20 18 REPORT INTEGRATED SERVICES SOC LIMITED - ATNS
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CONTENTS Performance highlights 4 About the Integrated Report 5 Scope and boundary of report 5 Navigating this report 5 Referencing content online 7 Feedback 7 Approach to integrated reporting 7 Sustainability statement 7 Assurance 8 Statement of precautionary principle 10 Board of Directors Approval Statement 10 Organisational profile 12 Vision 12 Mission 12 Values 12 Nature and purpose of our business 12 Organisational structure and business model 12 Structure of ATNS’s operations 17 Contextualising our operations 22 Global business context 25 Regional context 25 National context 25 Developmental context 25 Commitment to external initiatives 28 Leadership review 29 1
CONTENTS CONTINUED Governance and assurance 34 Performance 114 Application of KING IV 34 Ensure long-term financial sustainability 114 Ethical leadership and corporate citizenship 34 Enhancing operational efficiencies in line with global ATM standards 117 ATNS Board of Directors 42 Develop leadership capability in the Africa ATM space 120 ATNS Executive Committee 54 Create a transformative organisation 121 How ATNS’s control framework creates value 60 Build a culture of safety 123 Remuneration 66 Build a skilled and capable employee resource base 126 Code of ethics 70 Manage the organisation’s contribution to Climate Change 126 Manage and preserve scarce and vulnerable resources 128 Material issues 72 Develop enterprise-wide awareness for environmental impacts 131 Clustering of ATNS’s material issues 76 Ensure constructive and collaborative stakeholder relationships 131 Stakeholder engagement 79 Maintain an impeccable governance framework 134 Key stakeholders 79 Ensure regulatory alignment and compliance 135 Performance against our Shareholder Compact 136 Strategy 81 ATNS’s Strategic fundamentals 82 Outlook 144 Strategic drivers 82 Ensure long-term financial stability 144 Strategic imperatives 82 Enhance operational efficiencies in line with global ATM standards 146 Monitoring sustainable development outcomes 86 Create a transformative organisation 148 Build a culture of safety 148 Creating value through the Capitals 88 Build a skilled and capable employee resource base 149 Defining “value creation” 90 Manage the organisation’s contribution to climate change 149 Financial capital 90 Develop enterprise-wide awareness for environmental impacts 151 Manufactured capital 94 Intellectual capital 100 Consolidated 5-year review 152 Human capital 102 List of acronyms 156 Social and relationship capital 105 Natural capital 109 Company information 160 2 3
PERFORMANCE HIGHLIGHTS ABOUT THE INTEGRATED REPORT STRATEGIC OBJECTIVES INDICATOR 2016/17 2017/18 Scope and boundary of the report material aspects extend to other entities outside of the Company, as ATNS’s operations are located at different airports. Revenue R1,557 billion R1,594 billion This is our 6th consecutive Integrated Report and Ensure long- covers the financial reporting period from 1 April The previous Integrated Report was approved by term financial Operating costs R1,300 billion R1,382 billion 2017 to 31 March 2018. The Integrated Report sustainability the ATNS Board on 29 August 2017 and published combines financial and non-financial performance for the period 1 April 2016 to 31 March 2017. The Net profit R184,5 million R190,1 million in a single report. References to forward-looking 2016/17 reporting suite combined performance information and targets are extracted from the content, sustainability content and our Annual Total capital expenditure R307 million R305 million 2018/19 ATNS Corporate Plan approved by the Financial Statements across three reporting Enhance operational Communication • C: 99,80% C: 99,78% Board of Directors. volumes. A printed version of the three-volume efficiencies in line suite of reports was published and a web-based with global ATM Average systems Navigation • N: 97,98% N: 96,30% The boundary of this report is largely the ATNS version of each report was made available in standards availability legal entity. There may be instances where PDF format. Surveillance • S: 99,99% S: 99,97% • ATS AIC: 70,01% • ATS AIC: 72,27% Create a • • ATS Female: 42,43% ATNS AIC: 75,12% • • ATS Female: 46,55% ATNS AIC: 76,98% Navigating this report transformative Overall EE representation organisation • ATNS Female: 44,88 • ATNS Female: 47,35% • People with • People with Icons associated with strategic objectives disabilities: 3,31% disabilities: 3,22% Performance commentary in this report pertains to material issues that specifically align with the 2,57 safety events per Company’s key strategic objectives. Accordingly, performance commentary is linked to strategic Build a culture Safety events per 100,000 5,19 safety events per 100 000 air traffic of safety air traffic movements 100 000 movements objectives throughout the report by means of the following icons: movements Total number of ATS trainees 81 68 Ensure long-term financial Manage the organisation’s sustainability contribution to Climate Change 22 (12 Engineering SUSTAINABLE AVIATION AFRICA Build a skilled and Total number of engineering 6 learnerships and capable employee trainees resource base 10 graduates) Enhance operational efficiencies in Manage and preserve scarce and line with global ATM standards vulnerable resources Training investment as 8,13% 6,52% percentage of salary bill Deploy and use leading Develop enterprise-wide awareness technologies to the benefit of the for accountable environmental Develop enterprise- ATM community Total number of employees impact wide awareness trained on environmental 316 ATNS employees 0* for environmental training programmes Develop leadership capability in Maintain an impeccable governance impacts Africa ATM space framework Manage the organisation’s Create a transformative Ensure regulatory alignment and Total carbon inventory 23,292.01 tons CO2e 23,440,52 tons CO2e contribution to organisation compliance SUSTAINABLE AVIATION AFRICA climate change Ensure constructive and Manage and Overall annual electricity usage 20,515,469 kWh 20,358,981 kWh Build a culture of safety preserve scarce collaborative stakeholder and vulnerable relationships resources Overall annual fuel usage 89,761 Litres 81,612 Litres Build a skilled and capable employee resource base Ensure constructive and collaborative CSI spend R3,445,441 R2,521,704 stakeholder relationships * ATNS e-learning content being developed. 4 5
ABOUT THE INTEGRATED REPORT CONTINUED Referencing content online Materiality has been determined by the ATNS Icons associated with the six capitals Board of Directors and Executive Management through a process of extensive consultation within The 2017/18 Integrated Report, and ATNS’s Annual Performance commentary in this report further aligns with the Company’s perspective on value the organisation and with ATNS’s stakeholders. Financial Statements are available on our website creation, and in particular, value creation through the six capitals (financial, manufactured, The process considered ATNS’s strategic objectives as downloadable documents: http://www.atns. intellectual, human, social and relationship and natural). Accordingly, performance commentary is whilst taking into account the Company’s material co.za/annualreports. also linked to the six capitals throughout the report by means of the following icons: risks, strategic opportunities and the ATNS value chain. Financial capital Human capital Feedback Read more on the materiality determination process on page 72 and 73. We welcome feedback on our integrated reporting Manufactured capital Social and relationship capital to ensure that we continue to disclose information that is pertinent to all our stakeholders. P.16 Sustainability statement Intellectual capital Natural capital For further queries or suggestions kindly contact: As a signatory to multiple global conventions P.3 marketing@atns.co.za. P.16 – including the Chicago Convention, which established the International Civil Aviation Icons referencing KING IV principles applied Approach to integrated Organisation (ICAO) as a specialised agency of the United Nations - South Africa’s vision for Abridged governance disclosures in this report are accompanied, where applicable, by icons referencing the P.5 reporting sustainable development is embodied in the applicable KING IV principle by means of the following icons: P.15 relationship between social systems, ecosystems The 2017/18 Integrated Report offers a and economic systems. As a State-Owned comprehensive account of the Company’s Company - and national provider of air traffic P = Principle performance in terms of its ability to create management (ATM) services – ATNS plays a King IV principles are referenced where appropriate in this report. value through the ‘six capitals’, as defined by the significant role in contributing to South Africa’s International Integrated Reporting Council (IIRC).1 sustainability agenda. Our Shareholder mandate, represented by the Minister of Transport and Icons associated with material issues We apply the principle of ‘materiality’ to: the entire Department of Transport, directs us to contribute to both departmental and national • Inform disclosures, so that they are both outcomes by balancing the safe development of Icon denoting one or more of ATNS’s 19 material issues. important to the organisation and relevant in civil aviation, with the responsible consideration terms of our reporting priorities for the year of our impacts on the economy, society and the under review. environment. Icon denoting ATNS’s material developmental and environmental issues. Where appropriate in this report, material issues forming part of ATNS’s material developmental and environmental • Link disclosures on ATNS’s financial, social and We disclose both financial and qualitative (non- issues – as detailed in the online Sustainability Report - are denoted by using this icon. environmental performance to the Company’s financial) performance information in this report strategic objectives, top risks and to the six as it relates to ATNS’s business outcomes and the capitals. Company’s contributions to the country’s overall • Link performance to the Company’s economic efficiency and ATM competitiveness. developmental context, regulatory context, Our sustainability reporting includes Standard commercial context and its global business Disclosures from the GRI Sustainability Reporting context. Guidelines. 1 According to the IIRC: “The capitals… are: financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital, and natural capital. Together they represent stores of value that are the basis of an organisation’s value creation.” Further: “Integrated Reporting is an approach to corporate reporting that demonstrates the linkages between an organisation’s strategy, governance and financial performance and the social, environmental and economic context within which it operates” (2013a). 6 7
ABOUT THE INTEGRATED REPORT CONTINUED Assurance ASSURANCE ASSURANCE PROVIDERS ASSURANCE FRAMEWORKS, 2017/18 OUTCOME ATNS’s integrated assurance plan and framework encompass the assurances provided by the Company’s CONTENT STANDARDS AND GUIDELINES Board of Directors, management, internal specialists, internal and external audit functions and other Broad-Based • ATNS Internal Audit • DTI Codes of Good Practice B-BBEE Level 2 business advisers. Black Economic function • B-BBEE Act and associated Charters B-BBEE score: 85,42 Empowerment, • ATNS Board • Generic Transport Public Sector ATNS INTEGRATED ASSURANCE FRAMEWORK FOR THE ANNUAL INTEGRATED REPORTING PROCESS representation • ATNS Social and Ethics Charter and contributor Committee • Relevant Key Performance Areas level • ATNS Human Resource (KPAs) stipulated in the Shareholder ASSURANCE ASSURANCE PROVIDERS ASSURANCE FRAMEWORKS, 2017/18 OUTCOME Committee Compact CONTENT STANDARDS AND GUIDELINES • ATNS Procurement P.2 Committee P.10 Annual • ATNS Board of Directors • Financial Reporting Standards Qualified audit report P.11 Financial • The Company’s • Requirements of the Public Finance for 2017/18. Safety • ATNS Board of Directors • ICAO Standards and Recommended The safety ratio P.12 Statements directors Management Act (PFMA) of South management • ATNS Audit and Risk Practices (SARPs); ICAO Annex 19 attained was 5,19 P.13 (AFS) • External auditors: Africa and Committee requirement for States to implement safety events per P.15 Rakoma and Associates • Companies Act of South Africa performance • External assurance ATS safety management programmes 100 000 movements • Public Audit Act of South Africa provider: South African • The Civil Aviation Act (Act 13 of against a target of • International Standards on Auditing Civil Aviation Authority 2009), supported by Civil Aviation 2 safety events per (ISA) (SACAA) Regulations 100 000 movements. • South African Civil Aviation Risk • Audit and Risk • ICAO Standards and Recommended Risk management Regulations (CAR) Part 40 management Committee (ARC) Practices (SARPs) processes, practices • Relevant Key Performance Areas and review of • Executive Audit and Risk • The King Code of Governance for and systems satisfy (KPAs) stipulated in the Shareholder the efficacy (EARC) South Africa (2016) (King IV) all legislative Compact of internal • ATNS Management • Requirements of the Public Finance requirements • ATNS Safety Management System controls • ATNS IT Steering Management Act (PFMA) of South but have limited (SMS) and SMS Policy (including Committee Africa influence on the • CANSO and EUROCONTROL fraud risk) • ATNS Risk Department • ISO standards relating to safety and control environment. Standards of Excellence • ATNS Legal and environment There are areas Compliance Department • ERM and compliance standards of improvement Environmental • ATNS Board of Directors • ICAO Standards and Recommended For 2017/18 financial • ATNS Internal Audit including guidelines relating to the identified. management • ATNS Social and Ethics Practices (SARPs) year, 23 440.52 CO2e function Risk Management and Compliance and Committee • Relevant Key Performance Areas resulted from ATNS • External auditors: Institute of South Africa performance • Portfolio Project (KPAs) stipulated in the Shareholder operations. The Rakoma and Associates • The Civil Aviation Act (Act 13 of Management Office Compact emission distribution 2009), supported by Civil Aviation • Sustainability Executive • National Environmental Management resulted in 86% tonnes Regulations and Technical Standards Steering committee Act (NEMA) CO2e from scope 2, • Key Performance Areas (KPAs) • Outcomes of the South African Civil 13% from scope 3 stipulated in the Shareholder Aviation Authority (SACAA) Aviation and 1% from scope 1 Compact Environmental Protection (AEP) (graph 13). Therefore, Corporate • ATNS IT Steering • ICAO Standards and Recommended Controls Inadequacies Forum scope 2, electricity Governance Committee Practices (SARPs) were identified, • Greenhouse gas (GHG) Protocol emissions, account and regulatory • ATNS’s Internal Audit • The Civil Aviation Act (Act 13 of there is room for Corporate Standard for majority of the compliance Function 2009), supported by Civil Aviation improvement. • Carbon Disclosure Project (CDP) carbon footprint. (including IT • Compliance Function Regulations and Technical Standards governance) • The King Code of Governance for Integrated • ATNS Board of Directors • The King Code of Governance for Board-approved South Africa (2009) (King IV) Annual • ATNS Company South Africa (2016) (King IV) Integrated Report, • Requirements of the Public Finance Reporting Secretary • Global Reporting Initiative (GRI) G4 consolidating financial Management Act (PFMA) of South Sustainability Reporting Guidelines and non-financial Africa • International Integrated Reporting information • Companies Act Framework V1.0 (International Additional external • Permission applications as mandated Integrated Reporting Council (IIRC)) assurance on by the Regulating Committee in its • United Nations Global Compact certain aspects of Approach Document (UNGC) the nonfinancial • Relevant Key Performance Areas • Carbon Disclosure Project (CDP) sustainability (KPAs) stipulated in the Shareholder information reported Compact in the Integrated • ATNS Code of Ethics Report. 8 9
ABOUT THE INTEGRATED REPORT CONTINUED Statement of precautionary Board of Directors Approval principle Statement P.5 P.10 Airspace safety performance continues to be at The ATNS Board, assisted by its various the core of our business. Air traffic movements committees, is ultimately responsible for are expected to increase in future. Accordingly, the overseeing the integrity of the 2017/18 Integrated P.3 P.15 flexible optimisation of airspace will contribute to Report. safety and an operationally-efficient environment. The Board has applied its collective mind to the ATNS uses a ‘safety ratio’ to measure the number preparation and presentation of the Integrated of safety events attributed to its operations per Report and has concluded that this report is 100 000 movements. The safety ratio enables us presented in accordance with the International to verify that we are meeting safety performance Integrated Reporting Framework v1.0. The targets. Data is collected and analysed to assess Integrated Report also contains Standard our levels of safety performance. The safety ratio Disclosures from the GRI Sustainability Reporting is calculated using a 12-month rolling average Guidelines. method. Safety performance assurance and investigation activities are both reactive and The Integrated Report was approved by the Board proactive. on 22 October 2018, and signed on its behalf by: ATNS provides safe operations by applying ‘separation standards’ based on Instrument Flight Rules (IFR). With respect to air traffic control, ‘separation’ refers to the concept of keeping aircrafts a minimum distance from each other to SIMPHIWE THOBELA reduce the risk of collision, as well as preventing Chairperson accidents due to wake turbulence. ATS authorities stipulate minimum separation standards for 22 October 2018 airspace based on ICAO standards. Johannesburg Root causes for safety events include human- related errors and fatigue, and extends to external factors such as weather phenomena, airspace design, and complex traffic scenarios. ATNS’s Risk Safety Index (RSI) matrix measures the levels of safety risk according to the categories of ‘probability’ and ‘severity’. The Index increases risk visibility and supports management decision- making. Safety meetings are held with General Aviation at unit and regional levels to discuss safety performance, hazards, risks and mitigations. 10 11
ORGANISATIONAL PROFILE Vision The principal purpose of ATNS is to plan and operate safe and efficient services in the airspace FIGURE 1: ATNS CORPORATE STRUCTURE P.16 for which the state is responsible through: To be the preferred supplier of Air Traffic Executive Authority and Management solutions and associated services to Regulatory Oversight Regula areholder c Regu • Airspace infrastructure provision; fet y to Sh omi lat the African continent and selected international Sa on r Ec or markets. • Development of human capital (ATC, Minister of Regulating Engineering Technicians and ATM and related SACAA Transport Committee Specialists); and Mission • Partnerships and collaboration with other stakeholders. To provide safe, expeditious and efficient Air Traffic Management solutions and associated services The economic regulation regime is specified Accounting Authority in Section 11 of the ATNS Company Act. ATNS ATNS Board and Governance Values cannot levy an air traffic service charge unless it is in possession of a valid written Permission that • Accountability provides a tariff regime to be charged to users • Safety and customer service over a five-year cycle. The Permission is issued Internal Audit CEO Company Secretary • Continuous improvement and innovation by the Regulating Committee, which is required • Employee engagement and development to balance the interests of the Company with the • Fairness and consistency interest of our clients, which includes the safe, • Open and effective communication efficient, economic and profitable operation of the Company. This encourages timely investment Executive Executive Chief Chief Executive Executive Legal ATM/CNS and ensures that we are well placed to finance Counsel Strategy & Financial Operations Planning & Commercial Human Optimisation Officer Officer Services Capital Nature and purpose of our our obligations and have a reasonable prospect of Standards earning a commercial return. business The Company has its head-office at Eastgate Office Principal Chief Chief Chief • The Air Traffic and Navigation Service Company Technology Information Air Traffic Park, Block C, South Boulevard Road, Bruma, ATA Operations Services Limited (ATNS) is a State-Owned Company (Postal code: 2198) in Gauteng. (SOC). • Established in 1993 in terms of the ATNS Company Act (Act 45 of 1993) to provide air Organisational structure and traffic management solutions and associated business model Corporate function Regulated Business services on behalf of the State. P.13 • ATM services accord with International Civil • ATNS is a state-owned entity incorporated as a The ATNS corporate function determines the The principal activities of ATNS’s regulated Aviation Organisation (ICAO) standards and Company. direction of the Company as mandated by the business encompass the planning and operation of recommended practices, and the South African Board of Directors. The CEO is responsible for safe and efficient services in the airspace for which • A Board of Directors, appointed by the Minister Civil Aviation Regulations and Technical formulating and executing the strategy. This the state is responsible. At present approximately of Transport, provides leadership oversight Standards. function ensures that ATNS Executives adequately 90% of ATNS revenue is generated through and guides the implementation of the ATNS plan and utilise resources as guided by the five- Regulated Business. • ATNS is governed by South Africa’s legislative mandate. year permission cycle. Departmental, operational and administrative framework. • ATNS’s structure aligns with international and business plans also drive planning. The ATNS structure enables its unique value chain, • ATNS is a commercialised ANSP operating on legislation, such as the International Civil which comprises three main blocks: the “user pay” principle that relies on current Aviation Organisation (ICAO) ATM Operational Support function revenues and debt funding for its operational Concept and Global Air Navigation Plan (GANP). 1. ATM Operational Concept and Global Air and capital expenditure requirements. The support functions, such as Human Capital Navigation Plan (GANP). (HC), Finance, Information Technology, and Risk 2. Enabling infrastructure and resources. and Compliance create an enabling operating environment governance frameworks, processes 3. ATM and technical support (TS) operations. and professional practices. 12 13
ORGANISATIONAL PROFILE CONTINUED FIGURE 2: ATNS REGULATED BUSINESS MODEL Traffic Movement Assumptions With the ATM industry being strongly linked to growth in air traffic movements and overall economic growth, Corporate function ATNS projects the Company’s revenue based on expected growth in air traffic movements. The latter has a • Strategic formulation/execution • Planning (corporate/permission) high correlation to Gross Domestic Product (GDP) at approximately 80%. REVENUE AND 2017/18 2017/18 2016/17 2018/19 2019/20 2020/21 REVENUE (ATM) (PREDICTED) (ACTUAL) Revenue 1,376,490,388 1,433,597 1,402,408,229 1,497,917 1,590,736 1,722,529 Enabling/ ATM driving ATM Revenue ATMs 481,840 489,751 480,983 479,840 505,762 516,797 operational technology and TS concept infrastructure operations AAGR 0.61% 1.64% -0.18% -0.24% 5.40% 2.18% The ATNS Mandate (Revenue ATMs) Act 45 of 1993 Our customers Note: There is a reduction of 0,18 % on revenue movements for 2017/18 FY when compared with the previous FY due to a reduction in the route network, mainly for SAA flights and socio-economic drivers which drives demand for air travel. • ICAO block builds • Define enabling • Provide safe, efficient • AFI plan technology and effective air traffic • NAMP • Define driving technology services There is a reduction of 1,79% between predicted and the actual values of 2017/18 FY where an increase of • ATNS roadmap • Develop infrastructure • Operate and maintain • Airspace design • Deploy appropriate infrastructure and 1,64% was expected based on predicted figures. 2018/19FY – 2020/21FY figures are current forecasted values – Procedures resources resources as at 1st October 2018. – RNP/RNAV • ATNS CNS roadmap • Provide air traffic management solutions Air traffic service charges ATNS AIR TRAFFIC SERVICE CHARGES FOR THE REGULATED BUSINESS Support functions • HR/training • Risk & compliance • Finance • Information technology FORMULAS AND COEFFICIENTS (FCS) MAIN MASS COST CATEGORY COMPONENT AERODROME TMA ACCESS AREA CHARGE CHARGE CHARGE Air navigation services and infrastructure VC R28,29 R28.29 Air navigation infrastructure and services consist FAOR < 5 000 kg BSC R114,94/10 000.MCM R114,94/10 000.MCM of three main components: FC R60,64 R112,03 VC R28,29 R28,29 R28,29 1. Communications infrastructure, Navigation 5 000 kg < MCM < infrastructure and Surveillance infrastructure. BSC R114,94/10 000.MCM R114,94/10 000.MCM R114,94/10 000.MCM 15 000 kg 2. Auxiliary aviation services, such as aeronautical FC R121,30/10 000.MCM R22,41/1 000.MCM R16,08/100 000.MCMM.d information publications, flight procedure VC R28,29 R28,29 R28,29 design and aeronautical surveys. > 15 000 kg BSC R140,75/100.√MCM R140,75/100.√MCM R140,75/100.√MCM 3. Air traffic management. FC R148,57/100.√MCM R274,43/100.√MCM R197,00/10 000.√MCMd ATNS’s infrastructure and service development are Each rand-value coefficient in the table above is multiplied by: informed by user expectations and regulatory requirements at a global level, as well as new • 100% for a domestic flight; technologies and the needs of the air traffic • 100% for a regional flight; and management (ATM) community. • 100% for an international flight. The above coefficient formula applies to all charges except in the case of FCs for aerodrome, and TMA access charges at FAOR for aircraft with MCM
ORGANISATIONAL PROFILE CONTINUED Aviation Training Academy Space-Based ADS-B Structure of ATNS’s operations management (ATM) service delivery component is enabled by an advanced ATM system deployed ATNS’s Aviation Training Academy (ATA) provides ATNS has partnered with the first global air at the Johannesburg and Cape Town air traffic a full range of air traffic services training, traffic surveillance system using a space-based ATNS Services control centres and associated terminal control technical support and related training. The ATA is Automatic Dependent Surveillance-Broadcast units using enabling technologies encompassing also an ISO 9001:2015 accredited institution and (ADS-B) network. This system makes it possible ATNS’s services support seamless gate-to-gate communications, navigation and surveillance has international cooperation agreements with to have surveillance of aircraft in areas where operations. This concept encompasses the taxi-out systems. The illustrated value chain (Figure 3) is partners such as the Embry Riddle Aeronautical it is difficult to deploy traditional surveillance and departure, climb out, cruise, descent, arrival, scalable across the total user-demand spectrum in University, ENAC and WITS, enabling the ATNS systems, or to augment the current surveillance landing and taxi-in phases of a flight. The air traffic the South African airspace. ATA to maintain mutually beneficial partnerships capabilities of the region. The system will enable in the presentation and accreditation of ATS real-time transmission of ADS-B reports from international courses. The ATA holds full equipped aircraft, to Air Traffic Management (ATM) CURRENT AND NEW PRODUCTS AND SERVICES ICAO Trainair Plus membership and has been automation platforms and Air Traffic Controllers designated by ICAO as a Regional Training Centre (ATCs) in every Flight Information Region (FIR). EXISTING PRODUCTS AND SERVICES NEW PRODUCTS AND SERVICES of Excellence. The ATA is currently pursuing IN DEVELOPMENT registration as an academic institute with the ATNS has established a Processing and Department of Higher Education and Training. Distribution point in South Africa to distribute Air Traffic Flow Management (ATFM) Collaborative Decision Making (CDM) this space-based surveillance data for the region. Training Information/knowledge services, (e.g. SMS, Non-regulated business Due to the critical and time-sensitive nature of A-SMGCS, 4D) management information the surveillance data, the distribution option would need to have redundancy and could include Air Traffic Services (ATS) – Air Traffic Control (ATC) Carbon credits (efficient procedures/technologies) ATNS’s non-regulated business currently terrestrial links as well as the upgraded VSAT and Aeronautical Information Management (AIM) contributes approximately 10% of the Company’s revenue. The non-regulated business encompasses network stated above. a long-term strategy to facilitate regional African Centralised Aeronautical Database (A-CAD) NAVAIDS Flight Calibration expansion through a division vehicle presently AIS to AIM Roadmap Implementation known as “ATNS International”. The division will Engineering and Technical support New consulting services (high visibility ATM event enable the Company to take a more robust and ICAO has identified the need for global aviation planning e.g. ASBU) agile stance in the non-regulated business market operators to follow unified and integrated Aeronautical Billing & Collection Service AIS to AIM Transition without posing undue risks to its regulated market processes for ATM as described in its vision and Shareholder. It will also enable ATNS to enter statement: “To achieve an interoperable global air Aeronautical WGS-84 Survey ATMS Support Tools joint ventures and partnerships with external traffic management system, for all users during Consultancy Services Space Based ADS-B companies to harness more valuable market all phases of flight, that meets agreed levels of opportunities while extending its regional influence safety, provides for optimum economic operations, Airspace Management and reach. is environmentally sustainable and meets national security requirements”. Flight Procedure Design The following are some of the major regional based projects that ATNS’s non-regulated business has Therefore, in line with ICAO’s vision, ATNS has MARKET SEGMENTS AND GEOGRAPHIC MARKETS embarked on. focused on guiding aviation decision makers in the region to ensure that the changeover from CURRENT MARKETS NEW MARKETS VSAT Network Value-added Services AIS (Aeronautical Information Service) to AIM (Aeronautical Information Management) happens RSA – Statutory Selected global and African ATM markets ATNS has recently upgraded the VSAT network in a planned and measurable method. This is to RSA – Contractual platform from a legacy protocol-based system to ensure that we comply with the overall objectives an IP enabled platform. The new platform creates of global air traffic management. SADC – Prioritised an opportunity to provide value-added services into the region, as well as to improve aviation systems ATNS has established a regional Aeronautical and services. The current services on the network Information database, which is one of three on include AFTN, AMHS and voice services. ATNS is the African continent. The goal of the database currently determining the feasibility of utilising is to ensure that Aeronautical Information this as a telecommunication platform for services Management in the region benefits from high such as Space-Based ADS-B and the Regional levels of automation and consequently high levels Aeronautical database mentioned below. of Aviation Safety. 16 17
ORGANISATIONAL PROFILE CONTINUED FIGURE 3: ATNS SERVICE OVERVIEW Cruising Descending Holding Phases of flight Taxiing Take-off Climbing Climbing Landing Taxiing Fly-over Descending Letdown Fly-over Controlled Airspace Control Zone Control Areas Airways Control Areas Control Areas Control Zone Search and rescue (if required) Pre-flight planning En-Route Sectors Area Control Terminal/ Reporting Points Terminal/ Approach Approach Control Control Aerodrome Aerodrome Control VOR/DME NDB VOR/DME Control NDB VOR/DME VOR/DME VOR/DME Communication Air – Ground Ground – Air Radio & Data Link ILS ILS Navigation NDB VOR/DME & NDB NDB VOR/DME VOR/DME Surveillance Primary En-Route Radar Cover Primary Secondary Primary and Secondary Secondary Radar Visual Radar Visual 18 19
ORGANISATIONAL PROFILE CONTINUED FIGURE 4: ATNS’S PRESENCE IN SOUTH AFRICA FIGURE 6: ATNS’S EXTENDED SERVICES ON THE AFRICAN CONTINENT AND BEYOND Polokwane Pilanesberg Kruger Mpumalanga International Mafikeng ACSA Airports Wonderboom Regional Airports Lanseria Grand Central Rand OR Tambo ATNS service reach: International • Aerodrome and approach control Upington services: 9 ACSA airports • Aerodrome services: 12 regional Kimberley airports Bloemfontein • Approach procedural services: Pietermaritzburg 4 regional airports Virginia Additional services: King Shaka • National Aeronautical Information International Management and Oceanic Control Umtata services • Operates Aeronautical Rescue Coordination Centre on behalf of the DoT Bisho East London Cape Town Port Elizabeth International George FIGURE 5: ATNS AFRICAN INDIAN OCEAN (AFI) REGIONAL AIRSPACE COVER Aeronautical Surveying Aeronautical Documentation 20° Charting 18S 010W Flight Procedure design scarr agaasca Madagascar Training MMaaddag 26SS AIM 30° 040E Other projects 30S 30S South Africa 040E 057E Billing Current SADC VSAT satellite communication 35S 35S direct speech interconnectivity 40° 075E 075E Current NAFISAT satellite communication direct speech interconnectivity ASECNA region and SADC region VSAT direct speech connectivity via Antananarivo 50° 0° 10° 20° 30° 40° 50° 60° Interconnectivity between SADC and ASECNA networks Future planned circuits SADC 2% NAFISAT 3% 2% South Pole 3% AFISNET/ASECNA Figure 5 depicts ATNS’s current and potential new markets in the AFI region. ATNS bases its selection of the markets on the following criteria: GRAPH 1: SPLIT OF ATNS REVENUE SOURCES l En-Route and approach fees • Analysis of external market research and intelligence gained through customer engagements. l SADC VSAT 11 • Countries where ATNS already has established contracts and good working relationships. l Small Aerodrome Fees • ATNS’s current capabilities and what is required to build and extend these to new markets. l NAFISAT revenue • Current and potential revenue contributors. l Other • Strategic intent for the organisation’s long-term aspirations. 90% 20 21
ORGANISATIONAL PROFILE CONTINUED Contextualising our operations Committee (RC) and aims to balance the interests of the Company with those of our clients. This FIGURE 7: PERMISSION MODULE OVERVIEW encourages timely investment and ensures that we Regulatory context are well placed to finance our obligations and have F fic le En uturviro e Op a reasonable prospect of earning a commercial raf ir Defi P.13 The international aviation regulatory environment N S T Modu core aual sat nes th nm era ent tin return. AT cast t h e n n Sou isfy th e act Mo g e for he a , dul was formed through the International Civil Aviation For and s. T riffs e th A e re vitie f q i s e Organisation (ICAO), a specialised body of the dem rvic h ta ffic r Ma ican irem of AT u The RC is a statutory body formed and appointed s the rol se er wit ak tra nd s imp erplt N a e n N S e r nt th e a le an tiona ts of to United Nations Organisation responsible for by the Shareholder, the DoT and RC is empowered Cov fic co , toge ue. P esign ce con ment (NAN l Airs the traf traffic revenated d airspa the ATN tained the ini P) and pace global civil aviation. ICAO was established through by the ATNS Company Act to issue the Permission es el of w ti driv the r ation ine ho ness S with ATM within atives the Chicago Convention, signed by participating to ATNS, which regulates the increase in specified an nfigu eterm ) busi d r of t in th Roadm the nd co ors d tline ed. The an traffi ipme ule ( ion o he e co ap states in 1944. South Africa is a signatory to App Permi ntext ) fo erest paramaffic, a n is Humm the e equ x Mod nisat n the tariffs that ATNS can issue and prescribes t sec re (fro organ mp ost of rs fro lica ssio fron Capi c m nt co i.e. t f c ete the Convention and has acceded to abide by the co fromf the C r and f depe tion a gy is tion n c minimum service standard requirements for the dul mi . Cap taff con Mod as welent ATN al M o r tlin tal P odul mp he . terms and conditions. In terms of Article 28 of the any num tline config techn other cap n, in icin al) t fron tor ling The ow regulated business. Mo Econo th ape orga nd o nd cro NS es i (infl sets th ate (a e S H odu ent ofows t r th and sec enab ent). ents fl Chicago Convention, the South African Government atio e p nnu be staf ura olo the ironm pon m the env ff com y fro taff. g AT e co um le is required to provide air navigation services and sta largel line s - As per the regulations, the Permission formulation la r a infrastructure in compliance with the Convention m n process must commence in the third year of the t Ma eg pon fron and as promulgated from time to time by ICAO. e, alsos aggr current permission. A new permission process ital u t le commenced in 2017 after the RC issued an Eight modules fl as on ve ATNS’s regulated business is carried out in its the Approach Document to industry in December Dri l capacity as a State-Owned Company (SOC), 2016. After extensive consultation between that assist in mandated under Act by its Shareholder, the ATNS and industry stakeholders throughout building the minist y the ll as s uirem ated the permission leve fore t tive e taff or tutor nts. T to the Ad iven b as we .) req ggreg ule. com audi onen pex P The of ac e ope pend nisa (gove ese CAP asis force Pla pital le Department of Transport (DoT). Given its monopoly 2017, a permission application was made to the tha ual Mo pendit he ca maint the to and . dr me ase re pan c div agg rms pro eeds raffic e com xpend large Ma le, i.e e ove tal ba ned. l ven exp ed by egate odu ex com traffi ly the ple te er, l pan ting, ts ar lan M ann tivity ratio iture tion rnan B nan application du is p ich in s toge her tn status, this business is regulated by the Regulating ATN odu req nditu the com . EX RC in November 2017. The RC has concluded vide to inte . th r ti se uire re b ancATNS nt’) th eM y, wh odule the ot r ra Committee [RC], a statutory body established by M h its deliberation on the permission application p s t be S ur t n th al e are ure sim the DoT to regulate ATNS’s economic activities. made, after considering all comments received. the n etc e a m ies id O i s e e x Fin le ca pi It subsequently submitted its decision and final T driv pa n Economic regulation (‘re y’s ue m ta report to the Honorable Minister of Transport. es ny, res g OpeATNS tion e a ai rati istra s Mai and ons in le od e AdmModu tive y The economic regulation regime is articulated The current Permission (2018/19 – 2022/23) was nt ta Modenanc i tra re t inis ures a the u of t ce, Th in in Section 11 of the ATNS Company Act (45 of approved by the Minister of Transport in terms th e an ule e m h d A nd i t by e en of th ory he nua t e to ly e 1993), which specifies that ATNS cannot levy air of Section 11 of ATNS Act.1993 in September the he comtal lev l traffic exp ly driv ation statut .) Cap per pan el of o e is s tc traffic service charges unless it is in possession 2018. This approval by the Minister has been driv larg organ ell a ting, e the ex Mo ationa y, and activity es f f s w d i of a valid written Permission that provides for a promulgated and gazetted, thus authorising ATNS M b a d u l ex t h e in sta ny, a ce, au ents. ove odule sis of t le is a pendi refore pa an m r tim , i.e he t th t u comovern equire tariff regime to be charged to users for the use of to levy tariff charges for the 2018/19-20122/23 e p . the Main e sa re. Th (g r nee rovide capit tenanme tim e air navigation infrastructure and/or the provision period. ds t s th al e ce P e o be e ca xpe la of an air traffic service over a five-year period. ma pital nditu n inta b r ined se t e a The said Permission is issued by the Regulating Read more on ATNS’s Permission cycle on page 24. . hat 22 23
ORGANISATIONAL PROFILE CONTINUED FIGURE 8: PERMISSION MODULE INTERDEPENDENCIES Global business context networks in the last 10 years. Ethiopian Airlines, with its hub at Addis Bole Int Airport, is one of the Continent’s largest carriers with an extensive Aviation provides the only world-wide regional and intercontinental network, consisting transportation network2: of one of the youngest and most technologically- TRAFFIC MACRO- FINANCE advanced fleets globally. FORECAST ECONOMY PLAN • More than 3,3 billion passengers travel annually (7,3 billion world-wide by 2031). • 52 million tonnes of cargo is transported by air National context travel. Cost of Non-regulated • 40% of international tourists now travel by air. Numerous private airlines have entered the Ann. Traffic Small Airport Capital Tariffs (regulated) Traffic (non-reg) domestic market in recent years. Historically, Economic • Aviation generates 58 million jobs globally. South African Airways (SAA) had monopolised the Variables Peak Sector Regulated • Economic impact is estimated at US$2,4 trillion. market since 1934 until the early 1990s, when the Borrowings Traffic Configuration Tariffs industry was deregulated. SAA began the process • At least 1,570 Airlines/22,000 Aircraft. of transitioning to a commercial airline in a • Over 50,000 routes/100,000 flights per day. liberalised international market (Goldstein, 1999), making it difficult for new airlines to compete with • 1,670 Airports and 160 Air Navigation Service SAA. At the time, SAA held approximately 95% of Providers. the market share (Oosthuizen, 2013). Regional context South Africa has seen many entrants since the industry’s deregulation in 1990. Flitestar was the first South African airline to enter the market after Air travel in Africa has grown strongly and much deregulation, followed by other entrants such as FUTURE HUMAN faster than the rest of the world. IATA projects OPEX Comair, Nationwide and Sun Air. By 2006, Sun Air OPERATING CAPITAL that the airline industry in Africa will continue to PLAN and Comair had managed to erode SAA’s market ENVIRONMENT PLAN grow in passenger numbers at an annual average share to 66% on the Cape Town-Johannesburg- rate of 4.7% by 2034, faster than regional markets Durban routes (Goldstein, 1999). Sun Air however in North America and Europe whose growth is went bankrupt in 1999 and ceased operations. AOM forecast at 3.3% and 2.7%, respectively (IATA, Phoenix Airlines, Nationwide, Velvet Sky, Intensive AO Administration ATS 2014). To meet this demand, there has been entry DCB Air and 1Time all entered the market; however, TS Other Staff and expansion of numerous airlines. after a few years in operation, they too encountered CM AUO Operations ETS financial difficulties and closed operations. Other National carriers, such as Kenya Airways and ATMSDM late entrants include Kulula, Mango, FlySafair, Ethiopian Airlines, have been the most successful CEM Air, Skywise and Blue Crane. Apart from the in terms of growth by scale and scope of their national carrier’s subsidiary, Mango, of the 11 route networks as mid-hemisphere full-service airlines that entered the market between 1991 hub-based carriers LCCs are also quickly entering Legend and 2012, only a few are still operational, such as markets throughout the region and gaining AO – Aerodrome Operations MAINTENANCE PLAN Comair’s Kulula. AOM – Airspace Organisation market share. In the South African domestic Management arena, they are the dominant carriers (ASM Traffic ATS – Air Traffic Services Development Plan – ACSA, 2015). Developmental context AUO – Airspace User Operation CM – Conflict Management CAPEX PLAN Africa’s air travel connectivity has improved in As a State-Owned Company, ATNS aims to support DCB – Demand Capacity Balancing ETS – Engineering Technical recent years. This is partly due to the increase governmental socio-economic outcomes – which Services in legacy carriers on the Continent – Ethiopian aim to eliminate poverty and reduce inequality by Airlines, Arik and Kenya Airways – that have added the year 2030 through the National Development significantly more routes and destinations to their Plan (NDP). Equipment Facilities 2 Source: Industry Economic Performance 2017 24 25
ORGANISATIONAL PROFILE CONTINUED Statement of Strategic Intent and guided by the Medium-Term Strategic Framework KPA BUSINESS OBJECTIVES OBJECTIVE MEASURES FOR 2017/18 (MTSF), implemented by the South African Shareholder Compact Government to measure the NDP’s enabling NO. milestones. 2.2 Operation of the satellite communication Optimise revenue and ensure network ATNS’s activities are informed by the Minister of networks: SADC VSAT 2. availability. Transport’s Statement of Strategic Intent as well as The DoT, and by extension ATNS, focuses on the our Shareholder Compact, concluded annually with implementation of four of the 14 outcomes for 2.3 Operation of the satellite communication Optimise revenue and ensure network the Shareholder Minister. The business is further Government to achieve related MTSF outputs. networks: NAFISAT. availability. 3. DoT Outcome 9: The fight against fraud and corruption SHAREHOLDER COMPACT: BUSINESS OBJECTIVES AND OBJECTIVE MEASURES 3.1 Comply with relevant legislation, regulation Full compliance KPA BUSINESS OBJECTIVES OBJECTIVE MEASURES FOR 2017/18 and standards. NO. 3.2 All whistle blowing matters reported are Fighting corruption and promoting good 1. DoT Outcome 3: Transport safety and security investigated governance. 1.1 Risk Safety Index (RSI). Reduce the risk associated with safety events. 4. DoT Outcome 10: Environmental protection 1.2 Safety service provision. Increase successful safe operation. 4.1 Implementation of environmental plan. Measure ATNS Carbon footprint. 1.3 Operational efficiency. Reduce overall traffic delays. Performance assessment. 1.4 Operational efficiency. Achievement of CNS Systems Availability. 5. DoT Outcome 5: Training to contribute to job creation 1.5 Ensure commercial sustainability. Ensure financial sustainability. 5.1 Address societal challenges, thereby building ATS bursaries and engineering learnerships. PBN Operational Enhancement. PBN Roadmap implementation. a meaningful legacy for ATNS and the 1.6 Independent Parallel Runway operations at communities in which we operate. FAOR. 5.2 Manage the training pipeline for ATS and Adoption and approval of HC plan as per budget. 2. DoT Outcome 6: Infrastructure development and high-level investment plan for Transport technical staff. ATS and TS training plan. 2.1 Development of optimised and efficient aviation Approved CAPEX infrastructure in a cost-effective manner. Commitment Plan for 2017/18. Operational or implementation plan. 5.3 Review and implement the HR plan to recruit, Development programmes for employees, with FIGURE 9: ATNS REGULATED BUSINESS MODEL develop, retain, and reward employees across emphasis on AIC and women. all disciplines. 6. DoT Outcome 4: Broad-Based Black Economic Empowerment (B-BBEE) 6.1 Achieve B-BBEE targets. Percentage of discretionary spend on B-BBEE. Outcome Outcome Outcome Outcome Achieve preferential procurement targets as Total discretionary OPEX budgeted. 3 4 6 10 set by the Transport Charter. Total CAPEX budgeted. 7. DoT Outcome 4: Employment equity 7.1 ATS EE targets (AIMO, ATSO, ATCO 1-3). Achieve representation towards alignment of Decent employment An efficient, competitive Protect and enhance our A transport sector through inclusive economic and responsive economic environmental assets and Company staff profile with the demographics of that is safe the country. growth infrastructure network natural resources 7.2 ATNS EE targets. Increase representation of black (AIC) racial grouping - with a particular focus on African and female representation - towards creating alignment with the demographics of the country. 26 27
ORGANISATIONAL PROFILE CONTINUED Commitments to external initiatives • ICAO collaborates with member states, industry and international organisations to develop the ASBU concept. Mr Simphiwe Thobela Mr Thomas Kgokolo Mr Matome Advocate EdwinMoholola M. Mphahlele The ICAO Aviation Chairperson Interim CEO Chief Financial Officer (Acting) • ASBU helps to ensure the following operational imperatives: Chairman System Block Upgrades (ASBU) »» Maintaining and enhancing aviation safety. »» Harmonising air traffic management improvement programmes. »» Removing barriers to future aviation efficiency and environmental gains at a reasonable cost. Leadership review • ATNS fully endorses the ASBU initiative in setting the framework for globally harmonised air traffic management. This Integrated Report is a ‘transitionary report’ business in South Africa through reliable, cost- in several respects. Not only are we transitioning effective and efficient air traffic navigation services into a new dispensation of Shareholder oversight, on the one hand, and on the other, to ensure that • ATNS is a founding member of the Indian Ocean Strategic with the appointment of a new Shareholder we do our part to achieve Government’s greater The Indian Ocean Partnership to Reduce Emissions (INSPIRE). Minister, represented by Dr Bonginkosi Emmanuel development aspirations. These aspirations Strategic Partnership • INSPIRE is a partnership with airlines, ANSPs and airport Nzimande, we also transitioned from the previous are clearly articulated through the National to Reduce Emissions partners to address aviation’s impact on the Environment. King III governance framework to the new King Development Plan (NDP) and, more recently, by (INSPIRE) initiative • INSPIRE is a collaborative partner network across the Arabian Sea IV principles-based framework during the year, President Cyril Ramaphosa in his 2018 State of the and Indian Ocean region dedicated to improving aviation efficiency which in many respects has guided our integrated Nation address. This dual mandate is not always and sustainability. reporting. Further, strategy development and an easy balance as we consider the trade-offs Governance oversight are being transitioned to between commercial benefits and developmental new leadership with a new interim Board being priorities. appointed by the time of publishing this report. • ATNS is a founding member of the Civil Air Navigation On behalf of ATNS management, we wish to convey Air traffic navigation is a global business, which we Organisation (CANSO) in Africa. our earnest support to the new Minister and to the manage at a country level. When we consider our Civil Air Navigation • ATNS hosts the CANSO Regional Office in Africa. interim ATNS Board. strategy and planning for the provision of services Organisation (CANSO) for South Africa, we not only look at our domestic This integrated report is being published during needs, but also at what is happening globally and the celebration of the Nelson Mandela Centenary regionally on the rest of the continent. In addition, year. In the spirit of commemoration, we need we look at how aviation caters for peoples’ needs, to ask ourselves how we, as a company and as and the needs of businesses and indeed that of individuals, are ‘living his legacy’. Are we actively entire economies. Aviation is, the only true global • ATNS Carbon Emission Inventory and footprint is calculated using dismantling inequalities where we find them? Do transportation mode that is capable of reaching best practice methodology to account for all greenhouse gas (GHG) we aspire to excellence in all we do? As a State- land-locked cities and coastal areas alike. Air The GHG Protocol emissions released as a result of its operations. Owned Company (SOC), do our strategy and plans Transport is not an end in itself but a means to Corporate Standard • ATNS calculates its carbon inventory in accordance with the GHG contribute towards the vision of a sustainable an end. It serves as a conduit to opportunities, Protocol Corporate Standard. future, not only for the Company, but for the real or imagined. Different States and people with national aviation industry, the domestic economy, diverse cultures and interests are brought together the people of South Africa and the pursuit of safer through aviation. With the advent of technological African skies? Former president Nelson Mandela innovation, especially in the past five years, the • To ensure superior achievement of “Absorptive Capacity” and will be remembered for his many extraordinary world has become a smaller place. to promote strategic collaboration, ATNS has established a qualities, one such being his desire to act in the University of strong coalition with the University of Pretoria’s Department of best interest of the ‘many’ to ensure a prosperous Africa is home to 12% of the world’s people, and yet Johannesburg Electrical Engineering and Computer Systems in the areas of future for all South Africans. As an SOC, we have it accounts for less than 1% of the global air service (Leadership) telecommunication. the dual mandate of contributing to South Africa’s market.1 That said, we are observing increasing • This initiative builds capacity and learning opportunities for economic wellbeing by reducing the cost of doing commercial interest in Africa from foreign shores, undergraduate and postgraduate engineering students from historically-disadvantaged backgrounds. 1 http://www.worldbank.org/en/topic/transport/publication/open-skies-for-africa. 28 29
ORGANISATIONAL PROFILE CONTINUED particularly from the Middle East and Asia. Many we want to build Africa’s global competitiveness. a prosperous, interconnected African continent, fairly involved and includes consultations with new airports are, for instance, being developed For decades, there have been efforts to get the based on inclusive growth and sustainable industry stakeholders and culminated in a Joint around the continent by Chinese consortiums. This African union to follow the example of the ‘single development. Consultation Report from ATNS and the Industry. growth is very positive for the region, with new sky’ initiative implemented by the European The Joint Consultation Report is a reflection of the on-the-ground infrastructure being built; however, Commission, to make the entire continent one ATNS’s Financial performance constructive and positive nature of the consultation the ratio of traffic movements in Africa is still very connected, free airspace for civilian aircraft. meetings. During the consultations consensus low (approximately 2%) relative to other first-world Under the Single European Sky initiative, the Total revenue for the year at R1,594 billion (2017: was reached on most issues, with remaining regions, where air traffic is constantly growing, design, management and regulation of airspace is R1,557 billion), reflects a 2% improvement on the issues being resolved through active engagement which means the cost of aviation – and hence the coordinated throughout the European Union (EU). prior year. The minor improvement in revenue is between ATNS, the RC and the Industry. cost of doing business using aviation on the African Air traffic management in the European Union is mainly due to a slight increase in tariff revenue continent – remains largely prohibitive. largely undertaken by member states, cooperating as a result of increased movements. Technical The newly-approved permission will replace through EUROCONTROL, an intergovernmental the 2015/16-2019/20 permission. The current maintenance and training revenue also contributed There are also politically-motivated reasons for organisation that includes both the EU member permission dispensation, as approved, is in its first to increased revenue. Operating costs increased by Africa’s historically under-served air-movement states and most other European states as well. year of a five-year permission period. 6% to R1,382 billion (2017: R1,300 billion) mainly status. Many African countries have restricted their The initiative organises airspace into functional due to increased staff costs, telecommunication air services markets to protect the share held by blocks, according to traffic flows rather than to state-owned air carriers, a practice that originated national borders. Such a project was not possible expenses as well as the impact of the fluctuating Non-regulated business foreign exchange rates on our administration in the early 1960s when many newly-independent without common rules and procedures at European and contract maintenance costs. Capital ATNS’s non-regulated business currently African states created national airlines, in part level. As Africa, we need to get to a similarly expenditure decreased by 0,7% to R305 million contributes approximately 10% of the Company’s to assert their status as nations.2 However, as coordinated arrangement to truly benefit from the (2017: R307 million). Our balance sheet remains revenue and encompasses a long-term strategy commercial interest in Africa trade rises, many AfCFTA agreement. During the reporting year we sound with a liquidity ratio of 4.6:1 (2017: 5.2:1), to facilitate regional and continental expansion. are recognising the detrimental impacts this saw some positive steps towards this outcome. with our gearing ratio at 0,5% (2017: 0%). As Revenue from this sector of the business protectionist attitude has had on air safety records, On May 18, ministers of justice and attorneys- such, ATNS is well positioned to raise funding for is, however, below budget by R22,9 million inflated air fares and negative air-traffic growth general from the Common Market for Eastern imminent capital expenditure. Cash generated (21,5%) due to SADC VSAT II and NAFISAT Flight on the continent. With this, and the fact that and Southern Africa (COMESA)4 region approved from operation decreased by 15% to R366 million Information Region (FIR’s) crossing movements African countries have continued to charge each an agreement for the creation of a single airspace (2017: R431 million), mainly due to financial being lower than initially anticipated and currency other to trade long after the European Union had for its nineteen (19) member bloc. The open skies difficulties faced by some of our major customers fluctuations. established a single market, Africa, as a collective, agreement guarantees a free market for the bloc’s as well as increased operational costs. has remained uncompetitive on the global airlines by abolishing restrictions on, among other platform. A gradual ‘loosening’ of restrictions in things, routes, frequencies, number of selected These multilateral regional agreements facilitate We have introduced numerous interventions to communication between ATSUs via satellite links recent years, coupled with the new Agreement on airlines and type of aircraft, while market forces accelerate capital expenditure delivery going and are managed by ATNS and IATA under a seven- the African Continental Free Trade Area (AfCFTA) determine pricing. Although the approval of the forward. A Portfolio Programme Management year contract. The current dispensation is running launched in March 2018, will see a quickening unified airspace does not lead to an immediate Office (PPMO) has been introduced to oversee the from 2015 to 2022. of air-traffic movements as trade flows between opening up of the skies, it creates a foundation to execution of projects and to ensure they adhere countries with no (or reduced) import tariffs. establish more legal, regulatory and institutional to stringent project management principles. We Increased air traffic movement on the continent Some 44 countries out of 54 signed the free trade regional frameworks to enable unrestricted cross- also established the CAPEX Delivery Framework to will be the backbone of our long-term financial agreement, while 27 went even further, allowing border flights and boost trade across the region. provide a structured approach to investment and sustainability as there is little room left in the the free movement of all persons within African Ultimately, the SADC states and North East Africa – countries. According to credit ratings agency in partnership with ATNS and the International Air to enhance oversight of CAPEX implementation local market to improve our bottom line. As the Moody’s, countries such as South Africa, Kenya Transport Association (IATA) – have demonstrated projects for both the Executive, Board and other new interim Board and executive leadership, and Egypt are most likely to benefit given their that harmonised regional service provision is stakeholders. Strengthened Supply-Chain we are eager for the business to explore the large manufacturing bases and relatively robust achievable and brings improved and sustainable Management will further improve our asset- international expansionary aspirations articulated infrastructure, particularly given their access to infrastructure. creation value chain. and set in motion by our predecessors. The electricity.3 business rationale is sound; however the timing We look forward to seeing tangible results Permission application for actualising this vision depends on our ability While the AfCFTA will benefit African trade as opportunities arise following the AfCFTA to stabilise and position our internal systems, relationships, which would no doubt boost air agreement; and as the continent unfolds the bold Revenue, based within the regulated business, processes and human resourcing capabilities for traffic on the continent, there is still more to do if vision of the African Union’s Agenda 2063 towards is guided by the outcome of tariff applications to this pioneering journey. set prices – through a Permission Application. ATNS’s permission application was submitted to A critical lever of our expansion strategy is our 2 http://www.worldbank.org/en/topic/transport/publication/open-skies-for-africa 3 https://www.businessinsider.co.za/sa-to-benefit-most-from-africa-free-trade-area-2018-3 the Regulating Committee in November 2017. internationally-recognised and ICAO-accredited 4 Formed in December 1994 The process of compiling the Permission is aviation training academy (ATA), which is 30 31
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