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Langen, 15 July 2004 DFS aims to become best air navigation services in the world “Europe and the air navigation services” mark the DFS annual press briefing “The air transport industry along with DFS are on the road to recovery.” This was the key message of the speech held by Dieter Kaden, Chairman of the Board of Managing Directors and CEO of DFS Deutsche Flugsicherung GmbH. At the annual press briefing with the theme “Europe and the air navigation services", the DFS CEO summed up the year 2003 and presented key financial figures. Ten years after the foundation of DFS, Mr Kaden described the corporatisation of the company as a success. In this context, he welcomed the 1000th person to commence training as an air traffic controller last year. After two loss-making years, the economic situation significantly improved in 2003. According to Mr Kaden, the results of the year 2004 will be better than 2003, provided no other crisis hits the industry in the meantime. He insisted on maintaining this reservation with the reasoning that people’s behaviour – and thus passenger numbers – is being increasingly influenced not only by economic but also by global political developments. He was referring to events such as 11 September, the Iraq war and SARS which greatly influenced air transport in past years. DFS recorded approximately 2.55 million controlled flights in German airspace in 2003, compared with 2.49 million flights in 2002, representing a plus of 2.4%. Compared to the number of flights recorded in 2000 (2.58 million), however, it reflects a minus of 1.2%. In terms of service units, enroute services showed an increase of 3.8% in 2003, and tower services an increase of 2.6%. This difference between tower and enroute services is attributable to the fact that low-cost carriers mainly operate from regional airports at which DFS is not represented, a situation which the DFS CEO aims to change. The way has already been paved for setting up a new subsidiary for towers at regional airports; this move is pending the approval of the owner of DFS, the Federal Republic of Germany. Aircraft movements alone are not an indicator of the economic performance of the company, as the air traffic control charges which airlines pay to DFS also depend on the size of the aircraft. With revenues amounting to almost € 901 million, DFS achieved an over-recovery of charges of € 80.8 million. This over-recovery was the result of a moderate increase in 2003 charges, effective cost-cutting measures adopted by DFS and one-time revenues from a cross-border leasing transaction. Mr Kaden again referred to the charges system which is based on the principle of full cost recovery. In keeping with this system, DFS must raise charges in times of economic slowdown, while charges can be lowered under favourable economic conditions. Under current legislation, it is not possible for DFS to build up reserves in periods of economic growth. In June 2004, all parties in the German Bundestag called for this policy to be changed. The number of aircraft proximities remained at an extraordinarily low level in 2003. Eight incidents (2002: 13) were recorded by the independent Aircraft Proximity Evaluation Group (APEG), four of which were assigned to risk category A (risk of collision, 2002: 5) and four to risk category B (safety not assured, 2002: 8). DFS staff was a causative factor in three of the eight cases (2002: also 3).Punctuality figures were also positive; the average delay per flight is steadily decreasing. In Europe, this statistic was 1.7 minutes per flight, while Germany recorded a mere 0.93 minutes, 0.34 of which was caused by DFS. Mr Kaden also addressed the issue of flight routes and aircraft noise, thereby referring to the recent ruling by the federal administrative court. This court of last instance ruled in favour of DFS which had introduced a departure route from Frankfurt Airport, the so-called TABUM route. In spring 2002, the administrative court of Hesse had passed a different judgement which was largely interpreted in the public to be a scolding for DFS. The court found at the time that DFS had not sufficiently taken the rising terrain of the Taunus mountains into account when assessing noise levels. By cancelling this ruling, the federal administrative court confirmed that DFS had indeed performed its work with due care and consideration. Despite the scepticism surrounding air transport growth, air navigation services in Europe suddenly developed their own dynamics. Mr Kaden commented that the general rules of a Single European Sky had been known for quite some time and that “we have to prepare for competition on the air navigation services market in Europe”. But it has all happened so quickly: The European implementing regulations have come into effect this year, which will greatly affect the company. In order to compete in Europe, Mr Kaden stated that DFS would have to undergo re-structuring. Regulatory tasks, some of which are still performed by DFS, would have to be assumed by other institutions. DFS is already facing this challenge in 2004. Mr Kaden also mentioned a current and contentious issue which may divide the company, namely the foundation of an association which – as Mr Kaden put it – “would like to be a trade union”. He was referring to the GdF e.V., an association set up by air traffic controllers who feel that they are not being properly represented by the existing trade union ver.di. According to Mr Kaden, it would be better to hold talks with this important group and acknowledge their trade union status for the benefit of the whole working environment. To encourage two conflicting trade unions in one company would, however, be a fatal move, as it is feared that the strong demands placed on DFS by two competing unions would render DFS unable to even think about competing on the air navigation services market in Europe. He added that DFS had no other choice but to stick to its decision, and in the end the federal administrative court would determine whether or not it is a trade union in the eyes of the law. Mr Kaden drew attention to the shorter working hours and high salaries enjoyed by air traffic controllers, while at the same time he stressed that this was desired and part of the package when DFS was corporatised eleven years ago. The outcome of the last collective bargaining agreement was unfavourable for some employees, including air traffic controllers. These negotiations were held in 2002, which was a critical year. Mr Kaden also broached the subject of a possible further privatisation of DFS, over which the management of DFS only has limited influence given the fact that the project is in the hands of the State. Capital privatisation is a complex issue from a legal and constitutional point of view, especially considering air navigation services in Germany are still regarded as a sovereign task. In addition, DFS works closely together with the German Bundeswehr on account of the successful integration of civil and military air navigation services in Germany. This aspect would also have to be considered in the event of a further privatisation of the company. Finally, the Chairman of the Board of Managing Directors and CEO of DFS presented the Vision 2020. “DFS is the best air navigation services organisation in the world.” Mr Kaden defended this seemingly bold statement by reasoning that “a vision is more than just an objective which can be reached by making practical decisions. A vision is different; one must believe in a vision, as it is this belief that guides the way”. DFS Deutsche Flugsicherung GmbH is a State-owned company under private law and has 5,200 employees. DFS ensures the safe and punctual handling of flights. Staff coordinate around 10,000 aircraft movements in German airspace every day, and more than three million movements every year. With this large number of flights, Germany has the highest traffic volume in Europe. DFS operates control centres in Langen, Bremen, Karlsruhe and Munich. In addition, DFS is represented in the Eurocontrol Centre in Maastricht, the Netherlands, and in the control towers of the 16 international German airports. DFS provides training and consultancy services around the world and develops and sells air traffic control, surveillance and navigation systems. The company's portfolio also comprises flight-relevant data, aeronautical publications and aeronautical information services. DFS has the following business units: Control Centre, Tower, Aeronautical Solutions and Aeronautical Information Management.
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