National Performance Plan for Air Navigation Services Finland

Transcription

1 Performance Plan 1(28) National Performance Plan for Air Navigation Services Finland

2 2(28) Contents National Performance Plan for Air Navigation Services Finland Introduction Description of the situation Overall assumptions for Reference Period Economic assumptions and impact on traffic Safety Institutional context Stakeholder consultation Performance targets at national level Performance targets and alert thresholds Safety Capacity Environment (RP1 optional) Cost-efficiency Consistency with EU-wide targets Safety Capacity Cost-efficiency Interrelations and trade-offs Carry-overs from the years before the first reference period Parameters for risk-sharing and incentives Cost-efficiency Contribution of each accountable entity Finavia (ANSP) Share in the national targets and individual binding performance targets Incentive mechanisms to be applied on Finavia Finnish Meteorological Institute (MET) Share in the national targets and individual binding performance targets Incentive mechanisms to be applied on Finnish Meteorological Institute Trafi (NSA) Military dimension of the plan Analysis of sensitivity Sensitivity to external assumptions Comparison with previous performance plan Implementation of the performance plan Annexes... 15

3 3(28) 1. Introduction 1.1. Description of the situation The European Parliament and the Council have stated in Regulation (EC) N:o 549/2004 laying down the framework for the creation of the single European sky that the performance of the air navigation services system as a whole at European level should be assessed on a regular basis, with due regard to the maintenance of a high level of safety, to check the effectiveness of the measures adopted and to propose further measures. In order to reach this goal the Parliament and the Council required the Commission to enact implementing rules for laying down a performance scheme for air navigation services in the European Union. According to the mandate given, the Commission has issued Regulation (EU) No 691/2010 which lays down the principles for the performance scheme. The regulation presumes that in the first stage the Commission should adopt European Union wide performance targets and in the second stage the regulation requires states (or when applicable, FABs) to take actions to adopt individual performance schemes. When adopting individual performance schemes the states (or the FABs) should take EUwide targets into consideration. The Commission will assess the individual performance plans. The performance scheme should contribute to the sustainable development of the air transport system by improving the overall efficiency of air navigation services across the key performance areas (KPAs) of safety, environment, capacity and costefficiency, in consistency with those identified in the Performance Framework of the ATM Master Plan, all having regard to the overriding safety objectives. In order to assess and monitor each KPA, separate key performance indicators (KPIs) will be introduced. According to Regulation (EU) No 691/2010, during the first reference period which covers calendar years 2012, 2013 and 2014, targets for the capacity and costefficiency KPAs will be placed and monitored and it is under the states discretion if they are willing to adopt and monitor KPIs for the safety and environment KPAs. The Commission will not assess environment and safety performance during the first reference period. The performance plan may be adopted at national or functional airspace block (FAB) level. Finland is in the course of establishing a north European functional airspace block (NEFAB) with Norway, Estonia, Iceland and Latvia. So far the negotiations about NEFAB have not been completed, and therefore Finland needs to adopt an individual performance plan for the first reference period. Finavia Corporation is the only en-route service provider in Finland. The Finnish Meteorological Institute is the designated meteorological service provider. With reference to the scope of the regulation and the afore mentioned decision in Finland, this performance plan will cover the en-route services provided by FinaviaCorporation, MET services provided by the Finnish Meteorological Institute and the services provided at Helsinki-Vantaa Airport.

4 4(28) 1.2. Overall assumptions for Reference Period 1 This section describes the context to which this performance plan is applied and the assumptions that have been made during its development Economic assumptions and impact on traffic The Finnish economy is forecast to record annual growth of 3.6% in Strong external demand is accelerating the growth of exports, which is pushing up capacity utilization rates. As a result it is expected that investment will gather pace and that economic growth will expand. It is thought that all demand items will contribute positively to growth, with exports emerging as the strongest driver. The projected unemployment rate is 7.6%, which in annual average terms is almost one percentage point lower than in Rising raw materials prices coupled with higher market interest rates will push inflation to over three per cent in Output growth in 2012 is expected to come in at 2.7% and the unemployment rate to edge down to 7.2%. Finland's strong public finances deteriorated sharply with the economic crisis, but the deficit in 2009 and 2010 did not exceed the 3% threshold specified in the Stability and Growth Pact. Public finances are set to improve in 2011 in the wake of economic recovery, tax hikes and the withdrawal of temporary stimulus measures. The general government deficit in 2011 is 0.9% of GDP. Although public finances will improve on the back of economic recovery, it is projected that without additional measures, they will continue to remain in deficit in (The Ministry of Finance. Economic Survey, Spring 2011). Finland has decided to use the inflation forecasts of the Ministry of Finance in calculating the costs in real terms. This decision is based on the following factors. a) Inflation in Finland in March 2011 is 3.3% according to Statistics Finland. This is closer to the forecast of the Ministry of Finance than the IMF's forecast. b) The Ministry of Finance is a reliable institution, which has a long history of forecasting and it has a good knowledge of local markets A 2010 A 2011 F 2012 F 2013 F 2014 F Gross Domestic Product Growth Inflation rate (average consumer prices) -7,80 % 1,20 % 3,60 % 2,70 % 2,40 % 2,10 % 1,60 % 1,10 % 3,30 % 2,70 % 2,20 % 2,00 % The Ministry of Finance. Economic Survey, Spring Table 1: Economic backround Finland has decided to use Finavia's higher traffic forecast instead of Statfor's base-level forecast. This decision is based on the latest positive traffic development and forecasts concerning Finland's economic growth, especially in exports.

5 5(28) 2009 A 2010 A 2011 F 2012 F 2013 F 2014 F En-route total service units prior to RP Forecast total service units used for the determined unit rate Source: Finavia Finavia Finavia Finavia % n/n-1 1,70 % 6,20 % 4,10 % 3,90 % 4,10 % STATFOR service units forecast (Baseline scenario) Date of STATFOR SU forecast: Feb 2011 Feb 2011 Feb 2011 Feb 2011 Feb 2011 Feb 2011 % n/n-1 1,70 % 7,30 % 2,30 % 2,00 % 2,30 % Table 2: En-route service units forecast used for the calculation of the national en-route cost-efficiency target Safety Finland will implement a State Safety Programme (SSP) in compliance with ICAO standards and recommended practices in H1 / 2012, using the EASA approach (EASP). Together with the SSP, Finland will publish a State Safety Plan including a three- year plan of targeted actions, by which the NAA will undertake to maintain and improve aviation safety performance in Finland. The State Safety Plan includes e.g. the 2nd Tier Indicators (high level risks). National performance indicators determined by the NSA belong to the Tier 3 indicators, which will be used to measure effectiveness of mitigation measures in all NAA areas (rulemaking, oversight, safety assurance and promotion) Institutional context The institutional context for the provision of ANS in Finland, as covered in this plan, is as follows: The Ministry of Transport and Communications represents the Member State and determines the performance plan scope and targets and adopts the performance plan for Finland. The Ministry steers the operations of the and the Finnish Meteorological Institute. The Ministry sets general and operational targets for Finavia Corporation and holds the ownership of the company on behalf of the state of Finland. The Ministry ensures that the national supervisory authority (NSA) has the necessary resources and capabilities in all key performance areas to carry out the tasks provided for in Commission regulation (EU) No 691/2010. The (Trafi) is the national supervisory authority (NSA) for air navigation service provision and meteorological (MET) services. Trafi is responsible for drawing up the national performance plan, overseeing the performance and monitoring the performance plan and targets. Finavia Corporation provides en-route and terminal air navigation services in Finland. Finavia Corporation owns and runs the airports in Finland (excluding Seinäjoki and Mikkeli). Until Finavia is responsible for aviation weather observations in Finland while the Finnish Meteorological Institute (FMI) is providing forecast services. Finavia is having a service contract with the FMI concerning MET-services in Finland. The value of the contract is approximately 5M and it covers 25 airports and en-route services in

6 6(28) Finland. The total costs of 5M includes approximately 1,5M of Finavia s costs related to the provision of METARs. In accordance with the ownership steering policy of the Ministry of Transport and Communications, the FMI will be responsible for aviation weather observations and forecast-services in 25 airports from onwards. The Finnish Meteorological Institute provides meteorological services in Finland. In accordance with the ownership steering policy of the Ministry of Transport and Communications, the FMI is at the moment responsible for aviation weather forecast services and will be responsible for both aviation weather forecasts and observations in 25 airports in Finland from onwards Stakeholder consultation An initial consultation meeting for stakeholders was arranged on In addition to the arranged meeting, all stakeholders were invited to give their written comments by to also allow those organizations that will not be able to participate the meeting on , as well as those organizations, which were represented in the meeting but might want to bring up some views or considerations which did not come up during the meeting. A second consultation meeting was arranged on The performance plan was sent to stakeholders three weeks ahead, on List of main issues raised in the NSA s consultation meeting and responses to them Comment 1: Justification and calculations of Finland s cost efficiency target, which is lower than the EU wide target. (Finnair, Norwegian, SAS, AEA, IATA, Finnish Air Traffic Controllers Association) NSA s response: Finland s unit rate is currently below the EU average. Finavia has already implemented significant rationalization and saving measures. The draft target has been reviewed and the results are analysed in this document. Comment 2. Further details on and justification for the new allocation between en route and terminal costs and airport and ANS charges. (Finnair, Norwegian, SAS) NSA s response: It is important to get Finland s cost structure harmonized with other European countries. The restructuring of Finland s cost structure is important also for the establishment of FABs. Further details about the reasons for the new allocation will follow in Section Finland has made major changes to the en route cost base in From the beginning of 2011, the en route cost base also includes part of the approach control costs at Helsinki-Vantaa, Rovaniemi, Kuopio, Tampere-Pirkkala and Jyväskylä. Those airports have a separate approach control unit. The 20 km rule has now been applied to the cost base in the same way as in service units. This means that the costs for giving service to flights over 20km from the airport are allocated to en route costs.

7 7(28) The en route unit rate will rise in the beginning of At the same time Finavia s other traffic charges (landing charge and passenger charges) will be reduced. Comment 3. Justification for Finland s capacity target allowing an increase in delays. (Finnish Air Traffic Controllers Association, SAS, Norwegian, AEA, IATA) NSA s response: The aim is to have as little delays as possible. The draft target has been reviewed. The new target has been set to a remarkably more challenging level and is presented in Section Comment 4. Request to get information about any new charges decided at least 4 months in advance. (SAS) NSA s response: Even though the legislation requires only two months time, in practice Finavia consults its customers for the first time already in March. This request concerns airport charges and terminal ANS charges because enroute charges will be known well in advance. Comment 5. Justification for raising the MET costs after transferring them to the Finnish Meteorological Institute. (Finnair) Response from the Ministry of Transport and Communications: In the beginning there will be costs related to investments and the transition phase, but cost benefits are expected in the long term. The quality of weather services is also an important factor. There is an a review related to MET costs going on; the actual MET costs will be known after the review is finished at the end of June. 2. Performance targets at national level 2.1. Performance targets and alert thresholds Performance targets in each key performance area, set by reference to each key performance indicator for the entire reference period, with annual values to be used for monitoring and incentive purposes: Safety Finland has implemented a mandatory reporting system, which is considered to function well. Data collected from the system is fed into the ECCAIRS data base and a Eurocontrol AST is produced as required. The NSA has developed a Monthly Safety Review procedure, which aims to capture any trend in the area of safety. These safety reviews are based on analysed data collected from the reporting system. Information from safety reviews is used as a basis for identifying potential risks in the system, so that the results can be taken into account when defining audit scopes and other regulatory actions as considered necessary. In addition, Theme Safety Reviews are carried out 3-4 times each year. They are based on analyzed occurrences and give more profound information about current key safety areas, such as runway safety issues. At the moment Finland is also building up a risk-based function in all NAA areas (rulemaking, oversight, safety assurance and promotion) which includes analyses and risk assessments based on all available information (occurrence analy-

8 8(28) sis, audit and SAFA reports etc.) as well as active co-operation with the Safety Analysis Unit and oversight Departments. This process will continue during RP 1. The first annual Aviation Safety Review based on occurrence analysis will be published in September Finland has decided to set up two national performance indicators and associated targets in the following areas of safety performance: - National performance indicator 1: The number of runway incursions (RI) with ATM contribution -Performance target: Declining trend in the number of RI/year based on the average annual value calculated from historical data for the past 5 years - National performance indicator 2: The number of separation minima infringements -Performance target: Declining trend in the number of separation minima infringements based on the average annual value calculated from historical data for the past 5 years (expressed in number of incidents per flight hours). The will also monitor performance against the following three indicators set by the Commission in the area of safety, as defined in Regulation 691/2010, Annex I, section 2, 1a-c: -National performance indicator 1: effectiveness of safety management (ATM safety maturity) -National performance indicator 2: application of the severity classification of the Risk Analysis Tool -National performance indicator 3: just culture Capacity KPA Capacity KPI En-route ATFM delay (minutes per flight) National/FAB targets ,05 0,03 0,02 Table 3: Presentation of the national capacity target and thresholds for RP1 National threshold Deviation over a calendar year by at least 10 % of the actual traffic versus the traffic forecast Delays are expected to grow slightly during year 2012 and the first quartal of 2013 from the current low levels because of the planned EUROCAT-system upgrage implementation during Newertheless delays are still at a very low level compared to the European wide targets. During , en-route ATFM delays have been on average between 0.00 and 0.04 minutes per flight Environment (RP1 optional) For the first reference period, there shall be no mandatory national environment KPI. Finland does not propose to adopt any optional environment KPIs for RP1. The EU-wide environment target concerns the average horizontal en-route flight efficiency. The target is an improvement by 0.75 of a percentage point of the average

9 9(28) Cost-efficiency horizontal en route flight efficiency indicator in 2014 compared to the situation in For the second reference period, the national/fab environment KPI will be the development of a national/fab improvement process for improved route design, including the effective use of the civil/military airspace structures (e.g. CDRs). According to a study carried out in May and October 2010, average horizontal enroute flight efficiency between city pairs in Finland was extremely good. The en-route part of the flights was on average 2.2% and 2.0% longer than the optimum trajectory, when at the same time the European reference level for en-route extensions is 5.4% on an average. By using the continuous descent approach (CDA) technique, fuel burn, emissions and aircraft noise can be reduced. At Helsinki Airport, the proportion of CDA approaches during the follow-up period from June to December 2009 was 59% of all approaches. Even during parallel-runway operations, aircrafts approaching the runway for which procedure allows altitude to be adjusted according to the technique, 35-45% were able to make CDA approach. During night time (22:00 24:00) the proportion of CDA approaches was 61%. The Free Route Airspace Concept will be implemented progressively during years together with other NEFAB states. The mandatory cost-efficiency target for RP1 is the determined unit rate for en route air navigation services, defined as follows: - the indicator is the result of the ratio between the determined costs and the forecast traffic expressed in total service units contained in the performance plans in accordance with Article 10(3)(a) and (b) of the Performance Scheme Regulation; - the indicator is expressed in the national currency and in real terms; - the indicator is provided for each year of the reference period. The EU- wide target for cost-efficiency is a reduction of the average EU-wide determined unit rate for en route air navigation services from in 2011 to in 2014 (expressed in real terms, 2009), with intermediate annual values of in 2012 and in The target represents a reduction of the average determined unit rate by 3.5 % per annum. From the determined costs in real terms and the relevant traffic forecast, Finland has derived the values for the determined unit rate as set out in Table 3 below to be adopted as its cost-efficiency target for RP1. This target represents a reduction of the determined unit rate by 1.7 % a year from a baseline of The alert threshold associated with this target is a deviation over a calendar year by at least 10 % of the actual traffic versus the traffic forecast. This is in line with the EU-wide alert threshold. KPA KPI National/FAB targets National threshold Costefficiency Determined en-route unit rate ( 2009) 49,94 49,06 47,37 Deviation over a calendar year by at least 10 % of the actual traffic versus the traffic forecast Table 4: Presentation of the national cost-efficiency target and thresholds for RP1

10 10(28) 2.2. Consistency with EU-wide targets Safety Capacity Cost-efficiency There are no EU wide targets set in the area of safety for the RP1. However, there are three KPIs determined by the Commission, which will be monitored by the Finnish Transport Safety Agency. In addition Finland has set two performance targets in the area of safety at national level (section 2.1.1, Performance targets at national level). Finland has set a capacity target of 0.02 minutes delay per flight in 2014, which is much more challenging than the target set by the Commission (maximum 0.5 minutes delay per flight in 2014). Finland s capacity target supports achieving of EUwide capacity targets. The Finnish cost-efficiency target for an average annual reduction in the determined en route unit rate for RP1 is 1.7%, which is below the EU-wide target, which aims to reduce the average determined unit rate by 3.5 % per annum. There are two reasons why the EU-wide target is not met in RP1: 1. Air navigation services in Finland have historically been organized in a costefficient manner and the en route unit rate is low at European level. Finavia as an ANSP has continuously been seeking to rationalise its operations and to ensure maximum cost-efficiency in the provision of air navigation services. The most important measures before 2011 have been: - One of Finland s two air navigation centres was closed in November This is expected to reduce the need for staff resources in the area control centre, the number of fixed-time employees and purchases from the Air Force. - Staff lay-offs and converting holiday bonuses into paid leave in 2009 and Reorganization and centralization of technical air navigation services. Staff from air navigation technics, Helsinki-Vantaa Airport and the area control centre was centralized into a technical service unit, established in Local airport staff was centralized into three regional organizations for technical air navigation services, established in Project management has been improved. - Staff scheduling has been improved to make more efficient use of personnel resources. - The automatization of weather services ( ) has allowed Finavia to centralize the briefing services. The meteorological observation functions will be transferred to the Finnish Meteorological Institute in The number of air navigation service personnel (e.g. in briefing and technical air navigation services) has been reduced by more than 110 staff-years from 2007 to Another explanatory factor for a relatively modest en route unit rate reduction is that significant investments will be completed during (such as Eurocat Fre-

11 11(28) shup, WAM, RNAV/DME, Artas HW training, alternative radar system), which will lead to an increase in depreciations and cost of capital in 2012 and onwards. 2. All MET-services in Finland will be transferred to the Finnish Meteorological Institute on The change causes some extra-cost for the first few years. In addition, there is a need to renew outdated observation instruments and data systems, which causes a notable rise in MET-costs. Replacing old equipment will cause a cost of 5,5 million euros in Additional ITand display systems as well as quality control will require an extra investment of 1 million euros total. Beginning from 2013, the gradual replacement of observation equipment will cost approximately 1 million euros annually. The observation service will cost ca. 3,7 million euros in total during the implementation phase in In the beginning of the implementation phase development project, which aims to increase the quality of automated weather observations, an additional rise in costs will be caused. At the moment this service is mainly produced manually but the future goal is that human resources would only be needed for quality control and technical maintenance. The level of costs in aviation forecasting service is estimated to remain stable or decrease slightly. Annual forecasting costs are estimated at 3,25 million euros. The goal is to increase efficiency by automated and semi-automated forecasting products. Also co-production with other Nordic countries is under consideration to increase production efficiency in all participating countries. Due to changes in the provision of MET-services in Finland, the MET-cost data before and after 2012 is not economically comparable. Determined en route ANS cost in nominal terms Finavia (ANSP) % n/n-1-6,2% 51,2% 7,0% 4,6% 3,5% Trafi (NSA)* % n/n-1-3,0% -9,4% 7,4% 0,1% 2,1% MET Total determined costs in nominal terms % n/n-1 56,3% 18% 7,5% 6,6% 4,4% % n/n-1-3,5% 40,5% 7,1% 4,4% 3,4% *incl. Eurocontrol costs Table 5: Determined en route ANS costs in nominal terms (per entity) The table above shows a notable increase in ANSP costs in The explanation for the increase is Finavia s decision to change the allocation of ANS costs between en route and TN service in Service costs of 5 approach control units (approximately 70-80%) are now allocated to enroute services. These APP units are located in Helsinki-Vantaa, Rovaniemi, Kuopio, Tampere-Pirkkala and Jyväskylä. This change means that the en route cost base increases by about 9M. From year 2010, Finland has also allocated more MET costs from TN services to en route services. By these changes the en route costbase of Finland has come closer to the common European practice.

12 12(28) However, these changes did not affect the en-route unit rate charged from users, in year 2011, because Finland uses income from other sources to keep the unit rate at the same level as in year 2010 invoicing. The income from other sources includes Finavia s commercial income from the airports. From 2011 onwards the cost base of en route services includes the costs of the one ACC (EFIN), some centralized services (technical ANS, AIS etc) and those overhead costs of Finavia headquarters, which are allocated to en-route services. Finland s unit rate for en-route air navigation services in Finland remains clearly below the European Union average determined unit rate for en-route air navigation services and is at the moment the second lowest in the comparator group of the Nordic State s, set by the Performance Review Body. ANS en-route cost per nature Staff % n/n-1 5,2% 45,4% 2,1% 1,6% 2% Other operating costs % n/n-1-7,3% 28,8% 6% 3,7% 2,3% Depreciation % n/n-1-30,1% 43,8% 54,3% 22,1% 14,1% Cost of capital % n/n-1-4,3% 35,3% 34,8% 14,2% 4,6% Exceptional items Total determined costs in nominal terms % n/n % n/n-1-2,5% 39,4% 7,5% 4,5% 3,4% Table 6: Determined en route ANS costs in nominal terms by nature

13 13(28) Determined en route ANS costs in real terms The table below shows how total determined costs in nominal terms have been transformed to the total determined costs in real terms ( 2009) by adjusting for inflation. Total determined costs in nominal terms Inflation % 1,70% 40,5% 7,1% 4,4% 3,4% Inflation index (100 in 2009) ,70 105,06 107,89 110,27 113,57 Total determined costs in real 2009 terms % n/n-1-4,1% 36% 4,4% 2,2% 0,4% Table 7: Determined en route ANS costs in real terms Real en route determined unit rate The real en route determined unit rate is calculated and presented in the table below by using the total determined costs in real 2009 terms and the service unit forecast. Total determined costs in real 2009 terms Total en route SUs Real en route determined unit rate ( 2009) (thousand euros) ,29 38,94 49,80 49,94 49,06 47,37 % n/n-1-5,7% 27,9% 0,3% -1,8% -3,5% EU-wide target: average determined en route unit rate (in 2009) 57,88 55,87 53,92 Table 8: Real en route determined unit rate

14 14(28) Terminal ANS costs The performance scheme requires that, for RP1, EU Member States provide an overview of determined costs for terminal services. This information is provided in the table below. No targets are required to be set for terminal costs for RP1. ANS terminal cost per entity/charging zone (thousand euro) Finavia (ANSP) % n/n-1 17,3% -39,1% 6,2% 2,5% 2,3% Trafi (NSA) Finnish Meteorological Institute Total terminal costs in nominal terms Table 9: Terminal ANS costs % n/n-1 6,5% 19,0% 0% 2,1% 0% % n/n-1-27,3% 18,1% 7,5% 6,5% 4,5% % n/n-1 13,2% -35,8% 6,7% 3,1% 2,5% Interrelations and trade-offs 2.3. Carry-overs from the years before the first reference period The table below provides information about carry-overs from the years before RP1. Carry-over from To 2009 To 2010 To 2011 To 2012 To 2013 To 2014 To 2015 To RP2 (thousand euros) Total Table 10: Carry-overs from the years before RP1 (in nominal terms)

15 15(28) Under and over recoveries are used in 2011, which means that there will be no under or over recoveries for RP Parameters for risk-sharing and incentives Cost-efficiency There are no incentive schemes proposed for capacity, safety and environment impact in RP1. No incentives are proposed for airspace users in RP1 either. Incentives in relation to cost-efficiency are defined in the Performance Scheme Regulation as comprising the risk sharing mechanism as set out in Article 11a of the Common Charging Regulation. The traffic risk-sharing mechanism comprises the following issues. When, over a given year, the actual number of service units exceeds the forecast made at the beginning of the reference period by more than 2%, 70% of the additional revenue obtained by the ANSP in excess of 2% of the difference between the actual service units and the forecast with regard to determined costs shall be returned to airspace users. When, over a given year, the number of actual service units falls below the forecast made at the beginning of the reference period by more than 2%, 70% of the loss in revenue incurred by the ANSP in excess of 2% of the difference between the actual service units and the forecast with regard to determined costs shall be borne by the airspace users. The determined costs established in relation to: -the costs of relevant national authorities; and -the determined costs of the Finnish Meteorological Institute are not subject to traffic risk-sharing and are recovered regardless of the level of traffic. The cost risk-sharing mechanism provides that costs in excess of the determined cost shall be borne by the entity concerned, and that if the costs fall short of the determined costs, the entity concerned, the entity may retain the shortfall. The entity concerned must therefore bear all the cost risk. The Common Charging Regulation allows, however, certain exemptions to this principle, in relation to: (i) (ii) (iii) (iv) (v) unforeseen changes in national pension regulations and pension accounting regulation; unforeseen changes in to national taxation law; unforeseen and new costs items not covered in the national performance plan, but required by law; unforeseen changes in costs or revenues stemming for international agreements; significant changes in interest rates on loans. Changes in such items may be carried over and taken into account in the next reference period.

16 16(28) In Finland, it is proposed that all five of these exemptions should be allowed to be passed through. 3. Contribution of each accountable entity This section describes each accountable entity s share of Finland s national performance targets. The accountable entities in relation to the National Performance Plan for Finland comprise: -Finavia, in its role of ANSP; -The Finnish Meteorological Institute, in it s role of MET-service provider; and -The Trafi, in it s role of NSA and a relevant national authority in the terms of the Common Charging Scheme Regulation Finavia (ANSP) Share in the national targets and individual binding performance targets Safety Finavia is accountable for meeting the national safety targets set by Finnish Transport Safety Agency. Capacity Finavia is accountable for meeting the capacity targets. Environment No targets have been set on this area. Finavia is responsible for the implementation of the Free Route Airspace Concept and CDA initiatives described in section Cost-efficiency Determined en route ANS costs Finavia is responsible for all determined en route ANSP costs in Finland. Until Finavia is responsible for aviation weather observations in Finland while the Finnish Meteorological Institute (FMI) is providing forecast services. Finavia is having a service contract with the FMI concerning MET-services in Finland. The value of the contract is approximately 5M and it covers 25 airports and en-route services in Finland. The total costs of 5M includes approximately 1,5M of Finavia s costs related to the provision of METARs. In accordance with the ownership steering policy of the Ministry of Transport and Communications, the FMI will be responsible for aviation weather observations and forecast-services in 25 airports from onwards. Details of the Finavia s determined en route costs are provided in the Reporting Tables annexed to this performance plan. A summary of the tables is provided below:

17 17(28) Finavia (thousand euros) Staff Other operating costs Depreciation Cost of capital Exceptional items Total en-route costs Table 11: Finavia - Determined en-route ANS costs by nature (in nominal terms) Finavia (thousand euros) Air Traffic Management Communication Navigation Surveillance Search and rescue Aeronautical Information Meteorological services Supervision costs Other State costs Total costs Table 12: Finavia - Determined en-route ANS costs by service (in nominal terms)

18 18(28) Terminal ANS costs Finavia is the only accountable entity for terminal ANSP costs. Commission Regulation No 1794/2006 laying down a common charging scheme for air navigation services is for the time being applied only to Helsinki-Vantaa airport. There has been discussion about SES charging regulation to be applied also to some other airports in Finland (Jyväskylä, Kuopio, Rovaniemi, Tampere) from 2012 onwards. Final decision will be made in autumn Finavia (thousand euros) Staff Other operating costs Depreciation Cost of capital Exceptional items Total terminal costs Table 13: Finavia - Terminal ANS costs Return on equity The return on equity is presented in the table below: Cost of capital (thousand euros) Average operating capital Of which, average long term assets Cost of capital before tax (%) 2,99 % 4,70 % 4,85 % 5,09 % 5,14 % 5,19 % Return on equity (%) 4,85 % 7,00 % 7,00 % 7,00 % 7,00 % 7,00 % Average interest on debts (%) 2,50 % 1,90 % 2,50 % 3,00 % 3,10 % 3,20 % Table 14: Information on inflation and on the cost of capital (in '000 euro) Finavia uses a 7% return on equity both in en route and terminal navigation cost base calculations during RP1. Return on equity is based on the target, which Finavia s owner, the State of Finland, has set to Finavia. In March 2011, harmonized long-term government bond yield is 3.45%, which is 3.55% lower than the rate used

19 19(28) in calculations. The difference is based on business and financial risks associated with air navigation services. Investments The main investments of Finavia are presented in the tables below: Capital expenditure Eurocat system upgrade (incl. CCAMS & FPL2012) EFHK APP premises reconstruction Wide Area Multilateration (country wide) 2010A 2011F 2012F 2013F 2014F 2015F 2016F (thousand euros) RNAV/DME (country wide) Surveillance multitracker (Artas) Surface movement radar upgrade (EFHK) Voice communication upgrade (EFHK) Controller Pilot Datalink Radio Stations Renewal (excl. Small airports) MSSR renewal Sub-total main Capex above Sub-total others Capex Total Capex Table 15: Finavia - Annual investments (capex) in nominal terms in national currency for en-route and terminal ANS CAPEX Project ID Domain (ex. ATM Systems, C, N, S,..) Eurocat system upgrade (incl. CCAMS & FPL2012) ATM Allocation en-route / terminal ANS 80%/20% Assessed impact on Performance Targets Safety and capacity (Planned) Start date of investment project (Planned) Commissioning date of investment phased (latest part ) Lifecycle (Amortisation periods in years) 10 Planned total capex (in national currency) European ATM Master Plan (OIs reference) AOM-0801, TS-0102, CM-0801, CM-0202, IS-0204 Related SES IR / Community Specifications. 552/2004, 633/2007, 1033/2006, 10332/2006

20 20(28) CAPEX Project ID Domain (ex. ATM Systems, C, N, S,..) EFHK APP premises reconstruction ATM Allocation en-route / terminal ANS 100%/0% Assessed impact on Performance Targets (Planned) Start date of investment project (Planned) Commissioning date of investment Lifecycle (Amortisation periods in years) 10 Planned total capex (in national currency) European ATM Master Plan (OIs reference) Related SES IR / Community Specifications. CAPEX Project ID Domain (ex. ATM Systems, C, N, S,..) Wide Area Multilateration (country wide) Surveillance Allocation en-route / terminal ANS 100%/0% Assessed impact on Performance Targets Cost-efficiency (Planned) Start date of investment project (Planned) Commissioning date of investment From to Lifecycle (Amortisation periods in years) 15 Planned total capex (in national currency) European ATM Master Plan (OIs reference) Related SES IR / Community Specifications. CAPEX Project ID Domain (ex. ATM Systems, C, N, S,..) RNAV/DME (country wide) Navigation Allocation en-route / terminal ANS 60%/40% Assessed impact on Performance Targets Safety, Cost-efficiency (Planned) Start date of investment project (Planned) Commissioning date of investment from to Lifecycle (Amortisation periods in years) 15 Planned total capex (in national currency) European ATM Master Plan (OIs reference) Related SES IR / Community Specifications. CAPEX Project ID Domain (ex. ATM Systems, C, N, S,..) Surveillance multitracker (Artas) Surveillance Allocation en-route / terminal ANS 100%/0% Assessed impact on Performance Targets Cost-efficiency (Planned) Start date of investment project (Planned) Commissioning date of investment Lifecycle (Amortisation periods in years) 15 Planned total capex (in national currency) European ATM Master Plan (OIs reference) Related SES IR / Community Specifications.

21 21(28) CAPEX Project ID Domain (ex. ATM Systems, C, N, S,..) Surface movement radar upgrade (EFHK) Surveillance Allocation en-route / terminal ANS 0%/100% Assessed impact on Performance Targets Safety (Planned) Start date of investment project (Planned) Commissioning date of investment Lifecycle (Amortisation periods in years) 15 Planned total capex (in national currency) European ATM Master Plan (OIs reference) Related SES IR / Community Specifications. CAPEX Project ID Domain (ex. ATM Systems, C, N, S,..) Voice communication upgrade (EFHK) Communication Allocation en-route / terminal ANS 40%/60% Assessed impact on Performance Targets Safety (Planned) Start date of investment project (Planned) Commissioning date of investment Lifecycle (Amortisation periods in years) 10 Planned total capex (in national currency) European ATM Master Plan (OIs reference) Related SES IR / Community Specifications. CAPEX Project ID Domain (ex. ATM Systems, C, N, S,..) Controller Pilot Datalink Communication Allocation en-route / terminal ANS 80%/20% Assessed impact on Performance Targets Capacity (Planned) Start date of investment project (Planned) Commissioning date of investment Lifecycle (Amortisation periods in years) 10 Planned total capex (in national currency) European ATM Master Plan (OIs reference) Related SES IR / Community Specifications. EC 29/2009 CAPEX Project ID Domain (ex. ATM Systems, C, N, S,..) Radio Stations Renewal (excl. Small airports) Communication Allocation en-route / terminal ANS 80%/20% Assessed impact on Performance Targets Capacity (Planned) Start date of investment project (Planned) Commissioning date of investment Lifecycle (Amortisation periods in years) 15 Planned total capex (in national currency) European ATM Master Plan (OIs reference) Related SES IR / Community Specifications. Full 8.33kHz implementation

22 22(28) CAPEX Project ID Domain (ex. ATM Systems, C, N, S,..) MSSR renewal Surveillance Allocation en-route / terminal ANS 100%/0% Assessed impact on Performance Targets Safety (Planned) Start date of investment project (Planned) Commissioning date of investment Lifecycle (Amortisation periods in years) 15 Planned total capex (in national currency) European ATM Master Plan (OIs reference) Related SES IR / Community Specifications. Table 16: Finavia - Description of the main investments impacting RP1 (in nominal terms) Incentive mechanisms to be applied on Finavia The only incentive mechanism applied to Finavia is that for cost-efficiency (Section ). The cost risk-sharing mechanism provides an incentive to the ANSP, in that if costs are lower than the determined values, the difference may be retained by the ANSP Finnish Meteorological Institute (MET) The Finnish Meteorological Institute is accountable only for the cost-efficiency target Share in the national targets and individual binding performance targets Cost-efficiency The Finnish Meteorological Institute is at the moment responsible for aviation weather forecast services and will be responsible for both aviation weather forecasts and observations in 25 airports in Finland from onwards. Until Finavia is responsible for aviation weather observations in Finland while the Finnish Meteorological Institute (FMI) is providing forecast services. Finavia is having a service contract with the FMI concerning MET-services in Finland. The value of the contract is approximately 5M and it covers 25 airports and en-route services in Finland. The total costs of 5M includes approximately 1,5M of Finavia s costs related to the provision of METARs. Finavia s weather observation equipment and systems will be transferred to the FMI s ownership for approximately 1,2 million euros. Some of the equipment and systems in use today are technically at the end of their operating life. Replacing old equipment will cause a cost of 5,8 million euros during years This reinvestment includes equipment, software and documentation. The observation service will cost ca. 11,6 million euros in total during the implementation phase in This is approximately 2,9 million euros per year. In the beginning of the implementation phase development project, which aims to increase the quality of automated weather observations, an additional rise in costs will be caused. This project is necessary to identify the main reasons for low quality in automated observations, as well as to construct efficient processes to raise the quality to a reasonable level as required by users. At the moment this service is mainly produced manually, but the future goal is that human resources would only be needed for quality control and technical maintenance.

23 23(28) The level of costs in aviation forecasting service is estimated to remain stable or decrease slightly. Annual forecasting costs are estimated at 3,5 million euros. The goal is to increase efficiency by automated and semi-automated forecasting products. Also co-production with other Nordic countries is under consideration to increase production efficiency in all participating countries. The observation service will cost ca. 3,7 million euros in total during the implementation phase in In the beginning of the implementation phase development project, which aims to increase the quality of automated weather observations, an additional rise in costs will be caused. This project is necessary to identify the main reasons for low quality in automated observations, as well as to construct efficient processes to raise the quality to a reasonable level as required by users. At the moment this service is mainly produced manually, but the future goal is that human resources would only be needed for quality control and technical maintenance. The level of costs in aviation forecasting service is estimated to remain stable or decrease slightly. Annual forecasting costs are estimated at 3,25 million euros. The goal is to increase efficiency by automated and semi-automated forecasting products. Also co-production with other Nordic countries is under consideration to increase production efficiency in all participating countries. 50% of total MET costs have been allocated to en route services. Details of the FMIs determined en route costs are provided in the Reporting Tables annexed to this performance plan. The data in Reporting Tables annexed to this performance plan differs from the data sent to Eurocontrol on , because of the re-sectioning of the MET-investments done in by the Ministry of Transport and Communication. The aim of re-sectioning was to allocate MET-investment costs for a longer period to avoid a high, short-term rise in costs. A summary of the tables is provided below: Determined en route ANS costs Finnish Meteorological Institute (thousand euros) Staff Other operating costs Depreciation Cost of capital Exceptional items Total en-route costs Table 17: Finnish Meteorological Institute - Determined en-route ANS costs by nature (in nominal terms)

24 24(28) Finnish Meteorological Institute (thousand euros) Meteorological services Total costs Table 18: Finnish Meteorological Institute - Determined en-route ANS costs by service (in nominal terms) Terminal ANS costs Finnish Meteorological Institute (thousand euros) Staff Other operating costs Depreciation Cost of capital Exceptional items Total terminal costs Table 19: Finnish Meteorological Institute - Terminal ANS costs in national currency Return on equity The Finnish Meteorological Institute is a governmental institution and does not have its own capital, but is dependent on State capital. The Finnish State Treasury administers the debt financing of governmental institutions. Investments Capital expenditure (national currency) Replacement investments of observation equipments Finavia s old observation equipments 2012F 2013F 2014F 2015F 2016F Weather bank ARVO-sensors