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Practical Work and Experience With Performance Management

ICAO Performance Management Symposium

John Crichton, President and CEO

NAV CANADA

March 28, 2007

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Agenda

Unique, customer driven private company Why NAV CANADA measures performance Some examples of internal performance

measures What we have learned about performance

measurement Some NAV CANADA comments regarding

international performance measures

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NAV CANADA’S Unique Structure NAV CANADA assumed control of the Canadian

ANS on November 1, 1996. The Company’s creation was driven by its

customers’ need for improved and cost effective ATM services.

The Company is a completely private, non-share equity enterprise, funding both the $1.5 billion purchase and ongoing capital needs through publicly traded debt.

The board of 15 represents all major stakeholders including 5 customer representatives.

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2006 Marked the 10th Anniversary of NAV CANADA

November 1, 2006 was our 10th anniversary

Company has been aggressive in controlling costs while ensuring the system remains safe and efficient

The impact of our efforts can be seen in these comparisons to our former life

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Managing Head Count

Year End Head Count

6,300

6,152

5,692

5,266 5,224

5,426 5,466 5,426 5,369

5,302

5,000

5,500

6,000

6,500

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

6

226

203 200210 207

86

114

176

126 123

102114

123 127

77 7890

$0

$50

$100

$150

$200

$250M

illio

ns

Transport Canada

NAV CANADA

Capital Spending FY 1991 to FY 2006

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A Strong Safety/ Customer Value Focus

As a natural and statutory (ATC) monopoly, ensuring transparency is essential to be accountable to customers.

The Company is fundamentally based on three pillars of value creation for our customers:SafetyCost effectivenessService Quality

These pillars drive the overarching objectives established by our Board of Directors.

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Overarching ObjectivesMaintaining a safety record in the top decile of the major

ANSPs worldwide.Maintaining customer service charges in the bottom

quartile (lowest charges) of the major ANSPs worldwide. Implementing and maintaining a modern cost-efficient

ANS technology platform in the top quartile of Major ANSPs worldwide.

Ensuring that growth in costs of providing air navigation services do not exceed the growth in charging units, thereby resulting in a decline in customer service charges over the long term.

Creating a productive and fulfilling work environment which places NAV CANADA amongst the best employers in Canada.

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Overarching Objectives Drive Measurement

Our overarching objectives are the ultimate performance measures.

All our internal measures relate to the overarching objectives.

These objectives focus our performance measurement efforts thereby keeping the number of high level measures manageable.

Having a reasonable number of measures also recognizes the significant resource requirements that can arise.

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Why Does NAV CANADA Measure Performance?

A score card on how we measure up to our objectives.

To demonstrate value to customers, or lack thereof.

An early warning system to identify deficiencies especially with respect to safety.

A way to rank our Company against ourselves and with other ANSPs around the world.

A tool to identify areas of improvement or best practices

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Internal Performance Measures Performance measurement occurs

throughout the Company.

Individual managers’ goals are linked back to the Corporate objectives.

High level performance measures focus on customer concerns.

The following examples are high level measures in Safety, Cost Effectiveness and Service Quality, the three pillars.

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SAFETYIFR to IFR Losses of Separation

Rate per 100K movements IFR/IFR losses of separation

12 Month moving 2000-2006

00.10.20.30.40.50.60.70.80.9

1D

ecem

ber

June

Decem

ber

June

Decem

ber

June

Decem

ber

June

Decem

ber

June

Decem

ber

June

Decem

ber

2000 2001 2002 2003 2004 2005 2006

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COST EFFECTIVENESS Customer Costs Per Flight Hour

Customer Average Cost Per Flight Hour (1)From Service Charges

Fiscal Year 1999 to 2006

$280

$300

$320

$340

$360

$380

$400

$420

1999 2000 2001 2002 2003 2004 2005 2006

Fiscal Year

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1.15

1.20

CP

I

Rev per Flight Hour CPI

6 Months (1) IFR flight hours in Canadian controlled airspace, including oceanic; estimated 1999 to 2003, actual 2004 to 2006

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COST EFFECTIVENESSFlight Hours Per Employee

Average Flight Hours (1) per EmployeeFiscal Year 2004 to 2006

0

100

200

300

400

500

600

700

2004 2005 2006

Fiscal Year(1) IFR flight hours in Canadian controlled airspace, including oceanic (2) Year over year change

6.5% (2)

3.9% (2)

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Traffic Is Growing

TRAFFIC GROWTH1999-2006

90

95

100

105

110

115

1999 2000 2001 2002 2003 2004 2005 2006

Fiscal Year (Sep-Aug)

Gro

wth

Sin

ce 1

999 (

=100)

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SERVICE QUALITYYYZ Arrival Delays

Toronto Arrival Delays for 2005 and 2006

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

IFR

Arr

ivin

g A

ircra

ft

Other delays 756 1,529 1,180 1,302 897 1,173 2,202 760 2,681 997 775 1,270 1,304 1,771 1,039 1,204 2,228 2,578 1,076 2,341 1,101 1,018 1,162

NC Attributable delays 65 28 0 24 0 5 0 39 0 36 51 97 84 96 328 117 122 72 26 7 44 38 0

On Time 16,293 14,948 14,507 13,657 15,991 16,356 13,900 15,644 14,531 16,073 16,528 15,792 16,201 15,530 16,497 17,495 15,319 14,906 15,976 13,659 13,688 14,668 14,865

J an-

05

J an-

06

Feb-

05

Feb-

06

Mar-

05

Mar-

06

Apr-

05

Apr-

06

May-

05

May-

06

J un-

05

J un-

06J ul-05 J ul-06

Aug-

05

Aug-

06

Sep-

05

Sep-

06

Oct-

05

Oct-

06

Nov-

05

Nov-

06

Dec-

05

Dec-

06

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SERVICE QUALITYEquipment Outages

Total Number of Outages 2001-2006

0

500

1000

1500

2000

2500

Occurance Period

Nu

mb

er o

f O

uta

ges

Total Outages 20382159161414911554133913041185118011411211122812041062121712901079108511611152 871 870 912 737

Jan-Mar /01

Apr-Jun /01

Jul-Sep /01

Oct-Dec/01

Jan-Mar /02

Apr-Jun /02

Jul-Sep /02

Oct-Dec/02

Jan-Mar /03

Apr-Jun /03

Jul-Sep /03

Oct-Dec/03

Jan-Mar /04

Apr-Jun /04

Jul-Sep /04

Oct-Dec/04

Jan-Mar /05

Apr-Jun /05

Jul-Sep /05

Oct-Dec/05

Jan-Mar /06

Apr-Jun /06

Jul-Sep /06

Oct-Dec/06

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What NAV CANADA Has Learned

Good consistent data based on clear definitions is essential.

Data must be relevant to customers. Measures must be related to objectives. Collecting, analyzing and reporting on

performance measures requires resources. Measure what’s relevant not what’s nice to

have. Must avoid demand driven comparisons

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International Performance Measures

NAV CANADA’s overarching objectives require good international information from other ANSPs in a timely fashion.

Secretariat paper is helpful but too many different performance indicators to be useful.

Operational Concept has 11 key performance areas and more than 32 KPIs. This is too many.

International measurement must recognise that different ANSPs serve different customers. Measures must be relevant to those ANSPs.

Avoid prescriptive metrics. NAV CANADA supports the industry effort lead by

CANSO for global benchmarking.

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Conclusion NAV CANADA is committed to safety, cost

effectiveness and quality service to customers. Using appropriate performance measures

ensures that NAV CANADA stays focused on customers’ concerns.

Timely and validated international performance measures would be very useful for ANSPs and their customers.

The development of ICAO’s performance measures must take into account local and regional differences, leaving ANSPs and their customers to determine the measures that work best for them.