Tuesday, September 15, 2009

Back Down Under



Australia is busy tying itself in knots over their air traffic control system.

Military to lose airspace in $300m savings push

”The move would create a unified national air traffic control system for the first time, ending the wasteful separation of the systems and providing the government with a much-needed revenue boost.“

“Revenue boost” plus military matters -- it doesn’t compute for me. And then there is this:

”The loss of the three approach air traffic controllers forced Airservices to more than halve the number of aircraft movements at Sydney from 50 to 22.“

”Mr Walker said Airservices had been unable to find other controllers who could cover for the sick staff. He said there were generally six people working on approach control, and to have three sick at once was unusual.”

It’s real simple folks. If 3 sick controllers can sink your air traffic control system, I don’t think I would put the same folks running that system in charge of my military flights. But that’s just me.

As always, bear in mind that Airservices Australia is one of those wholly-owned government corporations that Robert Poole is always going on about. It’s the money. And the technology an entity like it can be sold. As Virgin Blue is finding out, it’s a slippery critter that can be hard to hold accountable. Speaking of which, if Australia had a national crisis and the ATC system failed the military as it failed the airline industry -- how much would that cost ? I’m sure CASA has a price for blood, just like the FAA does. What is it ? $1 million per life ? $1.5 ? When governments fail, not only do the bodies start piling up quickly, we find out that money isn’t really that important anyway.

But everybody has to learn the hard way it seems so take a look at the money side.

”The underlying rating on AsA is also very strong, based on its strong competitive position from the legislated monopoly status of its core services; legislated use of a cost-plus pricing structure; and modest financial profile. Nonetheless, with a forecast ramp-up in debt-funded capital spending, we expect AsA's financial metrics to weaken and its underlying credit profile to marginally weaken.”

If you’re Australian, you might want to ponder the meaning of “debt-funded capital spending” and what it means to you. As I’ve said before, it’s all about the bonds that can be issued.

You’ve got your operational side (Airservices) and regulatory side (CASA) separated. You’ve got your revenue stream set up to feed your “debt-funded capital spending“. You’ve purchased all this wonderful gee-whiz equipment and you’re working on sucking the military into this vortex. What’s missing ?

Oh yeah, controllers. The people that operate the fancy equipment. The people that make the system go so that the airplanes fly and the revenue stream...streams. Minor detail. Australia has a long and proud aviation history. They don’t need me to tell them how to run it. But they do need controllers to make it work.

Don Brown
September 15, 2009

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