Aviation Security Service Funding Review 2018/19
FAQs for the consultation period
What steps have been taken to limit the total operating and capital expenditure costs for Avsec? How has the link between passenger growth and processing costs been weakened?
- All planned activities for Avsec have been required or approved by either the Government, the Minister of Transport, the Authority Board or by the Director Civil Aviation.
- The anticipated increase in Avsec’s volume of work over the next three years results in an associated increase in the number of personnel and thus in personnel costs. The additional personnel are critical to the support and implementation of Avsec’s activities to achieve desired aviation security outcomes. The additional staff are calculated based on the minimum number of hours required to complete the required tasks. This is calculated using Avsec’s scheduling tool which makes optimum utilisation of existing staff when adding additional duties, based on demand.
- When developing any new capabilities, options are sought to ensure maximum equipment usage against a minimum equipment foot print and also how technology and mechanising processes can be used to effectively off-set increased staff costs. These are built into the design stage of the capability development and subsequently refined during trials and final deployment.
- The implementation of SMART lanes, as part of ‘smart security’ within the consultation document, increases screening point capacity. This delays the need for additional lanes which have a greater impact on staffing, lease space, health and safety issues, and provides the capability for networked screening systems across airports. This limits staff costs growth, fixed rental costs, delays capital expenditure increases and reduces costs associated with Health and Safety issues.
- Work is ongoing to enable flexible usage of new capabilities once in-service which enables the capability to operate efficiently across a range of throughput rates by either increasing or decreasing staffing numbers to match the predicted throughputs.
- All of Avsec’s budgets are reviewed and approved by the Board. Any major investment is subject to modelling and business case approval by Board to ensure implementation is as cost effective and as efficient as possible. Updates on project progress and Avsec finances are provided to the Board monthly.
- All business cases for procurement or equipment are based on Government Rules for procurement, ensuring a competitive process.
- Additional cost efficiencies may be achieved during the funding review period (i.e., as security technology becomes less expensive). The flexible pricing proposal allows adjustments to the passenger security rates to help avoid over recovery.
- The delivery of each requirement has been viewed a number of ways to ensure the most efficient way to deliver against the requirements.
What throughput rate is used for the modelling?
Modelling used Avsec’s current target levels (3 min wait on average, 95% of passenger’s end to end experience lasts 8-12 minutes.)
What are the various capital funding options as referenced in paragraph 26? Which is the best?
A number of capital options are available to Avsec to fund its future increased capital requirements. These include; third-party loan, capital injection (subject to 6% capital charge), operating lease or crown loan. The intention is for Avsec to seek a Crown Loan to fund its capital investment programme. At the current time this is assessed as providing the most cost effective way of funding Avsec’s future capital requirements.
What is the method for allocating costs between domestic and international cost pools?
Avsec costs are allocated directly where possible (i.e. depreciation on equipment in a domestic only terminal is fully allocated to the domestic reserve). The number of hours for each duty is assigned either to International or Domestic or shared duties by airport (with shared duties reallocated to International and Domestic by relative passenger volumes at that airport) to drive an appropriate allocation of staffing costs to each reserve. Other costs such as overheads are then similarly allocated based on the percentage of other costs already allocated to each reserve. (e.g. 60% International 37% Domestic, 3% Third Party)
What are the major items included within the ‘other expenses’ category listed in Table 3?
These relate to Infrastructure expenses such as rent, building maintenance and expenses, IT costs, support services, travel and equipment repairs & maintenance.
How does Avsec measure / define value for money, as mentioned in paragraph 18 of the consultation document?
Value for money is the balance between efficiency, security outcome and passenger facilitation. Using the Quintiq workforce management tool the impacts of increased delivery against acceptable targets can be modelled to ensure the balance is met. Avsec has a number of measures in place to monitor this balance for example, included in the Statement of Performance Expectations 2018/19 (PDF 9.2 MB) the average passenger wait times considered acceptable within the parameters of effective and efficient service delivery is less than or equal to three minutes.
The balance between over delivery and under delivery of services impacts on both efficiency and facilitation.