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


    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
                                                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:

                                                Total number of ATS trainees       81                        68
                                                                                                                                                     Ensure long-term financial                                     Manage the organisation’s
                                                                                                                                                     sustainability                                                 contribution to Climate Change
                                                                                                             22 (12 Engineering
                                                                                                                                                                                                  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
                                                                                                                                                     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

                         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

    * ATNS e-learning content being developed.

4                                                                                                                                                                                                                                                       5

                                                                                                                        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
         also linked to the six capitals throughout the report by means of the following icons:                                                                                                                risks, strategic opportunities and the ATNS value

                   Financial capital                                    Human capital
                                                                                                                                                                                                               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
                                                                                                                                                                                                               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.

                                                                                                                            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.”

                                                                                                                            “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

                                                                                                                            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

        Statement of precautionary                               Board of Directors Approval
        principle                                                Statement
        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.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

     Vision                                                   The principal purpose of ATNS is to plan and
                                                              operate safe and efficient services in the airspace
                                                                                                                           FIGURE 1: ATNS CORPORATE STRUCTURE

                                                              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



     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
     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.
                                                              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.
     • 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.
     • 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

     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
                                                   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

     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


                                                                                                                         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
                                                                             NDB                                                                          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

     FIGURE 4: ATNS’S PRESENCE IN SOUTH AFRICA                                                                                                              FIGURE 6: ATNS’S EXTENDED SERVICES ON THE AFRICAN CONTINENT AND BEYOND

                                                                                                                        Pilanesberg     Kruger
               ACSA Airports
               Regional Airports                                                                                        Lanseria

                                                                                                                              Rand      OR Tambo
           ATNS service reach:                                                                                                          International
           • Aerodrome and approach control
             services: 9 ACSA airports
           • Aerodrome services: 12 regional                                                         Kimberley
             airports                                                                                          Bloemfontein
           • Approach procedural services:                                                                                               Pietermaritzburg
             4 regional airports

           Additional services:                                                                                                       King Shaka
           • National Aeronautical Information                                                                                        International

             Management and Oceanic Control                                                                                    Umtata
           • 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
            010W                                                                                                                                                       Flight Procedure design

                                                                     Madagascar                                                                                        Training

                                                                          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
                                                                                                                                                                       NAFISAT                                            3% 2%
                                    South Pole                                                                                                                                                                       3%

     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.

20                                                                                                                                                                                                                                                       21

        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
        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
                                                                                                                                                                                                                     th A e re vitie
                                                                                                                                                                                                                           f         q
                                                                                                                                                                                                                                              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

                                                                                                                                                                                    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

                                                                                                                                                                                                                         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

                                                               minimum service standard requirements for the

                                                                                                                                                    dul mi

                                                                                                                                                                                                                                           Cap taff con Mod as welent
                                                                                                                                                                                                                                           ATN al M

                                                                                                                                                                                                                                             tlin tal P odul mp he
        terms and conditions. In terms of Article 28 of the


                                                                                                                                                                                                                                              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

                                                                                                                             (infl sets th ate (a e

                                                                                                                                                                                                                                                  S H odu ent ofows
                                                                                                                                             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.

                                                                                                                                                 e co

                                                                                                                                                                                                                                                       um le
        is required to provide air navigation services and

                                                                                                                                                                                                                                                        sta largel line s
                                                               As per the regulations, the Permission formulation


        infrastructure in compliance with the Convention


                                                               process must commence in the third year of the



        and as promulgated from time to time by ICAO.

                                                                                                                             alsos aggr
                                                               current permission. A new permission process



                                                               commenced in 2017 after the RC issued an
                                                                                                                                                                                                  Eight modules

                                                                                                                                                                                                                                                                         fl as
        ATNS’s regulated business is carried out in its

                                                               Approach Document to industry in December


        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

        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 .

                                                                                                                                                                                                                                                                         me ase

                                                                                                                                                                                                                                                          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

                                                                                                                                                                                                                                                     com traffi ly the ple te er,
                                                                                                                             pan ting, ts ar lan M

                                                                                                                             ann tivity ratio iture tion rnan

                                                                                                                             B nan


                                                                                                                                                                                                                                                          is p ich in s toge her
        status, this business is regulated by the Regulating

                                                                                                                                                                                  ATN odu

                                                                                                                                                                                                                                                                 req nditu the

                                                               RC in November 2017. The RC has concluded

                                                                                                                               vide to

                                                                                                                               inte . th r ti se

                                                                                                                                                                                                                                                                     uire re b


                                                                                                                                                                                                                                     wh odule the ot

        Committee [RC], a statutory body established by

                                                               its deliberation on the permission application


                                                                                                                                     s t be

                                                                                                                                        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




                                                               It subsequently submitted its decision and final

                                                                                                                                                 driv pa
        Economic regulation

                                                                                                                                                                                                                                                      (‘re y’s
                                                               report to the Honorable Minister of Transport.

                                                                                                                                                      es ny, res
                                                                                                                                                                                          OpeATNS                         tion


                                                                                                                                                                                               rati                  istra

                                                                                                                                                                                        Mai and ons                in le


                                                                                                                                                                                                                AdmModu tive

        The economic regulation regime is articulated          The current Permission (2018/19 – 2022/23) was                                                                              nt


                                                                                                                                                                                                                                 tra re

                                                                                                                                                                                                                           inis ures a the

                                                                                                                                                                    of t ce,

        in Section 11 of the ATNS Company Act (45 of           approved by the Minister of Transport in terms                                                                   th e an       ule e                     m

                                                                                                                                                                                                                    A nd      i t     by    e
                                                                                                                                                                                                                                    en of th ory

                                                                                                                                                                          t e to

        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
        The said Permission is issued by the Regulating        Read more on ATNS’s Permission cycle on page 24.                                                                                  .        hat

22                                                                                                                                                                                                                                                                                      23

     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
                                                                    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
          Peak                  Sector                                                     Regulated   • Economic impact is estimated at US$2,4 trillion.     market since 1934 until the early 1990s, when the
         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
                                                                                                                                                              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
                        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
                                                     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).

                                                    Facilities                                         2
                                                                                                           Source: Industry Economic Performance 2017

24                                                                                                                                                                                                                    25

     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

                                                                  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
                                                                                                                          3.1   Comply with relevant legislation, regulation     Full compliance
      KPA       BUSINESS OBJECTIVES                                 OBJECTIVE MEASURES FOR 2017/18                              and standards.
                                                                                                                          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.
                                                                                                                          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

     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
                                     »» 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
                                     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
                                     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

28                                                                                                                                                                                                                                                            29

     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
                                                                                                                                          the Regulating Committee in November 2017.             internationally-recognised and ICAO-accredited
       Formed in December 1994                                                                                                            The process of compiling the Permission is             aviation training academy (ATA), which is

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