User fees could pay for the modernisation of Russian far-east airspace.
Kieran Daly/LONDON
The task of modernising the air-traffic management/control of the former Soviet Union is awesome. For those faced with the challenge, it is hard to know where to begin. The signs are, however, that the best place is probably the Russian Far East. This is the region where there appears to be the best chance of recovering much of the capital cost from user fees. The most optimistic estimates suggest that the income from over-flights could even be sufficient to help pay for infra-structural improvements elsewhere in the country.
Russia's Far East provides, a potential alternative route-system, in an area where international carriers incur punishing costs, because of air-traffic-control (ATC) restrictions. The absence of adequate surveillance in the region means that airlines travelling between the Alaskan seaboard and northern China, Japan and beyond have to use routes across the northern Pacific (NOPAC). Although the NOPAC system works well for eastbound traffic -which can take advantage of the powerful jetstream-associated westerly winds - for westbound traffic, the fuel and time penalties are punishing. For Russia, therefore, there is an opportunity to charge fairly robust en route fees and still attract over-flights - but only if the navigation services can be put in place.
BUILDING ON SAVINGS
The business case was examined in detail earlier this year by US consultancy Booz Allen & Hamilton for the US Trade and Development Agency, in co-operation with Russia's Rosaeronavigatsia state navigation-authority. Booz's report, presented first at an Adam Smith Institute conference in Vienna, states that NOPAC traffic is forecast to grow, by comfortably more than 50% by 2010 and notes that more than 82% of the current traffic, is westbound - the advantageous direction for the Russian far east.
The consultants, also obtained, responses from 12 of the 16 top Pacific carriers which indicated that Russian far-east traffic would probably grow by around 18% a year through to 2010, if appropriately equipped. The additional opening of Chinese routes would result in "at least 30%" of all NOPAC traffic using Russian far-east routes by then. That translates into possible earnings for Russia of some $50 million a year by the end of the period, based on a realistic premium over standard International Civil Aviation Organisation rates. Over the intervening period, the network could earn at least $300 million and, if the Chinese routes also develop, up to $600 million of hard currency.
Report author Bob Hawley says that the study is "very conservative", but suggests that it "...points us to an opportunity, if undertaken responsibly, to purchase nearly the entire system with fees collected from international carriers rather than taxpayers". He notes that Northwest Airlines estimates the cost of it not being able to use Russian airspace at some $80 million a year on the NOPAC services. It says: "Given that the airlines would certainly be willing to pay some portion of those potential savings as fees, it would appear that there is already a revenue loss occurring in the region as each unmodernised day goes by."
Clearly, however, substantial funding is required early on to get the project to the stage where it has the potential for paying for itself. The main player involved in that aspect is the European Bank for Reconstruction and Development (EBRD), which has undertaken to provide finance and arrange for further funds for the work. Reaching a satisfactory agreement with Rosaeronavigatsia and other Russian institutions is critical to the launch of the effort, however. That is not proving so simple. Although the EBRD is enthusiastic about the project, it is struggling to pin down the arrangements in Russia for handling it. Part of the problem is that Rosaeronavigatsia lacks some of the executive power it needs to see the necessary activity under way with appropriate financial safeguards. The EBRD is careful about how it spends its money, and is anxious to ensure that funds going into Russia are correctly spent.
SPENDING SAFEGUARDS
Under the bank's rules, equipment acquisition must be carried out through fully open, competitive, international tender. Equally, under a Russian decree, the system must have 60% Russian content. The two requirements can be fulfilled only by Western companies teaming with Russian ATC expertise - a process which is under way, and which is causing Western industry some headaches as it tries to pin down the most promising Russian entities. Furthermore, the contract is intended to require as much off-the-shelf technology as possible to keep costs down, presenting Western companies with turn key capabilities, the problem of still finding roles for Russian partners to play. One answer may lie in Russian labour rates, which could make it advantageous for bidders to have their Western-designed ATC equipment produced in Russia.
Unfortunately, delays seem certain while appropriate tendering and funding processes are finalised. The Booz study envisaged issuance of a tender by August 1995, leading to contract award within a further six months and the probability of limited operational capability nine months later. Full operational capability would come some 18 months after contract award. Although the EBRD declines to discuss the situation, it is clear that it sees no possibility of that timetable being met. Indeed, officials close to the activity believe that the possibility of a tender this year is now questionable.
Selecting the best bidder will not be a simple task. The offered solutions are likely to be differ distinctly from each other and require substantial technical analysis. The EBRD and Booz see this is as one of the world's great opportunities to create from scratch an airspace management system compliant with the international Future Air Navigation System (FANS) concept. In particular, they want to see the use of satellite-based automatic dependent surveillance (ADS) rather than radar wherever possible, and at least provision for links into the aeronautical telecommunications network (ATN) of the future. For those Western suppliers, which manufacture radar, however, a reduction in the radar content of the system has consequences on the contract value.
The Booz study proposes a works programme addressing first the "immediate" technical requirements to produce an infrastructure capable of generating income; and then a longer-term modernisation to create an appropriate system for the next century. The major step in the first phase is the consolidation of upper-airspace control from sub-area control centres (SACC) to parent ACCS using improved communications. Surveillance over the Sea of Japan to provide coverage of the Russian airspace entry-point could be provided with a new radar, but, more economically, by integrating an existing military radar into the Khabarovsk ACC. Communications upgrades would include the installation of a very-high-frequency radio network with back-up high-frequency capability. Navigation would be conducted using airborne equipment backed by the region's sparse surface aids, which might be upgraded.
SECOND PHASE
In the second phase, covering the period up to 2001, Booz envisages a more extensive consolidation of the ACCs and the use of ADS for surveillance. International airports in the region would have their long-range radar replaced. VHF and HF communications will continue to play a major role but will be joined by satellite communications. HF datalinks may also be used in the region. Surface communications need to be digitised and made compatible with the ATN. Booz recommends the use of satellite navigation, but suggests that the region will have to go through a period of relying on improved VOR beacon-coverage. That will require the installation of the beacon network.
All this has caught the eyes of most of the world's ATM/C suppliers. Raytheon director of marketing for Europe and the CIS, George Dooly, says that his company is "very much interested" and "...in the process of finalising negotiations with Russian partners to co-produce radar systems". Dooly explains: "Unlike our major competitors, we are not a part of any international consortium and we do not want to be part of one. What we are attempting to do with our Russian partners is to position ourselves as fully as possible so that, when the request for proposals is released, we will be in the best position to address the needs of Rosaeronavigatsia."
Dooly agrees that the region is a prime candidate for use of FANS concepts, but adds that radar will also be involved. He says: "The RFE becomes the world's first real-life testbed for FANS-1. The Russians feel in their wisdom that Rosaeronavigatsia should make the technical leap to the global navigation satellite system [GNSS] now, while they have the opportunity. Unlike some competitors, we are waiting to see what they request. We are not going to rush in and tell them what they need."
STANDBY RADARS
He continues: "The question of ADS versus radar is interesting. There will be a need for the next ten to 15 years to have radar in the environment. In the RFE, there will be a number of emergency landing strips that will underlie the route structure and there may be additional long-range radar to augment that route structure -probably about six."
The technological competence of Russian ATC equipment-manufacturers is debatable, but Raytheon, like other companies, is anxious to praise its partners' abilities. Dooly says: "The radar that we will put into that route structure will be co-produced with our Russian partners. We are doing a transfer of technology and, at the same time, we will be using as much of their technology as possible. The RFE is going to give everybody a very good model on which to modernise the rest of the country. It is well defined and will give Rosaeronavigatsia an opportunity to have its first international tender in a controlled, limited programme."
Like Raytheon, Hughes also has, the capability to provide a turn key system, although, unlike its rival, it does not build radar itself. Manager of ATC business development Tom Harvey says: "We now have the clear decision that it is going to happen under the responsibility of Rosaeronavigtsia and that is critical to starting the process. This is a green-field FANS opportunity and we are extremely interested in it. The hard part is dealing with the Russian Government. How to get that right is the important piece."
Like Dooly, he sees Russian industry as critical to a successful bid. Harvey says: "The approach of working with Russian industry is essential for success. We have also to be in bed with people from the West - there has to be a group of companies that bring all the things together and create a turn key solution. The Russians are clearly very good on software, so any software tasks are definitely possible and long-term maintenance will certainly be done by them."
Hughes' manufacturing profile means that, in the form of the RFE system, it has less vested interest than some other players. Harvey explains: "It is going to be an ADS system - very similar to an oceanic system. After all, why not use what is known? We are doing a system in Canada where the Gander centre will be ADS. But there will be radar capabilities and a data-fusion requirement - we need them because 'why not?' If as an airline you are not equipped, then you will have to use NOPAC. It really doesn't matter to us what the systems are. We don't care, all we care about is what the customer says. If it is with radar then we will say 'yes sir'."
Canada's CAE Electronics is also enthusiastic about the FANS, having just seen into service, in New Zealand, the world's most FANS-compliant ATC system to date. Senior marketing manager for ATM systems, Bill Lang, says: "I think the RFE is a clear area to jump ahead into the FANS area right from the beginning. It is a large airspace and it is not really a feasible proposition for a radar-based system. If you look at the area involved, the investment required would be tremendous. The users that want to use that airspace are the ones who are operating very-long-range aircraft. Those aircraft are glass-cockpit aircraft that are candidate for FANS avionics packages."
He is anxious to capitalise on the New Zealand work, declaring: "A lot of that applies to the RFE. ADS and controller-pilot datalink-communications [CPDLC] are exactly what is needed in the RFE. For aircraft that are not FANS-equipped, you can display positions extrapolated from the flight plan. So the Russians can go from having very limited capability to very advanced capability. There is no reason why the RFE should not be open to long-haul aircraft with an initial capability in a matter of months."
Although Westinghouse is a major radar-producer it is particularly sensitive about suggestions that its proposal will be in any way outdated. Director of international ATM systems Alan Young says: "I think it is a misunderstanding that Westinghouse is promoting a ground-based system - we are promoting a hybrid system. We have always envisaged a phased programme that would introduce the new technologies, as they became practical, right from the very start of our dealings with the Russians. We have demonstrated a display that had both ADS and radar data and we see that as the solution for most of the parts of the world that don't have a ground-based infrastructure."
Young's vision of an evolving system closely reflects the views of consultancy Booz. Young says: "The RFE has a set of needs now that would allow it to increase its capacity and make it very helpful to people looking to offload Pacific routes. In the long term, you also have an international fleet that is moving rapidly towards GNSS use and you need to be adaptable and do that now, as well as grow with it."
There are complicating factors however, he notes: "There is a fairly big fleet of domestic aircraft that are using that area and you have to accommodate them. You're not going to pull those in and re-equip them. Short of blacking out the airspace, you have got to have a system in my opinion that grows with the introduction of new technology. The Russians view their ideal modernisation programme as one generating outside income and there are people there who believe they can also collect roubles from domestic traffic. But you cannot miss this opportunity to quickly address the GNSS possibilities. I see the project as being a hybrid that gets ready for the future - that is the issue."
RUSSIAN PARTNERS
Westinghouse's search for Russian partners has taken it so far to Ausrire of St Petersburg on radar activity. It is talking to other companies too, and Young says: "In the beginning, there will be more imported equipment, but, in the longer term, they will have step up to doing the majority of the work. The Russian intent is to provide 60% of the total modernisation programme, but I think Russia would trade off speed for more significant investment."
There are other potential major players, which have yet to show their hands. Loral, which inherited the IBM Federal Systems empire, concedes that some of IBM's earlier activities in Russia, ran into difficulties which may now make it an outsider. Loral] says: "We have no-one there now. We have to establish our bona fides and relationships with local companies and talk to the industry. It is a lot of work and right now we are not doing that."
In Europe, Thomson-CSF of France is less convinced that the EBRD-funded international-tender approach will necessarily go ahead and is watching the process from outside. It does not rule out an interest, however. Italy's Alenia operates in Russia, mostly through the Buran consortium, and it is also uncertain about the procurement process.
It has taken a long time, but perhaps the RFE will finally spawn a major infrastructure-modernisation programme in the former Soviet Union with benefits for all sides - not least the wider airline community.
Source: Flight International
