic
Viability
Provider/User
Cost/
Benefit
Business
Cases
Financial
Community
–State
–Sub-regional
–Regional
Summary of Results from
Case Studies
Studies
Period
Ratio
NPV
$ Mill
Fuel Saving
India
1997-2001
3.0
35
1.0-1.2 tons/flight
43% of total benefit
NHIP
1995-2010
1.5
162
Spain
1997-2016
-
389
1.3 -1.5% reduction
US FAA
1997-2006
2.7
862
C/AFT
1997-2010
-
-
$772m
(23% of total benefit)
6 to 9% fuel burn
MITRE
1996-2010
-
-
17% of total fuel in
US
12% worldwide
Financial
Institution
ATC Service
Providers
Airspace
Users
Other
Major
Stakeholders
A/C manufacturers
ATM Equipment supplies
ASECNA Future Plans
Capital Investment Plan for (1999 2005) for CNS/ATM
Modernization
ASECNA Business Case
Communications
Additional VSAT, VHF Voice/Data Link,
ATN
Navigation
WAAS/EGNOS, LAAS at 24 airports
CNS/ATM Modernization (Ground Side
by ASECNA)
ASECNA Business Case
Surveillance
Two en route SSR, ADS
ATM
Automation related to CNS modernization
ASECNA Business Case
Communications Avionics
VDL/TDMA, CPDLC
Navigation Avionics
WAAS/LAAS
Surveillance Avionics
ADS
CNS/ATM Modernization (Avionics
by Airlines)
Key Assumptions






Implementation
period:
Cost of capital:
Life cycle:
User charges:
Fee added to the
cost:
Satellite lease costs:

1999 - 2004
7 per cent
 15 years
 To resume in 2005
 10 per cent


0.45/kilobit
Key Assumptions (cont.)
 Traffic
growth rate:
 Movement and Flight
hours
 Rate of return:
 No cost savings
assumed for
decommissioning:


5%
3.5 %
 10%
-
Constant Current Present
1998
Year
Value
Incremental Revenues
Millions of Dollars
640
909
259
(through incremental user fees)
491
89
679
98
235
69
313
462
121
- Depreciation
89
118
45
Net Income
148
230
24
12 years
1.1
$24M
10%
Total Incremental Expenses
Revenues
- Upfront Expenses (capital)
(costs of acquisition and
installation)
- Incremental Recurring Expenses
(costs of operation and maintenance)
Payoff Period
Revenues to Expenses Ratio
NPV
Rate of Return
Business Case Results for
Service Provider (ASECNA)
Cumulative Present Value $ Million
Business Case
300
250
200
ASECNA Cash-flow
Revenue
Profile (User fees)
Revenue (Less
Operating
Expenses)
150
100
50
Equipment
Investment
Pay-out Period
0
1995
-50
2000
2005
2010
2015
2020
Constant Current Present
1998
Year
Value
Operational Cost Savings
Millions of Dollars
879
1,268
341
(through efficiency improvement)
Total Incremental Revenues
Expenses
- Upfront Expenses (capital)
735
31
1,034
35
308
22
35
49
15
30
640
42
909
12
259
144
234
33
15 years
1.1
$32M
10%
(costs of acquisition and installation)
- Incremental Recurring Expenses
(costs of operation and maintenance)
- Depreciation
- User Fees
(Incremental fees charges by the
service provider)
Net Income
Payoff Period
Revenues to Expenses Ratio
NPV
Rate of Return
Business Case Results for
Service User (Airlines)
Business Case
Cumulative Present Value $ Million
400
350
300
Airlines Cash-flow
Revenues
Profile
250
200
Revenues
(Less Operating
Expenses)
150
100
50
Equipment
Investment
0
2000
-50
2005
2010
Pay-out period
2015
2020
Risks
Exchange rates
Schedule
Traffic growth
Rate of return
Efficiency rates
Stages of the Business Case
Business
case
Providers
perspective
User
perspective
Co-ordination
Final
business
plan
To the
Financing
community
Conclusion
Methodology enhanced beyond costbenefit to develop Business Cases
 This assessment may require updating
after consultation with ASECNA, IATA &
Financial Institutions
 Once the Business Cases are co-ordinated,
an integrated Financial Plan can be
established

Conclusion (cont.)

Investment for some components are
substantial for both service provider & user

Multinational planning & co-ordination
among various States, sub-regions &
regions are essential in order to minimize
costs, ensure compatibility and avoid
duplication of effort, for the efficient
implementation of the system