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SES 2+ Regulation: Economic Regulation

By  Brussels, — Last updated on 11 December 2023


The current regulation concerning the Single European Sky (SES) was published in 2009 as Single European Sky II or SES II. By 2013, it was more than obvious that an overhaul was necessary. A subsequent SES 2+ was discussed – but never finalised. On 22 September 2020, the European Commission finally published its view on an updated SES regulatory framework that could achieve the original SES targets on CO2 emissions reductions, a reduction in delays and an increase in the cost efficiency of the ATM service provision.

The current SES 2+ draft proposes strong and independent bodies to implement economic regulation measures for the air navigation services market. It introduces a European Economic Regulator (foreseen as the “new Performance Review Board” (PRB) and mandates the establishment of fully independent National Supervisory Authorities (NSA). This is a welcomed step that A4E and its airlines have been requesting for many years.

Whilst the suggested changes to empower and make the economic regulations more transparent are welcomed, A4E notes that some vital principles are missing or are unclear in the draft text – hence,  further details are required. Amendments are called for to clearly determine key regulatory requirements and competencies.


A fully implemented Single and Digital European Sky (SES) is key to maintaining safety once traffic grows again. It will also be instrumental in reducing aviation’s environmental impact and CO2 footprint – supporting the European Green Deal. An updated SES regulatory framework must not only facilitate a transition to a clear future vision but also include strong incentives and clear targets to encourage the responsible parties – EU Member States – to increase the efficiency of the ATM system and thus positively contribute to these environmental targets.

As such, the draft SES 2+ proposal is based on the 2013 draft regulation and more recent analyses, including the Wise Persons Group (WPG) Report (April 2019), the joint ATM Stakeholder Declaration (September 2019) as well as the ATM Masterplan.


The current SES 2+ draft introduces a European economic regulatory body, the “new PRB” responsible for overseeing performance and costs, in particular. For efficiency reasons, based on the EC Staff Working Document, this European regulator should be established within EASA but remain independent in its decisions. This is not ideal in our view as safety and economic regulation should not be combined based on the key principles of civil aviation. However, the link between operational performance and economic regulation is highly relevant. The respective change for EU 2018/1139 has already been issued for public consultation. An initial review of this amendment has not revealed any major issues. Nevertheless, further clarifications are required to ensure that the key principle of “safety first” will not be impacted by the drive for greater efficiencies.

Do we think this will support an effective economic regulation?

Historically, A4E has asked for independent economic regulation on a national and/or European level. The existing system sees very close ties between Air Navigation Service Providers (ANSPs), their shareholders and their “economic” regulators — which lack sufficient independence and clear competencies and rules on how to effectively regulate. The mandate of the draft SES 2+ regulation establishing independent (national) economic regulatory bodies is very much welcomed. However, each regulator should be assessed by the European Commission whether it fulfils the expected level of independence and competence. (Similarly, the introduction of a regulatory body at a European level, exercised by a “new PRB” is supported)

Nevertheless, we see the need for improvement of the draft texts as these primarily focus on the establishment of structures and neglect to appropriately address the required regulatory contents – i.e., what is needed to effectively regulate those services that are not provided under normal market conditions.

In addition, we see the need to include in this proposal key principles of the regulative provisions. Doing so would ensure that all regulatory bodies (national and/or EC level) follow common regulatory standards and put the spotlight on how effective economic and performance regulation is done, not which organisation does it.

The recent reports from the PRB on Reference Period 2 (RP2) and the experience during the first round of consultations of RP3 clearly show the need for more guidelines on effective and harmonised regulation requirements. This spans from the competencies of the regulator to the limits of the transparency of the regulated financial figures and the competencies of the individual national supervisory authorities to intervene and regulate costs.

What are the key regulatory principles needed in the SES 2+ regulation?

First, a clear and direct goal of economic regulation needs to be identified for secondary regulation to be consistent. The idea of finalising the single European aviation market by including air navigation services – and other aviation services – must be part of SES 2+. This is especially true as this regulation is designed to exist for the foreseeable future. A free market is already assumed for the Aviation Data Service Providers and partly for tower services, — so the question remains: why not foresee this as well for air navigation services?

This draft regulation keeps the existing monopolistic structure for the provision of air navigation service (especially for the en-route and approach environment) under Article 7.1, stating “Member States shall ensure the provision of air traffic services on an exclusive basis within specific airspace blocks…” – allowing at most for a competition for the market — but not in the market. There must be a clear mandate to bring all air navigation services to the market, if of benefit to the users, and allow for site-specific charging for tower and approach services, in particular.

While today’s regulation makes a single aviation market for ANSPs challenging, the new regulation should make the leap and support and drive discussion around different business models for ANSPs (not only for ADSPs, or ancillary services) or the separation of infrastructure and service provision (as it is already implemented in many other industries like road, rail or energy). This would enable benefits from digitalisation to take hold. Such benefits are technologically possible but currently only imagined — to be reaped by the aviation industry, employees and states. It would also push new digital concepts and new forms of service provision, ensuring a flexible, resilient and scalable service in all areas – not only air navigation service provision.

Second, economic regulation must be independent of political agendas. Regulatory measures, i.e. price setting in the form of ATC charges, should only follow the cost efficiency and performance delivery principles. Furthermore, changes to quickly adapt to crisis situations need to be possible without lengthy political decision-making.

Third, transparency by meaningful consultation and a cooperative decision-making process – including full competencies of the NSA and/or “new PRB” to effectively regulate the cost base and set cost efficiency targets (independently from political influence) are key. Therefore, this needs to be defined and enshrined in the framework regulation and not in the implementing regulations. Having done so, this will allow the regulators to determine smart and effective targets – balancing scalability of services to changing demand with cost efficiency requirements – for the individual providers taking into account EU-wide targets and traffic demand.

Fourth, costs must be capped. Airspace users are missing unified standards for the calculation and determination of relevant costs. The guiding principles should be taken from other successfully regulated sectors and could include, for instance, that charges shall – as a minimum requirement – not exceed the cost of efficient service provision. The regulatory bodies should have full competence to determine this cost and have the power to set effective cost-efficiency targets. Based on the experiences in RP1 to RP3 there should have already been clear standards addressing, for instance, cost of capital, double charging between reference periods or fulfilment of investments.

These are core principles that need to be applied consistently and independently from the different secondary regulations and should not be re-defined in each implementing rule.

Furthermore, revenue losses arising from changed demand especially during a crisis should not follow a mere full cost recovery principle but reflect market behaviour. The current crisis shows that prices remain in many cases at least stable. Flexible, market-orientated mechanisms should be the basis for regulatory actions.


First and foremost, all airspace administered by a Member State should be subject to economic regulation. In today’s times, the cost recovery principle should be a relic of the past.

Implementing key principles for economic regulations, a clear definition of the desired state, independence of the regulator and meaningful consultations will deliver a set of positive effects and enable:

  • Easy definition of the required competencies of the regulatory bodies, be it at the European or national level;
  • Effective regulatory processes and unbiased governance;
  • All concerned parties are to be involved in defining smart targets, which are binding by agreement.

These are the principles that need to be applied consistently for further regulations implementing the economic regulation at EU and national level. In addition, these principles will also positively influence other areas of the SES 2+ framework by providing standards that make drafting the other secondary regulations simpler.