Select Committee on Transport Minutes of Evidence

Memorandum submitted by the Airport Operators Association


  AOA is the trade body that speaks for, and represents the interests of, British Airports. It has in its membership all of the UK's international and major regional airports, together with a significant number that are engaged in business and general aviation. A current list of our member airports is attached as annex one.


The remit, structure and powers of the CAA:

  The reputation, viability and development of the UK's airports is intrinsically linked to their ongoing relationship with the CAA. In gathering member views for this submission one common thread that has emerged is the high degree of respect for the CAA and the quality of its work. It is viewed by many members as a good model and is believed to play no small part in the UK's reputation as a leader in aviation. Several members have cited examples of how CAA input has helped the industry recently, in areas such as facilitating the granting of fifth freedom rights to regional airports and its input in bilateral negotiations. However, members do believe that there is more scope for the CAA to work jointly with the industry in developing and revising safety standards. We believe that this is increasingly appropriate given the degree of expertise in the industry and the ever increasing complexity that safety regulators must deal with.

  Members do not believe that there is any case to make substantive changes to the overall remit and scope of the CAA's work. Historically this was not the case. Until several years ago members believed that there was an inconsistency in CAA's dual roles in its oversight of both safety regulation and air traffic control. We believe that this conflict has now been removed and that no other substantive conflict of interest exists.

  A point related to CAA's remit, is the scope for greater joint working with other government bodies to ensure good communication and flow of expertise. A recent DfT consultation provides an example of this. The DfT has estimated the costs of bringing foreign registered aircraft into the UK system as £250,000, based on the costs of re-licensing. In fact costs are likely to be many times greater than this—in the order of tens of millions of pounds. CAA regulatory requirements would be the main driver in causing these costs. Closer working prior to the consultation might have identified these costs. We believe it important that CAA specialists are able to channel their expertise into the relevant government branch and that likewise, DfT officials have a thorough understanding of the CAA's regulatory approach and practice in order to improve the effectiveness of policy making. We believe that this should be pursued through greater efforts towards joint working with CAA being involved at the early stages of policy making and DfT officials having a thorough grasp of CAA regulation, perhaps through the use of secondments or job rotation. Some members have also commented that some CAA employees may be too specialised and that there may be a case for multi-skilling of field personnel to improve efficiency. Others note that there are skill shortages in the parts of the CAA dealing with safety regulation at inspector level and above. Consideration needs to be given to how to attract and retain employees of the right calibre to these roles.

The effectiveness and efficiency of the CAA's regulatory framework:

  The CAA over time has developed a specifically British model of safety regulation. In an increasingly globalised world, this raises questions about the degree of harmonisation between the UK and the rest of the world. The AOA strongly supports the maintenance of high safety standards and believes that in working to harmonise standards internationally there can be no question of applying a lowest common denominator approach. However, that is not to say that there are not uniquely British standards that have been developed historically to which serious consideration should be given with regard to appropriateness. Examples of this have emerged recently following the DfT consultation on foreign registered aircraft, which aims to stem the trend for aircraft owners to maintain aircraft on foreign registers, while still basing them in the UK. This has been a particular issue for smaller airports, who cite the main reason for this trend as the particularly onerous processes that pilots must follow to gain UK instrument ratings and also modifications to aircraft in order to place them on the UK register. Such modifications can be highly expensive in the case of business jets and arguably lead to a loss of business to the UK aviation sector and to the wider economy. There is a strong case to say that if harmonised standards existed then the root causes of this trend would be removed. We believe that there is an opportunity to address this through the further extension of EASA, but that it is critical that any attempt at harmonisation is carefully developed and implemented in order not to create a further tier of regulation.

  In the same vein, there is a view among some of our smaller general aviation airports that aspects of the CAA's regulatory model that have been developed with large airports in mind are not necessarily appropriate to businesses of their size. This is not to say that their desire is for deregulation (though that might be appropriate in some areas) but rather for more appropriate regulation. Issues in this area have come to light recently with the formation of the Light Aviation Airports Study Group (LAASG), which has addressed issues such as the appropriateness of CAA CAP 168 (the licensing of aerodromes) to small aerodromes and also the requirements for Rescue and Fire Fighting Services (RFFS). We believe that the CAA should be encouraged to take more initiatives in areas such as these that might allow GA sector airports to benefit from light touch" regulation, provided that safety standards are not compromised. The present strategic review of general aviation has the potential to provide a good starting point for this.

  With regard to efficiency, we strongly question the need for the CAA to earn a rate of return on capital of 6%. Rate of return is an accounting measure, which is best used to compare the performance of companies in the same sector or where a similar financial risk exists. Other similar public sector bodies, such as those regulating the privatised utilities do not earn a rate of return on investment. Our European competitors, some of whom do not even bear the actual costs of their own national regulatory regimes, do not experience the higher costs resulting from this requirement. This disparity results in what is effectively a double cost of regulation, which acts to place the UK's airports at a competitive disadvantage.

The effectiveness and efficiency of the CAA in the general discharge of its duties:

  We believe that there is scope for greater ongoing scrutiny of the CAA's cost base to ensure that it represents value for money to our members. Some members have expressed concern that there is no recompense to airfields for services that are carried out on behalf of the CAA, such as where airports provide services as part of the Local Competency Examiners Scheme. Another area of concern is that overall costs to our members may increase as the European Aviation Safety Agency's (EASA) remit expands. We question whether there has been a commensurate reduction in CAA's role, resourcing or cost pass-through associated with the already achieved transfer of aircraft certification and maintenance standards work to EASA, and are concerned at the potential for similar dis-benefit when the responsibility for airport operations is similarly transferred. We believe that CAA should reduce its costs in proportion to the degree of work that EASA takes over from it and demonstrate that this is occurring in order to re-assure our members that they are not experiencing a drift towards double regulation, with its associated on-costs.

  On a related note we believe that there is scope for the CAA to take more account of the increasingly competitive and market based regime operating among UK airports. Some members have commented that they have little scope to pass through cost increases that occur as a result of increasing regulatory costs in the UK. Attempts to pass through cost may result in airlines moving to cheaper airports overseas. This is not to say that the CAA should in any way cut corners, but should be mindful of the fact that airports cannot simply pass through cost increases to customers within the context of a globally competitive marketplace.

The effect of the growing international and EU co-operation on the work of the CAA:

  The AOA supports the idea of greater harmonisation of regulatory safety standards across Europe. In principle this is good for airports wishing to operate in continental markets and also good for the industry if all EU countries (in terms of aviation standards) are obliged to operate at the same standard as leaders. However, we believe that the development of EASA must take place in full consultation with the industry and are strongly against any form of double or overlaid regulation, whether this applies to the developing EASA or any other source of regulation. It is also critical that the UK does not apply internationally developed norms in an inflexible manner. Members suggest that ICAO recommendations should not be automatically implemented as standards, where recommended practices may be more appropriate. We therefore see a potential role for EASA in safety certification provided this does not lead to over-regulation. We believe that it is critical that EASA develops at a pace that it can sustain and ensures that it has consolidated current activities before further expanding its remit. We believe that this will take several years. During this process it is critical that ICAO is seen as the overall standard and that EASA works closely with the industry and the CAA within this long-established international framework in order to avoid superfluous work and costs in developing new standards where satisfactory standards already exist, or where industry best practice can provide a solution. Some members have expressed concern that without strong CAA involvement EASA may result in a continental model of regulation that does not reflect current ways of working in the UK. Similar concerns have been raised in relation to CAA and the work carried out at ICAO. For this reason, we would encourage the CAA to play an even stronger part than it presently does in shaping and influencing both EASA and ICAO.

15 November 2005

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