NAV CANADA seals Aireon deal with Iridium

NAV CANADA has finalised the terms of its Aireon joint venture with Iridium.

Aireon’s mandate is to provide satellite-based surveillance capability for air navigation service providers (ANSPs) around the world. Aireon will deliver this global aircraft surveillance through Automatic Dependent Surveillance-Broadcast (ADS-B) receivers built as an additional payload on Iridium NEXT, the second generation satellite constellation to be launched by Iridium in the 2015-2017 period.

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The new capability will extend air traffic surveillance to vast regions of the globe, promising a huge leap in fuel savings and avoided greenhouse gas emissions for the world’s airlines. The savings stem from the increased ability to use more optimal altitudes and routes due to the expanded capacity of airspace formerly limited to less efficient procedural separation.

“Despite the progress being made around the world, we are all limited by the geography of the world’s oceans, and by mountain ranges and remote areas that are difficult to reach,” said John Crichton, president and CEO of NAV CANADA. “Aireon promises to circumvent these geographical barriers, extending the benefits of ADS-B surveillance far beyond what was previously thought possible. In addition, the Aireon partnership opens the door to collaboration with other air navigation service providers in other parts of the world.”

The agreement provides for NAV CANADA to acquire up to a controlling interest in Aireon, currently a wholly owned subsidiary of Iridium. Under the agreement, NAV CANADA will purchase Series A preferred membership interests representing up to 51 per cent of the fully diluted equity of Aireon. The aggregate total investment in this venture is up to US $150 million.

This investment will be made in five tranches, each subject to the satisfaction of various operational, commercial, regulatory and financial conditions. Payment for the first tranche – amounting to US $15 million and representing 5.1 per cent of the fully diluted equity of Aireon – was made on November 19, 2012. The final tranche is scheduled for late 2017 and NAV CANADA’s preferred membership interest could ultimately represent up to 51 per cent of the filly diluted equity of Aireon.

“The milestone approach is a prudent way for NAV CANADA to manage its investment in a project of this nature, with each tranche dependent on the achievement of performance milestones,” said Crichton.

As announced in June, NAV CANADA also intends to participate in Aireon as a customer, aiming to deploy this new satellite-based surveillance capability in its North Atlantic airspace operations – the busiest oceanic airspace in the world with some 1,200 flights per day. Work is underway on an agreement by which Aireon will provide the required ADS-B surveillance data to NAV CANADA for this purpose.

NAV CANADA estimates customer fuel savings on the North Atlantic alone of over $100 million per year as a result of this new capability, as well as reduced greenhouse gas emissions of 263,000 metric tons of CO2 equivalents annually. “ADS-B is a proven technology with proven benefits. The level of future savings to airlines and aircraft operators will quickly recoup our planned investment thus providing this project with a strong business case based on customer and environmental benefits,” said Crichton.

Once Aireon’s data service is established, other ANSPs will be able to subscribe to the Aireon service for their own flight information regions.

“We are pleased to formalize this undertaking,” said Crichton. “This is an important milestone in a venture that promises to revolutionize the way the flow of air traffic is managed over the world’s oceans, in remote locations and in other areas of the globe requiring more cost-effective alternatives to traditional air traffic surveillance.”

NAV CANADA manages the second largest air navigation service in the world by traffic volume, next to the FAA in the US. In its North Atlantic operation, NAV CANADA co-operates with other ANSPs such as the FAA and NATS in the UK.

Subject to Aireon’s ability to successfully negotiate customer agreements with other air navigation service providers (ANSPs), Iridium also expects to receive annual data fee revenue in addition to the approximately $200 million in one-time hosting fees that Aireon plans to generate for the integration and launch of the payloads between 2014 and 2017.

 

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