Select Committee on Transport Minutes of Evidence

Memorandum submitted by Prospect


  1.  Prospect is the trade union representing all air traffic controllers and air traffic systems specialists employed by National Air Traffic Services (NATS), which is regulated by the Civil Aviation Authority, and also represents professional and specialist employees of the Civil Aviation Authority, including the safety inspectors and other specialists employed within the Safety Regulation Group of the CAA. All the members we represent in NATS and the CAA have a direct interest in the remit of the Transport Committee's Inquiry, and we therefore welcome the opportunity to submit evidence to this Inquiry.

  2.  We note that the scope of the Committee's Inquiry is wide-ranging rather than focussed on any specific aspect of the CAA's role and responsibilities. Prospect's primary interest, on behalf of the members we represent in NATS and the CAA, is in relation to the regulation of air traffic safety. However, we also have a direct interest in how the CAA discharges its statutory responsibilities in relation to the economic regulation of NATS; also the CAA's role in airspace design, in relation to capacity, and changes being driven by the Single European Sky legislation.

  3.  Prospect welcomes the timing of this Inquiry, which comes at a crucial juncture in the development of the Civil Aviation Authority, given the external influences that will have a direct bearing on the regulatory functions of the CAA, including:

    —  Single European Sky legislation and its impact on National Supervisory Authorities such as the CAA.

    —  Increasing commercial pressures on National Air Traffic Services (NATS), following the PPP of 2001.

    —  Current Government policy towards regulation following the Philip Hampton review of March 2005 and the impending Government Bill for Better Regulation".

  Against these developments it is essential that the CAA is sufficiently prepared to meet the challenges posed by these developments in terms of:

    —  Independence from Government.

    —  Capability.

    —  Resources.

    —  Effectiveness.

    —  Respect of those it regulates.


  4.  Since its inception under the 1972 Civil Aviation Authority Act, the Authority has evolved its role and responsibilities and been required to fulfil its statutory functions in an ever changing and rapidly growing aviation industry. Since the separation of NATS from the CAA in 2001 the residual regulatory functions of the CAA have been divided between four distinct groups:

    —  Safety Regulation Group.

    —  Economic Regulatory Group.

    —  Director of Airspace Policy Group.

    —  Consumer Protection Group.

  Whilst this division of responsibilities within the CAA may appear logical, Prospect is becoming increasingly concerned that the organisational independence of each Group undermines the over-riding requirement for cohesion in the way that the CAA discharges its statutory responsibilities. There is a possible risk that the current Group structure perpetuates independent organisational structures that are not joined up" to provide coherent regulation, particularly in respect of air traffic control.

  5.  The comment later in this submission on the relationship between the Economic Regulator and the Safety Regulator arises from specific proposals within the price control framework for NATS during Control Period 2, as published in September 2005. These proposals in themselves highlight some of the conflicting objectives from within which the CAA has to operate. For example, the Economic Regulatory Group of the CAA is seeking to incentivise NATS to reduce air traffic delays that occur during the peak morning periods by applying a heavier weighting of delay penalty in that period; whereas NATS ability to reduce delays by increasing airspace capacity is constrained by the restrictions imposed by the CAA's Directorate of Airspace Policy; and the economic pressure on NATS to reduce delays during that peak period would compromise safety if air traffic flow rates were increased above target levels during peak periods, thereby compromising the safety case required by the CAA's Safety Regulation Group. In this example three arms of the CAA are pursuing regulatory policies that would in certain circumstances be contradictory to each other. It is in that context that we seek greater coherence in regulatory policy delivery so as to horizontally integrate the separate organisational structures of the CAA.


  6.  The performance of the CAA in relation to its statutory objectives and functions can, in part, be assessed by its reputation. Historically the CAA has a proud and enviable reputation as an effective independent organisation with the highest standards of aviation safety in the world. It is highly respected within the aviation industry, and there is a widespread perception that the CAA's promotion of high safety standards has enabled the UK to have the safest airspace in the world—a fact that can be verified by all available Air Accident Performance Indicators.

  7.  However, no organisation can rest on past laurels, particularly in the safety critical aviation industry which is continually changing and vulnerable to many external developments. It is essential, therefore, that the CAA is visibly committed to a process of continuous improvement to ensure that it is capable of maintaining the highest standards of air safety. There should be no dilution of those standards arising from a combination of economic cost pressures coupled with industry pressure on Government for much less regulation.


  8.  Senior CAA officials are on record as referring to the CAA adopting a lighter touch" to regulation. This is a theme gaining credence in Government, and positively recommended in the Philip Hampton report on regulation published in 2005, which will be a key influence in the Government's new proposed Bill for Better Regulation". The rationale for lighter touch" regulation is based on a belief that inspection and enforcement should not be done without good reason, and that all regulation of industry should be targeted and focussed. In other words a risk-based approach to inspection and enforcement rather than a one size fits all" blanket approach of regular inspection and enforcement.

  9.  Prospect is concerned that as the CAA moves towards this new lighter touch regulatory regime there is a very real risk that the highest standards of air safety in the UK will diminish. The other external pressures bearing down on safety—particularly the financial squeeze of economic regulation and the economic pressures driven by low cost budget airlines, will combine to undermine the CAA's ability to lead regulatory development and continued enforcement of the highest standards on which its reputation has been built.

  10.  As the airlines continue to cut their costs to meet growing competitive pressures, and openly challenge the cost recovery charges required by the CAA and NATS, the pressure on Government to cut regulation" will continue. It is often stated that safety is a given". This could be complacent—safety is not a given". It can only come about through a framework of high standards based on best practice, set out in clear regulations, updated by research, and effectively enforced throughout the industry. Developing concepts of lighter touch" regulation runs a real risk of compromising effective standards of safety and encouraging greater pressure to reduce costs in all areas, including safety enforcement within the aviation industry. Airlines seeking to cut costs through, for example, outsourcing catering sources has shown to introduce an element of risk to continuous operations. Similarly, cost cutting in safety critical areas, if left unchecked, would have risks of a far greater magnitude.

  11.  The Civil Air Transport Regulations are there for a purpose, and it must be an absolute rule that there would be no exemptions from the regulations as published. Yet, we have had recent experiences of the CAA being consulted by operations at NATS London Area Control Centre for dispensation to overcome the essential SRATCOH (Scheme for the Regulation of Air Traffic Control Officer Hours) regulations relating to the hours worked by operational air traffic controllers. Dispensation to not comply with the regulations as published was readily given. That could be the unacceptable consequences of allowing lighter touch" regulation.


  12.  A key question in assessing the effectiveness and efficiency of the CAA, is whether it has the necessary capability and resources to discharge its statutory objectives and duties. In order to be an effective safety regulator, the CAA is required to employ teams of highly skilled professionals with sufficient credibility within the industry and the necessary depth of civil air traffic experience. There continue to be unfilled professional posts in the Air Traffic Services Investigation arm of the CAA, which it is required to investigate, report on and initiate follow-up action in respect of civil air traffic aspects of aviation accidents, incidents and airprox reports. As the Transport Committee observed in its 1999 report on civil aviation, the CAA must be in a position to attract the best quality candidates for recruitment. Despite a number of separate initiatives for recruitment and market pay supplements, there continues to be a gap between the resources required and the staff in post.

  13.  A common factor in the recruitment difficulties is that CAA salaries are lower than those available in comparable posts within the larger air traffic service units of NATS. Within the past 18 months there have been two separate recruitment exercises which failed to attract sufficient suitable candidates, leaving the posts unfilled. Whilst the CAA is aware of its need to pay comparable market rates, it has consistently allocated insufficient resources to match equivalent salaries in NATS for such posts as air traffic area inspectors and air traffic systems engineers. It is essential that the CAA has the necessary resources and commitment to attract the best quality professional staff and retain them within the CAA.

  14.  As indicated earlier in this evidence, Prospect has a specific concern about the relationship between economic and safety regulation as applied to NATS. The Economic Regulatory Group within the CAA has now confirmed its final decision to apply heavier financial penalties for aggregate air traffic delays that occur during the peak morning period (5am to 9am). Prospect maintains that this decision based on economic criteria will impact on air traffic safety, and thus conflict with the over-riding requirement of the Safety Regulation Group of the CAA to maintain the highest standards of air traffic safety.

  15.  Prospect has expressed its concerns directly in written submissions to the CAA Economic Regulator during the extensive consultation on the price control proposals for CP2. We have argued that there is a direct correlation between air traffic delay and safety considerations. Delays attributable to air traffic control normally arise as a consequence of enforced reductions in traffic flow within particular sectors in order that air traffic controllers and the systems can cope with the given level of air traffic movements within the available capacity at that particular time. Reducing the flow of traffic is, therefore a safety tool to minimise the risk of loss of separation or overload. In that context, the proposal to double the financial penalties tied to NATS delay performance maybe perceived as a pressure to compromise safety by increasing traffic flow when capacity is limited, in order to avoid incurring significant financial penalties. Incentive schemes designed to regulate service delivery by reducing air traffic delays should be focussed solely on increasing airspace capacity not through the direct measurement of air traffic delay at particular times or on particular individual delays. Prospect does acknowledge that it is not the intent of ERG's proposals to influence day to day operational decisions on traffic flow. However we would emphasise that such delay penalties designed on economic criteria do in themselves create a culture of avoiding air traffic delays at peak penalty periods at all costs, and thereby will inevitably influence day to day decisions taken because of the new focus taken on reducing delays so as to avoid financial penalties. As a result of the Economic Regulator's proposals, NATS has already committed itself to finding £132 million of savings compared to its 2004 Business Plan for its en-route business; and is now required to find a further £50 million of cost savings to meet the Regulator's final proposals. Our fear is that undue pressure will be placed on en-route operations to avoid any risk of further financial pressure through having to pay delay penalties.

  16.  The Economic Regulator has assured Prospect that these proposals were assessed by the Safety Regulation Group. It is not clear how this assessment was undertaken, and how the CAA can effectively reconcile its economic regulatory remit with its over-riding safety remit.


  17.  An essential capability of the CAA's Safety Regulation Group is the ability to undertake research into emerging aviation technologies as well as investigating new innovative approaches to safety management systems. Yet, there is clear evidence that the Research Department of SRG is being run down, on an expectation that this would become a European-wide capability, even though the newly formed European Aviation Safety Agency (EASA) will not have its own research facilities. We invite the Committee to enquire how this research gap will be filled by EASA.


  18.  One of the greatest challenges facing the CAA at the present time is how it responds to developments in Europe. The Single European Sky legislation is now in place which will have a significant impact on air navigation service provision across Europe over the next 10 years. Whilst there will now be growing collaboration between air navigation service providers (ANSPs) such as NATS, in developing cross border Functional Airspace Blocks (FABs); there will still be a single National Supervisory Authority (NSA) for each country to regulate the air service providers and ensure common standards throughout Europe. In addition, and more significantly for the CAA, the new European Aviation Safety Agency will be given the power to impose its own European-wide standards.

  19.  EASA expects to take on many of the roles previously undertaken by professional staff in the CAA's Safety Regulation Group. This is having a considerable negative effect on recruitment in the roles that SRG will continue to fulfil as the National Supervisory Authority in the UK. It is in that context that the CAA must be able to clearly define its role, purpose and future within the new European framework for air traffic management.

  20.  Prospect's over-riding concern is that as EASA is established the high standards of aviation safety on which the CAA has built its reputation will be diluted in order to meet the average of all European National Supervisory Authorities. It is essential that the remit of EASA supports the very high standards of aviation safety established in the UK by the CAA.

  21.  We suggest the Committee consider the funding of the CAA, with the suggestion that this should be at least partly from departure tax to create more financial independence from those that the CAA regulate—significantly the airlines. This will increase UK airline competitiveness and allow the CAA to operate with clearer objectivity.

  22.  As joining EASA was a political decision supported by DfT, CAA staff should not be financially disadvantaged as a consequence. There should be no reduction in terms and conditions of service as a result of the new European dimension. CAA transition costs, which are significant, should come from DfT, not from the CAA.

  23.   EASA is inadequately resourced in some areas of national interest. The CAA should retain the power to intervene where EASA fails to address the issue, for example offshore helicopter operations, important for the UK oil and gas industry.


  24.  Prospect appreciates the opportunity to submit evidence to the House of Commons Transport Committee's timely Inquiry into the work of the Civil Aviation Authority. Our principle concerns relate to the inter-relationship between economic and safety regulation, and ensuring that there is a joined-up" coherent Civil Aviation Authority. The CAA must be able to meet the challenges of a rapidly changing aviation industry and economic framework. To meet those challenges, the CAA must have:

    —  Independence from Government, particularly in respect of Better Regulation initiatives".

    —  Independence financially from those that it regulates by moving to funding based on departure tax.

    —  Capability to meet the challenge it faces.

    —  Sufficient resources to fund its work.

    —  Effectiveness in what it does and to protect UK specific interests.

    —  Specific DfT funding for CAA transition costs as rulemaking responsibilities transfer to Europe.

    —  CAA staff terms and conditions to be maintained.

  25.  We would welcome the opportunity to elaborate on these points in oral evidence to the Transport Committee.

14 November 2005

Witnesses: Mr John Eagles, Technical Chairman, Executive Committee, Association of Licensed Aircraft Engineers; Captain Mervyn Granshaw, Chairman, British Airline Pilots Association; and Mr David Luxton National Secretary, Prospect, gave evidence.

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