Journal of Air Transport Management 33 (2013) 73e80

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Journal of Air Transport Management

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Single European Sky and the functional airspace blocks: Will they
improve economic efficiency?
Kenneth Button, Rui Neiva*
School of Public Policy, George Mason University, Arlington, VA, USA

a b s t r a c t
Keywords: The paper examines the potential economic efficiency of on-going changes in the European air traffic
Air traffic control control system. Air navigation services in Europe are undergoing a process of consolidation and tech-
Single European Sky
nological changes known as the Single European Sky initiative. The ultimate aim is to shift the industry
Functional airspace blocks
from a paradigm based on national borders, to one where operational efficiency is the goal. One of the
key components of the movement toward this is the notion of functional airspace blocks (FABs) whereby
blocks of airspace are combined as a precursory to total unification of the system. To study the effects
that those changes might have on the economic efficiency of the system, a data envelopment analysis
framework is used. Although these FABs are not yet deployed, it is possible to simulate, ceteris paribus,
how these different systems would have ranked in terms of economic efficiency by using data for each
individual air navigation service provider.

2013 Elsevier Ltd. All rights reserved.

1. Introduction enhanced the efficiency of airline operations (Barbot et al., 2008).

Air navigation services (ANS) involve a complex network that
handles the movement of aircraft at and around airports and in
their movement between those airports. Under the 1944 Chicago
Convention, governments have sovereignty over their national air
space, and thus each country has traditionally dealt with this issue
by having its own air navigation service provider (ANSP) that
handles ANS and other related matters such as weather informa-
tion services and flight planning. This has continually posed chal-
lenges of ensuring both the internal efficiency of individual
monopoly suppliers of ANS and the external efficiency of ensuring
optimal coordination of service between a series of network
suppliers.
The economies of scale, scope, and density involved in ANS
provision, together with the external economies associated with
each unit being a supplier in an interactive network makes not only
the provision of optimal services difficult, but also the measure-
ment of exactly what efficiency entails. This contrasts somewhat
with the other two main elements in the air transportation supply
chain; airlines and airports. Airlines have been the subject of eco-
nomic deregulation, beginning in the US, for some 35 years, albeit it
at various rates and forms in different countries. In general this has
* Corresponding author.
E-mail addresses: kbutton@gmu.edu (K. Button), rneiva@gmu.edu (R. Neiva).
Airports have also seen changes in many countries with moves to
remove them from excessive political control, open up new sources
of finance, and to tie airport fees more closely with the costs of
airport use (Barbot, 2004). This has involved changes in institu-
tional structures of the facilities, ranging from overall ownership
and control, to outsourcing particular elements of service (Barbot,
2012). There have also been considerations to link the operations
of airlines and airports to enhance efficiency and encourage long-
term stability services (Barbot, 2011).
There has been much less activity regarding the provision of
ANS. What has been done has largely been to change the institu-
tional structure under which services are provided, moving away,
except in the notable case of the US, from provision by a govern-
ment department to various forms of corporatized structure, and in
the case of the UK, public-private company (Button and McDougall,
2006). Reforming air traffic control is, however, inherently more
difficult than deregulation of airlines and airports. The infrastruc-
ture in long lived and highly integrated making piece-meal reforms
difficult. There is the need for, if not complete standardization, at
least the use of a common platform to allow aircraft to be passed
smoothly and safely from one control area to another. In contrast,
aircraft can vary considerably as can airports, and a wide variety of
varying technologies infrastructure can be used in both a compet-
itive and cooperative manner.
Some of these factors lead to a questioning of whether ANS are
being provided and used efficiently, and if there are issues, how

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2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.jairtraman.2013.06.012
74 K. Button, R. Neiva / Journal of Air Transport Management 33 (2013) 73e80

Table 1 damage, and flights that are, on average, 49 km longer that they
US and European Air Navigation Systems (2010). would need to be if the airspace was optimized and more modern
Europe US Difference: technologies were utilized.2 Specific analysis of the individual Eu-
US vs. Europe ropean ANSPs indicates that there are considerable disparities in
Area (million km2) 11.5 10.4
10% terms of the ways in which they function and are financed (Button
Number of air service navigation 38 1 and McDougall, 2006), and in terms of their economic efficiencies
providers (NERA, 2006; EUROCONTROL Performance Review Commission,
Number of air traffic controllers 16,700 14,600
13%
2011; Button and Neiva, 2013, 2014).
Total staff 57,000 35.200
38%
Controlled flights (million) 9.5 15.9 þ67% It is against this background that the European Commission
Share of flights to/from top 66% 63%
5% created the Single European Sky initiative with the aim of treating
34 airports European airspace as a single entity, instead of being a patchwork of
Share of general air traffic 4% 23% x 5.5
all the different national systems. Because of the complexity of the
Flight-hours controlled (million) 13.8 23.4 þ70%
Relative density (flight- 1.2 2.2 x 1.8
systems, their diversity, and the inability to simply carry thorough a
hours per km2) “big bang” style reorganization, a phased approach to reform was
Average length of flight (within 557NM 493NM
11% initiated.
respective airspace) A major transitional component of this program is the notion of
Number of en-route centers 63 20
68%
functional airspace blocks (FABs), which are intended to aggregate
Number of airports with air >450 w509 þ13%
traffic control services several individual ANSPs into larger entities that would handle air
Number slot controlled airports >90 3 traffic as if they were a single ANSP. Strictly, a FAB is defined in the
Note: NM is nautical miles.
Single European Sky legislative package, namely Regulation (EC)
Source: EUROCONTROL and US Federal Aviation Administration (2012). No. 1070/2009 amending Regulation (EC) No. 549/2004, as an
airspace block based on operational requirements and established
could the system be improved. Aircraft, are mobile and if airlines regardless of State boundaries, where the provision of air naviga-
are unhappy with the local infrastructure or are competitively tion services and related functions is performance-driven and
unsuccessful in any market, they can rapidly be deployed else- optimized through enhanced cooperation among air navigation
where. While airports are certainly not mobile, there is consider- service providers or, when appropriate, an integrated provider
able competition amongst them for business, with large airlines in (European Commission, 2012b).
particular exercising countervailing power (Button, 2010). ANSPs in
contrast are institutional monopolies, and indeed given the scale
3. Single European Sky and the functional airspace blocks
effects involved also have significant features of natural
monopolies.
First muted by the European Commission in 1999, the SES has
Here we supplement the work of Barbot and others on the
been put into law in 2004.3 It made ANSs a responsibility of the
efficient supply of airline and airport services, by considering the
European Union, instead of its member states individually, and has
efficiency of ANSPs. The focus is on Europe, and in particular on the
the main goal of improving the efficiency and the capacity of ANSs
efforts to unify the ANS of the region. Other studies have pointed to
in Europe. A number of stipulations were put in place by legislation
the current levels of inefficiency that exist, and EUROCONTROL has
in both 2004 and 2009, including the creation of the FABs, the
for a number of years collected data and monitored the situation.
Single European Sky ATM Research (SESAR) technological initiative
Here we hone in on a particular aspect of the on-going efforts to
to modernize the ANS system, and the extension of competencies of
improve the European situation, by assessing the role that greater
the European Aviation Safety Agency (EASA) to include air traffic
local coordination of ANSPs may play in the longer-term policies of
management and air navigation services (European Commission,
establishing a full Single European Sky (SES).
2012b).
One of the fundamental aspects of the SES initiative are the
2. The current institutional situation
FABs, which have the goal of reducing the inefficiencies e in terms
of safety, capacity, and cost e that result from the fragmentation of
Unlike the US, which has just a single ANSP, the Federal Aviation
European airspace.4 FABs are seen as an explicit bottom-up
Administration (FAA), Europe has several dozen ANSPs to handle an
approximately area similar geographical area. Albeit similar in size,
the European system handles fewer flights, using more centers and 2
There is also a wide dispersion in the size of ANSPs, with the five largest Eu-
airports and is more labor intensive than the American system to ropean ANSPs handling 54% of the traffic and incurring 60% of the costs, with the
which it is often compared (Table 1).1 There are a number of remaining 46% of the traffic being handled by over 30 providers (EUROCONTROL
technical reasons that can explain the differences, including geog- Performance Review Commission, 2012).
3
raphy, but a particular issue is that lack of coordination across the Implementation involves a number of institutions and initiatives involving; the
European upper information region (EUIR), functional airspace blocks (FAB), flex-
European systems, and that the small scale of many of the national
ible use of airspace (FUA), National Supervisory Authorities (NSA), certification of
European systems prevents economies of scale from being ANSPs, ait traffic controllers licencing, interoperability, SESAME, and extensions to
exploited. 3rd party countries.
4
This fragmentation of the airspace, with its boundaries The criteria for the creation of FABs are strictly to do with:
mimicking the national borders on land and frequent handing-over
of traffic, is believed to have significant impacts on the overall ef-  safety;
 optimum use of airspace, taking into account air traffic flows;
ficiency of the system and its costs. This resulted in an estimated  overall added value, including optimal use of technical and human resources,
V4.0 billion in annual delay costs in 2011, significant environmental on the basis of cost benefit analyses;
 ensuring a fluent and flexible transfer of responsibility for air traffic control;
 ensuring compatibility between upper and lower airspace;
1  complying with regional agreements concluded within ICAO;
Gloaszewaki (2002) outlines the nature of the US air navigation system and
 respecting regional agreements, in particular those involving European third
gives a comparative analysis of the interactions between air navigation service
countries.
providers and airport regulations in the US and Europe.
 K. Button, R. Neiva / Journal of Air Transport Management 33 (2013) 73e80
approach to the ultimate integration of European airspace. They
seek to improve ANS for a number of agency airspaces by intro-
ducing better coordination of their ANSPs. The underlying philos-
ophy being that, “each FAB is different an faces different political,
operational, technical, and economic challenges. .FAB initiatives
show wide differences in scope, timescales and approaches. It is
clear that a flexibility of approach needs to be maintained, as long
as improvements are delivered.” (EUROCONTROL Performance
Review Commission, 2008).
The concept was established in 2004 in the first SES legislative
package, and further developed in 2009 in the second legislative
package; the so-called SES II (European Commission, 2012a). The
initial idea was that they were to be based on the experience of
States/ANSPs, with the European Commission developing binding
general principles for establishment and modification of FABs. The
extension of FABs to lower airspace below 28,500 feet was to be
studied by the Commission before the end of 2006, with the
Commission reviewing the functioning of the bottom-up approach
by early 2009 and to propose additional measures, if necessary;
hence the 2009 legislative package. The aim was that by 24 June
2012, the consultation material of all FABs shall be submitted to the
European Commission; a target that was not met.
The phasing in of the SES is almost inevitable, but there are
often issues when changes are made sequentially rather than as a
single, big bang.5 In particular, major changes often occur when
there is a crisis in the existing regime and a consensus, or at least
a dominant coalition of interests emerge for change; it is also
useful to have what is seen as a more favorable alternative
available. A comprehensive, rapid change, while often painful to
many parties in the short-term, yields subsequent large positive
results for the system as a whole. Gradual changes often affect
various groups differentially during the change, leading to reluc-
tance for some parties to move forward. Ex ante, those likely not
to be early winners are often reluctant participants. The SES
initiative inevitably entails differential changes by the various
ANSPs at different times, leading to the potential of simply
moving from one sub-optimal situation to another and remaining
stuck there.6
With the FABs, operational concerns would supersede national
boundaries in the handling of traffic. The rationale behind this is
that it will lead to an optimized use of the airspace and will facil-
itate the handing out of traffic between operators, thus reducing
the inefficiencies of the system. To be established, the proposed
FABs have to report to the European Commission on a number of
topics, including safety, consistency with European Union-wide
performance targets, and be justified by their overall added value,
on the basis of cost-benefit analyses (European Commission,
2012a).
Nine FABs have been proposed, but only the first two have been
declared established and notified to the European Commission7:
 UKeIreland FAB
5
One can compare the different ways in which airline deregulation was
approached, with the US basically adopting a big bang approach, and the EU
adopting the “three packages” staged approach over a decade (Button and Johnson,
1998).
6
A similar situation is occurring with the NextGen technological initiative that
aims to improve ANS in the US. It is also been implemented in a staged approach,
and like in Europe many stakeholders (namely airlines) have also been reluctant to
jump in, fearing that the realized gains will take too long to materialize.
7
All the FABs produce periodic reviews of progress that contain quasi-cost
benefit analysis of their activities, embracing some environmental as well as
operational performance assessments e.g. for the UKeIreland FAB, see Irish Aviation
Authority/NATS (2012). These contain performance data, but no rigorous assess-
ment of economic efficiency.
75
 DanisheSwedish FAB
 Baltic FAB (Lithuania, Poland)
 BLUE MED FAB (Cyprus, Greece, Italy and Malta)
 Danube FAB (Bulgaria, Romania)
 FAB CE (Austria, Bosnia & Herzegovina, Croatia, Czech Republic,
Hungary, Slovak Republic, Slovenia)
 FABEC (Belgium, France, Germany, Luxembourg, the
Netherlands and Switzerland)
 North European FAB (Estonia, Finland, Latvia, and Norway)
 South West FAB (Portugal, Spain).
Fig. 1 shows the FABs in their geographical context, and Table 2
presents some basic statistics relating to the individual ANSP
aggregated at the FAB level.
Although the implementation of the FABs was supposed to be
underway in late 2012 and start having practical results some time
after that point, by that date the process was stalled, with the
agreements to form the FABs in place, but only two of them (DENe
SWE and UKeIRE) having been declared established and notified to
the European Commission, and the consolidation of air traffic
control has yet to take place (European Commission, 2012a).
The efficiency concerns within Europe need to be taken in
context. The demand for ANS is derived from that for airline ser-
vices, which in turn fluctuates considerably dependent on such
things as the performance of the European macroeconomies. In
recent years the average costs of ANS in Europe has tended to fall
due to the economic recessions and, in particular, the Eurozone
crisis, but the forecasts are that, with macroeconomic recovery the
costs of ANS will rise, at least for a period (Fig. 2). One of the ob-
jectives of the SES is to counteract these latter trends by enhancing
the efficiency of the air traffic control system. The aggregate data
also do not show the variations that exist between systems, one of
the factors that prevent full system efficiency.
4. Methodology
The approach adopted here deploys standard data envelopment
analysis (DEA) with variable returns to scale. The approach is
preferred over parametric techniques based on regression analysis
because there is no need to explicitly specify the production or cost
function in determining the relative efficiencies of the ASNPs that
constitute the FABs. The technique also allows the consideration of
multiple inputs and outputs that are relevant in the ANS context
and does not require them to be converted into monetary units.8 It
is appreciated that DEA is sensitive to such things as outliers and
that the number of “efficient firms” may expand with the number
of inputs and outputs considered, but these do not appear serious
issues in this case.
The nonparametric nature of DEA requires bootstrapping to
allow statistical analysis of the results using Gaussian methods
(Simar and Wilson, 1998), and this is deployed here to gain insights
into factors that may affect the relative efficiency of the different
European future FABs. The procedure is widely used, but does pose
some difficulties, and the approach pursued here is very much in
line with that advocated by Simar and Wilson (2007).
The data used largely comes from the annual ATM Cost-
effectiveness (ACE) Benchmarking Report that EUROCONTROL has
8
This is somewhat different to the methodology underlying the ex ante study of
the EUROCONTROL Performance Review Commission (2008) that, although looking
at a range of outputs in a quasi-cost benefit framework did not conduct a strict
efficiency analysis. This study, across all the FABs, foresaw most of the benefits
coming, not from savings in ANSPs’ costs, but from improvements in flight effi-
ciency and delays.
76 K. Button, R. Neiva / Journal of Air Transport Management 33 (2013) 73e80
Fig. 1. The functional airspace blocks. Source: www.eurocontrol.int.
been producing since 2003.9 In particular it provides measures of
air traffic control operators’ (ATCO) hourly productivity, ATCO
employment costs, and support costs. All the data is reported for
individual ANSPs for 2002 through 2010, and it was then aggre-
gated10 at the FAB level to simulate the operation of the European
airspace under that paradigm. This is a very crude approximation
of what a FAB will eventually constitute, because it is expected, for
example, that the number and boundaries of en-route sectors will
be adjusted to operate in a more rational manner, thus leading to
consolidation of facilities and adjustments on personnel levels,
but given the data that is available at the moment, it allows for a
preliminary analysis on how the future FABs stand against each
other in terms of economic efficiency.
The base DEA analysis involves considering two inputs to the
production of ANSs, both measured in financial terms for con-
sistency, and three outputs. The later could have been “cut” in
several ways given the data available, but because of the possi-
bility that to many observations would lead to a large number of
providers being on the frontier, a simple division between what
are generally taken as control inputs and service inputs is
made.11
9
These carry basically the same name for the nine years they have been issued e
EUROCONTROL Performance Review Commission (2012) is the most recent.
10
Except for Luxembourg e which upper space is controlled by the MUAC e and
Bosnia and Herzegovina, all the countries that constitute the nine FABs are included
in this dataset.
11
One output that is not considered is safety, a major policy consideration when
looking at ANSPs’ performance. The challenge is that actual events are very small in
number, tend to be context specific, and in any case, because of strict and uniform
institutional structures regarding safety there is little difference across the region.
4.1. Inputs
 Gate-to-gate air traffic management/communications, naviga-
tion and surveillance (ATM/CNS) provision costs (V
million).12 These constitute the costs of providing air traffic
management services and the Communication, Navigation and
Surveillance infrastructure, including, staff costs, non-staff
operating costs (rentals, energy, insurance, etc.), capital
related costs (depreciation and cost of capital), and exceptional
items.
 Other gate-to-gate costs of non-control services (V million).
These embrace aeronautical meteorological costs, EURO-
CONTROL costs, payments for regulatory and supervisory ser-
vices, and payments to governmental authorities (e.g. for the
use of government-owned assets).
4.2. Outputs
 Instrument flight rules (IFR) flight-hours controlled by ANSP
(thousands). This is variable reflects one of the scale of op-
erations of any ANSP; essentially it is the base, and generally
used, unrefined measure of the traffic handled by any
provider.
 IFR airport movements controlled by ANSP (thousands).
EUROCONTROL does not control air traffic in any airports, thus
they have a value of zero for this output.
 1/(Minutes of air traffic flow management delays exceeding
15 min) (thousands). The variable is a reflection of the quality
12
These are in current prices because they represent the relative values for any
year and thus are indexed to a base of unity in the calculations.
 K. Button, R. Neiva / Journal of Air Transport Management 33 (2013) 73e80 77

Table 2
Basic statistics of the FABs (2010).

FAB Area IFR flight-hours IFR airport movements Staff Air traffic En-route Revenues Costs
(million km2) controlled (thousands) controlled (thousands) controllers sectors (V million) (V million)

BALTIC FAB 0.4 394 326 1994 486 10 172 171

BLUE MED 1.7 1751 1428 5141 1992 78 940 994
DANUBE 0.4 453 255 2800 635 14 265 250
DENeSWE 0.8 606 836 1825 728 28 295 333
FABCE 0.5 1016 807 3933 1063 43 589 586
FABEC 1.8 4581 5080 16,908 5370 242 3341 3115
NEFAB 0.7 431 686 1617 513 18 200 221
SW FAB 2.9 1598 2097 4859 2064 77 1191 1168
UKeIRE 1.3 1511 1911 5029 1608 82 925 846

Note: Luxembourg and Bosnia and Herzegovina are not included in the figures for their respective FABs. Airspace area does not include oceanic airspace.
Source: Adapted from EUROCONTROL Performance Review Commission (2012).

of service provided by an ANSP, with the 15-min delay factor To gain insights as to why some FABs will be more efficient in
being a widely used international measure. The use of a terms of the DEA analysis, the bootstrapped measures of FABs’
reciprocal is adopted to turn the variable into a positive scale relative efficiencies are related, using ordinary least squares, to a
for purposes of calculation. number of independent variables. A linear model is adopted
because there is no a priori expectation of functional form. A more
For estimation we make use of the variable returns to scale flexible form could have been used, such as a translog or quadratic,
model developed by Banker et al. (1984) to evaluate the efficiency but these still involve specification and interpretation issues when
of DMUo (o ¼ 1,.,n): there are dichotomous variables involved.
The effects of the following independent variables were tested.
minqB These involve measures related to the area of airspace served, staff
qB;l figures along with administrative overheads, and the ability to fully
Subject to : qB xo
X l ¼ 0 recover costs in a non-profit setting13:
Y l ¼ yo (1)
el ¼ 1  Year (YEAR). A linear time trend picks up any temporal effects
l ¼ 0 that exist in the provision of ANSs.
 Number of air traffic controllers in operation (ATCO). This is
where qB is a scalar 1; l is a column vector with the weights for all
intended to pick up scale effects but may also be an indicator of
firms; xo is input data (0) for DMUo; yo is output data (0) for
X-inefficiency if the level of ATCO is larger than optimal.
DMUo; X is the matrix of inputs; Y is the matrix of output and e is a
 Number of air traffic controllers in operation per thousands of
row vector with all elements equal to one. With observations (x1,
square kilometers (ATCOkm). This reflects the spatial coverage
y1), . (xk, yk) and Farrel efficiency measures E1,., Ek, bootstrapped
of coverage of each controller. It provides some indication of
DEA estimated efficiency scores can be obtained from (Simar and
the length of time a plane is the responsibility of a controller
Wilson, 1998):
and adds an extra dimension to the measurement of the
n   o complexity of the airspace covered.
 b
Ek ¼ min q˛R qxk ; yk ˛ T ðk ¼ 1; .; nÞ (2)  Number of en-route sectors (SECTORS). The sign of this is not
intuitively clear. A large number of sectors may indicate the
where is the estimated technological set for the technology set T; possibility of congestion and the internalization of sector
transfer costs within one ANSP/FAB activities, but equally there
(  ) may be economies of scope and density in handling operations
 X
k X
k X
k
b ¼
T 
ðx; yÞx  l x ;y 
k k
l x ; y  0;
k k
l ¼ 1
k
(3) across a number of sectors.
k
1 k
1 k
1  Size of controlled continental airspace in thousands of km2
(AREA). Again it is unclear exactly what the effects of this may
be, but it is possible that if the airspace under control is large
this may reduce the difficulties of handling heavily trafficked
62
corridors by limiting congestion.
60  Revenues/costs ratio (REV_COST). This is seen as a reflection of
58 the financial strength of the ANSP/FAB that may affect its ability
to invest in efficient technology. It is anticipated to be directly
56
related to the relative efficiency of the provider.
54
52
13
50 A variable for which there is good data, but is omitted is the amount of airspace
that is under military control. Military restrictions can affect the flight paths of
48 private aircraft, and thus impact on air navigation services costs. The variable is not
considered, however, because military airspace is often deliberately restricted to
46 areas where commercial air services would not go anyway and, perhaps more
2009 2010 2011 2012 2013 2014 importantly, each nation’s civil aviation authority, and ipso facto their ANSPs tends
forecast forecast forecast to interact differently with the military; some have strict delineations of flight
areas, but most have a variety of cooperative arrangements. A simple measure of
Fig. 2. Real en-route unit costs of European ANS (V2009). Source: EUROCONTROL military air space is likely a poor proxy for differences in the ways civil and military
Performance Review Commission (2013). flying co-exist.
Fig. 3. Longitudinal evolution of the relative efficiency of each FAB.
 K. Button, R. Neiva / Journal of Air Transport Management 33 (2013) 73e80 79

 Staff/air traffic controllers in operations ratio (STAFF_ATCO). Table 3

This captures differences in an ANSP/FAB’s handling of directly Regression results.

productive and overhead labor in their activities. Variable Model

1 2 3
5. Results
(Intercept) 11.26 (1.392) 8.85 (1.162) 9.75 (1.225)
YEAR
5.054e
3
3.951e
3
4.311e
3
Fig. 3 provides visual detail of the DEA results for the nine FABs (
1.255) (
1.040) (
1.087)
in the years of the dataset.14 The horizontal line in each figure ATCO
5.154 e
5 e e
represents an arbitrary 80% threshold of relative efficiency. (1.030)
ATCOkm
1.998e
1***
1.134e
1***
1.819e
1***
Because DEA only estimates relative levels of efficiency, a change (
6.091) (
4.168) (
6.532)
in the value or ranking of any block does not means it has become SECTORS 1.621e
3 1.960e
3*** 2.415e
3***
more or less efficient per se, but rather that its position relative to (1.929) (5.508) (7.225)
the most efficient FABs in that year has changed. DEA does not AREA
1.619e
4***
1.358e
4***
1.382e
4***
(
5.193) (
6.007) (
6.558)
produce absolute levels of efficiency, so it also cannot be concluded
REV_COST e 3.227e
1* e
that these results are evidence that the creation of the FABs will (2.309)
lead to system-wide increases in efficiency, indeed it is quite STAFF_ATCO e
5.757e
2* e
possible that the system could lead to efficiency being pulled down (
2.398)
by the least efficient FABs.15 Adjusted 0.4055 0.4556 0.4363
R-squared
What we do see from the figure is that with the exception of the
Danube and South west, FABs, all other blocks tend to consistently ***Significant at 0.001; ** significant at 0.05; *significant at 0.10.
Numbers in parentheses are the t-values.
stay above the 80% threshold or be very close to it. This consistency
contrasts with the more disaggregate findings of Button and Neiva
(2014), who analyzed each ANSP individually using the same The bootstrapped regression results show consistently high
dataset, and found evidence of wide dispersion in the relative levels levels of significance in both physical and operational variables. A
of efficiency that varied over time. In one sense, therefore, by greater number of en-route sectors is associated with higher levels
combining ANSP’s into FABS there is some evidence that there of relative efficiency, while both area of airspace controlled and
combinations would at least be consistent. Of the “established number of air traffic controllers per unit of area are associated with
blocks”, the UKeIreland and DanisheSwedish, one stayed above lower levels of relative efficiency.
the 80% threshold for the entire period, and the other for all but one These results would suggest that there may be some optimum
year; and very much above it for all but the exceptional year. Over level of sectors or air space that would maximize efficiency. The
time, one would expect some fluctuations in relative efficiency, and efforts of forming FABs can be considered as a first approximation
this may well explain what appears as an outlier 2010 result for the at achieving this. The difficulties, however, is that this information
DanisheSwedish FAB, but in fact the data is remarkably stable. One tells us little about the parameters of an optimal situation. The FABs
explanation for this could be the time it takes from ANSPs to change are combinations of national airspaces, each of which many well
their structures, but this is essentially speculation. If this were so it contain areas of efficient ANS provision and some inefficient areas.
could be a largely cyclical effect, with inflexible equipment needing They are in no way axiomatically optimal spaces, they are just
periodic upgrading,16 or it could be shorter term as a function politically determined “market areas”. Combining them may, thus
having to spread fixed costs over fluctuating demand patterns. increase efficiency over some parts of air space but equally reduce it
To get a better handle on factors that may be affecting the cross- over other areas; and this may be with countries of in areas that
sectional pattern of the programming results, and their changes overlap countries.
over time, the bias-corrected bootstrapped efficiencies obtained From a dynamic, incentive perspective, while the data analysis is
from the DEA and subsequent bootstrapping are regressed on a insightful in terms of tracking previous patterns of efficiency, it of-
number of parameters that seek to normalize the technical and fers little insight into whether the gradualist approach toward a
institutional conditions under which the air navigation services are Single European Sky via way stations of FABs is either optimal or
being provided. The results obtained (Table 3) present some ex- likely to succeed. While a big bang approach limits the opportunities
amples of alternative specifications examined, and they seem fairly for coalitions to capture a la Stigler (1971) any reform process during
robust to changes in the variables that are included. The specifi- transition, gradualism provides more opening. In the FAB case, the
cations reflect: (Model 1) an analysis of physical and operational less efficient blocks have limited incentive to move forward and can
characteristics; (Model 2) a comprehensive coverage of variables; either limit the full benefits that could come from an ultimately
and (Model 3) to reduce multicollinearity problems.17 completely integrated European ANS, or de facto demand “bribes” in
The results are relatively modest in terms of the overall fit to the the form of restructuring payments to move forward. By combining
data, but the individual coefficients offer some insight as to the in groupings of similar FABs, the bargaining position of any indi-
influence of the physical environments in which the grouped vidual ANSPs increases. The outcome of this is much less of a tech-
ANSPs function. The correlation matrix of bilateral relationships nical economic matter and much more to do with political economy.
indicates there is only limited multicollinearity between the inde-
pendent variables. 6. Conclusions

Although airspace is a common resource, air traffic management

14
Results for the DANUBE and BLUE MED FABs start at later dates because data for in Europe is still organized in a fragmented way. Every time a plane
one or more ANSPs was not available for the earlier years. enters the airspace of a Member State, it is serviced by a different
15
The data shows that over time the average cost of handling flights in Europe ANSP on the basis of different rules and operational requirements.
have fallen, but that this improvement was not spread evenly across ANSPs.
16
Each provider procures tailored equipment and most maintain
Given each FAB represents a collection group of ANSPs it is unlikely that all
would be upgrading their systems simultaneous.
their own training schools and all other support functions. This
17
There is quite a high degree of multicollinearity, 97.6%, between ATCO and fragmentation impacts on safety, limits capacity, and above all,
SECTORS and one reason for the specifications of Model 3. adds to cost. The move to a Single European Skies, however, has,
80 K. Button, R. Neiva / Journal of Air Transport Management 33 (2013) 73e80
despite the potential benefits for Europe as a whole, proved prob-
lematic. The efforts to overcome this, or at least to improve the
situation, have essentially been “regional” reforms of airspace with
greater integration of similar, adjacent systems.
The analysis here provides insights into the nature of the FABs,
looking at their relative efficiencies over time and some factors that
may explain differences. It provides, however, little more than
background to a largely political process, but does highlight some of
the quantitative considerations that need to be thought through.
Acknowledgments
Rui Neiva was supported by a PhD scholarship from the Fun-
dação para a Ciência e Tecnologia (SFRH/BD/64730/2009), funded
under the POPH and QREN Portugal programs.
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