The PRAL Air Transport Office Fiscal Year 2005 Annual...

The PRAL Air Transport Office

Fiscal Year 2005 Annual Report

PORTS, RAILWAYS, AVIATION & LOGISTICS THEMATIC GROUP

TRANSPORT AND URBAN DEVELOPMENT DEPARTMENT THE WORLD BANK

PRAL Air Transport Office Annual Report - 2 - Fiscal Year 2005

Abbreviations A319 Airbus aircraft Model 319 AFT Africa Region (WBG) ADS-B Automatic Dependent Surveillance - Broadcast ATAG Air Transport Action Group (affiliated to IATA) ATC Air Traffic Control ATKB Air Transport Knowledge Base ATM Air Traffic Management ATO Air Transport Office of PRAL ATR-42 Aerospatiale aircraft Model ATR-42 B777-200ER Boeing aircraft Model 777-200 extended range CAA Civil Aviation Authority CES Charles E. Schlumberger, Principal Air Transport Specialist CNS Communication Navigation Surveillance services/systems GNSS Global Navigation Satellite System GPS Global Positioning System DOT Department of Transportation of the United States of America EAP East Asia & Pacific (WBG) ECA Europe & Central Asia (WBG) ESW Economic sector work FAA Federal Aviation Administration of the United States of America FY05 Fiscal Year 2005 of the World Bank Group (01JUL04 – 30JUN05) HCB Heinrich C. Bofinger, Air Transport Consultant at the World Bank IATA International Air Transport Association IBRD International Bank for Reconstruction and Development (WBG) ICAO International Civil Aviation Organization (UN Agency) IDA International Development Association (WBG) IFC International Finance Corporation (WBG) IL-76 Ilyushin aircraft Model 76 LAC Latin America & The Caribbean Region (WGB) MNA Middle East & North Africa (WBG) N/A not available NTSB National Transportation Safety Board (USA) PPIAF Public Private Infrastructure Advisory Facility PRAL Ports, Railways, Aviation & Logistics Thematic Group SAR South Asia Region (WBG) T/A Technical Assistance TBD to be determined TTL Task Team Leader TU-154 Tupolev aircraft Model 154 WBG World Bank Group

Cover Page: The fleet of the Soviet provided TU-154 B aircraft of Tajikistan’s national carrier. Tajikistan, one of the poorest countries of the former Soviet Union territory, is very dependant on a reliable and cost effective air transport system. Major sector reforms, including the introduction of modern aircraft, are urgently needed.


Table of Contents Abbreviations .................................................................................................................... 2 Foreword............................................................................................................................ 4 Executive Summary ......................................................................................................... 5 The WGB FY05 Air Transport Portfolio ........................................................................ 6

Africa Region (AFT) ..................................................................................................... 6 Latin America & The Caribbean Region (LAC) ....................................................... 7 South Asia Region (SAR) ........................................................................................... 7 Middle East & North Africa (MNA) ............................................................................. 7 Europe & Central Asia (ECA) ..................................................................................... 7 East Asia & Pacific (EAP) ........................................................................................... 8 International Finance Corporation (IFC) ................................................................... 8

Air Transport Office Activities at a Glance ................................................................... 9 Operational Cross-Support ........................................................................................... 11

Africa Region (AFT) ................................................................................................... 11 West & Central Africa Air Transport Projects (P083751 & TF051220).......... 11 Mozambique – Communication Sector Reform Project (P073479) ............... 12 Cape Verde – Airline Privatization (P074055) ................................................... 12

Latin America & The Caribbean Region (LAC) ..................................................... 13 OECS Emergency Recovery Project – Transport Security (Five countries). 13 Guatemala – PPIAF Study and Civil Aviation Component (P055084) .......... 13

South Asia Region (SAR) ......................................................................................... 14 Afghanistan – Air Traffic Management & Airport Infrastructure (P078284) .. 14 Bhutan – Air Transport Sector Diagnostic Note ................................................ 14

Middle East & North Africa (MNA) ........................................................................... 15 Algeria – Air Transport Policy and Regulatory Reform (P072458)................. 15

Europe & Central Asia (ECA) ................................................................................... 16 Tajikistan – Air Transport Sector Reform (P074889) ....................................... 16 Kazakhstan – Transport Sector Strategy Note (P088643) .............................. 16

East Asia & Pacific (EAP) ......................................................................................... 17 Mongolia – Air Transport Sector Policy (P056200)........................................... 17

External Relations .......................................................................................................... 18 The 35th Assembly of ICAO ..................................................................................... 18 Joint ICAO, World Bank, and ATAG Workshop .................................................... 18 FAA sponsored Seminar and Meetings.................................................................. 19

Internal Dissemination ................................................................................................... 20 Air Transport Knowledge Base ................................................................................ 20 Air Transport Clinic .................................................................................................... 21 Air Transport Brown Bag Luncheon ........................................................................ 21

Research, Publications, and Various .......................................................................... 22 Alaska - New Air Traffic Surveillance Technology ................................................ 22 Paris Air Show ............................................................................................................ 22 Publications ................................................................................................................. 24 Flight Operation Activities ......................................................................................... 24

Outlook for Fiscal Year 2006 ........................................................................................ 25


Foreword Since its early days, the World Bank Group has been financing projects in the air

transport sector. The Bank initially financed equipment such as aircraft and

infrastructure for state owned airlines. With the liberalization of the air transport

sector worldwide, and the privatization of many state-owned airlines, the WBG

shifted its pure investment focus to a policy and regulatory support function.

Subsequently, air transport projects or components became a niche product.

However, a renewed focus on infrastructure fostered the understanding that a

safe, secure, reliable, and cost-effective air transport system is an essential tool

for development. The Transport Sector Board therefore decided to reinstall the

Air Transport Office at the Bank’s transport anchor unit in July 2004.

The first year has been a very challenging but rewarding experience. While the

high demand for operational cross-support was satisfactorily met, the ATO

established an air transport working group with ICAO and other sector

organizations. In addition, the ATO conducted technical research and assured

internal dissemination. The successful lift-off, however, should be seen as a

window of opportunity around which a sustainable house must be built. The focus

of internal dissemination must address the fact that many still do not fully

understand the linkage between air transport and the WGB’s ultimate mandate,

the fight against poverty.

I would like to thank the Transport Sector Board and its Director, Ms. Maryvonne

Plessis-Fraissard, for the confidence displayed by mandating me with this

challenging task. I am looking forward to the even higher objectives set for FY06.

Finally, I would like to thank my colleagues and support staff at the center and

within the regions for their continued support and cooperation. Without them, the

successful launch of the ATO would not have been possible.

Charles E. Schlumberger Principal Air Transport Specialist

August 2005


Executive Summary The WGB FY05 Air Transport Portfolio included over 24 projects in all six

regions of the IBRD/IDA. The total volume financed by loans or grants of these

two institutions is about US$ 650 million, which represents less than 5% of the

Bank’s transport sector portfolio of US$ 20 billion. The IFC has established an air

transport lending portfolio of about US$ 275 million. Overall, the WBG air

transport related project portfolio volume is assessed to be close to US$ 1 billion.

The ATO has primarily provided operational cross-support (71% of time) to

the six regions of the Bank. The main focus was on the Africa Region (AFR),

followed by the Latin America and Caribbean Region (LAC), and South Asia

(SAR). Two-third of cross-support was done on actual lending or grant

operations, and one third as technical assistance to clients. The operational

focus of cross-support was balanced between the six main topics of Safety,

Security, Regulatory, Infrastructure, Sector Policy, and Airline Restructuring.

The second activity, external relations, focused on establishing a joint ICAO,

World Bank, and ATAG (IATA) working group, which held a first air transport

workshop in Montreal. In addition, the ATO represented the Bank at the ICAO

assembly and at various FAA sponsored events.

For the internal dissemination of air transport information, the ATO created the

web based Air Transport Knowledge Base. In addition, the ATO held a learning

event, the Air Transport Clinic, and an industry related Brown Bag Luncheon.

Finally, the ATO conducted technical and industry relevant research, which is

currently under preparation for publication during FY06.

The outlook for FY06 focuses on three areas: (i) operational cross-support

(50%), (ii) research and publications (knowledge base, infrastructure,

performance indicators), and (iii) external relations (joint working group).


The WGB FY05 Air Transport Portfolio The WGB FY05 Air Transport portfolio is composed of various lending or technical assistance (ESW) projects in the six regions of the Bank (IDA, IBRD). In addition, IFC has a current portfolio of proposed and active lending or investment financing throughout the aviation sector. The overview below summarizes the most important projects of the WBG. However, there are currently several smaller projects or project components in various WBG projects which are not included, due to their small dimension or to their preliminary stage.

Africa Region (AFT)

Country Description Amount Type Status Tanzania Safety and security of the Ports,

Rail, and Aviation sector est. US $70 million IDA loan preparation

Mauritania CAA capacity building, airport security, airport concession TBD IDA loan preparation

West & Central Africa (ECOWAS & CEMAC Region)

Regional air transport safety project (multi-donor grants for reg. organizations of 23 countries, IDA loans to five countries)

est. US $50 million

Donor grants/ IDA loans: TBD

preparation

Sierra Leone Infrastructure rehabilitation at Freetown International Airport

est. US$ 11 million

IDA grant preparation

Cape Verde Airline privatization of TACV US$ 1.3 million.

IDA loan: $1.3m. active

Liberia Assessment of needed emergency repairs at Roberts Intl Airport N/A T/A active

Mali Airport rehabilitation (technical assistance & construction)

US$ 6.55 million


Kenya Airport infrastructure rehabilitation, ATM improvements (GNSS), and capacity building at CAA for safety and security oversight

US $51.65 million


Madagascar Airport safety & security improvements and PPI financing

US$ 79.32 million


Mozambique CAA capacity building, airport concessioning, airline privatization

US$ 5.5 million


W & C Africa (ECOWAS & CEMAC)

Institutional strengthening of regional organizations for the liberalization of air services.

US$0.5 million

IDA grant closed


Latin America & The Caribbean Region (LAC) Country Description Amount Type Status

OECS (St. Vincent & the Grenadines, Grenada, St. Lucia, Dominica, St. Kitts & Nevis)

Transport security infrastructure improvements, regulatory framework and capacity building (Sea ports & airports)

US$ 20.5 million

IDA / IBRD loans: $13.3m.

active

Guatemala Capacity building at CAA TBD IBRD loan active

South Asia Region (SAR) Country Description Amount Type Status

Nepal Airline privatization TBD T/A active

Afghanistan Airport rehabilitation, CNS & CAA capacity building

US$ 19.3 million

IDA loan: $17.9m

active

Bhutan Air Transport Sector Diagnostic Note T/A N/A done

Middle East & North Africa (MNA) Country Description Amount Type Status

Iran Reconstruction of transportation infrastructure after earthquake (highways, roads, BAM airport)

US$ 29.32 million

IBRD loan active

Egypt Construction of third terminal at Cairo’s international airport and T/A for gradual liberalization of sector.

US$ 574 million

IBRD loan: $335m.

active

Algeria Air transport liberalization, airport and ATM policy framework, CAA

US$ 0.97 million

IBRD loan: $0.83m.

active

Europe & Central Asia (ECA) Country Description Amount Type Status

Tajikistan Air transport sector reform in policy based credit TBD IDA

loan preparation

Kazakhstan Air Transport Sector Strategy Note N/A ESW active


East Asia & Pacific (EAP) Country Description Amount Type Status

Indonesia Roads, bridges, and non-road transportation facilities improvements (sea ports & airport infrastructure)

US$ 191.05 million

IBRD loan: $133.97m.

active

Lao PDR Airfield rehabilitation at Boun Neua (Phongsaly Province)

US$ 1.25 million IDA loan active

Mongolia Air transport sector aspects for a transport sector policy project N/A T/A done

International Finance Corporation (IFC) The IFC, which is specialized at providing financing to private sector companies, has traditionally financed air carriers and airport infrastructure projects. It currently has several projects in a proposed or active status.

Country (by recentness)

Description Amount Type Status

Russian Federation

Financing of the establishment of a Russian air taxi service company

US$ 15 million C Loan proposed

Jamaica Expansion and redevelopment of Sangster International Airport

US$ 42 million

A & B loans proposed

El Salvador Pre-delivery financing of A320 aircraft for TACA International Airlines

US$ 30 million

Rev. credit active

Panama IFC standby credit facility for working capital for COPA Airlines

US$ 15 million

Stby. credit active

Russian Federation

Bridge loan to finance new cargo operations to Europe and China and modernization of IL-76 cargo aircraft.

US$ 38 million

A & B loans proposed

Dominican Republic

Completion of airport infrastructure under concession agreement.

US$ 60 million

A & B loans active

Chile Credit line to strengthen long-term working capital position of LAN Chile.

US$ 30 million

Stby. credit active

Kenya Pre-delivery financing of two B777-200 ER aircraft for Kenya Intl. Airlines

US$ 15 million A loan Closed

Russian Federation

Financing of aircraft acquisition for Siberian Airlines

US$ 25 million

A & C loans pending

Cambodia Investments for airport infrastructure under concession agreement

US$ 20 million

A & B loans active


Air Transport Office Activities at a Glance

The overall Air Transport Office activity consisted of a total time of 2,223 hours. CES provided 82% (1,823 hours) and HCB 18% (400 hours). The main activity was centered on providing Operational Cross-Support to units of all regions of the Bank (71% of total time), followed by external relations (17%), research & internal dissemination (10%), and internal activities (2%).

Air Transport Office Activities(in hours)

157671%

37517%

22310%

492%

Opertional Cross-Support

External Relations

Research & Internal Dissemination

Unit activities and internal

In terms of regional focus distribution, the Air Transport Office provided operational cross-support to all regions of the Bank. However, the main demand came from the Africa Region (40% of total), followed by the Latin America and the Caribbean Region (21%), and South Asia (18%). Of all operational cross-support provided, 68% (1,079 hours) was in the context of an actual lending or grant operation and 32% (497 hours) as technical assistance to clients.


Operational Cross-Support by Region(in hours)

AFT63840%

EAP443%

ECA1409%

LAC33521%

MNA1439%

SAR27618%

The operational focus of Cross-Support was well balanced between the six main topics of (i) Safety (31%), (ii) Security (17%), (iii) Regulatory (15%), (iv) Infrastructure (15%), (v) Sector Policy (12%), and (vi) Airline Restructuring (10%).

Operational Focus of Cross-Support(by hours)

487

265239

188

160

237

0

100

200

300

400

500

600

Safety Security Regulatory Sector Policy Airline Restr. Infrastructure

Hou

rs


CES is visiting the airport infrastructure at Conakry International Airport in Guinea. Major investments are necessary to ensure security (e.g. perimeter fencing) as well as safety (e.g. navigation installations). Guinea is one of the fivecountries of phase I of the project.

Operational Cross-Support Africa Region (AFT) West & Central Africa Air Transport Projects (P083751 & TF051220)

The Bank is preparing a West & Central Africa Air Transport Safety Project, which involves 23 states in three regional organizations. The project’s objective is to create a safe and secure environment for air transport in the region. This is one of the prime requirements for the successful implementation of the Yamoussoukro Decision (liberalization of air transport in Africa). The project will be implemented on two levels, regional and national. On a regional level, the project will focus on the development of regional air transport safety oversight capacities, which will be established within three regional safety agencies. On a national level, the Bank will support the enhancement of national oversight standards by the strengthening of Civil Aviation Authorities. For the financing of the regional components by grants, the Bank has teamed up with other donors, such as the African Development Bank, the French Cooperation, and the European Commission. As to the Bank’s support, five countries, in a first phase, have been selected to each benefit from a national lending project. The overall project amount is assessed at about US$ 50 million, the Bank’s lending share at about US$ 35 million. The project is planned for Bank Board presentation during fall of 2005. CES is supporting the project preparation as Co-Task Team Leader by focusing on the regional components. This includes donor coordination, as well as the establishment of the regional units and organizations. In addition, he is reviewing the national project components. In addition, CES was managing as TTL a US$500,000 IDF grant (TF051220) to ECOWAS and CEMAC. The objective of this grant was to strengthen the institutional capacity of the regional economic organizations, in order to implement necessary reforms in the air transport sector. These reforms should lead to the development of better air services by fostering competition and improving regulatory oversight. The grant has satisfactorily achieved most of its objectives. It came to a closing on 24 June 2005, at nearly full disbursement.


Mozambique – Communication Sector Reform Project (P073479)

During two missions, CES has provided operational cross-support on the air transport component of this project, which consists of three sub-components: (i) airport concession of Maputo International Airport, (ii) privatization of the national air carrier (LAM), and (iii) strengthening of the Civil Aviation Authority. The mission recommended a review of the proposed concession and has offered direct technical advice to the Ministry of Communication and Transport, as the current terms of the contract do not seem to be fully in line with the developmental priorities of the sector. The privatization of LAM, which is also supported by the Bank’s project, remains pending in a difficult market environment. Alternative solutions, such as e.g. the spin-off and sale of maintenance operations, are currently being evaluated. The third sub-component, the strengthening of the Civil Aviation Authority, has progressed very well. Equipment has been procured and, after selecting the international consultants, training will start shortly. Finally, the project component has been enhanced to finance seven GNSS (satellite based) approaches at secondary airports throughout the country, which will greatly enhance operational safety of the sector. In addition, it will serve as a model project component for other projects.

Cape Verde – Airline Privatization (P074055)

In the context of the Privatization and Regulatory Capacity Building Project, cross-support was provided by CES for the selection process of advisors for the

privatization of the national airline TACV. The Government of Cape Verde (GoCV) intends to privatize certain state-owned entities, which could develop a more dynamic role if owned and managed by the private sector. TACV was identified as such an entity. However, a difficult industry environment after 9/11, as well as TACV’s role of assuring a “service public” linking the various islands together, renders this privatization project particularly challenging. The GoCV has engaged an experienced

consultant and financial advisors, who are financed by the Bank’s project. The mandate is result and transaction oriented, which includes financial restructuring, operational improvements, management support, and M&A activities.

An international bidding program for Maputo International Airport was financed by the Bank.However, the deal is currently being reevaluated.

TACV currently operates three ATR 42-300 and two Boeing 757-200. The ATRs primarily serve on the inter-island market.


HCB is discussing the airport security plans in St. Lucia.

Latin America & The Caribbean Region (LAC) OECS Emergency Recovery Project – Transport Security (Five countries)

The sub-region-wide Organization of Eastern Caribbean States (OECS) Emergency Recovery Program seeks to secure the productive capacity of the OECS countries’ tourism in the aftermath of the September 11, 2001 terrorist attacks. Among other activities, the program finances enhancements to airport and seaport security, necessary to maintain secure transportation linkages to major markets and to preserve the image as a safe tourist destination. The project development objectives related to security included (i) the enhancement of security at key airport and seaport facilities in line with international standards, with the aim of preventing acts of terrorism and safeguarding the sub-region’s image as a safe tourist destination, and, (ii) the strengthening of the countries’ institutional capacity to develop and implement security plans, procedures and measures as mandated by the international civil aviation and maritime transport

regulatory agencies. The financing of US$20 million for this program was approved by the Board in April 2002. The Air Transport Office conducted a technical review, by visiting all islands participating in the program (St. Vincent & the Grenadines, Grenada, St. Lucia, Dominica, St. Kitts & Nevis) and the Regional Civil Aviation Authority in Antigua. It prepared a detailed technical report. The project, unique of its kind for the Bank, can be considered best practice that

could be replicated in other client countries.

Guatemala – PPIAF Study and Civil Aviation Component (P055084)

CES provided cross-support during the presentation and review of the PPIAF study on private participation in infrastructure in view of a new airport project. In the context of a new air transport component on the COMPETITIVENESS AND GROWTH PROJECT (P055084), he prepared a technical note on the sector, which was discussed with the authorities. Guatemala, which is rated IASA category 2 by the FAA, is striving at regaining the important category 1 rating, a key element for the development of air service to the USA.

The Bank financed patrol security vessel of the Port Authority in Nevis and St. Kitts. All ports of the project region have been ISPS certified within the required deadline.


Afghanistan relies heavily on air cargo operators such as VOLGA-DEPR, which received financing by the IFC.

South Asia Region (SAR) Afghanistan – Air Traffic Management & Airport Infrastructure (P078284)

Afghanistan has a privileged geographical situation in relation to its international overflight corridors. Despite the fact that the country currently does not provide any positive air traffic control, it was able to generate an income from ATC of over US$ 25 million in 2004. However, for the future sustainable development of air traffic, investments in infrastructure for a modern ATM system are necessary.

On request of the Minister of Finance, CES visited Kabul in December 2004 in order to evaluate the current situation of the Afghan Air Traffic Management System, its potential for further development, and to discuss alternatives to the proposed traditional radar infrastructure. In addition, he joined the mid-term review of the EMERGENCY TRANSPORT REHABILITATION PROJECT (CR. 3735-AF) in order to provide input

and technical guidance on air transport project components. These include the repair and final installation of an ILS system at Kabul Airport, airport demining operations, and needed ATC infrastructure.

A detailed technical note was prepared and a feasibility study was launched, which will evaluate the different technical and operational options for establishing a modern air traffic management system for the country.

Bhutan – Air Transport Sector Diagnostic Note Bhutan is a landlocked mountainous country with a little developed road network. By assuring safe, reliable, and affordable air transportation, the country’s national airline, Druk Air, plays an important role in the economic development of Bhutan. Druk Air acquired two new Airbus A319, which are suitable for the challenging operations out of the main airport Paro. However, this total investment of over US$ 100 million calls for a much more commercially focused approach in order to relieve the Royal Government of Bhutan (RGoB) from this financial burden and risk.

The World Bank project team is inspecting the damaged ILS antenna at Kabul International Airport.

The A319 is technically and operationally appropriate, but the acquisition costs call for higher utilization to assure profitability.


CES visited Bhutan in December 2004 and discussed with the RGoB different

business and financial options for Druk Air. One promising path could be the establishment of a partnership with an international airline. He therefore met with management of Indian Airways in Delhi, and with Thai Airways International in Bangkok. In addition, he prepared a technical note summarizing the findings and recommending various operational improvements, such as the introduction of a

modern yield management system, the establishing of a modern reservation system, and seeking interline agreements with international airlines.

Middle East & North Africa (MNA) Algeria – Air Transport Policy and Regulatory Reform (P072458)

The Government of Algeria has requested assistance from the Bank for the preparation of the Transport Sector Road Map. The objective was to prepare a concrete set of sector policy reforms, which shall become the basis for institutional and regulatory reforms that result in a structural overhaul of Algeria’s transport sector. CES has participated in the September 2004 mission and reviewed the air transport sector. The focus of the air transport sector strategy consisted (i) definition of the core responsibility of the Ministry of Transport, including recommendations for a sector policy, (ii) definition of the responsibility of a future Civil Aviation Authority, (iii) review and policy recommendations on the national air traffic management entity, (iv) considerations for restructuring and/or granting of concessions for the country’s main and domestic airports, and (v) sector policy recommendations concerning the national carrier Air Algérie and its competitive and regulatory environment. The mission prepared and presented a technical note. The team decided, on the basis of these findings, to further investigate the sector issues by launching several studies. The conclusions shall be incorporated into the final sector note.

The Bank is supporting Algeria in defining its air transport sector policy. This includes the country’s main airline, the airports, and the air traffic management infrastructure.

The country’s airport PARO has one of the most challenging approaches due to terrain (actual cockpit view on final approach). Only a few aircraft are suited for these operations.


The Dushanbe airport infrastructure needsinvestment. The terminal building, which incorporates the tower, is inadequate.

Tajik Air’s aging fleet of TU-154 is very fuel inefficient and costly.

Europe & Central Asia (ECA) Tajikistan – Air Transport Sector Reform (P074889)

During a mission to Tajikistan in April 2005 CES assisted in the preparation of the Policy Note on Air Transportation (P074889). Tajikistan, as a landlocked country with a poor road and inefficient rail network, depends on air transportation. Migrant workers especially, who generate an important amount of remittances, are traveling by air and are often paying a highly priced airfare. The current structure of the Air Transport Sector of Tajikistan is characterized by its national air carrier Tajikistan Airlines (TSA), which operates a fleet of inefficient Russian-built aircraft. While there are no financing charges for the aging fleet, fuel savings could, in fact, finance the acquisition of some modern aircraft. The mission has reviewed the options for

restructuring and fleet modernization of TSA. However, for the overall development of the air transport sector of Tajikistan, flight operations of TSA must

be separated from the airport and ATC operations. This should ultimately lead to a more competitive environment, which would lower the cost for transportation and increase quality. The mission has summarized the findings and recommendations in a technical note. This note was also discussed with the European Development Bank, which is preparing the financing of a fleet renewal support program. In addition, the Bank has launched a more detailed sector review study by a specialized consultant.

Kazakhstan – Transport Sector Strategy Note (P088643)

The transport unit of the ECA Region of the Bank is preparing a Kazakhstan Transport Strategy Study. CES has provided cross-support by reviewing the draft study on the civil aviation sub-sector and prospects for its future development. The main focus of the study is the airport infrastructure and airport services in Kazakhstan, and its institutional framework and organizational structure. The objective is to define a strategy for the country's airports and airport services. However, the study also addresses wider issues such as air services and air traffic infrastructure. It is due for Fiscal Year 2006.


The runway at Ulaanbaatar airport needs constant repairs, which are carried out during low traffic hours.

Air traffic control has begun to implement Automatic Dependent Surveillance (ADS-B) technology.

East Asia & Pacific (EAP) Mongolia – Air Transport Sector Policy (P056200)

Mongolia was visited by CES in April 2005, in response to the Government's (GoM) request for technical assistance concerning issues in the air transport sector. These issues included: (i) airline restructuring and privatization options, (ii) necessary investments in airport and ATC infrastructure, and (iii) proposed construction of a new airport. Mongolia is a large landlocked country which is sparsely populated. With a minimal road network, the population relied on a well developed domestic air traffic service during the time of Soviet affiliation. However, since the end of the Soviet Union, the domestic air transport market has shrunk dramatically, and its carriers and infrastructure are deteriorating. The national airline, MIAT, has been operationally restructured, but focuses mainly on international air service. The mission prepared a technical note, which became the basis for future policy discussions on the country’s air transport sector. With regard to the airline privatization options of MIAT, the mission recommended actively pursuing a privatization strategy by initiating talks with potential operational partners. In order to address the issue of the low tariffs that negatively affect the domestic

market, a transparent scheme of subsidies for destinations of public interest could be developed. For necessary investments in airport and ATC infrastructure, it is important that current air transport infrastructure is adequately maintained and necessary investments are assured. Given the relatively small air transport sector, and given the limited funds generated by the sector, the mission recommended to focus

on three key investment areas: (i) maintenance of the current Ulaanbaatar International Airport, (ii) investments in infrastructure (runway paving, lighting, and telecommunications) at selected

key domestic airports, and (iii) the development of an effective air traffic management system (e.g., by the establishment of a network of ADS-B stations). The mission also visited and discussed the possible construction of a new airport in Kharkhorin with the GoM. However, it remains skeptical that sufficient tourists and the local population will generate significant new traffic.


The ICAO Headquarters in Montreal, Canada.

External Relations

The 35th Assembly of ICAO CES represented the World Bank at the 35th Assembly of the International Civil Aviation Organization (ICAO), which was held in Montreal, Canada, from 28 September to 8 October 2004. The meetings were attended by 175 Contracting States and 35 international organizations. The objectives of the ATO mission were (i) to represent the Bank as observer at the 35th Assembly, (ii) analyze and report trends, issues and major policy developments of international civil aviation, (iii) consider the relevance and impact of these trends, issues, and policies for developing countries, (iv) respond to inquiries about the World Bank's support in air transport related projects, and (v) meet with representatives of client countries and relevant international organizations to discuss air transport related matters. CES has prepared an internal publication of the observations and conclusions of the 35th Assembly of ICAO, which was disseminated internally. In addition, the mission proposed the organization of a workshop with ICAO, and ATAG (IATA) on the economic impact of air transport, which would include the obstacles for development, how to address these obstacles in concrete measures and projects, and funding issues of the aviation sector.

Joint ICAO, World Bank, and ATAG Workshop The ICAO, World Bank, and ATAG (IATA) Workshop on "Maximizing Economic Contribution of Air Transport" was held from 6 to 8 June 2005. About 120 representatives from the airline industry and aviation support services, civil aviation authorities, ICAO, and the World Bank participated. The President of the ICAO, Dr. Assad Kotaite, opened the workshop by outlining the economic importance of air transport, the current challenges and opportunities, and by confirming ICAO's dedication to working with the air transport industry in promoting a healthy and dynamic operating environment. Maryvonne Plessis-Fraissard, Director of TUD, represented the Word Bank as opening speaker and outlined the Bank's renewed focus on infrastructure, the importance of air transportation, and the important issue of linkage of transportation to the Millennium Development Goals (MDG).


Maryvonne Plessis-Fraissard (WGB)addresses the workshop participants as the Bank’s opening speaker.

A series of presentations followed which focused on (i) air transport and economic development, (ii) policies, management and technologies, (iii) air traffic carriers, and (iv) development cooperation in civil aviation. All presentations can be found on the workshop's web-site, http://www.icao.int/atworkshop/Docs.htm. The workshop underlined the importance of air transportation in economic development. In fact, air transportation's outreach and economic effect directly influence the outcome of the progress of reaching the MDG in many countries. However, the workshop also recognized that developing countries face a heightened challenge regarding (i) oversight and regulation, (ii) meeting infrastructure

requirements, and (iii) providing a sustainable environment for air carriers and services.

These issues, and the fact that many donor interventions are uncoordinated, clearly indicate a need for closer cooperation between ICAO, the World Bank, and other donor and aviation institutions. It was agreed between the ICAO Secretary General, Dr. Taïeb Chérif, and the Bank, that the two institutions will create a working group with the objectives of (i) exchanging data and information on the developmental needs for aviation oversight and infrastructure, (ii) preparing an outline of needs for support of client countries, and (iii) planning and coordinating support activities between donors and partners. A joint working group will be created this summer to start implementing these objectives. In addition to continuously sharing information and coordinating efforts to meet client countries' needs, this working group will also prepare follow-up workshops on an annual basis, to focus on the implementation progress of the conclusions of the different working groups.

FAA sponsored Seminar and Meetings

CES participated as a speaker to the FAA sponsored Regional Safety and Security Summit in Washington DC, which was held from 1 to 3 February 2005. He outlined the Bank’s activity on air transport safety and the importance of focusing on regional solutions when it comes to small developing states. On 16 March 2005 CES attended the FAA’s 4th Annual Conference on Centers of Excellence at the University of Central Florida in Orlando. The objective was to consider the possibility of client countries participating in the program. The ATO will continue to monitor the program for this option.


Internal Dissemination Air Transport Knowledge Base The prime tool for internal dissemination of air transport relevant information is the web based Air Transport Knowledge Base (ATKB). The ATKB was developed during FY05 under the technical guidance of HCB. It contains eleven directories with numerous sub-directories, links to internal and external sites, as well as a frequently asked question and feedback section. The ATKB is regularly updated with new documents, such as studies and technical reports, as well as with aviation relevant news. The FY05 objective to create an internal Air Transport Knowledge Base was well achieved. However, the ATKB needs to be actively maintained and regularly updated and enhanced. In addition, the ATO intends to extend the ATKB to the Bank’s external web-site during FY06. The welcome page of the ATKB on the Bank’s intranet site is presented below:


Air Transport Clinic On 11 March 2005, the ATO held an Air Transport Clinic at the Bank in Washington DC. The objective of this clinic was to prepare staff to better assist clients in implementing appropriate strategies to improve air transport services in regions that have traditionally not been beneficiaries of efficient air transportation. Over 40 staff and outside partners participated in this full-day event, which was held during the Transport Forum and Learning Week. Professor Kenneth Button, George Mason University, and DOT Chief Economist John V. Wells focused on the economic aspects of air transport and CES on international regulatory frameworks. This was followed by a presentation on aviation safety which outlined the importance of accident investigations by a representative of the NTSB. The afternoon was spent working in different teams on a case study. The Air Transport Clinic was very well perceived by the participants and it was rated the second best event of the Transport Forum and Learning Week 2005.

Air Transport Brown Bag Luncheon The ATO held a Brown Bag Luncheon meeting on 15 June 2005, hosted by IATA. The Regional Vice President for North America, Mr. Douglas E. Lavin, spoke about “An Aviation Industry in Crisis: Solutions from The International Air Transport Association”. Interesting aspects were discussed, especially the challenging new requirements for airlines in developing countries.


Such ground based ADS-B stations could become the affordable CNS solution for many developing countries.

Research, Publications, and Various

Alaska - New Air Traffic Surveillance Technology In June 2005, the Air Transport Office traveled to Anchorage to visit the FAA's CAPSTONE project. This project consists of the experimental introduction of ABS-B in Western Alaska, which is a GPS based aircraft surveillance system. The introduction of ADS-B in Alaska for smaller aircraft has reduced the high accident rate by 47%. The new technology can definitely be seen as an answer for future air traffic management systems for developing countries, as its cost represents only a fraction of traditional radar based surveillance technology. In addition to taking stock of the new technology, the mission recognized Western Alaska as the prime example of a well functioning rural air transport system. Due to the fact that most Native American villages remain inaccessible during the summer because of large areas of melted permafrost, air transportation in small commercial aircraft remains the only means of transportation. The efficient set-up of these on-demand air carriers at relatively affordable tariffs must be considered a possible model for communities in developing countries that lack any other means of transportation (e.g. access to remote villages in the Democratic Republic of Congo). The mission took stock of this model and will deepen its research during FY 06, in order to prepare a note on the development of rural air transport. The sector note will also include considerations and recommendations for required basic air transport infrastructure, such as the ADS-B technology.

Paris Air Show The Air Transport Office visited the Paris Air Show in June 2005. In addition to

the impressive demonstration of the new Airbus A380, the mission took stock of technological progress in various fields and noted the serious emergence of certain developing countries in the air transport sector. The mission also met with representatives of the aviation industry to discuss new air traffic surveillance technologies, such as ADS-B. These new technologies are generally seen

by the industry as the future solution for those developing countries, which might


decide e.g. to move directly to ADS-B at a much lower cost than with the setup of a network of traditional radar installations. Of interest was the announcement during the show that the Indian domestic low cost carrier INDIGO was ordering 100 Airbus aircraft of the A320 family. This came just after the Indian carriers Jet Airways and Kingfisher ordered several new aircraft of the same category. The Indian air transport market, today at 23 million passengers, is expected to rise to over 50 million within the next five years. Other important aircraft orders came from carriers in Brazil (TAM) and Mexico (ABC). This clearly illustrates that major growth of the air transport sector is expected in emerging markets of middle-income countries.

ADS-B – the future CNS system for developing countries? ADS-B is the acronym for Automatic Dependent Surveillance – Broadcast – a new technology that allows pilots in the cockpit and air traffic controllers on the ground to "see" aircraft traffic with much more precision than has been possible before. ADS-B-equipped aircraft broadcast their precise GPS based position via a digital datalink along with other data, including airspeed, altitude, and whether the aircraft is turning, climbing, or descending. ADS-B receivers that are integrated into the air traffic control system or installed aboard other aircraft provide users with an accurate depiction of real-time aviation traffic, both in the air and on the ground.

Unlike conventional radar, ADS-B works at low altitudes and on the ground so that it can be used to monitor traffic on the taxiways and runways of an airport. It's also effective in remote areas or in mountainous terrain where there is no radar coverage, or where radar coverage is limited.

The FAA has established CAPSTONE, which is a test program in Western Alaska of ADS-B. The system has reduced the high aviation accident rate by 47%. Given the fact that full coverage of Alaska with ADS-B would only cost an estimated US$ 9.6 million versus US$ 146 million for traditional radar systems, this new technology must be evaluated for developing countries. Most of these countries today lack any modern CNS system.

Source: GARMIN INC., photo by CES of actual cockpit display during Alaska mission.


Publications The Air Transport Office planned two publications during FY05. However, due to higher than expected demand for cross-support, only one publication of the observations and conclusions of the 35th Assembly of the International Civil Aviation Organization was disseminated internally (see Air Transport Knowledge Bank on the intranet).

For FY06 the Air Transport Office is planning several publications. The first one will focus on the conclusions and results of the joint workshop on "Maximizing Economic Contribution of Air Transport". Another publication in preparation addresses the development of rural air transport services (see above).

Flight Operation Activities Both CES and HCB are licensed and active pilots. In August 2004 CES underwent annual simulator training for the renewal of his US FAA commercial pilot license and flight instructor certificate. The same month, he passed a conversion course of his Swiss commercial pilot license to a European JAR license. Being an active pilot, with both FAA and JAR licenses, is of prime advantage when discussing operational, technical, or regulatory issues that concern flight operations. In May 2005 the PRAL Air Transport Office carried out a community service flight mission. The mission was requested by the non-for-profit organization Angel Flight (http://www.angelflighteast.org/), which coordinates free air transportation for medical patients who do not have the financial means to afford necessary transportation. The flights are provided by registered general aviation pilots who fully carry all costs of the mission. CES and HCB flew Tabatha Cox and her mother from Charlottesville, VA, to Cincinnati, OH and back. Tabatha, who was severely burned as a toddler in a kitchen accident, needed skin transplants. The Bank staff received, in accordance to Staff Manual 9.10, one day administrative leave to carry out this very rewarding community service.


Outlook for Fiscal Year 2006

OPERATIONAL CROSS-SUPPORT The objective is to provide a maximum of 50% billable time on operational cross-support. However, given the fact that last year’s high demand resulted in 71% cross-support and that demand continues to rise, one priority will be to continue to establish a network of internal specialists and external consultants who are able to respond.

RESEARCH AND PUBLICATIONS The Bank, as a leading development institution, must maintain high standards in its specialized technical sectors. These standards are maintained by research, high level technical exchange, and by specific industry contacts. The following three areas for research and publications have been identified for FY06: 1. Knowledge Base and Data Repository: The web based air transport

knowledge base will be expanded, and an internal repository of data shall be developed for both technical and economic work in the air transport sector, as needs and inquiries arise. These are two interrelated yet separate projects – knowledgebase content will be created using industry data drawn from the newly developed data repository.

2. Air Transport Infrastructure: There is increasing demand for financing air transport infrastructure. These include (i) airports and airport equipment, (ii) air navigation installations, and (iii) specialized aviation equipment (e.g. calibration aircraft). One particular infrastructure, area and terminal air traffic surveillance, is of significant importance. With the advent of highly effective and low cost technologies such as ADS-B, there will be a new emphasis on infrastructure solutions for air traffic control and airport operations, which will become affordable for many developing countries.

3. Performance Indicators: The indicators agenda, still in a nascent stage for the air transport sector, will be addressed with the above mentioned. In addition, the performance indicators to be developed must focus on operational aspects and set clear benchmarks.

EXTERNAL RELATIONS

The conclusions and recommendations of the joint ICAO, World Bank, and ATAG workshop mandated the initiating institutions to establish a permanent working group to discuss, coordinate, and jointly focus developmental initiatives. The Air Transport Office shall therefore continue to implement this working group by developing and expanding external relations in conferences and workshops.

The PRAL Air Transport Office Fiscal Year 2005 Annual...

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