At the turn of the year, air navigation services will adopt a new performance plan – what is RP4 exactly?

EU Member States are obliged to draw up a performance plan for air navigation services and submit it to the European Commission for approval. At the turn of the year, Finland will move on to the next five-year planning period when RP4 (Reference Period 4) will be introduced on 1 January 2025. The plan sets targets for safety, the environment, capacity and cost-effectiveness. What is it all about in practice?

Under EU legislation, each EU country must draw up a performance plan setting out the objectives for services covered by the legislation. The first period (2012–2014) was three years, after which the planning periods were extended to five years. In Finland, the regulation covers the en-route service and the air navigation service of Helsinki Airport.

“From the perspective of capacity, the environment and safety, the transition into the next planning period will not bring about any major changes since the level of air navigation services in Finland is already very high. For example, in the last ten years no delays have been observed in air traffic attributable to air navigation services. We have also done well from an environmental point of view, for example, in the selection of efficient flight routes. Our most important goal is to keep the operations at the same strong level in the coming years,” says Raine Luojus, CEO of Fintraffic Air Navigation Services Ltd.

Traficom is currently finalising the plan for the upcoming RP4 period. It will be submitted to the Ministry for review at the end of September. The plan will then move on to the European Commission, which assesses whether it adequately supports the EU-level objectives.

The new planning period will increase prices

The cost-effectiveness section of the performance plan and EU legislation determine the pricing of services covered by the legislation. In practice, the transition into the next RP period will show as an increase in prices, as the number of service users has dropped from the previous planning period.

“RP4 determines the unit price charged to airspace users, i.e. what airlines pay for the use of Finnish airspace, for the next five years. In practice, the unit price is formed by adding up the planned costs of the service and the adjustment items arising from previous years in accordance with EU legislation and dividing the sum by the forecast traffic volumes. The traffic volume forecasts for the current RP3 planning period were high but remained unrealised due to the global situation. Costs from these will now be carried over to the next period, which will have a direct impact on the unit price,” says Business Controller Jarkko Luoma from Fintraffic Air Navigation Services Ltd.

This will make the Finnish airspace expensive for some time. The reason for this is the fact that, even though the number of air traffic units has already returned close to pre-pandemic figures, the aircraft now spend a shorter period of time in the Finnish airspace. In addition, the aircraft types have changed so that the planes used now are smaller and lighter than before. From a financial point of view, this means that the amount of work done by air navigation services has remained the same, but the money earned has reduced. 

The Russian war of aggression is also reflected in pricing

Air traffic volumes are also affected by the fact that, at the moment, companies in countries subject to sanctions are not allowed to fly over Russian airspace. Sanctions also pose a challenge to the economy when banks do not want to receive and transmit payments from Russian airlines. This threatens to increase the credit losses for Kaliningrad. Due to the global situation, air navigation services must be prepared for a wide range of scenarios. This will inevitably also be reflected on how cost-effectively they can operate and achieve their economic targets for the coming years. The result will reflect, for example, a major system reform of EUR 30 million to be carried out during the upcoming RP4 period.

“Although other parts of Europe have recovered well from the effects of the coronavirus pandemic, our situation is very different due to the Russian war of aggression. The situation is also similar for, for example, Sweden, Estonia, Poland and Denmark, which normally have a high volume of overflight traffic in Russia. We hope that the European Commission will take into account that Finland is facing a new normal in which traffic volumes have decreased but we still need to make significant investments in matters such as safety,” says Luojus.