Welcome to the General Aviation Advocacy Group of New Zealand

CAA Notices: The reinvention of a failed methodology

Since our last update, feedback shows that concerns are shared across the aviation sector about this matter. The introduction of CAA Notices would be a significant departure from the way aviation in New Zealand has been regulated for the past 25 years. Whilst the official comment period for NPRM 17-02 has closed, the following is a quick recap of what the CAA is proposing:

  • Section 28(5) was inserted into the Civil Aviation Act in 2010 and confers certain powers to impose requirements or conditions.
  • About seven years later, the CAA has suddenly come up with an interpretation of how far Parliament intended these powers to extend.
  • In the Cabinet Paper recommending amendment of the Civil Aviation Act, the Minister sought to grant the Director power to determine technical matters such as testing equipment, syllabi and examinations.
  • Cabinet agreed (via Cabinet Minute) to amend the Civil Aviation Act to provide for rules to delegate to the Director the power to determine technical matters, such as testing equipment, syllabi, and examinations.
  • When introducing the amendments to Parliament for debate, the Associate Minister highlighted them as being about the power of the Director to determine technical matters under the Civil Aviation Rules.
  • Parliament intended the granting of powers to determine technical matters in a narrow range of areas. It never intended the establishment of a process where the CAA becomes the risk-definer, the solution-chooser, the rule-maker and the law-enforcer.
  • NPRM 17-02 (released in February 2017) presents CAA Notices as though they are an existing tool. A reader would be forgiven for concluding that CAA Notices are an existing and routine method of communication.
  • The CAA knows that it currently has a Minister who is distracted by other issues within his portfolios and that he basically rubber-stamps anything the CAA puts in front of him.
  • The CAA also knows that it will most likely only have this Minister until August this year; so the Authority is pushing to make hay while the sun shines so to speak, and get everything it possibly can into position before then.
  • The CAA has done a very good job of maximising confusion in the way it has rolled out this CAA Notices concept.
  • Crucially, CAA Notices are a CAA invention.
  • The CAA believes that Section 28(5) of the Act enables the Minister to put in place rules which empower the Authority to impose mandatory requirements or conditions without the need to put the proposed requirements or conditions through the normal rule-making process.
  • The CAA has decided that, should the Minister put in place such an empowering rule, then the mandatory requirements or conditions imposed under it will be documented in a CAA Notice.
  • The first attempt at convincing the Minister to create an empowering rule is contained in NPRM 17-02 in the form of the proposed new Subpart I to Part 61.
  • The CAA has everyone fixated on how a CAA Notice will be consulted upon, who might be allowed to issue it, and how much faster it will allow things to be achieved. Only now are people waking up to whether Parliament ever intended Section 28(5) to be used in the way that is proposed, or what the implications are of enabling this sort of regulatory power to be wielded outside the normal rule-making process.
  • The CAA has carefully chosen the subject matter of the first CAA Notice. R22/R44 operational safety is a subject upon which some fairly firm views are held across the community and most discussions can be relied upon to revert to this subject matter, rather than sticking to the core issue of what regulatory checks and balances are appropriate.
  • The introduction of the CAA Notices concept will never reach an NPRM stage. As outlined above, the CAA has invented it for its own ends.
  • What will reach an NPRM stage are the proposed empowering rules which we expect will be introduced by the CAA as and when it decides it wishes to create mandatory requirements or conditions in different areas. The proposed Subpart I to Part 61 is the first example of an empowering rule.
  • Should the Minister decide to create an empowering rule under Section 28(5), he must specify the consultation that is to be undertaken prior to mandatory requirements or conditions being promulgated. The cynical side of us wonders how long it will be before the CAA convinces the Minister that specifying zero consultation will lead to a far more expeditious pathway to introduction of various requirements or conditions.

When questioned about CAA Notices, the CAA has made it very clear that consultation on their introduction is not necessary because this is already provided for in Section 28(5) of the Act. Our assessment is that the CAA has made its mind up on what the Act means and will attempt to drive this CAA Notices concept forward – regardless of resistance.

The Swedavia-McGregor Report was in part instigated because the aviation regulatory framework had become an unwieldy ad hoc mess of rules, circulars, orders and other tertiary regulations.

CAA Notices are a reinvention of this failed methodology and we encourage everyone to continue voicing their opposition at every opportunity.

A proposal to challenge the new CAA levies

By now, operators will have received a letter and information booklet from the CAA detailing the new safety levies that will take effect from 1 July 2017. These levies have been introduced despite efforts by a number of individuals and organisations to enlighten the CAA and Minister of Transport of the failings in the consultation process, as well as the inequities in the methodology adopted.

Immediate financial implications

The levies will be introduced across two financial years (2017-2018 and 2018-2019) with 50% of the full rate payable in the first year and 100% payable in the second year and beyond. For the purposes of analysis, this article is based upon the full levy rate payable and ignores the first year’s sugar-coated Trojan horse.

Certificated operators will no longer be charged at an hourly rate by the CAA for routine inspections and monitoring. They will instead be levied at varying rates as outlined in the following table:

Sector Full levy rate
Part 115 – Parachuting $1.60 per descent
Part 121/125 – Passenger Air Transport $5.50 per flight hour
Part 135 – Passenger Air Transport $6.50 per flight hour
Part 137 – Agricultural Operations 0-10,000 tonnes per annum $0.87 per tonne
10,000 – 50,000 tonnes per annum $0.73 per tonne
50,000+ tonnes per annum $0.65 per tonne
Part 121/125/129/135 –
Freight Only
0-10,000 tonnes per annum $3.00 per tonne
10,000 – 50,000 tonnes per annum $2.60 per tonne
50,000+ tonnes per annum $2.00 per tonne

 

Apply the above figures to your operation to determine how much you will pay the CAA under this new levies regime. Compare this to how much you currently pay annually for routine audits and this will tell you whether you are immediately better or worse off.

The longer term consequences

These are numerous. A couple of the more obvious consequences are the loss to industry of the mechanism whereby demonstrated safety performance was financially rewarded via an increased audit interval and a corresponding reduction in CAA charges; and the fact that in moving away from an hourly rate-based method of cost recovery, the CAA has skilfully managed to put itself in a position where its operating costs can’t easily be compared with other similar organisations or government agencies.

Of far more significance, however, is the fact that throughout the process of setting these levies, the CAA was very clear that its objective was to more closely match the revenue recovered from each sector of industry with the expenditure it incurs in regulating that sector. This all sounds very nice as a concept, but an analysis of the CAA’s current sector-by-sector costs and budgeted future expenditure shows what full cost recovery might look like, and the ramifications for commercial general aviation become immediately apparent:

  • Regulating commercial general aviation accounts for 23% of the CAA’s total expenditure.
  • The CAA’s budgeted total expenditure for FY2019 is $42.818m.
  • This means that the CAA’s expenditure on the regulation of commercial general aviation will be 23% of $42.818m, which equals $9.848m.
  • Deducted from this is the CAA’s projected revenue from other sources (for example, fees and hourly rate charges) of $1.637m, which leaves $8.211m to be recovered from commercial general aviation by way of levy.
Sector Historic percentage of total cost of commercial general aviation audit oversight Share of $8.211m to be recovered if 100% cost recovery principles applied Levy rate required to achieve 100% cost recovery
Part 115 – Parachuting 11.3% $927,843 $11.94 per descent
Part 121/125 – Passenger Air Transport 11.6% $ 952,476 $25.15 per flight hour
Part 135 – Passenger Air Transport 25.4% $ 2,085,594 $29.78 per flight hour
Part 137 – Agricultural Operations 34.7% $ 2,849,217 $3.99 per tonne
Part 121/125/129/135 – Freight Only 17.0% $ 1,395,870 $13.75 per tonne
TOTAL 100.0% $ 8,211,000

 

In terms of the way the Government sets fees and charges, there is nothing to prevent the CAA moving to a 100% cost recovery methodology. You will be able to assess the impact on your business, but it doesn’t take rocket science to also imagine the implications for the entire commercial general aviation sector.

Can this be challenged?

Yes it can. Four avenues have so far been identified through which various aspects of this levy can be subjected to scrutiny. These range from the veracity of the consultation process, through to the selective targeting of the levy, its longer term implications, and compliance with government guidelines and the Civil Aviation Act itself.

This isn’t going to be an easy process. It will involve significant research and analysis coupled with engagement in the political arena to maximise the chances of success. Any such challenge needs to be mounted now, before the levies are cemented in place.

The estimated cost to mount a credible challenge will be around $20,000.

The next step

If you have any questions, or would like to support the effort to overturn this parasitic threat to the future livelihood of commercial general aviation, please contact Qwilton Biel.

Phone:           (027) 493 5655

Email:            qwilton [at] biel [dot] nz

Client Satisfaction Surveys in a post-factual world…

The CAA is either living in a fools’ paradise and thinks all its customers are happy, or it is deeply afraid to ask them. We can’t think of any other reason why the CAA refuses to hire a neutral organisation and tell it go to the customers and ask some honest questions. We also have convincing proof that no company or organisation can rely on anything other than an independent monitoring of its customers.

Here’s why…

In January this year, we wrote to the Chairman of the CAA Board pointing out that the Authority engaged Colmar Brunton to undertake a client satisfaction survey in 1995 and 1998; five years later in 2003, the same research company carried out a similar survey. Since then, there have been no further CAA Client Satisfaction Surveys specifically targeting all CAA document holders. The 2003 survey’s results did not heap praise upon the CAA.

In his reply, the Chairman said:

“Your interest in surveys is topical as the CAA will shortly be repeating its flagship ‘Feel Safe’ survey conducted by Colmar Brunton. Management are currently planning on supplementing the survey, or even splitting its content, so that while retaining its prior focus on the CAA’s ultimate customer (the public) it also provides more information from the aviation sector”.

OK, it’s costing you $4.50 a minute. But do have a problem with me?

The Colmar Brunton “Feel Safe” surveys have typically only contained results from 300 to 400 respondents. We have written to the Chairman and asked that all CAA document holders be made aware of his planned consumer survey. But we reminded Mr Gould that this is just a consumer survey, and what is actually required is a CAA document-holder survey related to specific client issues, and promoted via the CAA’s email user database and Vector magazine.

Post-audit or inspection feedback to the CAA

In our letter to the Chairman, we pointed out that MoBIE has for many years operated a system in which, after every investigation, an inspector is required to send a client satisfaction survey to all parties involved. Something similar would be a valuable tool for the CAA Director for feedback about, to quote just one example, the knowledge and performance of auditors and the way they interact with aircraft operators and aircraft maintenance facilities. A client feedback system also provides useful information to senior managers of departments to gauge the performance of individual staff members as part of their yearly performance reviews.

The Chairman said:

“… at the end of each audit or inspection, the CAA already surveys the parties involved in order to gather information on their views on the effectiveness and efficiency of the regulatory intervention they have just been involved in. While that provides limited information about the performance of one regulatory function, we are interested in gathering a broader range of views to inform risk management and decision-making. Both the management and Board of the Authority recognize the importance of such information from the sector to inform our planning and improvement efforts. In part, this is one of the reasons we place so much importance on the relationship with representative bodies like the Aviation Community Advisory Group.”

We then sought to verify what the Chairman had claimed was correct – “the CAA already surveys the parties involved in order to gather information on their views on the effectiveness and efficiency of the regulatory intervention they have just been involved in”.

We asked a number of operators if what the Chairman claimed (or had been told by his officials) actually happened in practice.

  1. Did the Chairman’s statement have validity?
  1. Did operators feel comfortable providing feedback to the CAA when their AOC is at stake?

We believe the replies below speak for themselves, and we’d welcome further comments.

  • No, I’m not aware of any statement like that. Imagine if an operator criticised them at that point, they could be deemed not fit or proper and their AOC withdrawn or delayed when the auditors got back to Wellington. Yes there is a discussion, but who would dare to complain? It proves how out of touch the Chairman is.
  • I never had the auditors ask me how the audit went or what I thought of CAA. If you wanted a good audit report you would never consider expressing your thoughts on that issue. Ask the Chairman for some of the recorded comments.
  • No, I haven’t been asked for feedback (that’s not to say I haven’t given verbal feedback to auditors at a subsequent audit however!).
  • I am not aware of any formal feedback system. At one point during an audit, I found I was being asked the same questions at each audit such as “Is your fax number still xxxxxxxxx. Is your mailing address still xxxxxxxxx. Is your phone number still xxxxxxxx. When I’m paying over $4.50 PER MINUTE for CAA to ask me the same questions at each audit to which there was no change, I wasn’t happy. I suggested they send me an A4 sheet with those questions on it prior to the audit and I could go through and tick the boxes, thus saving valuable minutes. They thought that was a great idea but nothing was done.
  • I have never been asked at all, fair to say I have offered my opinion on a number of occasions regarding their efficiency levels, no one has ever asked me for it tho and I have undergone approx 25 audits over the years.
  • The last CAA audit that I went through was about 2 years ago for our former Part 145 maintenance organisation. There was certainly a discussion on how we viewed the conduct of the audit but our responses were very much along the lines of what you would expect of “the regulated” talking to “the regulator”. No matter how the CAA Chairman might like to dress it up, it is extremely difficult to get anyone whose livelihood relies on holding an aviation document to be critical (no matter how well intentioned or constructive) of the organisation that issues said document.
  • I am in full agreement for the auditing process to be outsourced, what a great idea, at least if this happened there would be no favoritisms by the auditors. It’s imperative that all operators record* audits.  In that way it keeps the auditors honest and semi under control.
  • Yes this is an interesting subject and I totally agree with the other comments.  After last year’s audit we received a survey, which I filled out with my own feelings regarding CAA.  But I then thought it wasn’t a good idea to return it as it may have been held against me.  So I never posted it. I am certain that industry is running scared of CAA and feel that there are “bully” tactics going on. CAA is determined to change the aviation industry to make it highly regulated to cover their own arses.  Hence industry is finding this hard to come to terms with.
  • A further point about commenting on audit skills etc is as long as they are sitting at your table you are paying for that time.  You want them in and out of your place as soon as possible so the audit doesn’t cost you an absolute fortune.  So no, we wouldn’t think there would be anyone out there brave enough to criticise the CAA openly and in front of the auditors, as it would make their lives a misery.

The Chairman also said:

“On the information theme, please note that management is also introducing a ‘balanced scorecard’ to improve the information available on organisational performance. While not yet complete, over the next 12 months you can expect to see information being sought from the sector and others to inform the assessment of matters of regulatory effectiveness, efficiency and regulatory burden”.

  • Record, in this context, means to “tape record”. The GAA recommends that all important dialogue you have with CAA personnel –  on your premises, over the telephone or at the CAA’s office – should be recorded on audio and/or video. Before making any recording, you should advise your intentions to the CAA personnel, ensure they agree to an uncensored recording and offer to provide them with a copy of it.

CAA Notices – The tentacles of regulation just keep growing longer

In mid-February, the CAA announced its intention to publish CAA Notices as a means of ensuring that “the regulatory framework remains responsive and adaptable to change.”

On the surface, these objectives almost appear noble. But when we peel back the layers, what emerges is a worrying erosion of the checks and balances that have underpinned aviation rule-making since the early 1990s.

A CAA Notice will be a mandatory stipulation of requirements and must be complied with. It will be reinforced by a rule, but the notice itself will be issued by the CAA rather than going through the rule-making process.

Parliament did not vote for this

When concerns were raised about the advent of CAA Notices without any consultation, the response from CAA management was that there is no proposal to consult on the concept of Notices because these are currently permitted under Section 28(5) of the Act.

Section 28(5) was inserted into the Civil Aviation Act in 2010 and does confer certain powers to impose requirements or conditions; however, some seven years later, the CAA is being somewhat cute in its interpretation of how far the law-makers (Parliament) intended these powers to extend.

One of the positives of our system of government is that it keeps records, and these very clearly show that:

  • In recommending amendment of the Civil Aviation Act to Cabinet, the Minister sought to grant the Director power to determine technical matters such as testing equipment, syllabi and examinations
  • Cabinet agreed to amend the Civil Aviation Act to provide for rules that delegate to the Director the power to determine technical matters, such as testing equipment, syllabi, and examinations
  • When introducing the amendments to Parliament for debate, the Associate Minister highlighted them as being about the power of the Director to determine technical matters under the Civil Aviation Rules.

Parliament intended the granting of powers to determine technical matters in a narrow range of areas. It never intended the establishment of a process where the CAA becomes the risk-definer, the solution-chooser, the rule-maker and the law-enforcer.

This entire CAA Notices concept is a flossed-up attempt by the regulator to twist the intent of the law-makers in order to extend its tentacles and shield itself from the scrutiny of its masters. Aviators will not have recourse to the MoT or Minister regarding the content of CAA Notices.

Rather than looking for mechanisms to increase its powers and subvert the checks and balances that exist, the CAA should be focusing on getting rules and rule amendments right the first time so that they progress through the existing process in a timely manner.

CAA funding review: Political leadership is now essential

Since our update last month, we’ve achieved much greater clarity around a few things:

  • The Minister of Transport, Simon Bridges, is still waiting for the final Cabinet paper and Regulatory Impact Statement on proposed charges.
  • He believes that these two papers are months away, not weeks.
  • He has given an undertaking that the Chairman of the Board will respond to our letter calling for independent and open and transparent analysis of the Regulatory Impact Statement, but told us that he doesn’t think such transparency is necessary.

So what does this all mean?

It is by no means certain that the new levies and other changes will occur in November as planned. This triennial review of charges is already running at least 12 months late. Some say that if there is no decision on changes before the end of the year, it will be very difficult to impose them until after the election.

We are quite happy with (and support) a number of the CAA’s proposed changes. We oppose only one of them: the proliferation of new levies on commercial general aviation. All the others are either unequivocally supported or backed with some reservations about their consistency with the user pays philosophy.

The GAA is opposed to the introduction of new levies because:

  • They are unfair and unjust – some sectors, notably GA commercial, will have to pay for audit and surveillance through the proposed new levy, while all other groups get this service for free.
  • Commercial GA will have to pay for educational, safety investigation/prosecution and safety promotion and implementation of rules under the levy arrangements, while all other sectors have these activities paid for by the levy on passengers.
  • Safety in commercial GA is highly vulnerable to increased costs – a recent statement by the CAA’s Deputy Director responsible for GA confirms this point, saying a recent survey of more than 600 helicopter pilots has shown cost-consciousness was a major safety issue for the group.
  • The CAA doesn’t need the money. It is extraordinarily well resourced, reporting reserves of more than $5m in the 2015 financial year.
  • Obedience to Treasury and Audit office guidelines for charging in the public sector is leading to an internationally uncompetitive industry, with the CAA’s hourly rate significantly in excess of the UK or Australia.
  • Levies are like taxes – they only increase. When the aviation industry is expanding, the CAA over-recovers – and if there is a a shortfall, charges are increased with government approval.

Last time, the CAA had some justification for a rate hike but on this occasion there should be only one recommendation and that is to reduce present charges because the Authority is rolling in money.

And that’s why the Regulatory Impact Statement is so critical.

Simon Bridges: Time for some serious attention

Simon Bridges: Time for some serious attention

If you get this high-level analysis wrong, things go really pear-shaped. We are surprised that the Government doesn’t see the RIS as a key part of managing its political risk – and there is significant risk if the analysis is wrong.

We know through our network that the hourly rate charges are doing a lot of damage. There is a commitment out there to bring in new equipment and technologies, but exorbitant CAA costs are having an impact. New Zealand is simply not always getting the best kit because CAA charges can be as high as $60k per aircraft and these charges must be paid up-front, before the aircraft is productive. So we get new aircraft, but perhaps not always with the best technology and safety benefits.

At no time did officials tell ministers that this would be one of the downside consequences.

We cannot understand why Simon Bridges is so quick to rule out any engagement with the industry on developing the RIS.  The CAA clearly understands (or has allegedly been told as much by an astounding 600 helicopter pilots in what appears to be a private survey) that commercial pressures are substantial in the sector.

So why aren’t the Ministry of Transport and CAA open to engaging independent and informed advice on the issue? This is the best way of managing the political risk.

Aviation safety is not some esoteric flight of fantasy by number-crunchers in gold-plated towers with water views. It is a very practical matter to which we all contribute, so why won’t Wellington officialdom accept we should have input into this critical paper? We have nothing to hide.

I am disappointed that, despite Minister Bridges’ commitment, the Chairman of the Civil Aviation Authority has chosen not to respond to my letter of mid-July on the RIS issue. Now I do know that The CAA’s apparent position is that it has made recommendations to the Minister, and that’s it. However, it also appears that the CAA is still having major input into the development of the RIS Why wouldn’t CAA want to put the best possible advice to the Ministry?

At the behest of the Auckland National Party MPs, we filed a formal complaint via Andrew Bayly, MP for Hunua. Its content has not yet been widely circulated, but we’ve done some more work on the impacts of all the changes proposed and concluded that the new levels of cross-subsidy are larger than the current ones.

The GAA believes that the Authority’s underlying strategy is aimed at taking our focus off its exorbitant hourly rates, and the escalation to a 100% cost recovery hourly rate of $466 per hour plus GST.

The real issue is benchmarking CAA charges so that they are internationally competitive. This would mean hourly rates of between $150 and $190 per hour and a medical application fee of no more than $80. Forget the Treasury and Audit Office guidelines; this is about making New Zealand’s aviation industry as attractive as possible, and that means safe and cost-competitive.

Our message to you: It’s really important to keep talking to your local MP, because sooner or later Minister Bridges will make a recommendation to his Cabinet colleagues.

Our message to Simon Bridges: It really is time to seriously consider and discuss our sector’s competitiveness, and that requires accountability and leadership.

 

♦ If your experience with the CAA – on any issue – has been disappointing, don’t keep it to yourself and them. Please share it with fellow aviators. Email admin [at] caa [dot] gen [dot] nz. Your privacy is assured.

Ag pilot competency checks: CAA leaves a mess in its wake

CAA - the fox in charge of the henhouse

CAA – the fox is in charge of the henhouse

The CAA is clearly in difficulties over its plans to reform the testing regime for agricultural pilots, particularly since the GAA pointed out that much of the proposed reform was not practical – particularly for the single-seat, single-control fixed-wing aircraft. Yes, it may be “legal” using the subtle differences in interpretation between a “passenger”, a“crew member” and a “required crew member”.

However, legality does not necessarily translate into a safe operation.

There are serious Health and Safety implications in the CAA’s proposals. Protests from the ag operators have highlighted the hazards. The CAA has adroitly passed the health and safety issues back to the operators and made them responsible for mitigating the dangers.

Because some of the single-control aircraft do not have a specific reference in their operating limitation pages of their flight manuals (a single-control Fletcher aircraft has only a placard on the panel, for example), the CAA says that the manufacturers do not specifically prohibit the carriage of a person in the jump seat during actual agricultural operations. However, a GA 200C Fatman, for example, does have a specific reference in the limitations pages to the fact that the passenger seat must not be occupied during agricultural operations and therefore an E Cat or a flight examiner may not be legally carried in that seat.

To mitigate the risks of restricted control movement caused by the person occupying the passenger seat during actual agricultural operations, the CAA has passed that responsibilty over to the PIC to ensure he has full and free control movement before takeoff. Whether this control check adequately takes into account the person in the passenger seat shifting his pre-takeoff seated position during a critical phase of flight, such as the low level reversal turns at the end of a spray or topdressing run, is open to conjecture.

As a result of submissions regarding the difficulties in complying with AC 61-15, the CAA has modified its stance and now permits ground observations of Ag competency checks in single-control, single-seat aircraft, provided they are backed up with high resolution video footage taken from within the cockpit.

The CAA is delegated to manage the new Health and Safety Act in the sphere of aviation. We question how the CAA can be expected to carry out an independent investigation of its own ACs and AMCs when it is, in effect, the fox in charge of the henhouse.

Ag pilots – a tiny and easily identifiable group for the CAA – were never individually consulted when the Authority issued its first AC about flight testing.

The Authority’s latest Advisory Circular is now up to Revision 5.

Of course, all this nonsense could have been avoided by proper consultation.

The General Manager GA has told us that there is no requirement for the CAA to consult on the addition of an AMC (Acceptable Means of Compliance) to an AC, although it may disclose and discuss the AMC informally but not necessarily with all interested parties.

However, the parties most affected by the Rule and the first version of the AC were the single-seat, single-control, fixed-wing Ag pilots – and they were not specifically consulted. We ask the obvious question: “How hard would that have been?”

We say that the way the Authority handles ACs and AMCs amounts to regulation by stealth, there being no compulsory requirement to consult with all interested parties – leaving the CAA at liberty to advise hand-picked groups claiming to represent the industry.

 

♦ If you have written to the CAA – on any subject – don’t just keep it to yourself and them. You can share it with fellow aviators by sending it to the GAA as well. Email to admin [at] caa [dot] gen [dot] nz

 

CAA Funding Review: Mud sticks – and so do promises

It wasn’t just former Transport Minister Gerry Brownlee who, in 2012 (when imposing those dramatic rises), promised to reduce or remove the need for increased CAA charges in the 2015-2018 triennial review. He spoke for every minister of the day. In 2016, that still involves at least 13 ministers in the present Cabinet.

Min of Tran Simon Bridges: Muddled response

Min of Tran Simon Bridges: Muddled response

There seems to be an official reluctance to even acknowledge Mr Brownlee’s undertaking, possibly because bureaucrats and politicians wish to avoid accusations of broken promises. Current Transport Minister Simon Bridges’ muddling response, when recently faced with sharp questions in the House from NZ First’s Denis O’Rourke, was, we suspect, because he had been hoodwinked by officials who had conveniently failed to brief him about the Brownlee pledge.

If you read the CAA’s briefing papers to the incoming minister in 2014, you’ll see that its “first principles review” of future funding was already under way.

This suggests that Minister Brownlee either approved a first principles review in the expectation that charges would be held or reduced and the present hourly rate of $288 would become the 100% cost recovery rate, or officials charged off on their own. Gerry Brownlee is not known to mislead his Cabinet colleagues. He’s a minister of long standing. His expectation would be that the promise:

For the period for the next funding review (that is 2015-2018) the Civil Aviation Authority will look to decrease costs so that fees and charges reflect full cost recovery from 2015/16 and the need for further increases is reduced or removed…”

would be honoured.

Few ministers have objections to “first principle” reviews; such reviews are set in the context of the Government’s overall policy objective. In this case, the CAA apparently never told Mr Bridges that his predecessor had committed to two things:

  • Decreased costs
  • Need for further increases reduced or removed.

One can only assume that the promises were designed to get the controversial 2012 increases across the line. In other words, they were false and merely designed to comfort other ministers who were concerned that the draconian 2012 rises were unfair.

We also know that, this time round, many politicians are uncomfortable that those who can afford to pay – such as central and local government-controlled monopolies – get a free ride under the new proposals, while some of our most vulnerable operators, servicing similarly vulnerable communities, must pay up to 300-400% more.

If the present review is a “first principles review”, why weren’t these principles clearly articulated to everyone?

I was around when we went to “user pays”. The first principle of user pays is that the users have a say. As users, what say had we in the $43m of revenue the CAA claims it needs? As far as I am aware (along with everyone I have spoken to), we were merely told that $43m was what CAA wanted. Well, let me offer just a few of many money-saving thoughts:

  • The Civil Aviation Act S.72 E requires the Board to consider the most efficient and effective means of performing its functions and discharging its powers either by delegation, contracting or performing in-house. There is no evidence that the Board has ever done this. Why not?
  • The CAA undertook an expensive investigation ($250,000-plus) of an accident involving a US-registered aircraft. The Feds were not even interested and the findings were of zero benefit to the New Zealand flying public – where’s the accountability for that?
  • LTSA has a perfectly good system for registering vehicles. Why can’t we register our aircraft on the same system and at the same cost?

The second principle: All who benefit should contribute something. This means there should be no free-loaders. Under the CAA’s new proposals, this principle is destroyed. The likes of the private pilot will pro rata contribute more to financing the system than any airport, ATC and Met provider, engineering company or registered cargo agent. This is unfair and unjust.

The third principle: Where an activity can be identified and linked to a beneficiary, an hourly rate should be charged. This is not merely some flight of fancy but is enshrined in how charges must be set. There must be zero cross-subsidisation of these activities.

The fourth principle: Ability to pay. Not all companies and/or individuals have an equal ability to pay. Some businesses derive much more global credibility than others, through having a competent regulatory authority.

The fifth principle: When all activities have been allocated fairly according to the 100% cost recovery hourly rate, then – and only then – can a levy be struck. Levies cannot be based on hours because if a beneficiary can be identified, that beneficiary must pay.

One of the reasons the Ag levy is so high is because of the cost of implementing the Ag Sector profile. I put money on it that Ag operators were never told they would have to retrospectively pay for the Ag Sector profile. Levies – as with taxes – can’t be applied retrospectively without Parliament’s authorisation. This is a big NO NO.

Recent advice from the CAA says: “The Board… has now finalised its advice to the Minister of Transport. As he is now considering that advice, it is not appropriate for me to comment further…..”

This clearly shows that the Regulatory Impact Statement (a document forming part of the advice to ministers) was undertaken by officials without any transparency or consultation with industry as to the impact of the proposals. We had sought, on the industry’s behalf, an independent development of the RIS. The Chairman of the CAA didn’t even bother to respond to that letter.

We are determined to oppose any unjust or unfair proposal and will use every means at our disposal.

The GAA has commenced a formal complaint process with the Minister of Transport, highlighting the areas where consultation has been deficient, and in particular:

  • the “selective” nature of aspects of the consultation process
  • the failure of the CAA to release to all parties the individual submissions it received
  • the timing of the consultation process, which curiously coincided with peak work periods for the industry
  • the lack of full financial transparency around the levy proposals
  • the defective thinking behind decisions that would permit “free-loading”

Individually, these aspects may seem minor. Collectively, they form a convincing basis to claim a breach of process and to challenge these proposals.

The doctor needn’t see you now: UK PPLs freed from Class 2 medicals at last

PPL holders in the UK are within weeks of liberation from the Class 2 medical, along with its needless hassle and expense.

96% of UK pilots backed the scrapping of the PPL medical

96% of UK pilots backed the scrapping of the PPL medical

This means the medical requirement for UK private pilot licence and national private pilot licence holders will be the same as for a DVLA Group 1 Ordinary Driving Licence (ODL). Existing medical options (for example, a UK declaration with GP countersignature) will remain open. The same options will be available for private balloon pilots.

To take advantage of the change, pilots will only need to complete a form on the CAA website to declare that they meet the DVLA medical standard. Pilots under 70 will need to do this once, while pilots older than that must confirm their declaration every three years.

The changes are subject to enactment of the proposed Air Navigation Order 2016 (ANO) which is planned to come into effect on a so far unspecified date in ‘late [northern] summer’ 2016. The proposed ANO legislation will contain these changes and other significant amendments for GA.

Currently, UK pilots with an NPPL (National Private Pilot Licence) must merely comply with DVLA group 1 or 2 standards and have their self-declaration of fitness countersigned by their GP. Holders of a UK PPL currently need an EU Class 2 medical, or meet the NPPL medical requirements if they only use the privileges of an NPPL licence (in other words, only fly within the UK).

The change has been supported by a study of the risks associated with GA flying, together with a review of the causes of light aircraft accidents and the likelihood of these being triggered by a pilot being medically incapacitated.

The risk to third parties was considered by the CAA, as well as the regulatory approach now being taken by the Federal Aviation Administration in the USA, which mirrors the UK proposal.

In New Zealand, pilots continue to ask: Just how long will it take for our own Civil Aviation Authority to awake from its slumbers and try to catch up with much of the developed world?

Our most recent information from the CAA (couched in its characteristically defensive, bureaucratic wording) said:

The CAA is aware of, and monitoring, developments relating to questions of Private Pilot Licences and medical requirements in the UK and USA. The question of suitable future requirements in the New Zealand context is to be the subject of policy work by the CAA. However, please note that any significant changes to the current regime would require changes to the Civil Aviation Rules, which is a matter outside the control of the CAA.

And as CAA deputy boss/Associate Minister of Transport Craig Foss told a GAA supporter in a letter dated 26 July 2016: “the CAA is not currently considering any changes to medical certification requirements.”

Live within your means – Minister Brownlee’s promise after the 2012 review

Brownlee may have gone away, but we haven't

Brownlee may have gone away, but we haven’t

I’ve already expressed my view that the CAA’s proposed new levies on commercial general aviation are some of the most draconian steps I have ever seen attempted, although I am assured they rank up there with the epic pricing debacle of the early 1990s.

Well, it would appear our former Minister of Transport nailed the CAA’s feet firmly to the ground when he said:

for the period of the next funding review (that is 2015-2018) the Civil Aviation Authority will look to decrease costs so that fees and charges reflect full cost recovery from 2015/16 and the need for further increases is reduced or removed…”

It’s time to deliver.

Has the CAA looked to decrease its costs? To be fair, it’s a mixed bag – some “ups” pushed by such things as the agreement with Airways on the AIP ($2m plus CPI adjustments) and SMS; and some “downs” such as shared services with AvSec.

BUT the net effect has been, as disclosed in the CAA consultation document, to push up the full cost recovery hourly rate calculated on the same basis as in the 2012 review to $466 per hour. Under the Treasury and Audit Office guidelines on charging for public services, this is the rate CAA should be charging industry – and could charge, unless costs are controlled at the 2019 review.

There was a quid pro quo in 2012 – Ministers formed the view that the industry had to “suck up” the increases – but there would be no more. The clear message: the CAA must live within its means.

We do agree that its “means” are pretty gold-plated compared to what we ordinary people in industry are used to, but nevertheless the message from Ministers was clear: Enough is enough.

Ministers come and go and Minister Brownlee handed the reins to Minister Bridges. But the problem remains.

Our lobbying programme is reminding everyone of the Cabinet’s undertaking.

For those who have responded to our survey and wanted further action, we have drafted letters for them to send to their MPs. We have also been in contact with and spoken to many more commercial GA companies. Each has been grateful for the assistance we are providing.

We are not suggesting that commercial GA shouldn’t continue its contributions towards the costs of running the CAA, but we are opposing the imposition of any new levies.

Levies are taxes that reduce financial accountability. They are the beginning of the slippery slope towards future revenue hikes. An hourly rate of $466 is simply ridiculous.

Let’s be clear:-

  • The CAA does not need $1.792m from GA commercial – present reserve levels are almost 300% higher than stated as required in the 2012 Cabinet paper.
  • Minister Brownlee’s 2012 assurances were an undertaking to reduce costs and remove the threat of further increases.
  • The CAA is not delivering value for money – commercial General Aviation is reporting little if any improvement in services.
  • The new levy “pays” for services which commercial GA already funds via the participation levy.
  • The CAA’s communication of proposals was too complex, lacked the critical financial information justifying the $1.792m increase, and occurred during peak season.

A quick reminder of the increased charges being proposed;

  • Introduction of new levies for commercial General Aviation (3-year phase-in):
Parachuting/Paragliding operators $2.50 per descent
Commercial Passenger operators (Medium/Large aeroplanes) $5.50 per flight hour
Commercial Passenger operators (Small aeroplanes and helicopters) $6.50 per flight hour
Adventure Aviation operators $12.50 per flight hour
Freight only operators $3.00 per tonne
Agricultural operators $0.87 per tonne

 

  • Existing levies (Passenger and Participation) to be retained.
  • Removal of hourly rate charging for all CAA audits.
  • A claimed 30% reduction in the pilot medical certificate application fee, which on closer examination was proved to be CAA sleight of hand: The Authority first increased the existing fee by 23% (to $404.71) and then reduced the new total by 52%, to $210.45. A genuine 30% reduction would put the charge at $162.76.
  • CAA annual income requirement projected to increase from $38m (2016) to $43m (2019)
    • o Removal of hourly rate audit charge – $2.24 m
    • o Reduction in medical cert fee – $0.8m
    • o Passenger levy + $6m
    • o New GA levies +$1.792m
  • CAA actual reserves $10.2m; targeted reserve $3.6m

We understand the CAA Board has considered and reconsidered the final recommendations. Adjustments to the levy rates have been flagged but the CAA continues to pursue the new levy on commercial GA.

There are now well over 50 letters with key Ministers and MPs. Each of them requests a one-on-one meeting with the MP to raise “parliamentary awareness” of the issue.

If you are opposed to these new levies and want to join our campaign, let us know and we will help you. We know we still have a bit more time as the Minister hasn’t received the CAA’s final recommendations. We will only overturn these levies if we speak with one voice and deliver the same message:;

LIVE WITHIN YOUR MEANS – deliver on Brownlee’s undertaking

We are not going to go away, and we will use every possible avenue to get these new taxes on commercial GA removed.

 

Now the CAA puts small aviation businesses in its sights

Drop 'til you pop - the CAA will grab $2.50 every time someone falls out

Drop ’til you pop – the CAA will grab $2.50 every time someone falls out

Many of us may be thinking that, this time around, GA has been let off lightly in the CAA’s triennial funding review. But we could be very wrong.

Did you know, for example, that the CAA is reducing charges for many big operators such as airports and airlines, but plans to radically increase them for many small GA commercial operators, if it can convince the Minister of Transport?

Take a look at this little-known article: http://www.sunlive.co.nz/news/123994-bureaucrats-threaten-skydivers.htm

The CAA could once again inflict serious damage on the little guys – but this time there will be knock-on effects for local businesses and our country’s important tourism sector.

We think this needs a closer look, and we are asking commercial GA operators for some pretty urgent assistance. The GAA has already written to Transport Minister Simon Bridges about this (and, for good measure, we reminded him of the harm done to GA by the last round of increases signed off by his predecessor, Gerry Brownlee).

The GAA is asking commercial GA operators:

1 – Do you support the introduction of a new levy on GA commercial?

2 – The CAA’s proposal is that you will no longer pay for regular audits. How much do you presently pay (on an annual basis) for CAA audits?

3 – Looking at the table below, what could be the cost to your business of the new charges? Remember to remove the annual cost of your routine audit(s).

CAR 121/125/135 Freight only$3.00 per tonne plus participation levy
CAR 121/125 less than 20,000 pax $5.50 per flight hour plus participation levy
CAR 135 $6.50 per flight hour plus participation levy
CAR 115 Adventure Aviation $12.50 per flight hour plus participation levy
CAR 115 Parachute/Paraglide $2.50 per descent
CAR137$0.87 per tonne applied plus participation levy

 

The estimated cost to my business would be: $

4 – Are you aware that charges for all other certificate holders (e.g. Airlines paying pax levy, Airports, Airways, Engineering, Aviation Training Providers, Registered Cargo Agents) will be reducing? Do you consider this fair and equitable?

5 – Do you wish to participate in further work we do in opposing these new levy payments?

If these proposed charges affect your business, we invite you to respond by simply sending an email to airfabrico [at] xtra [dot] co [dot] nz with the following info:

1 – yes or no

2 – $ amount

3 – $ amount

4 – yes or no

5 – yes or no

Add any comments, if you feel inclined…

Confidentiality is guaranteed.

We will use this information to prepare more opposition to the CAA proposals.

The GAA is asking the Director to reveal details of all 111 responses to the second stage of consultation. We know that the CAA has already given that information, in a neatly bound document, to a select group of its customers.

We are also collecting information on whether you are receiving “value for money” from the services CAA presently provides. We’d welcome your comments (either positive or negative) on this subject.