A regional approach

PAIP is about to enter its third phase, with around $175 million expected to be spent during the three phases.

Phase 1 involved activities in Tonga, Tuvalu and Kiribati. Phase 2 saw Samoa join the program in

Many Pacific Island countries are too small to access donor loans for even modest aviation projects.

early 2014 for support of its airside pavement rehabilitation, as well as navigational and other equipment. It is anticipated that Vanuatu will join the program in mid-2015 – activities have already commenced in Vanuatu where immediate works have been needed to repair the runway at Bauerfield International Airport at Port Vila. Solomon Islands may also participate at a later stage.

“PAIP has encouraged multiple donors to collaborate on development projects in the Pacific” Cocker adds.

“In addition to the World Bank, other donor partners from New Zealand and Australia plus the Asian Development Bank are interested in supporting regional projects. Donor partners provide both money and technical support. ”

Tongan origins

Two structural reform projects undertaken by Tonga have been the genesis for the regional initiatives undertaken by PAIP. The Tonga Transport Sector Review (TTSR) provided a roadmap for how Tonga could reform its transportation sector.

“The TTSR provides a framework for aviation to push away from government control and obtain funding for infrastructure and operations. It separated the regulatory and operational functions of Tonga’s civil aviation authority,” Cocker says.

Tonga approached the World Bank for support to establish a commercially-run, governmentowned organisation to operate its air traffic control activities and airports – Tonga Airports Ltd (TAL). Funding for the initiatives to establish TAL occurred under the Tonga Transport Sector Consolidation Project (TCSP). Funding was through the International Development Association (IDA), the World Bank Group’s grant and credit aid program for eligible countries.

TSCP initiatives, which commenced in late 2008, provided policy direction plus some airport equipment and infrastructure. Some of the core activities included rewriting the civil aviation act and developing new rules and developing an air transport strategic plan for Tonga. Equipment and infrastructure works included a new rescue fire vehicle, navigational, communications and security screening equipment. Current work includes a new rescue fire station

Rescue fire staff travel up and down the runway removing people and animals from the area ahead of the aircraft arrival.

and a passenger transit lounge at Fua‘amotu International Airport.

The success of the Tonga project encouraged the World Bank to engage with Tonga Airports to explore opportunities to undertake aviation improvement projects in other Pacific Island countries.

“For Pacific Islanders, connectivity requires a high reliance on air transport. Ensuring that these countries’ aviation infrastructure meets international requirements for safe operation is critical to maintaining that connectivity, whether it be for tourism, jobs, education or medical needs,” explains Chris De Serio, a World Bank transport specialist responsible for the Pacific. “The experiences gained in working with TAL encouraged us to explore similar project approaches that included both the infrastructure and technical assistance to support other states with their air transport sector development. ” Elaborates Darin Cusack, PAIP’s director: “We looked at ways to improve aviation infrastructure and services in the region, leveraging our skills and the relationship we had developed with the World Bank. Improvements were also identified that could potentially enhance international air services to countries outside the Pacific region, as well as increase regional connectivity. ”

Funding

Many of the region’s airport authorities have difficulty in financing the upgrade and maintenance of their airport infrastructure. To meet these needs bilateral aid and donor-funded projects provide a vital contribution to island nations’ aviation investment needs.

While the International Development Association provides grants and lends to eligible countries on highly concessional credit terms, PAIP has been able to bring other development partners together in a coordinated manner. Australia’s Department of Foreign Affairs and Trade and New Zealand’s Ministry of Foreign Affairs and Trade, both directly and through the Pacific Region Infrastructure Facility, are also providing funding to different elements of the program.

Parallel financing from Taiwan is facilitating investments in Kiribati.

The European Investment Bank is anticipated to co-finance airfield assets in Samoa. Together, these partners bring significant capital contributions to PAIP.

The economies of many Pacific Island countries are normally too small to access donor loans for even modest aviation infrastructure projects. Use of the International Development Association enables states to access supplemental resources that would normally exceed a particular country’s funding envelope. By creating a regional program, countries could leverage a national contribution by four to five times and tap into an International Development Association pool of funds that focuses on regional benefits.

“Bringing Tuvalu and Kiribati into the PAIP, together with Tonga, enabled several states to access the regional IDA funding,” Cusack says.

“It also enabled us to use this as a platform to progressively bring other countries under this regional IDA framework to undertake aviation infrastructure improvements. ” While infrastructure improvements have been funded from donor grants or bilateral funding mechanisms, many nations have not had the financial means to maintain these assets. A key initiative of PAIP has been to provide for the ongoing financial sustainability of aviation activities in Pacific nations in order to fund certain aspects of airport operations, plus provide ongoing infrastructure maintenance. “To provide for the ongoing upkeep of aviation infrastructure and services, countries participating in PAIP have been asked to implement a $5 safety and security levy on departing international passengers,” Cusack says.

“In the case of Tonga, the funding is directed to both operational safety and regulatory oversight. TAL receives 40 per cent of the generated revenue, with Civil Aviation Division (CAD) receiving the other 60 per cent. CAD uses these funds to supplement its budget, as well as fund its commitments to the Pacific Aviation Safety Office. Airlines have the opportunity to audit these public expenditures to ensure that they are being properly utilised. ” Despite increased access to bilateral aid and concessional donor loans, some states are beginning to fund capital projects, including for aviation, through commercial borrowing, such as from the China EXIM Bank. This form ofborrowing is exposing these states to commercial risk.

In the case of airports, that can be problematic. The Airports Council International conference on Airport Economics and Finance in February highlighted that airports with fewer than one million passengers annually account for 66 per cent of airports globally. Of these airports 87 per cent are not profitable. In the Pacific region only two airports – Port Moresby, Papua New Guinea and Nadi, Fiji – process more than one million passengers annually.

Other airports in the region often process much lower passenger numbers and struggle with their economic viability.

Consequently airport revenues will in most cases be highly unlikely to be sufficient to fund debt repayment obligations on commercial loans.

Airport infrastructure initiatives

PAIP has undertaken similar airport infrastructure projects in each of its participating countries.

“Priority has been placed on projects that would ensure that aircraft operations can continue tooperate safely,” says Cusack. “In particular we needed to focus on upgrading aerodrome pavements, airfield ground lighting, navigation aids, communications equipment, weather reporting, training across all facets and rescue fire services.

The projects were driven by the age and state of key infrastructure, while meeting the changing mix of aircraft servicing the Pacific region. ” The practical issues faced by PAIP can be illustrated by some of the initiatives undertaken in Tuvalu and Kiribati. Both comprise a number of coral atolls that are flat and very narrow in places. The major airports of each country play a vital but quite unique role in the community.

Airports at Funafuti (Tuvalu) and Bonriki (Kiribati) each receive two or three international flights per week. At other times the airports are used as common space for the local community.

For example, the airport at Funafuti is located at the widest point of the atoll, around 500m.

The airport is not fenced, and when not needed for aircraft movements, people run and walk along the

Three countries within the Nadi FIR are agitating for an increase in their share of upper airspace revenue.

runway, play games and travel from one side of the atoll to the other. A horn is blown by the flight service station when an aircraft is 20 minutes from arrival. Another is blown when the aircraft is on final approach. Rescue fire staff travel up and down the runway in the tender vehicle removing people and animals from the area ahead of the aircraft arrival.

As Cocker explains: “We understood the need to balance ICAO compliance requirements with the role that the airport environment plays for the day-today life of the local community.

PAIP was not going to change the unique community aspects that the airport provides by, say, constructing security fencing around the perimeter. Instead we decided to manage risks in a different manner and avoided a ‘one size fits all approach’. This meant that while we have undertaken work like strengthening the runway and upgrading navigation aids at Tuvalu, we have not restricted community access to the airport, outside of aircraft operating times. ”

Knowledge and skills

Capability development is commonly listed as an objective for aid or donor-funded projects in developing countries. In most instances only an incremental improvement is probably realistic. Within PAIP a multiple tier approach to capacity development is being undertaken.

Along with improvements to physical infrastructure, PAIP has targeted the improvement in skills of the staff involved in performing aviation roles both operational and regulatory. A training needs analysis was undertaken. Upgrade training programs have been developed for funding. For example, courses and on-the-job training programs for flight service operators have been organised and funded, which are provided by Airports Fiji Limited.

Funding skilled expertise to assist each civil aviation authority has also been undertaken.

A project support team has been formed within each country to manage PAIP activities. The project manager was appointed from the host country. Finance, project management and administrative roles have also been sourced locally.

These locally appointed staff have enabled the PAIP to foster strong linkages with government officials and the business community. Each country is required to establish a national steering committee, which provides representation to a program steering committee.

Specialist skills have come from external consultants. The PAIP central program team, termed the Technical and Fiduciary Services Unit, provides financial management, technical, procurement and administrative expertise. Other professional development of the project team members comes through the interchange of staff from the islands into the PAIP project office located in Tonga. Regional project workshops with participating countries enable the exchange of information, but importantly the development of networks among project team members.

Although contracts for major infrastructure projects are awarded to international companies, local access to project jobs and wages is particularly important.

Liberalising air services

PAIP has engaged expertise to review and provide guidance to countries on their current air services agreements within the region. Some countries are concerned that their existing air services agreements prevent competition on air routes by restricting the number of airlines and services that can be undertaken.

The existing framework has resultedin high airfares in the more remote countries.

Fiji has the greatest influence on air travel in the region.

Liberalisation of air services agreements requires other countries to negotiate changes with the government of Fiji. Cocker describes some of the problems: “Many Pacific Island States do not want to be reliant on Fiji for its air routes and airline services. Fiji, however, is sometimes unfairly maligned. We have found that a number of states are not clear about existing air services agreements and airline arrangements.

Inadequate knowledge of these agreements by government officials presents difficulty in conducting negotiations with Fiji in a structured and fruitful manner.

While a review can identify issues and present recommendations, it is up to each state to assume responsibility and negotiate changes. I believe there is greater opportunity for the states to unite to collectively address the manycommon problems. Discussions also need to be undertaken with other large nations to foster routes and services, as an alternative to those to Fiji. ”

Modernising air navigation and surveillance

Two other significant PAIP activities are expected to modernise air traffic and communication technologies. One involves placing ADS-B ground stations at each of the PAIP countries. ADS-B will provide position information for aircraft operating around these islands, particularly SAR support for those flying over ocean areas.

(The maximum range of the ADS-B ground stations is 250nm, which limits its use for aircraft operating in the upper airspace that are flying on flexible routes over the Pacific. ) The other project is the introduction of VSAT (very small aperture terminal) for communications between PAIP countries. VSAT provides for satellite-based secure point-to-point aviation communication between them. It replaces a reliance on HF and an often unstable data network, and also provides the connectivity to relay ADS-B surveillance datafrom the ground stations to air traffic control centres at Nadi, Auckland and Brisbane.

There is concern about the equity in the revenue earned by the various Pacific Island countries from aircraft operating in the upper airspace. The Pacific upper airspace spans from the Solomon Islands and Nauru in the west, to the Cook Islands and Samoa in the east.

The southern boundary is midway between New Zealand and Fiji, and extends almost to the equator in the north. It involves the airspace above 24,500ft.

Operations in this airspace largely comprises large sophisticated aircraft flying on flexible air routes, that can change daily depending on prevailing wind conditions.

Most operations involve aircraft flying between North America and Australia or New Zealand. It favours air navigation service providers (ANSPs) who have a high degree of operational sophistication.

Three ANSPs deliver air traffic management services in this upper airspace. Airways New Zealand provides services over the eastern portion overhead Samoa, Tonga, Cook Islands and Niue. AirportsFiji Limited (AFL) delivers services within the middle part overhead Kiribati, Tuvalu, Vanuatu and New Caledonia. And Airservices provides services over the western portion of this airspace overhead the Solomon Islands and Nauru.

Flight information regions (FIRs) within this area were determined in the early 1950s and reflected the political environment of the time. Their dimensions have not been updated to reflect the dramatic advances in aircraft performance nor changes to national sovereignty since. The Republic of Kiribati, for example, was formed in 1979 and spans 2,800nm east to west. The sovereign territory of Kiribati lies beneath the boundaries of the Nadi, Auckland, Oakland and Tahiti FIRs.

The advent of commercialised air traffic management service delivery since 1987 has seen the large ANSPs explore opportunities to increase the volume of airspace that they are responsible for. Pacific Island countries have been lured into changing air traffic management service delivery arrangements in the airspace above their sovereign territories with the prospect of earning a share of the income generated from airline operations in this airspace.

Most notably in 2002 Samoa, Tonga, Cook Islands and Niue negotiated a change in FIR airspace boundaries over eastern Polynesia to obtain a share of upper airspace air navigation services revenue. These new FIR boundaries resulted in Airways New Zealand replacing Airports Fiji as the air traffic management service provider over this area.

Air traffic management service delivery in the upper airspace have high fixed-capital and operating costs to begin providing a service but very low marginal costs for additional airspace controlled. The change in FIR boundariesover eastern Polynesia resulted in Airports Fiji having a sharp reduction in oceanic revenue with the loss of airspace. Airports Fiji’s cost base, however, did not reduce.

Nations that have Airservices and Airways provide air traffic management service delivery in their sovereign upper airspace receive substantially greater income than those nations within the Nadi FIR and receive services from Airports Fiji, as Airports Fiji does not have the revenue base to match the income distributed to states by Airways and Airservices. Not surprisingly three countries within the Nadi FIR are agitating for an increase in their share of upper airspace revenue from AFL, in line with that provided by Airways and Airservices.

Through the program some work was commissioned to study the present arrangements used by the three ANSPs to provide countries with greater context around upper airspace revenues and operations. An increased share of upper airspace revenue provides a greater opportunity for them to have the financial means to maintain new aviation infrastructure and provide safety oversight.

An unforeseen benefit has arisen for Pacific Island nations in addressing issues with the upper airspace. PAIP has brought the countries together in workshops and smaller group meetings to form consensus and develop a way forward. As a result of this process, countries are now working together to resolve other aviation-related issues and form a collective voice. In the past, they tended to work independent from each other.

Safety and security oversight

Several countries in the Pacific region have historically had difficulty in meeting their ICAO obligations for managing aviation infrastructureand safety and security oversight. In many instances Pacific Island countries recorded ICAO audits results that were lower than global averages. PAIP is supporting the strengthening of regulatory oversight of aviation activities in many countries through the Pacific Aviation Safety Office (PASO).

Many countries do not have the specialist skills, capability and funding to undertake these functions. Established in 2004, PASO aims to provide its 10 member states with technical advice on safety and security oversight and seeks to overcome the shortcomings in aviation regulation experienced by many Pacific nations.

Headquartered in Vanuatu, PASO is a non-profit organisation which generates revenue to cover operational costs. State members fund PASO activities through a combination of subscription fees to fund fixed costs and service fees to fund the costs associated with specific inspections and other activities. In addition to the membership fees paid by the Pacific Island countries, Australia, Fiji and New Zealand each make significant contributions to PASO operating costs as associate members.

The focus of PASO will be reworked to assist countries implement their own safety programs and undertake audit rectification actions. An improved inspectorate program will also be implemented.

Strength in numbers

PAIP is having an important and ever-increasing influence on a wide range of aviation activities in the Pacific. A regional program is enabling countries to simultaneously elevate their safety and security compliance to international standards.