First Supplementary memorandum submitted
by the Civil Aviation Authority
RESPONSE TO WRITTEN QUESTIONS FROM THE COMMITTEE
1. In striving for efficiencies, what consideration
have you given to the possibility of allowing some CAA services
to be provided by competent third parties on a competitive basis?
The CAA believes that, in order to maintain
a coherent safety regulatory system that continues to deliver
the high safety standards that are enjoyed in the UK, it is important
that core regulatory activities are, in the main, carried out
by the CAA. However, the CAA regularly reviews activities which
might usefully be outsourced to others. During the last seven
to eight years the CAA has outsourced many support activities:
IT services, mail services, printing, catering, security, and
travel management. Such arrangements are not confined to support
activities and the CAA authorises appropriately qualified persons
in industry to carry out a number of safety regulatory functions
including, for example, pilot flight testing. The CAA will continue
to keep this under review in order to provide the most effective
service to those we regulate.
The ATOL scheme provides several examples of
how the CAA enables third parties to provide its services. For
example, the CAA has reached agreements with one travel trade
association and a bank under which they carry out administrative
functions relating to ATOL, as well as providing financial protection,
for participating ATOL holders. This enables ATOL holders to choose
to obtain their ATOLs from the CAA either directly or via either
of those bodies. About 200 ATOL holders hold their licences via
such third party arrangements, and the CAA is in discussions with
other potential providers of this service.
In providing refunds to the customers of collapsed
ATOL holders, the CAA engages the services of claims handling
agencies which are equipped to manage high levels of demand, selecting
them on the basis of price and their ability to provide a good
service to the public. In the last two years, almost 80% of the
public's claims were handled by third parties, and there are presently
three agencies providing this service.
2. It has been suggested that the CAA should
be given a wider remit in terms of promoting all aspects of aviation,
including innovation, exports, and sports, and that you should
report to the Department for Trade and Industry as well as Transport.
Would you welcome such an extension of your remit?
The CAA would not welcome such an extension
of our remit, as we fear it could detract from the clarity of
the objectives currently given to us through legislation and through
guidance from Ministers.
We note that the FAA used to have a mandate
to promote the growth of the airline industry. That mandate was
repealed in the aftermath of the ValuJet crash in 1996, when questions
were raised about possible contradictions between the promotion
mandate and the FAA's safety obligations.
We recognise that the French DGAC has support
for the aircraft industry" as one of its objectives. However,
that needs to be seen in the context of the DGAC's role in providing
launch investment and R&D funding for the French aviation
industry. The CAA does not have such functions.
3. How do you use targets to drive performance
on service level and efficiency?
Challenging objectives and targets are set for
each Executive Member of the CAA Board and these are cascaded
down throughout the organisation. Each Group Director will add
other objectives and targets specific to their respective groups.
Targets and performance objectives are developed annually for
staff at all levels as part of the employee performance appraisal
process. All employees, including the Executive Members have formal
six monthly meetings with their line managers to assess progress
against objectives. Corrective action or objective updates are
then generated, and the remuneration of Executive Members and
employees will be affected by achievement or otherwise of their
respective targets and objectives.
4. Why do you not have any performance indicators
or targets relating to your environmental objective?
Following the Civil Aviation Authority (Air
Navigation) Directions 2001, the CAA is required to take into
account various factors relating to the environmental impact of
aviation. The guidance to the CAA on Environmental Objectives
relating to the exercise of its Air Navigation Functions (January
2002) provides amplification and clarification of those Directions.
In most respects, the Department for Transport is responsible
for the environmental regulation of aviation. The CAA has limited
ability to require aviation stakeholders to provide environmental
data and we have been given no statutory or other obligation to
report on the environmental performance of aviation.
5. Do you publish all of the service level
performance data you record? Do you have any plans to increase
the publication of performance data as a means of increasing transparency
and demonstrating the quality of your service?
We do not currently publish all the performance
data gathered. However, it is our intention to put on the CAA
web site all relevant indicators in early 2006.
In addition, SRG has a Standing Committee called
the Safety Regulation Finance Advisory Committee (SRFAC). This
joint Industry/CAA Committee meets on average five times a year
and is used as the vehicle to consult on SRG's charges, budget
plans, actual performance against budget, and to discuss the wide
range of performance indicators that SRG produces. The SRFAC also
provides a forum within which industry is consulted on SRG efficiency
and proposed business initiatives.
6. Your corporate plan makes reference to
a number of papers due for delivery to the Board during the course
of 2005 and 2006 in relation to improving efficiency and cost
effectiveness. What real benefits have been achieved so far and
how are you measuring and validating these?
The Corporate Plan identifies a number of improvement
projects that the CAA initiated during 2005-06. Examples of such
projects are set out below:
Review of SRG's Operating Standards
Division: The structure and organisation of the Division was reviewed,
which will result in an annual reduction in staff costs of £376,000
being realised from April 2006.
Review of location of SRG's
Regional Offices: The review of the requirement for, and the location
of SRG's 10 regional offices has resulted in three being merged
into one site and one office being relocated to SRG's main site
at Gatwick. This has resulted in reduced accommodation and employment
costs providing an annual saving of £157,000.
SRG's Medical Department: Other
organisational rationalisations have been achieved, including
the restructuring of the management of the Medical Department,
which has reduced annual costs by £133,000.
CAA House, London: The CAA has
rationalised its occupancy of its London property, which has enabled
an additional floor of CAA House to be sub-let at commercial rents,
providing an additional income of £265,000.
Insurance arrangements and VAT:
The CAA initiated a review of its insurance arrangements during
2005 and was able to renegotiate its policies, and it is forecast
that the premiums will be reduced by £240,000. It is expected
that this saving will be maintained over future years. Also during
this period, the CAA has renegotiated its VAT recovery methods
with HM Customs and Excise and it is forecast that the CAA's VAT
charge will be reduced by £700,000. It is expected that this
saving will be continued for future years.
The initiatives outlined above have reduced
the CAA's annual costs by £1.87 million. This is part of
a continuous process; for example during 2002-03 the CAA initiated
a review of its publications methods, which resulted in the CAA
making all of its publications available on the internet. This
has saved an average of £650,000 per annum.
Projected cost savings are incorporated in the
annual budget setting process, which is overseen by the Board.
Any variances from the savings planned would show up in the reporting
of budget against actual expenditure, which is reported to the
7. What progress have you made in developing
a CAA programme of efficiency improvements and identifying quantifiable
Each update of the CAA's Corporate Plan incorporates
a programme of efficiency improvements aimed at delivering the
overall efficiency improvement target set by the Board.
The CAA is currently developing its business
plans for 2006-07, which will be used as the basis for the next
Corporate Plan. A number of efficiency improvements have been
identified, but have yet to be endorsed by the CAA Board. Examples
of such improvements, which are currently being planned for 2006-07,
are set out below:
SRG's Operating Standards Division
rationalisation of regional offices initiated in 2005 will continue
with the objective of merging other regional offices in 2008.
The merger of SRG's Airworthiness
Maintenance Standards Department with its Design and Production
Standards Division will be implemented early in 2006-07 and future
efficiency improvements will be identified as a result of the
The Consumer Protection Group
will be developing the skills of its staff to enable them to manage
a greater variety of further tasks and to be able undertake risk
assessments on licence holders.
The improvements identified in the business
plans of the regulatory groups and the corporate centre will be
consolidated into the CAA-wide 2006-07 Continuous Improvement
Programme. This will include recommendations of the Hampton Review
and the Better Regulation Task Force's Less is More" report.
The programme will also include quantifiable targets for each
of the improvement initiatives. The progress of the activities
will be monitored against the plan and reports will be provided
to the CAA Board.
8. Was Phase 1 of the Electronic Records
Management programme successfully completed in September 2005
as planned? How is Phase 2 progressing and when do you expect
this to be complete?
Phase 1 of the Electronic Records Management
(ERM) Programme is scheduled to be completed at the end of January
2006, four months later than originally stated. The ERM software
products which were available initially, failed to meet the acceptance
criteria of the CAA following product assessments prior to the
start of Phase 1. This situation was largely caused by changes
to the requirements of The National Archive (TNA) for those products
to gain TNA accreditation, which resulted in some products losing
their accreditation (12 products reduced to four). TNA accreditation
was one of the CAA's key criteria for acceptance to enable compliance
with the Government's ERM2004 directive. A further assessment
of products was therefore undertaken, which delayed the start
of the ERM Programme by three months.
Other factors associated with the definition
of the requirements and prototyping of the software contributed
to the delay, but we have contained these instances within the
planned contingency for the Programme.
The ERM Programme was re-planned to take account
of the above situations, with Phase 1 given a revised completion
of the end of January 2006. Phase 1 is on target to meet this
Phase 2 of the ERM Programme (Proof of Concept)
can only follow once the ERM System has been designed and built,
and therefore is delayed as a consequence of the delay in Phase
1. Where possible, Phase 2 activities have been brought forward,
including some pre-planning work. Phase 2 is still forecast to
be completed within budget and duration, but will now complete
in July 2006 (originally April 2006).
9. Is the wider Electronic Document and Records
Management System still on course for completion by December 2007
and are costs still in line with those initially planned?
The whole ERM Programme remains within the budget
and overall timescales. Therefore, despite the early stages of
the Programme taking four months longer than initially stated,
the CAA expects to complete the whole programme by no later than
December 2007 as originally planned.
10. Why were 27 of your 59 key actions for
2004-05 not met in full and on time? Was it due to poor planning
or poor delivery? And is the fact that performance was particularly
poor against those actions described as being CAA-wide indicative
of problems of coordination?
The CAA intends that the key actions set out
in its Corporate Plan are both challenging and focused on the
strategic direction required by the CAA, DfT and Industry. However,
as with any business, the CAA recognises that there will always
be occasions, because the Plan has been drawn up about six months
before the start of the year, when events require activity to
be re-prioritised to deal with issues that arise subsequently,
and necessarily take priority over those originally put in the
In its 2005-06 Corporate Plan, the CAA reported
that out of 59 key actions for 2004-05, 32 had been met in full
and on time, and 11 were completed though not on time and 15 that
were delayed mainly due to a lack of resources or changes in priorities,
and one action was not completed as it was no longer required."
The reported delays were not due to poor planning, poor delivery
or poor coordination.
The CAA monitors closely delivery against the
key actions identified in the Corporate Plan as the year progresses
and regular reports are put to the Board. The criteria for deeming
an action to be late were stringently applied, with four of the
11 actions not completed on time" being only delayed by at
most four weeks. This marginal delay did not cause any significant
problems to the operation of the CAA or its ability to achieve
During 2004-05, the CAA had to react to many
EASA related issues which could not have been foreseen and resulted
in four projects being postponed because specialist resources
were diverted to support EASA crisis activities. As a regulator,
the CAA is also subject to the decisions and processes of external
agencies such as Eurocontrol, which are outside of its control.
Nine of the delays encountered were due to such external causes.
The Plan included four projects delayed due
to requests from industry to increase timescales in order to ensure
that all of their issues were adequately addressed. One example
was the SRG Costs and Charges Review. The project had been scheduled
to last eight months, but due to industry's request for more time
to attempt to achieve a consensus on the CAA's charging proposals,
the project was extended for a further three months.
Two of the delayed actions reported in the Corporate
Plan were associated with the EDRMS programme. The reason for
these delays has been included in our answer to question 8 above.
11. What actions have you taken to ensure
that you achieve greater success with the key actions detailed
The CAA continues to monitor progress against
all its planned actions and ensure that these actions remain challenging.
However, the CAA will continue to give priority to any business
critical issues as and when these arise, particularly if they
have a safety context, and will manage its resources accordingly.
12. Do you apply cost-benefit analysis in
the setting of safety standards?
Cost-benefit analyses are carried out routinely
as part of the Regulatory Impact Assessment (RIA) process. If
a new safety standard is to be mandated, the Cabinet Office guidelines
require the CAA to consult using the RIA mechanism, which includes
the determination of the cost of a proposal and the impact it
would have on industry, and in particular on small businesses.
At the completion of the consultative phases of the process, a
Final RIA is drafted and accompanies the proposed legislation
for approval by the appropriate Minister of State. The Ministerial
sign-off" of the RIA includes the following statement: I
have read the Regulatory Impact Assessment and am satisfied that
the benefits justify the costs".
13. In 2003, our predecessor Committee criticized
the CAA for failing to ensure the development and investment in
runways and airport facilities. In your own view, have you improved
in this area?
The Committee's criticisms of the CAA in its
2003 report related, we understand, to the statutory objective
in the 1986 Airports Act to encourage investment in new facilities
at airports in time to satisfy anticipated demands by users of
such airports. This duty applies only to the CAA's role as the
economic regulator of airports and, in particular, its function
of setting price caps on charges to airlines every five years
at the three designated BAA airports in LondonHeathrow,
Gatwick and Stanstedand Manchester Airport. For the BAA
London airports, the CAA set price caps in 2003 which have enabled
BAA to undertake investment at those airports expected to total
around £5 billion [in 2004-05 prices] over the period of
the current price caps (2003-04 to 2007-08). The vast bulk of
this investment is at Heathrow with the construction of Terminal
5, following the grant of the necessary planning permissions,
which is due to be completed by the end of this period. The CAA
included a mechanism in the price caps at Heathrow to provide
an incentive to BAA to complete the various stages of the Terminal
5 project on time.
The scale of airport investment currently being
undertaken and the speed with which it followed the Government's
decision that Terminal 5 should go ahead after a much delayed
planning process suggests that problems have lain somewhere other
than in the exercise of the CAA's regulatory responsibilities
A similar conclusion might be drawn from the
advice the CAA gave the Government on the UK's future airport
needs in 1990. That detailed study led to the CAA advising the
then Government that a new runway to cater for demand arising
in the South East would be needed in the first few years of this
century. The CAA considered a number of options for locating this
additional runway development, including Heathrow, Gatwick and
Stansted as well as at other sites in the South East, mainly from
an air traffic control perspective. The Government subsequently
set up a working group, on which the CAA was represented which
identified in a report published in July 1993 those airports that,
from a wider perspective, had scope to provide additional runway
capacity to serve the South East. The Government did not pursue
the working group's main recommendations.
The CAA has recently (December 2005) published
a consultation paper setting out the issues for the next review
of the price caps at the BAA London airports for the five years
starting in April 2008. The paper identifies the need for investment
in new airport infrastructure, including runways, to cater for
future demand from airlines and passengers as a major issue for
the review and discusses possible ways to incentivise BAA to bring
forward the right investment at the right time.
14. How are you planning to encourage development
at airports over the next decade?
In its December 2005 consultation on BAA's airport
charges from 1 April 2008, the CAA explicitly recognised the need
for investment in airport infrastructure, and made a number of
proposals consistent with its duty to encourage investment in
time to satisfy anticipated demand. In addition to adopting an
evolutionary approach to the review, designed to avoid unnecessary
change to regulatory policy and to create a stable climate for
investment, the CAA has focused on the need to ensure that the
legal requirement to set price caps every five years does not
impede investment. The CAA has therefore proposed a number of
modifications to ensure greater flexibility in revenue recovery
where a major investment is
contemplated, or where the future rate of growth in demand is
uncertain, allowing BAA greater flexibility in its pricing. This
would enable the strength of demand for new capacity to be assessed
(better informing the decision on the timing of the investment),
and allow prices to follow a path to a level covering the costs
of investment. If such an approach led to prices in 2008 to 2013
that were higher than merited by airport costs, there would need
to be compensating adjustments in future price control periods;
where demand is uncertain, revising
the regulatory framework from 1 April 2008 so that under-recovery
of revenues against allowed revenue (eg as a result of weaker
demand than forecast) in a given five year period could be rolled
forward and recovered in future periods, and linking allowed returns
on investment to actual (rather than forecast) capital investment.
The CAA is currently consulting on this position
in respect of BAA's airports until 20 March 2006. It will firm
up its position once it has considered responses to that consultation.
(The CAA expects to undertake an equivalent consultation on the
issues around Manchester airport in November 2006.)
15. What has been the effect on airport investment
of the Competition Commission's rejection of the single till"
The Competition Commission actually rejected
the dual till"2
model, and recommended the continuation of the single till"
model. In principle, it is impossible to establish the effect
of this decision, as the degree of investment that would have
occurred had a dual till" approach been adopted can never
be known. However, in practice, investment has been very strong
under a single till"3
approach. This is illustrated in the chart below, which shows
investment across BAA's three London airports at unprecedented
levels over the period 2003-04 and 2004-05, the first two years
of the current price control period.
16. Does the CAA still favour the dual till"
At the last review, the Competition Commission
concluded, and the CAA agreed, that having considered the relative
merits of alternative regulatory approaches, airport charges for
the current five year control period should be set on the basis
of a single till". In the light of its evolutionary approach
to the current airports review, the extensive discussion and analysis
of this issue at the last review and resulting conclusions, the
CAA does not intend to re-open the debate over the introduction
of a dual till" for this review. It is therefore proposing
that price caps for airport charges in the next five year control
period should continue to be set on the basis of a single till".
The CAA is currently consulting on this, and
will therefore not firm up its position until it has considered
responses to that consultation.
17. Why are you proposing to continue to
treat the three BAA airports as single entities rather than one
In its February 2003 decision on the price controls
for BAA's designated airports, 4
the CAA decided to apply price caps on a stand-alone5
basis on the grounds that it would:
provide for a level playing
field between Stansted and non-BAA airports in the South East;
remove a potential distortion
whereby Stansted investments may be undertaken even though Stansted
users do not value them sufficiently to pay for the life cycle
costs at that stage; and
improve the transparency of
regulation for each airport.
However, the CAA is not at this stage aware
of any additional arguments or evidence that was not considered
as part of its February 2003 decision that would suggest that
the stand-alone approach to price regulation should be reconsidered.
Further, the CAA considers that the requirements of UK and European
competition law are more likely to be met through a policy of
The CAA is currently consulting on this position,
and will therefore not firm up its position until it has considered
responses to that consultation.
18. How much weight do you attach to the
CAA Passenger Survey in the process of determining airport price
The CAA Passenger Survey provides comprehensive
and detailed information about the flow of passengers through
the designated airports. It is a vital planning tool for airports,
airlines and aviation related stakeholders who meet some 50% of
the costs in return for access to the data. Its main use in the
regulatory price cap reviews is in assisting with analysis of
the market circumstances of each airport as it provides comprehensive
information of airport catchment areas. However, the existence
of the Survey provides the CAA with the opportunity to seek specific
information from passengers and was recently used in this way
for the CAA's December 2005 report on the demand for outbound
leisure air travel and its key drivers. The CAA will be considering
what further use it might make of the scope the Survey gives it
for accessing passengers' views in the current airports price
19. To what extent is the Air Transport Users
Council (AUC) involved in the creation of regulatory policy in
areas other than specifically consumer protection, and do you
have other mechanisms for involving consumers in the regulatory
The AUC's principal focus is on matters that
directly affect the interface between airlines/airports and air
passengers. In general, these cover aspects that fall outside
the CAA's regulatory remit but this does not constrain the AUC
from expressing an independent view on any issue that it judges
to have a significant and direct operational impact on customers
of air services or where its experience in the field of customer/operator
relations enables it to make a distinctive contribution on matters
subject to regulation, or in response to formal consultations.
Consequently, in the area of economic regulation the CAA specifically
seeks the views of the AUC on matters that are likely to affect
the interests of consumerssuch as the pricing and quality
of services and facilities provided by airports, route licensing
policy, and competition and transparency issues regarding air
The AUC is free to comment on any issues where,
according to its own judgment, it wishes to promote the interests
of air passengers. It responds to consultations from the CAA,
the Government, or the European Commission; it participates in
official working groups or committees where it feels it is able
to add value, and it promotes a consumer view proactively (for
example, seeking meetings with officials or ministers) as it considers
The level of detail of the AUC's consultation
responses, or the scope of its involvement in committee or proactive
work, varies according to a number of factors. The main ones are
its perception of the degree of consumer interest or possible
consumer detriment and its potential ability to influence an outcome.
But an important secondary consideration is the degree to which
it believes its contribution will add value to the contributions
of other interested parties.
20. It has been alleged that the Air Transport
Users Council (AUC) is not adequately resourced. Can you explain
how this body is resourced, and how the level of resourcing is
The AUC receives its funding from the CAA, as
an Auxiliary Group within the CAA corporate structure. The level
of funding is determined via the CAA's normal business planning
Regulation EC 261/2004 on compensation and assistance
for air passengers in the event of delays, cancellations or overbooking
came into force on 17 February 2005, resulting in a significant
increase in complaints and enquiries to the AUC. The AUC and CAA
had expected the Regulation to generate additional complaints
and enquiries, but it was impossible to predict the level of increase.
In the event, the AUC was not able to keep up
with the increase in demand for its services arising from Regulation
EC 261/2004, with the result that there have indeed been allegations
that it is not adequately resourced. It has, however, taken on
additional staff, and, as the training of the new staff progresses,
is catching up with the backlog. The AUC and CAA have together
monitored the impact of the Regulation and both believe that the
AUC is currently resourced at an appropriate level.
21. In your submission to this inquiry which
amounts to some 114 paragraphs, you mention General Aviation just
twice. Does this reflect how important you think this sector is?
The fact that we mentioned General Aviation
(GA) just twice in our submission does not reflect our view of
the importance of General Aviation. Instead, we consider that
the extent to which GA was mentioned reflects more the questions
which were posed for this inquiry. Those questions stemmed from
the statutory framework within which the CAA operates, and from
the guidance given to the CAA by Government. Neither the statutory
framework nor the guidance from Government make much, if any,
explicit mention of GA and, as a result, our submission did not
make much explicit mention of GA either.
None of this detracts from the CAA's view that
GA is an important sector of UK aviation. The GA sector and its
interests are given attention continuously in the Airspace Policy
and Safety Regulation activities of the CAA, and currently there
are several major joint initiatives underway with GA:
Light Aviation Airports Study
GroupThis review, undertaken by the CAA and Industry, is
considering the use of non-licensed aerodromes for flying training
and some small public transport operations.
General Aviation Regulatory
ReviewThis Industry/CAA review is considering the future
shape and extent of UK General Aviation regulation once EASA takes
responsibility for Operations and Licensing issues.
General Aviation Strategic ReviewThis
CAA/Industry review is considering the wider benefits of General
Aviation to the UK. Included in the review will be the economic
benefits of General Aviation to the UK economy and technical and
Small Air Operator's Certificate
(AOC) Holders Many small General Aviation companies also
have an AOC and oscillate between AOC operations, aerial work
and private flying. The CAA/Industry Review Group is looking to
reduce the regulatory burden and oversight without affecting safety
levels; this involves the increased use of Industry bodies to
take on a more active interface between the CAA and companies
so as to reduce CAA involvement and hence costs.
The CAA would not be engaging in such reviews
if we thought that GA was not important. Please also see answers
to questions 22, 23, 26 and 27.
22. The CAA is currently running two reviews
of the General Aviation sectorcould you explain what you
are reviewing, and what areas of policy will be influenced by
The Review Teams will be looking at the following:
a description and definition
of general aviation in the UK;
the existing UK policy context
for general aviation;
GA sectoral trends in the UK
during the past 10 years;
UK versus international trends;
other regulatory models used
within Europe and elsewhere;
the accident rate for UK general
aviation over the past 10 years compared with selected other European
National Aviation Authorities and the Federal Aviation Administration.
(The Review Teams will consider appropriate safety targets for
benefits (quantified so far
as possible) to UK or European aviation industries from general
implications of general aviation
activities for other users, and for the community generally (including,
so far as practicable, environmental impacts);
major current developments which
are likely to affect UK general aviation: airspace, infrastructure,
technology, regulatory, costs, etc;
issues concerning access to
future trends affecting GA;
methods and effectiveness of
consultation and dialogue between GA interests and CAA/Government;
key strategic issues for UK
possible legal and Regulatory
costs of administration;
advantages and disadvantages
of each proposal; and
cost effectiveness and risk
Given the very broad scope of these two reviews
and the wide range of activities and issues being examined, and
the fact that the CAA is taking part in the reviews with a completely
open mind, the CAA does not wish to pre-judge the areas of regulatory
or other policy that will be influenced by the outcomes of the
It should be noted that all the information
concerning the two reviews, ToR's etc, have been published on
the CAA web site.
23. Was there a link between the protests
from the General Aviation sector against the proposed new safety
regulation charges and the announcement of two reviews of General
Aviation (the Strategic Review and the Regulatory Review)?
The announcement of the two reviews did not
stem from the protests of General Aviation (nor, as has been suggested
by some, from the CAA anticipating the Transport Select Committee
inquiry, which was announced some five months later).
The strategic review arose from a number of
discussions in the CAA Board about the Joint Review Team (JRT)
project and its proposals, and from the Board's recognition of
a need for the CAA and other parties to have a better understanding
of the key strategic issues facing the UK General Aviation sector.
We are not aware of any comparable wide-ranging review over the
last 10-15 years, and there are currently many developments in
progress and planned which have important implications for that
the Single European Sky initiative;
the European Aviation Safety
changes in airspace classification;
changes in technology eg Mode
continued rapid growth in commercial
air transport; and
possible introduction of unmanned
Against the above background, CAA and DfT had
felt for some time that a strategic review of the GA sector could
be useful, but we were concerned that the industry might not welcome
it. However, CAA discussions with DfT Ministers showed that there
was now an appetite in the industry for a review of this nature.
The Regulatory review of Large AOC holders was
a Business Plan initiative before the start of the Costs and Charges
review. The Small Aerodromes working group and the Small AOC working
group review stemmed from the JRT analysis, which highlighted
the full cost of the regulatory activities being undertaken once
cross-subsidy was removed. Both of the latter two work streams
were established before any consultation on SRG's revised charges
24. Should the CAA not have a non-executive
Board member from the General Aviation sector in order to ensure
proper balance and representation?
No. Non-executive Members of the CAA Board are
appointed by the Secretary of State on merit under the rules of
the Office for Public Appointments. They are not appointed in
a representative capacity. If Members were to be appointed on
a representative basis, all the principal classes of organisation
regulated by the CAA would be entitled to representation on grounds
of fairness. This would make for a very large Board, which would
be at risk of its agenda being distorted by the special interests
of those representatives.
That said, we are interested in having someone
with experience of general aviation on the CAA Board, and the
advertisement last year for a new Non-Executive Director stated
that experience of the GA sector was one of the areas which would
be an advantage to applicants, amongst other attributes. In the
event, the person appointed to fill that vacancy does not have
a general aviation background.
25. Is it not true to say that your proposed
charging scheme for safety regulation is unfair on General Aviation
as compared to the airlines who do not pay VAT or fuel taxes under
ICAO protocols? 6
No, this is not a true statement. Please see
answers to questions 26 and 27.
26. What modifications were made by the Board
to the proposals put forward by the Joint Review Team on Costs
and Charges for the Safety Regulation Group?
The JRT Report for the Board was completed in
Changes to the JRT Recommendations by the CAA
Board at its meeting held on 4 May 2005 were as follows:
(a) The proposed implementation date was
deferred from 1 October 2005 to 1 January 2006 so as to enable
a full 12-week consultation period to provide industry with an
appropriate amount of time to coordinate a response to the consultation.
The normal charges consultation period adopted by the CAA is five
(b) The proposals would be restricted to
initial changes over a 15-month period concluding on 31 March
2007. This 15-month period will also permit greater clarity to
be obtained around the impact of work transferring from SRG to
EASA and how EASA will work with SRG. The original proposals were
to be implemented in full over a five year period.
(c) To lessen the impact on the GA community:
to limit the increase on AOC holder
charges to 25% of the combined annual and variable AOC charges
levied for the year ended 31 March one year prior to the charging
year. The JRT's recommendation was for a limit of 40% applicable.
to limit the increases proposed within
the General Aviation and the Aerial Application Certificates Schemes
of Charges to 8.4%. The average price increases as per the JRT
Report were 11.1%.
These limitations were expressly acknowledging
that while charges had to increase to reduce cross-subsidisation,
caution should be exercised because of the impact on the GA community.
However, given the gap between the cost of providing the regulatory
activity and the income being generated by the current charges,
the Board considered that taking a limited step forward would
not compromise the GA community.
Following receipt of industry comments resulting
from the charges consultation process that closed on 5 September
2005 and the Adjournment Debate held in the House of Commons on
11 October 2005, the CAA Board made three further amendments to
assist the GA community as follows:
(a) Charges for Permits to Fly within the
Airworthiness Scheme would increase by 10% (previously 23.1%).
(b) Charges for the General Aviation Scheme
would increase by 3% (previously 8.4%) with the exception of parachuting
whose charges would remain at the previous years' level.
(c) Aerial Application Certificates Scheme
charges would increase by 3% (previously 8.4%).
27. What assessment did you make of the regulatory
impact on different parts of the aviation industry from your proposed
reform of safety charges?
As part of the development of the Charging proposals,
the CAA was always cognisant of the impact the proposals would
have on the aviation industry. Consequently, it undertook impact
analyses for the proposed charges covering the operators and organisations
of the following regulatory areas all of which have elements of
GA included as they cover large as well as very small operators:
Air Operator Certification.
Maintenance organisations approvals.
The analyses were compiled with an emphasis
on identifying the impact on the smaller organisations. The analyses
compared the current and proposed regulatory charges as a percentage
of the organisations total operating costs.
The analyses concluded that on average for those
AOC holders that operated aircraft below 15 tonnes the current
charges represented 0.28% of their total operating costs and that
this would increase to 0.35% when the AOC proposals were implemented.
The range of operators within this group is extensive and turnover
figures range from £130 million (Helicopter operators) to
the smaller AOC holder whose turnover does not exceed £1
These percentages were also broadly consistent
for those AOC holders that operated aircraft above 15 tonnes.
The analyses concluded that on average for the
eight smallest aerodromes with turnover below £2 million
the current charges represented between 0.08% to 0.20 % of the
organisations turnover. This would increase between 0.25% to 1.46%
if the charging proposals were implemented.
The analyses concluded that on average for a
Part 145 maintenance approval with turnover below £1.6 million,
the current charges represented between 0.35% of the organisations
turnover. This would increase to 0.45% if the Charging proposals
The conclusion from each of these analyses is
the same in that the proposed charge increases represent a very
small proportion of the turnover of the companies sampled. If
the charge proposals did cause organisations to question their
viability, then that would be for a reason or reasons other than
All members of the JRT were given full disclosure
of the work carried out on the small operators. The results of
which developed the transitional arrangements and determined the
period of implementation.
The CAA's policy is to undertake RIAs wherever
appropriate. In this case, the CAA did not undertake a formal
there is no proposed change
in regulatory policy; the change is in cost recovery methodology;
the process of change had been
initiated over a number of years via the Safety Regulation Finance
Advisory Committee (SRFAC). With significant amendments being
made to the Charges Schemes over many years, although more so
in the last two years;
the proposals were principally
as a consequence of JRT. The work of the JRT ran for a 15 month
period and the JRT was comprised of representatives that covered
all sectors of the aviation industry. In addition, the CAA approached
the JRT process in an open and transparent manner and during the
15 month period the CAA finances and efficiencies were subject
to close scrutiny by all sectors of the aviation industry;
based upon the work undertaken
in SRFAC and more recently in the JRT, the CAA firmly believes
that it has complied with the principle that supports the RIA
process, namely that of evidence-based policy making; and
the Better Regulation Task Force's
publication on Independent Regulators (2003) mentions that in
line with the principle of `comply or explain', independent regulators
should explain why particular aspects of the RIA process do not
apply to them." The publication recommends to the independent
regulators the Cabinet Office guide to better policy making as
a useful starting point. In establishing the Cost & Charges
Joint Review Team, and by providing a 12 week consultation period
for industry comment the CAA believes that it has explained the
changes to the cost recovery process in sufficient detail so as
not to require the compilation of an RIA.
For the past seven years SRG has fully conformed
with Cabinet Office Guidelines for best practice in this area
and Regulatory Impact Assessments are routinely carried out for
all new regulations.
28. What role do you think self regulation
should play in the regulation of General Aviation?
Various regulatory models are used by the CAA
in its oversight of General Aviation (GA) activities. These range
from self-regulation, through devolved" regulation to full"
regulation depending upon the activity and the risks involved;
the activities are therefore regulated proportionately. However,
devolving regulation does not absolve the CAA of its legal responsibilities
and an appropriate level of oversight of such activities must
Self-regulation plays a significant part in
GA activities. For example, foot-launched aircraft and conventional
gliders are self-regulated activities but EASA's remit now encompasses
certain airworthiness aspects of glider operations which, hitherto,
had been unregulated by the CAA. A CAA led/Industry Group is currently
considering what future regulation should comprise for this sector
of the aviation industry. It is, however, complex as GA encompasses
everything from foot-launched hang gliders through unmanned aerial
vehicles to Boeing business jets. Therefore, one size will definitely
not fit all" and proportionality to risk is dominant in the
CAA's thinking on this issue.
The Group is considering what future regulatory
models will be required or available once EASA takes over responsibility
for Operations and Licensing for some elements of GA. The Group
is due to report to the CAA Board in June 2006. Undoubtedly, self-regulation
will continue to play a significant role in the non-EASA (ie so
called Annex 2 aircraft) sector of UK GA. In addition, again for
non-EASA aircraft, the CAA would wish, subject to Industry competence
being available, greater devolution to take place.
29. Would you agree with the Campaign to
Protect Rural England that the CAA should be given a new statutory
duty to promote environmentally sustainable development?
The CAA is already required by the 2001 Air
Navigation Directions and the Environmental Guidance to have regard
for the Government's policies on sustainable development and to
take into account the need to reduce, control and mitigate, as
far as possible, the environmental impacts of civil aircraft operation.
Consequently, the CAA is broadly content with the balance between
its obligations in respect to the environment and those regarding
the safe and efficient use of airspace and does not see the need
for further statutory duties.
In August 2005 the Campaign to Protect Rural
England wrote to the CAA concerning our assessment of tranquillity
in considering airspace change proposals. The CAA responded in
some detail and offered to meet the Campaign's representatives.
Despite a number of subsequent offers to meet, the CAA has not,
thus far, received a response.
30. We have been told that the height and
location of flight paths are changed on a piecemeal basis preventing
adequate assessments of the cumulative environmental impact. Is
that an accurate description?
Controlled airspace is established for the safe
containment of civil air transport aircraft. Air traffic controllers
are able to use the full lateral and vertical extent of controlled
airspace for the purpose of achieving the most efficient and expeditious
flow of traffic. Such use will vary according to the operational
circumstances such as weather, volume of traffic and landing and
take-off direction at local airports. Safety remains the overriding
consideration. Therefore, notwithstanding the establishment of
routes, which are published as a template for flight planning
purposes, the precise position and altitude of aircraft within
controlled airspace will depend on the prevailing operational
circumstances and fluctuations in demand.
31. In your regulation of the National Air
Traffic Service (NATS), you have now imposed financial incentives
to avoid delays in the morning peak. Is this not likely to encourage
NATS to take risks with safety standards in order to avoid penalty
No. A scheme of financial incentives has been
in operation since PPP in 2001 and the CAA's decision to further
enhance it from 1 January 2006 was against the background of its
safe and effective operation to date. The enhanced service quality
term is specifically designed to influence NATS' planning and
resourcing decisions and not the daily activities of ATCOs and
their managers. It is intended to encourage NATS to ensure that
it has in place the correct infrastructure and resource to cope
with traffic demand at all times of the day including the morning
rush". In particular, it is aimed at providing an incentive
for NATS to have in place sufficient resource, primarily controllers,
to be able to staff fully the operational positions needed at
that time of the day and, thus, should have the effect of enhancing
safety rather than degrading it.
The operational safety culture of the NATS operational
managers, such as flow managers, watch managers and operational
supervisors, is such that they will always ensure that safety
is the first priority in any decision making process and will,
within the criteria imposed by that priority, attempt to make
the air traffic system run as smoothly, efficiently and effectively
as is possible. These managers do not allow financial pressures
to impinge on their sound judgement on matters of safety and,
in practice, have been dealing effectively with such pressures,
in running a most efficient, high capacity operation, for many
years. The CAA believes that the new delay term does not create
any extra pressure in this respect.
Moreover, the measurement of delay performance
takes place at one remove from the NATS operations itself, in
both time and position. It will be measured a matter of days later
at the EUROCONTROL CFMU, in Brussels, and therefore cannot act
as a real time performance monitor in the operational environment
(which the CAA acknowledges could directly influence the decision
making of the local flow managers, watch managers and operational
The CAA approves the NATS operation, under the
UK Air Navigation Order, on the basis of its mature and effective
Safety Management System (SMS). That SMS requires NATS' managers
to assess all operational risks to the safety of day-to-day operations
and take immediate action to ameliorate any risks so identified.
The enhanced delay term does not change that and it remains NATS'
responsibility to ensure its operation is, and can be shown to
The CAA's Economic Regulation Group and Safety
Regulation Group worked closely together on the specification
of the delay term from the very early stages of its development
and were at pains to remove any element that could directly affect
safety such as penalty criteria that might encourage inappropriate
operation in deteriorating weather conditions.
32. We have had industry representations
that your approach to safety regulation is becoming outmoded and
overly cumbersome, encouraging box-ticking and perhaps tempting
some in the industry to withhold information. Is there a risk
that your model of safety regulation could become self-defeating
through overload and fatigue, especially in the General Aviation
The CAA audit philosophy for the oversight of
AOC holders and maintenance organisations has been developed over
the past 20 years. It is a proportionate system based on giving
credit to high performance companies and increased oversight to
those companies that are either changing their business or experiencing
safety related problems. On an annual basis a review takes place
between the Accountable Manager, nominated post-holders and company
Quality Manager with CAA staff to ascertain the company's safety
performance. Based on this information, together with future company
plans and the CAA's own audit experiences throughout the year,
a future CAA audit programme for the following year is formulated.
There are, however, recent EASA requirements
which are legally binding and therefore have to be met, and these
involve Part M and Part 145 activities.
Where European law does not prevail, then the
CAA's previous pragmatic approach to oversight is retained. As
mentioned in the answer to other questions, there are a number
of ongoing initiatives which may, particularly in the field of
General Aviation (see question 21 for details) reduce regulatory
oversight and make CAA regulations more proportionate. These include:
Light Aviation Airports Study
General Aviation Regulatory.
General Aviation Strategic.
Small Air Operator's Certificate
Large Air Operator's Certificate
HoldersA Review Group is examining whether oversight of
the larger AOC operators can be reduced without detriment to safety.
This would involve giving credit for Safety Management Systems,
improved Quality Assurance programmes etc.
In summary, there is a measure of compliance
finding due to EASA's requirements but this is complemented by
the CAA's performance monitoring which is, by nature, more investigative
and searching than pure compliance finding. The CAA is continuing
to improve its oversight methodology to be less intrusive into
a company's operations whilst maintaining an acceptable level
of oversight commensurate with the safety risk. The CAA is just
seeking assurance that the company is meeting its regulatory obligations
and we do not believe our model of safety regulation will become
self-defeating through overload and fatigue. Furthermore, the
CAA has seen no evidence, neither to our knowledge has evidence
been produced, that this is the case. There are, however, some
concerns to be addressed by EASA regarding proportionality for
maintenance operations affecting General Aviation aircraft; the
CAA is assisting EASA in those deliberations.
33. We have received a representation that
the CAA has been insufficiently bold in challenging the unrealistic
policies of other jurisdictions in terms of security. Are you
satisfied that the present aviation security regime is fully satisfactory?
If not, please write to us under separate cover, and in confidence
with your concerns.
There is often a tension between safety and
security matters and the CAA works closely with Transec (which
has responsibility for aviation security). The CAA advises Transec
on issues affecting flight and cabin crew performance with respect
to safety interfaces.
Post September 11, the CAA was instrumental
in seeking some limited alleviation to Transec policies for flight
crew in particular. However, these did not meet all of BALPA's
aspirations. The CAA is not convinced that further alleviations,
sought by BALPA, have safety implications and therefore are outside
of the safety domain on which the CAA advises and must be viewed
as social matters.
The CAA is satisfied that the current security
rules represent the correct balance between safety and security.
34. The Civil Aviation Bill will require
the CAA to start recovering the cost of running the Aviation Health
Unit from the aviation industry. What direct benefit will the
industry get for its money?
The Aviation Health Unit will remain a source
of information and advice about health matters in relation to
aviation for flight crew and airline passengers. It will identify
the need for, and support appropriate research on aviation health
concerns. For example Head of AHU will be the Chair of the Steering
Group of the Ideal Cabin Environment (ICE) project (sponsored
by Industry and the European Commission) and in collaboration
with the other consortium members which include universities,
research institutes and industry (including Airbus) will seek
to identify the best possible internal cabin environment. This
should inter-alia provide European industry with a commercial
35. Are you aware of any inefficiencies or
duplication of effort caused by the transfer of responsibilities
to EASA? What action are you taking to minimise these?
We are aware of many inefficiencies caused by
the transfer of responsibilities to EASA.
There is limited duplication of effort, but
we are now denied the previous flexibility we had prior to the
EASA contractual arrangements. This may mean that we have to revisit
an applicant a second time if they wish to raise a matter with
us that is not covered by the existing contract. We are providing
continuing feedback and advice to EASA and the Commission to highlight
inefficiencies as we uncover them, and to seek possible solutions.
36. What steps are you taking to ensure that
there is transparency in the process of transferring responsibilities
to EASA? Are you able to demonstrate to industry that you are
reducing your costs in proportion to the degree of work EASA takes
EASA's current responsibilities were transferred
to it by the implementation of Regulation (EC) 1592/2002 on 28
September 2003. To ensure that there is transparency in the transfer
of tasks, the DfT and SRG hold regular meetings with UK industry
to brief them on transition progress. The Joint Review Team initiative
and consultation on UK fees and charges covered in detail the
impact of EASA on SRG costs. The Safety Regulation Finance Advisory
Committee (SRFAC) is briefed fully on the steps being taken to
reduce the CAA's costs as work is transferred to EASA. However,
the CAA and the DfT can only brief industry on EASA and on our
own plans based on what is known. Industry has understandably
found it difficult to understand a transition in which much of
the work, to implement functions EASA took over from the National
Aviation Authorities, has been sub-contracted back to those NAAs
because of EASA's lack of resources. Due to the difficulties EASA
is having with poor management, poor planning, lack of finance
etc, it has been very difficult for the CAA to keep industry well
informed about the transition, and to ensure that transition is
managed in the most effective way possible.
37. How long would it take to get EASA turned
round to a fully functional state where it is able to fulfil all
its duties satisfactorily?
There are many factors that will determine how
long it will take for EASA to reach a fully functional state where
it is able to fulfil all its duties satisfactorily. These include
EASA's management capability and governance arrangements, its
ability to recruit the required numbers of sufficiently experienced
staff, and resolution of the current funding problems. It is difficult
to predict how long it will take to resolve all the issues but,
based on experience with other organisations in difficulty, it
should be possible to make EASA fully functional within about
two years from the start of a comprehensive turn around programme.
The CAA and DfT are pressing for urgent action through the EASA
Management Board and the European Commission. It is the action
taken by those bodies, and EASA's own management capability, which
will largely determine the outcome.
38. What arrangements have you put in place
for redeploying and transferring employees affected by EASA?
The CAA's primary aim in relation to staff affected
by EASA's establishment has been to encourage and assist staff
in obtaining jobs with EASA. Thereafter, the CAA's priority has
been to ensure adequate staffing to cope with current and projected
CAA regulatory work, whilst seeking to minimise the risk of redundancies
as a consequence of EASA. A number of measures have been put in
place to this end and these are summarised as follows:
Pursuing Jobs With EASAWherever
practical and appropriate we have put measures in place to encourage
employees to follow-up job opportunities with EASA. The measures
put in place include practical assistance such as the provision
of intensive language training, familiarisation visits to Cologne
and open days in the CAA attended by representatives of EASA and
by Cologne City Officials.
RedeploymentWe have focused
on encouraging employees to consider their options at EASA or
within the CAA. Arrangements have been put in place to ensure
that all CAA vacancies are first publicised amongst those areas
impacted by EASA, before wider publication elsewhere in the CAA.
Managers considering these employees for vacancies are required
to take a creative approach to considering their suitability and
expect that an element of training and retraining will be required.
Voluntary Early RetirementArrangements
are in place for considering requests from individuals to retire
early with immediate payment of pension, where that retirement
would result in a net reduction in staff numbers. Subject to appropriate
business benefits being derived (and an overall financial limit),
employees may leave under this scheme.
2005, the CAA introduced Flexible Retirement arrangements and
these have enabled the extension of employment in several cases
where a job currently exists but is expected to disappear in due
course as a result of EASA. This has enabled SRG to provide continuity
of cover for jobs of recognised limited duration. The individual
employees concerned will simply retire later than they would otherwise
The CAA has pursued all the above avenues but
with limited success in terms of staff moving to EASA. This is
due to a number of factors, the main ones being EASA's HQ being
sited in Cologne, the lack of employment opportunities for partners
moving to Cologne, CAA staff concerns about the effectiveness
of EASA's recruitment process, and the poor reputation EASA currently
has. These factors make EASA less attractive as a career move
for our staff.
39. It has been suggested to us that staff
immobility may inhibit your ability to downsize as appropriate
in response to EASA. Do you expect to be able to reduce the workforce
without the need for redundancies? If not, how have you budgeted
The measures put in place and referred to in
response to question 38, together with staff leaving the CAA,
mean that the CAA is on track to achieve the necessary workforce
reductions, on the basis of EASA's current responsibilities, without
the need to resort to compulsory redundancies. Indeed, by the
end of 2005, more staff had been successfully redeployed, or had
left, than was expected in our early plans. These arrangements
are reviewed on a regular basis to ensure that that remains the
In summary, through careful monitoring and updating
of the measures in place as required, we do not currently expect
to resort to compulsory redundancies as a result of EASA and its
current responsibilities. We do not recognise staff immobility"
as a major issue for the CAA as it downsizes in response to EASA.
40. What has the staff reaction been to the
transfer arrangements? In particular, how has morale been affected
by the uncertainty of timings in relation to EASA?
Morale has been difficult to maintain in areas
where we have had to encourage employees to pursue alternative
jobs outside the area in which they are currently employed. EASA
has not been an attractive alternative for many of these staff,
for the reasons described above. A further impact on morale is,
of course, the ever-reducing possibilities for a career with the
We have sought to maintain morale through sensitive
change management, open and frequent communication and a supportive
approach. This has been balanced with the need to challenge any
idea amongst CAA employees that EASA might fail to get fully established.
An external assessment of SRG carried out in August 2005, as part
of its IIP assessment, found that employees most directly impacted
felt that there was sensitive and pro-active handling of the changes
required as a result of EASA and that employees felt appropriately
informed and assisted in the transfer of work to EASA. Not surprisingly,
the results of our Staff Survey, published early in 2005, show
that those employees most impacted by EASA are less optimistic
about their own and the CAA's futures than staff in other areas
of SRG and the CAA generally.
41. Have you experienced staff leaving the
CAA in anticipation of a reduction of scope who has not subsequently
been recruited by EASA? What actions are you taking to prevent
this loss of regulatory skill and experience?
Yes. Of those who have left the CAA due to a
reduction in scope, 28% have taken up roles with EASA, 33% have
been redeployed to roles elsewhere in the CAA, 29% have retired
and 10% have resigned. Accordingly, 72% of the staff lost in anticipation
of a reduction in scope have not joined EASA.
Whilst it is inevitable that valuable employees
have been lost from the CAA, we are seeking to maintain regulatory
skills and experience through being clear with staff precisely
what opportunities continue to exist, in order that the CAA can
retain adequate skills and experience to meet ongoing requirements.
We have backed this up with enhancements to our staff development
arrangements to meet the challenges of the future. Inevitably
the CAA's capability in a range of specialist areas of aviation
engineering will reduce. However, we plan to retain sufficient
specialist expertise to continue to deliver successfully our statutory
and advisory roles.
42. One of the Airspace Policy Group's key
is to provide advice to the Government on national issues such
as financial protection as well as international issues like the
development of EASA and the Single European Sky. To what extent
do you think your advice is listened and adhered to?
The CAA provides advice to Government across
a very wide range of aviation policy issues, including Airspace
Policy. We work closely with the DfT on such issues, and the CAA's
views are generally well received and Government's subsequent
actions are usually consistent with our advice.
There are occasional differences of viewa
recent instance was the CAA advice on Financial Protection for
Air Travellers, where the Government rejected our proposal for
a £1 levy. However, such instances are rare and, in the vast
majority of cases, there is a close alignment on policy positionsespecially
in the many international fora in which we are engaged.
43. What role did you play in the work culminating
in the 2003 Aviation White Paper?
The CAA Chairman was a member of the White Paper
Steering Group (WPSG), which oversaw preparation of the White
Paper, and he is now a member of the White Paper Implementation
In its response to the DfT's consultation, the
CAA articulated the need for a careful and well-balanced analysis
of all of the options under consideration to ensure that safety,
economic, airspace and environmental issues were given due regard.
The CAA's response drew on the expertise of each of the various
strands of CAA activity, including:
the ability of the UK to meet
its obligations in terms of European legislation on nitrous oxide
emissions in the vicinity of certain airports;
safety aspects of various infrastructure,
project and logistical matters;
detailed technical advice on
specific aerodrome development issues, including the proposed
development of new airports at Cliffe and Severnside;
advice on the Future Development
of Air Transport in the UK: South East (SERAS); and
extensive airspace and noise
modelling of the various options under consideration.
Much of the CAA's detailed technical advice
was instrumental in shaping the outcome of the White Paper.
Notes promised to the Transport Select Committee
during the oral evidence session on Wednesday 11 January 2006
1. NOTE ON
CAA BEING SUBJECTED
The CAA has no financial relationship with Parliament
and is not to be regarded as acting on behalf of the Crown. This
distinguishes it from most other regulators and bodies to which
the NAO already has access, which are either non-ministerial government
departments or are mainly funded by public money. Where direct
public expenditure is involved, the NAO has a clear role to play,
but this does not apply in the case of the CAA.
The CAA is a public corporation, which is financed
from charges on the industry it regulates. The National Audit
Act 1983 explicitly excludes it from those bodies of which the
Comptroller and Auditor General may carry out an examination.
The Civil Aviation Act 1982 was amended in 1984 to remove the
role of the Comptroller and Auditor General in relation to the
CAA's accounts. The CAA is now subject to independent external
audit by auditors appointed by the Secretary of State.
The Secretary of State, in consultation with
the Treasury, determines the remuneration of Board members, including
the performance related pay scheme which applies to the CAA's
executive directors. This scheme includes finance and efficiency
and cost-control targets. Furthermore, in giving the CAA Chairman
guidance about the aims and strategic direction which the Government
wishes him to pursue, the Secretary of State has said that he
expects the Chairman, as a matter of course, to keep the Authority's
costs under constant review and to devise formal cost reduction
programmes where appropriate. The CAA's record, at least in the
period since 2001, shows that the CAA takes very seriously the
need for cost effectiveness and is delivering good results in
In determining and setting its charges, all
parts of the CAA carry out detailed annual consultation with those
it regulates on future plans and associated charges. The recent
extensive consultation with industry on the proposals for revisions
to SRG's charges to come into effect in 2006 is a good example
of the effectiveness of the process.
The CAA is subject to regular technical audit
by the International Civil Aviation Organisation (ICAO)and
will, in due course, be subject to similar oversight by the European
Aviation Safety Agency (EASA). Such audits influence the CAA's
use of resources and the way in which it operates.
2. NOTE ON
BETWEEN 2004-05 AND
Within the heading Employment Costs" covered
in the Corporate Plan there are 26 individual cost code types,
covering National Insurance, London Weighting, pension costs,
luncheon vouchers, market related supplements, redundancy costs
etc. The cost code which relates to basic salaries, rises by just
below or at 3% pa across the plan period. The market related supplements
paid to certain sections of CAA staff rise by more than inflation
across the plan period. This planned increase has been included
to ensure that the CAA avoids getting behind again in areas such
as pilot and Air Traffic Controller pay. At the recent Committee
evidence session, Sir Roy McNulty told the Committee that the
new Corporate Plan, which will be discussed at the CAA Board in
March 2006, is likely to have lower staff numbers than previously
reported, as EASA takes over responsibilities from the CAA.
3. NOTE ON
The CAA is required to grant an AOC provided
that the Authority is satisfied that the applicant is competent
to secure the safe operation of the relevant aircraft. In addition
to the flight operational aspects, the AOC is also dependent upon
a number of other factors, particularly maintenance management
and the performance of maintenance either in-house or contracted
to third party organisations (otherwise known as Part M and Part
When an AOC is suspended, either by the CAA
or at the request of the AOC holder, the CAA allows an AOC to
remain suspended while it is kept informed about progress towards
a resumption of operations. Once it becomes clear that there is
no such prospect, revocation action is commenced. Revocation may
be immediate if there are extreme reasons for doing do so or if
there are urgent safety concerns, but revocation normally follows
a period of suspension and investigation.
AOC suspensions 2001-05 inclusive
There were 59 AOC suspensions in the period.
Part M and Part 145 (Maintenance Approvals) suspension
There were 35 Part M and Part 145 suspensions
in the period.
AOC revocations 2001-05 inclusive
There were 72 AOC revocations in the period.
Many of these revocations follow on from a period of suspension.
Part M and Part 145 refusals
There were 20 refusals for approval of Part
M and Part 145 companies in the period 2001-05.
The CAA has powers to suspend or revoke AOCs,
and Part M & Part 145 approvals when it is no longer satisfied
that an operator or company is competent to secure the safe operation
of its aircraft. However, these powers are relatively infrequently
The CAA controls the initial
entry standard into the systemtherefore only organisations
that have already demonstrated their competence are permitted
The operating Industry in the
UK is long-established and has developed a culture not only of
compliance with minimum safety requirements, but of operating
as safely as is reasonable possible.
The CAA takes a collaborative,
rather than punitive, approach to regulation that encourages Industry
to recognise when standards are declining and when remedial or
preventative action, including suspension, needs to be taken.
The CAA will, however, act immediately when circumstances require.
4. NOTE ON
The CAA has completed 59 RIAs since 2002, broken
down as follows:
The CAA publishes its RIAs on its web site and copies of
two examples are included with this document. In preparing RIAs,
the CAA follows the BRTF's five principles of good regulation
when considering regulatory changes. The CAA has also fully embraced
the Cabinet Office guidelines on the completion of RIAs and pays
particular attention to the likely costs and benefits of proposed
regulatory changes and the impact of such changes on small businesses.
5. NOTE ON
Over the last 10 years, the CAA has invested an average of
£2 million per annum in aviation safety research, although
more recently this figure has reduced in areas where regulatory
accountability has passed to EASA, since it would not be appropriate
to invest funds in areas where the CAA alone would be unable to
deliver the outcome of the research. However, to ensure that previous
research is utilized to Industry's benefit, the CAA has been presenting
selected information to EASA for consideration, concentrating
on safety issues that were `CAA work in progress' when EASA was
The following table summarises the CAA's actual and planned
safety research expenditure over the period 2002-03 to 2010-11.
A detailed analysis of the main safety research projects over
the period 2002-03 to date is shown at Appendix 1.
The CAA continues to support research in areas where it retains
In Aircraft Operations, we have created the
Flight Operations Research Centre of Excellence (FORCE). Managed
by an operational transport aircraft captain, FORCE is undertaking
research in areas such as Type Rating training and Cockpit Risk
In General Aviation, the CAA has recently
completed research into Carburettor Icing and will report the
In the field of Large Public Transport Helicopters,
the CAA has contracts in place to test new helideck lighting schemes
that are expected to significantly improve the safety of night
operations to the UK's offshore oil and gas installations.
Where external research is required to help better understand
a risk, or to help identify potential solutions, the CAA is committed,
whenever possible, to gearing" its own contribution to projects
principally funded by industry, other NAAs and other interested
organisations. This should avoid duplication and provide better
value for money for all involved.
Examples of this approach to CAA research funding are the
matching of contributions from elsewhere, including the European
Commission, Health & Safety Executive, industry bodies (notably
the UK Offshore Operators Association and Shell Aviation), professional
bodies (such as the Guild of Air Pilots and Air Navigators) and
other national regulators (such as Norway, USA and Canada). Academic
funding (such as the Engineering and Physical Sciences Research
Council (EPSRC)) has also been utilised where appropriate.
The CAA details the research being conducted in its annual
Safety Plan. This document is published on the CAA website and
the 2006 edition will be published in the next few weeks. This
is part of the CAA's programme to enhance consultation with industry
on topics such as where the CAA's scarce resources should best
With regard to the CAA's research into side-floating helicopters",
the CAA withdrew from the final helicopter type-specific design
study, as a cost benefit could not be established. The CAA was
prepared to support partial funding if this could be matched by
adequate external funding. Funding partners were lobbied via the
Helicopter Safety Research Management Committee (HSRMC) to provide
assistance but the response was insufficient.
A report summarising all of the ditching and water impact
research has been completed and is published as CAA Paper 2005-06
on CAA's website.
Additional information which, although not requested,
the CAA would like to offer to the Committee
6. NOTE ON
In accordance with Regulation (EC) 1592/2002, the European
Aviation Safety Agency (EASA) from the date of its inception was
obliged to set the airworthiness standards for most aircraft operated
by EU persons or organisations. Under the terms of the implementing
Regulation (EC) 1702/2003 the certification standards for aircraft
already in operation in the EU at 28 September 2003 were set at
a datum level equivalent to that of the State in which the aircraft
type was designed. In the UK, the CAA has a long history of setting
and enforcing its own airworthiness requirements and for many
aircraft types had previously adopted a certification standard
above that of the State of Design.
Differences in the UK standard often took the form of design
changes to be incorporated into new aircraft at manufacture, or
embodied retrospectively into used aircraft on import into the
UK. Such changes are called Additional Requirements for Import
(ARI). Other changes affected the way that aircraft were operated
or maintained and required, for example, additional inspections,
time limitations or component replacements. Such changes are called
Additional Airworthiness Directives (AAD). Given EASA adoption
of the State of Design's certification standard as the EU standard,
it followed that no CAA ARI or AAD would be legally valid any
longer. Effectively, all ARIs and AADs would be deleted on 28
Over the 30 years that the CAA has been in existence, a substantial
number of ARIs and AADs have been generated. However, during the
last 20 years, SRG has carried out two major initiatives with
industry to reduce this number substantially. The number of ARIs
and AADs remaining at the inception of EASA in 2003 was 3500.
To eliminate all but 150 of these measures SRG revisited
and reviewed the risk analysis which had generated them. The two
main criteria that were applied to the risk analysis and which
enabled SRG to remove the requirements were:
whether the State of Design of the aircraft
type had taken the opportunity to publish a Service Bulletin or
Service Letter, which took account of the UK's measures raised
in the AAD; or
if the ARI related to an aircraft that was
over 10 years old, and on further investigation of the world statistics
for that aircraft in service, the SRG specialist could down-grade
the risk based on that service record and therefore remove the
Regulation (EC) 1592/2002 contains a flexibility provision
under Article 10(1) that allows a EU Member State to act unilaterally
in the event that it identifies a safety problem involving an
aircraft subject to the provisions of the Regulation. The CAA
utilised this regulation as can be seen from the numbers below.
The approach taken was to use a targeted safety and business risk
based analysis in which consideration was given to the safety
and business risk associated with deleting an item after taking
into account the origins of the ARI or AAD, the immediacy of its
safety impact, or the position of the State of Design on the item.
The overall intent was to identify those measures without which
an unsafe condition may develop as defined by the new Regulations.
Based on this approach, 150 ARIs were proposed to EASA in
accordance with article 10(1), of which EASA has accepted 94.
The remaining 56 have been dealt with as follows:
Eight items, EASA ruled that the particular
measure was outside its legal remit to adopt. In those eight cases
the CAA will maintain the measure as a national requirement in
accordance with its Competent Authority responsibilities.
36 items, EASA showed that alternative measures
were already in place that would achieve the same safety intent
as the UK Article 10(1) item.
12 items, the CAA was persuaded to the EASA
viewpoint that an acceptable level of safety could be achieved
without a particular measure in place.
7. NOTE ON
OF LED LIGHTING
The CAA is always ready to embrace new technology but does
so taking safety considerations fully into account.
The CAA does not approve or licence individual products that
are used within an aeronautical ground lighting (AGL) system.
However, the functional performance and suitability of the system
as a whole must be assessed and accepted by the CAA both prior
to its operational use and upon further modification, including
the introduction of new technology, such as LEDs.
In December 2002, the CAA notified Aerodrome Licensees that,
at the request of the CAA, the Airport Operators Association (AOA)
had formed a working group to explore the potential uses of LEDs
in AGL applications on an aerodrome and, through co-ordinated
research and trials, provide input to the development of UK policy
and requirements for their operational use. By necessity, most
of the research and trials were conducted using LEDs in an actual
operational aerodrome environment.
The AOA working group had, by the summer of 2005, completed
the initial research and trials and reported its findings to the
CAA. The CAA's view was that no application should be excluded
provided the operational performance of the LED light source could
be demonstrated to match that required of a conventional lamp,
and that the safety of the system was not comprised as a result
of an integration of different technologies.
In August 2005 the AOA requested that the CAA re-issue a
notification of the policy and requirements for AGL applications,
which excluded the use of LEDs in specified AGL applications.
It subsequently became known that LED lights in some of the excluded
applications were able to meet the required performance and safety
assurances and had already been installed at some aerodromes.
In further consultation with the AOA working group, in December
2005, the CAA revised the policy to only exclude applications
of LEDs which were definitely unable, and unlikely for some time,
to be able to meet the required performance.
8. IS IT
SRG HAS 70 VACANCIES
STANDARDS (ATS) DEPARTMENT?"
The CAA is no different to other medium to large organisations
in that, at any given date, it has a number of vacancies as part
of ordinary organisational churn". As at 31 December 2005,
SRG had a total of 64 (9.9%) unfilled posts. This is an unusually
high percentage for the CAA and should be viewed in the context
of the transition of some safety regulatory activities to EASA.
In the Design and Production Standards Division, there were 25.6
unfilled posts, which relate to activities that are now part of
EASA's remit. There were only eight vacancies in the Air Traffic
Standards Department and the remainder were spread across SRG,
both in Aviation House Gatwick and across the Regional Offices.
We should also point out that, in common with other commercial
organisations, the CAA recognises this phenomenon" in its
budgeting process, by not funding 100% of its posts 100% of the
time. If the CAA were to fund all posts all of the time, this
would result in higher charges to industry than necessary.
9. LIGHT TOUCH
CAA IS NOT
Over a numbers of years SRG has transitioned, in some areas,
from a regulatory regime of significant numbers of inspections
to a method of audit, and oversight and compliance testing of
company Safety Management Systems. This approach, in partnership
with Industry, is much more likely to capture systemic failure
in company safety performance, than just relying on inspections
alone. The UK safety record is testament to this approach being
successful. The CAA believes that this approach should be seen
as proportionate regulation rather then Light touch".
One of the strengths of the relationship between the UK aviation
industry and its CAA safety regulator is that there is absolute
clarity about their respective responsibilitiesthe industry
manages safety through identification and mitigation of the risks
associated with its activities, and the regulator provides the
regulatory framework and requirements against which to measure
the compliance and practice of the industry.
The variation in the level of risk and the complexity of
the organisations across the sectors are readily recognised. The
CAA, in order to properly focus its resources, must provide a
proportionate level of regulatory oversight on the basis of these
conditions. In those areas where there is the highest risk and
complexity, there is a corresponding need for companies to exercise
a higher level of systematic control over their activities, while
the regulator needs to provide a high level of oversight that
not only tests compliance but also makes a judgement on how capable
and effective the organisation is in managing its risks.
The formal establishment of a safety management system (SMS)
makes the task easier" for both the industry and the regulator.
SMS is not a form of self-regulation". SMS is a tool and
the regulatory oversight function is still undertaken, albeit
that it has a greater emphasis on audit against the company safety
and quality management systems and their associated procedures.
To aid our proportionate approach to the diversity of players
in aviation, there are a number of regulatory approaches employed
which include elements of prescriptive inspection, audits of formal
risk management systems, alternative means of compliance, codes
of practice and, indeed, a measure of devolved/self regulation
as, for example, in the case of the Popular Flying Association
(PFA). However, under the latter arrangement, the CAA (rightly)
retains its statutory accountability for the safe conduct of PFA
In the UK we have a mature and highly professional industry
in which there exists a very strong safety culture that is underpinned
by very sound regulatory principles and behaviours. The CAA will
not step back from its statutory responsibility to the Secretary
of State and we remain committed to sustaining aviation safety
and seeking continuous improvement in the face of continued growth.
Proportionate regulatory oversight, using a diversity of approaches,
will be at the heart of our approach.
10. BA MAINTENANCENOTE
The recent adverse press reports and speculation about British
Airways' (BA) maintenance standards have to be viewed in context.
BA flew 867,108 hours (33% of UK total) in 2004 whilst the rest
of the UK fleet flew 1,782,364 hours. Proportionally one can therefore
expect more incidents with BA being reported than any other individual
operator. It is important to bear in mind that the three BA incidents
recently featured in the AAIB reports all occurred between 18
and 30 months ago. Much has been done since then by the airline
and its engineering organisation to address the issues, which
led to the incidents, whilst being actively overseen by Safety
Regulation Group's (SRG) Aircraft Maintenance Standards Department
Without doubt, BA had difficulty for a time in instilling
a culture of procedural compliance amongst some of its maintenance
workforce. The precise reasons for this are difficult to determine
but organisational changes, business re-engineering, transfer
of work allocation between engineering facilities and less than
congenial staff/management relations may have been contributory
factors. These changes have been monitored by the AMSD and, with
constant pressure to do so applied through the AMSD regulatory
oversight; BA has taken positive action to address any concerns
that have arisen. Some examples of how AMSD have effected change
within BA are shown below:
1. AMSD have highlighted instances of procedural deviation
at BA's two monthly Quality Review" meetings with Quality
Department staff and management and pressing for effective corrective
action and improved management controls in respect of each of
2. AMSD have targeted and are continuing to target routine
and unannounced audits of facilities, processes and aircraft surveys.
3. AMSD have required BA's own Quality Department to
conduct special audits.
4. AMSD have required BA's maintenance certifier continuation
training sessions to focus on the potential perils of procedural
In addition to the above, BA action encompasses education,
focused continuation training, enforced attendance at safety seminars,
the distribution of a range of safety related publications, the
application of an industry respected maintenance error investigation
system and in the extreme cases, by decisive disciplinary action.
BA also intends to reintroduce a specific supervisory role for
the oversight of maintenance. Much of this activity both by AMSD
and BA, despite the impression given by the AAIB report, was initiated
prior to mid-2003 but had not been completed.
In 2003 there were two BA incidents involving serious maintenance
errors and one in 2004. During the past 18 months there have been
no such incidents due to maintenance malpractice by BA staff.
There has been a 57% fall in the number of BA reported Mandatory
Occurrence Reports (MORs) involving maintenance error when comparing
the average for 1996-2000 with the average for the last five years
(2001-05). All the current signs, including feedback from specifically
targeted AMSD audits, suggest that BA's response and actions are
taking effect. The CAA is satisfied that the safety threat from
maintenance errors has been fully accepted by BA engineering management.
11. EX -MILITARY
ON HOW MANY
AND WHERE CURRENTLY
The CAA currently employs 65 ex-military employees. This
amounts to around 6% of our workforce. Of those, 29% have an Air
Traffic background, 8% an engineering background and 62% a flying
background. Also, of the 6%, 68% are employed in SRG, 25% in DAP,
5% in Corporate and Ancillary Groups and the remaining 2% in ASSI.
In the last five years, around 95% of our new recruits have
joined from the private sector.
12. EASANOTE TO
FOLLOWING EASA BECOMING
Since EASA became operational on 28 September 2003, the CAA's
airworthiness responsibilities consist of those required for competent
authorities" under the EASA regime dictated by the Basic
Regulation (EC) 1592/2002 and the Implementing Rules 1702/2003
and 2042/2003, together with those relating to aircraft that are
excluded from EASA's scope. The tasks include:
(a) Issue of Certificates of Airworthiness for UK registered
(b) Issue of Noise Certificates.
(c) Issue and surveillance of the following organisation
approvals with place of business in the UK:
(i) Production Organisations;
(ii) Maintenance Organisations (eg Part 145);
(iii) Maintenance Training Organisations (Part 147);
(iv) Continued Airworthiness Management Organisations;
(d) Full responsibilities for aircraft set out in Annex
II of the Basic Regulation eg homebuilds, ex-military aircraft
(e) State aircraft eg Police helicopters.
The responsibilities transferred to EASA include the issue
of Type Certificates and continuing airworthiness (design) for
aircraft not included in Annex II of the Basic Regulation, and
approval of design organisations.
The CAA's safety regulatory functions are not affected in
relation to Regulation of AOCs, Flying Training Organisations,
Air Traffic Services providers, Aerodromes, flight crew licensing
etc. Similarly, the CAA's Economic Regulation, Consumer Protection
and Airspace Policy activities are not affected.
|Research Projects by Year 2002-06
|Aircrew Fatigue Model
|Flight Operations centre excellence
|Helideck Marking & Lighting
|Hazard Analysis of GPS/GNSS Approaches
|Investigation of large water droplets break up on impact
|Lighting and Colour vision on the flight deck
|Helideck Environmental Issues
|Differential GPS Guidence for Off-Shore Approaches
|Helicopter ship operations
|Hums Research (Helicopters)
|Pilot View and Visual Clues
|Mortality and Cancer incidence in Commrcial Pilots
|GNSS Monitoring and Advice
|Objective risk based management of ATM
|Validation of the Fatigue Model
|CAA Chair in ATM & the Environment
|Operation Flight Data MonitoringHelicopters
|Operational Flight Data MonitoringOFDM
|Human Hazard Analysis of Complex Aircraft System
|Damage tolerance, fatigue and fracture
|Computer Modelling of Evacuations
|Vigilance and Wakefulness Assurance
|Reliability of composition of composite structures
|Auditory Interface Design for A/C Systems
|Improved Bird Strike Reporting
|Carbon Monoxide detection
|Assessment of Operaing Systems for Safety Related Systems
|Large Bird Strike Database
|Research on Cabin air Quality
|Performance Monitoring of Operational GPS/GNSS
|Aerodynamics of Gyroplanes
|Investigation into key Parameters of Damage Tolerance Design
|Total of larger items
|*Nine months only
2 Under which airport charges would be calculated with reference
to the costs and revenues associated with providing aeronautical
activities alone, removing the scope for commercial revenues to
reduce airport charges below the costs associated with the provision
of these activities. Back
3 Under which the revenues from all aeronautical and commercial
activities, undertaken by the airport company, are set against
operating costs and capital charges for the purposes of calculating
the revenue required to be raised through regulated airport charges. Back
4 Economic regulation of BAA London Airports (Heathrow, Gatwick,
Stansted), 2003-08, CAA Decision, February 2003. Back
5 A stand-alone approach sets price caps by reference to the costs,
assets and market conditions of each airport individually, but
does not imply treating each airport as a separate company in
its own right. Back
6 CAA 31 British Gliding Association, para 1. Back
7 CAA 56 Civil Aviation Authority, Annex 1 para 7. Back