Managing European air traffic control provision

We develop a network congestion game to test a series of scenarios in order to analyse potential paths for change in air traffic management in Europe. The two stage game models air traffic control (ATC) providers that set charges and in the second stage airlines that choose flight paths given an airline schedule and the charges from the first stage. The scenarios analysed in the model include (i) the impact of privatization and deregulation; (ii) defragmentation of the set of current providers; (iii) introduction of technology via the common projects and SESAR step 1; and (iv) the regional forerunner approach in which an ATC provider and a specific airline co-operate. The results show that horizontal integration across ATC providers, known as functional airspace blocks, would appear to be problematic with respect to incentives hence regional forerunners in a bottom-up institutional process would appear to be a preferable approach. Vertical integration between companies may succeed in accelerating change as long as the ATC companies are permitted to charge for improved quality, such as reduced congestion. Institutionally, a clear separation of the ATC providers from the Member States and subsequent franchising of the support services and ATC services could further encourage efficiency, consolidation and technology adoption.