Our Targets and future direction

We have a number of targets that drive us towards meeting our customers’ high priority for reduced emissions and fuel burn, which reduces airline costs and helps to ensure a long term sustainable future for the aviation industry. These include:

• A long term strategic target to reduce ATM CO2 emissions by an average 10% per flight by 2020, from a 2006 baseline. This targets UK and North Atlantic en-route and airports services
• An interim target to achieve an average 4% per flight reduction by the end of 2014 calendar year, against the 2006 baseline
• Annual calendar year 3 Dimensional Inefficiency Score (3Di) which financially incentivise our performance in line with our strategic target.  This targets UK en-route services only
• Specific short-term fuel savings targets agreed annually with customers via the Operational Partnership Agreement (OPA) and the Fuel Efficiency Partnership (FEP). These target UK and North Atlantic en route and airports services.

Strategic Target

Our strategic target to reduce emissions by 10% per flight by 2020 is extremely challenging but, supported by major long term investments we have included in our Reference Period 2 (RP2) plans and the short term procedural or tactical changes we have planned, we believe it is achievable.

To meet our 4% interim target, we have implemented a large number of relatively small scale operational improvements at our centres and airport ATC units.  As the chart below shows, last year the pace of delivery stepped up, but to achieve the target we will need to deliver significant change through the 2014 calendar year to enable 130,000 tonnes of fuel savings (worth more than £84m at today’s fuel prices and 400,000 tonnes of 2 reductions).

Our operational units have embedded business plan targets to deliver this extraordinary outcome.

Beyond 2015 our plans focus on emissions reductions enabled by large scale airspace modernisation and new technologies linked to our long-term capital investment programme.  The London Airspace Management Programme (LAMP) is key among those developments and is the largest ever airspace re-organisation in NATS history, and possibly the world.  This is a highly complex programme and NATS has already begun to consult on the changes it will deliver in RP2.

3Di Environmental Performance Metric

Our strategic target is supported by an incentivised flight efficiency measurement for our domestic en-route services – known as the ‘3D inefficiency score’ (3Di). There is no equivalent measurement for ATM environmental performance anywhere in the world.

While our CO2 metric essentially captures structural changes in our operations (e.g. from projects and specific initiatives), 3Di reflects actual day-to-day operations that includes both structural and tactical improvements. In 2012, 3Di was adopted by the CAA and our airline customers as the key metric for incentivising our delivery of fuel burn and CO2 performance improvements within our en-route regulated business (NERL).

By analysing historic performance, a ‘par’ or average performance score was set by the CAA for 2012, 2013 and 2014. Bonuses and penalties apply within a ±3 3Di unit range around the par value. For 2012 and 2013 the 3Di target set by our regulator was 24, we beat that target in both years. In 2014, the CAA further tightened the target and we are now striving to achieve a 3Di score of 23 for the calendar year. This year to achieve this new target our Swanwick and Prestwick ATC units have individual target profiles and through our new ‘Business Intelligence’ platform, access to unprecedented levels of detailed environmental performance data to track their progress.

In total, the CAA estimate that achieving the 3Di target will generate 600,000 tonnes of CO2 savings compared to historic levels (2006 – 2010) by the end of 2014, worth over £120 million to airlines and equivalent to 2,000 flights from London to New York. Significantly, achieving a further one unit 3Di reduction is equivalent to around 35,000 tonnes of fuel, which means a further saving to customers of around £22 million.

Near-Term Fuel Savings Targets

We also focus on making near-term fuel savings through joint initiatives with our customers in the Operational Partnership Agreement (OPA) and Flight Efficiency Partnership (FEP).

Challenging annual targets are set by the OPA which count towards our strategic ATM CO2 target above. These joint initiatives are mostly small scale procedural improvements across our airspace network that deliver fuel savings.

Future Regulatory Context

During 2013 NATS consulted extensively with our airline customers on the services it provides, and prices to be applied, during the Single European Sky (SES) Reference Period 2015-2019 – known as RP2. Price reduction is, as always, a key concern for our customers. With this in mind our RP2 Business Plan proposed significant price reductions in RP2 against different service offerings that provide a degree of choice for customers. But at the core of our offerings, responding to clear calls from the airlines, remains a redoubled effort to deliver fuel and emissions savings as part of our service.

We will face challenges in continuing to deliver an air traffic management service that further reduces fuel burn and emissions:

1. Achieving our CO2 target beyond 2015 is heavily dependent upon investment. If our regulator signals a need for significant cutbacks in investment in RP2 to achieve lower prices could materially affect those key programmes that enable flight efficiencies, impacting our environmental performance in RP2.
2. The Single European Sky (SES) performance scheme will restrict its environment target to en-route horizontal flight efficiency only (otherwise known as the KEA metric), rather than the far more significant CO2 saving through improved vertical and horizontal profiles in all airspace (including terminal areas) as per our 3Di metric. Analysis of our UK airspace network operation shows that the opportunity for reducing en-route track extension is small and, in our view, the proposed SES target would set the wrong focus for our efforts in RP2. We have proposed to our regulator that our 3Di metric should continue to be our focus during RP2, to drive the best fuel and emission reduction outcomes. If this proposal is accepted NATS will continue to be the only air traffic control organisation financially incentivised on such broad scope metric. We also expect to be the only organisation across the European airspace network, to have environmental performance metrics other than KEA driving its service delivery.