Case Study 1
Sector Reporting Model

Figure 1 – Air Traffic Controllers monitoring airspace sectors


In 2004 Airservices Australia lodged an application with the ACCC to have their air traffic management fees increased which they levy against the Aviation industry. This application was rejected on the basis of a lack of cost transparency. BRG was tasked by the Air Traffic Management Group to derive a costing methodology which could be defended through contestability as a basis for any future fee review applications as it related to enroute high-level airspace charging.

Figure 2 – Australian airspace sectors.


BRG recommended that Air Traffic Management costs be matched to a common element which all its customers use. All aircraft must transcend airspace sectors which cover all of Australia’s airspace (see Fig 2) and are three dimensional (see Fig 3) as an example. These airspace sectors also merge and disaggregate during the day depending on traffic congestion at the time on particular routes.

So how are costs allocated to dynamic airspace?

The solution was to use ground based navigation aids, ie: beacons, radar and air traffic control towers and to map their coverage to airspace. Both the direct and indirect costs for Air Traffic Management was allocated to airspace based on the coverage of each ground based navigation aid.

Figure 3 – Airspace sectors (three dimension example).

What BRG did …

Customised Airservices ERP (SAP R/3) to deliver a costing methodology called the ‘Sector Reporting Model’.

This cost attribution methodology was managed in SAP R/3 using internal order cost objects. Air Traffic Management costs (Cost Centres) were mapped to ground based navigation aids (Internal Orders) which were then mapped to airspace sectors (Internal Orders). At the end of each reporting month cost attribution cycles would be executed within SAP R/3 CO to allocate costs to these different cost objects. This then supported three different views of cost. One at the organisational level (Cost Centres), by ground based navigation aid (Internal Orders) and Airspace (Internal Orders).

Figure 4 – Example of ground based navigation aids assisting aircraft transcend airspace.

How it actually works …

Figure 4 shows how ground based navigation aids assist aircraft. In reality each navigation aid services an arc of airspace. The navigation aid is only consumed by a customer, ie: aircraft when it transcends the airspace and communicates with the air navigation aid which in turn relays the unique aircraft identifier to the Air Traffic Control System.

Capturing this information would support the introduction of a ‘user’ pays system rather than setting a fixed fee regardless of use.

This aspect of cost allocation was not persued as it would disadvantage aircraft on long haul flights where flight activity is low and would attract a higher cost compared to a more congested route such as the flight corridor between Melbourne and Sydney where the flight path is relatively small and in high demand.