The impossible task of getting blood from a stone

05 March 2013 / by Brian Mackie / Costs, Governance

You may be very angry about the Civil Aviation Authority’s recent fee impositions on the General Aviation community, or you might be a microlight pilot worrying that you could be next in line for the CAA bean counters’ unwelcome attentions.

But no matter who you are, it’s a fair bet that you just cannot understand why the CAA took such a harsh approach.

Spain’s glossy Alicante airport. It’s picture-perfect, because there are no passengers. The nation is bankrupt, and every Spanish-based airline has gone bust

Part of the answer may lie far beyond our shores. For instance, the UK Government is pushing ahead – despite loud opposition – with a big increase in its already horrendous Airport Departure tax (APD), which varies between £13 and £184 per passenger.

A family of four Brits visiting New Zealand will face an APD bill of £500 (around NZ$910) from April. As far as we know, none of it goes to the UK CAA. It enriches the UK Treasury, and it stifles tourism – incoming and outbound.

You might also get some clues by looking at a couple of local indicators. For example, commercial traffic movements at Christchurch International are believed to be running at around half the previous high. And when our CAA lit a rocket under its charges to General Aviation, the airline passenger levy was quietly reduced.

This tells us that our Government is worried about the falling income from tourists, who are also scared off by the absurdly over-valued New Zealand dollar.

Associate Tourism Minister Chris Tremain: Our questions to him went to and fro in Wellington… and resulted in no coherent answers

Mindful of all this, on January 31 we sent an enquiry to Chris Tremain, the Associate Minister of Tourism:

“Commentators on GAA have suggested that rather than imposing such heavy CAA extra charges on the general aviation community, a 50 cent passenger levy on internal commercial airline flights could provide up to $4 million revenue per annum for the CAA, to support its activities.

“While these figures are speculative, what is your position as Associate Minister of Tourism on this subject? I would also appreciate your figures on the impact this might have on CAA finances and any possible downside to tourism that you or your department might perceive.”

On February 11, Mr Tremain’s Ministerial Secretary, Emma Stringer, replied: “Upon further consideration of the issue you raise, it has been decided the most appropriate Minister to respond to your email is the Minister of Transport, the Hon Gerry Brownlee. For this reason, I am transferring your email to Minister Brownlee’s office for consideration.”

So far, not so good. Minister Brownlee’s performance in answering GAA supporters is less than stellar and in one case, his response was baffling. It appeared to have been intended for someone else, on another subject.

Tourism Minister John Key’s young Associate seemed to handle an awkward challenge as deftly as father Kel did as an All Black. Quite why the Transport Minister should take control of a question about tourism was a mystery. What we do know is that at March 5 – almost five weeks after the initial GAA enquiry – no answers had been received from Mr Brownlee either. But that day, we did get an email from Mr Tremain’s office. It said: “As the matters you raise require consultation and input from other offices, it is taking longer than usual for a response to be prepared. Minister Brownlee’s office has asked that Minister Tremain responds [to your email]; you will not be receiving a reply from Minister Brownlee on this matter.” Emma promised a response before a scheduled meeting between Mr Tremain and myself, on March 15. And it came, on March 14: Take a look at Comments.

Iberia: A major air disaster, among many, that has left aviation authorities wondering how they can survive…

Mark Chesney is Head of Flight Operations Inspectorate (Aeroplanes) at the United Kingdom’s CAA. (He was also the author’s flying instructor.) We asked Mark about UK CAA charges, and what he said made us suspect that New Zealand GA might be a precursor for what could happen elsewhere. Mark said: “Because we are funded solely by the industry we regulate, charges are kept honest by constant challenge.

“However, a review is about to start, largely because we are the only EU member state with this funding model and it puts us at disadvantage in some respects with other countries.

“We are going through considerable change in business models and this will have an impact on regulators and fees.

“For example, Spain’s CAA used to be funded by taxation on its airlines, most of which have now gone bust. They [Spain] now put a 39c [about NZ 62 cents] levy on every ticket, irrespective of nationality.”

Ryanair boss Michael Ryan is furious at the rising cost of landings, and not just in the UK. But his airliners pay not a penny to the UK CAA

The biggest airline operating in Spain is now Ireland-based no-frills Ryanair, followed by easyJet, then Iberia, Spain’s former national carrier which merged with British Airways (which is, in turn, part of the International Airlines Group). At the end of February, IAG crashed to an £865 million (NZ$1.6 billion) pre-tax annual loss and will axe 3800 jobs at Iberia.

“Ryanair has 155 aircraft in the UK that the CAA has no safety oversight of and no income from”, says Mark Chesney.

To make matters worse, Ryanair – whose 2012 bid to buy Stanstead Airport, north of London, was acrimoniously rejected – reacted strongly when the new owners slapped a 6% increase on landing charges. It has slashed 170 flights a week, reducing Ryanair passengers through the airport by 1.1 million a year, and said 1000 jobs would go as a result. (Ryanair’s fiery chairman, Michael Ryan, would have 50 shades of hissy fits if he was operating in some of New Zealand’s airports, where landing fee rises of more than 60% have recently been recorded.)

So the UK CAA is cash-strapped, hosts airliners over which it has no jurisdiction, is suffering from airline financial crises beyond its shores or control, and will have to seek new income streams – or shrink.

It will be interesting to see how the UK CAA remodels its charges. Heaven help UK General Aviation, if the New Zealand model is copied.

Despite the best efforts of the UK and New Zealand CAAs, wherever they go looking for new money, that elusive crock of gold will vanish over the rainbow.

Why?

Because it doesn’t exist.