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Harfwit tops up OneSKY trough fund at ATCO & GA expense -

Via the Oz:

Airlines the winners as Airservices proposes to cut fees

Airservices Australia chief executive Jason Harfield. Picture: Jonathon Searle.

• Annabel Hepworth
  
• The Australian
  
• 12:00AM July 21, 2017
  

Airservices Australia boss Jason Harfield has foreshadowed a potential cut to the fees it charges airlines, a move that would provide a fillip to Qantas Airways, Virgin Australia and a slew of other carriers.

The boss of the nation’s air traffic control and aviation rescue firefighter services said Airser­vices was set to outperform its 2016-17 corporate plan with its 2017 profit.
He also hit back at previous claims that job cuts at Airservices had posed a risk to safety, saying safety performance on key metrics had improved while the cost-cutting program called Accelerate was rolled out.

Last year, Airservices froze its fees after dumping a five-year proposal that would have seen it increase fees for air traffic control and firefighting services.

“We’re now in a position where I’m going to hold prices for another 18 months,” Mr Harfield said in an interview with The Australian. “The reason for holding it for another 18 months is I want to make sure the changes we’ve made have traction and are bedded in and are sustainable, with the intent that after that 18 months, that we will be going out to industry to offer a price decrease and still deliver on our commitments such as OneSKY.”

The move would benefit all domestic and international airlines that land at Australian airports and fly into Australian airspace and must pay Airservices for its monopoly services.

He said he did not want Airservices “economically distorting the industry because of our pricing”. “We have an obligation to help grow the industry and sustain the industry,” he said.

“That means as an organisation I don’t want to be an organisational or economic impediment to that growth. All carriers are all dealing with their own pressures ... It isn’t just because we’re trying to be altruistic, it’s actually about how do you continue the growth.”

Airservices began cost-cutting because it was facing flat revenues and rising costs. The number of full-time equivalent staff had increased from 3770 in 2011 to 4483 in 2013. It reported a loss in the 2016 financial year.

Mr Harfield said Accelerate, which finished on June 30, had returned the government-owned monopoly to profitability. Net profit after tax for the 2017 financial year would surpass the $20.6 million forecast in the organisation’s corporate plan for 2016-17. In a new corporate plan, the organisation is forecasting an NPAT of $24.5m for 2017 and $59.2m for 2017-18.

Among changes from the program, Airservices has changed from a ratio of 4:5 operation to support staff to a ratio of 5:4.

The cost-cutting program saw about 1100 people made redundant, although there were some new recruits with “new capability”, so in net terms, Airservices has cut its head count by about 800.

Earlier this year there was media reporting of fears of a risk to public safety because of job cuts at the organisation. Mr Harfield, who has previously criticised this suggestion, said “the issue with aviation safety is it’s a very emotive topic”.

“The big focus in downsizing was back of house because I quarantined operationally rostered air traffic control and the fire fighters from it because at the end of the day, that’s our core business.”

Arguing safety performance had maintained or improved through Accelerate, he said the overall loss of separation rate attributable to air traffic control had gone from 2.97 incidents per 100,000 aircraft movements in the March 2016 quarter to 1.14 incidents per 100,000 in the June 2017 quarter.

Some $177.5m in annualised costs have been stripped out and business groups consolidated.

Mr Harfield said that “we’ve seen continued improvement in our safety performance and operational performance”.

“Our core business and refocusing the organisation was all about we’re here to do two things, air traffic management and aviation rescue and firefighting. And if we don’t do that well, then what’s the point of business?”

MTF...P2