Select Committee on Transport Minutes of Evidence

Memorandum submitted by TUI UK

  TUI UK is the UK's largest holiday company, with a turnover of £2.3 billion and includes the leading UK brand of Thomson Holidays. TUI UK is owned by TUI NE which employs around 13,000 people in the UK, 9,000 of whom work overseas in around 40 holiday destinations around the world. TUI UK is the market leader in the UK inclusive holiday market, a position it has held since 1974.

  TUI NE also owns and operates Thomsonfly, the UK's largest charter airline carrying approximately five million UK originating passengers out of 28 UK airports to 87 overseas destinations. Thomsonfly operates a growing mix of charter and scheduled flying and operates a fleet of 43 Boeing aircraft.

  TUI NE is also part of the wider TUI AG group. TUI AG is the largest tourism group in Europe and operates seven airlines out of six member states with a total of 122 aircraft as of 1 October 2005. With this experience of other National Air Authorities, Thomsonfly believes we are in a good position to comment on the UK CAA when compared with other NAA's around Europe.

  As TUI UK[NE] we interact with the CAA in the Economic Regulation Group (ERG) and the Consumer Protection Group (CPG). Thomsonfly, TUI UK's in-house airline also has a high level of interaction with the Safety Regulation Group (SRG).

  We will attempt to answer the main areas of concern to the committee as set out by the press notice but will also devote sections of this response to practical examples of where we believe there could be over regulation and what action we believe should be taken.


  1.  TUI UK understands and supports the role of the CAA and agrees that regulation to ensure safety is a necessary requirement of having a safe aviation industry. However we believe that over regulation does not assist air carriers or tour operators and in some cases over regulation has limited the effectiveness and competitiveness of the UK travel industry. The argument that heavy and over regulation from the UK CAA makes it safer and therefore better than any other national air authority is unfounded and costly to UK aviation industry.

  2.  There is very little consultation with industry within SRG. Currently the CAA tends to issue rules and recommendations with minimal consultation with the airline industry and Thomsonfly would recommend a review designed aimed at enhancing the ability of industry to provide comments on proposed and implemented amendments, whilst guaranteeing the CAA is following the recognised procedures for a pan European approach. The current system of asking the operator's technical group is not sufficient and a wider consultative forum with both the industry and other European NAA's should be investigated. Thomsonfly believes it is a matter of urgency that a requirement for an effective comment response system is introduced for all CAA additional regulatory requirements.

  3.  The SRG also needs to be more transparent. It is often hard to get the correct information and Thomsonfly believes the CAA should provide a Help Desk for guidance on all regulatory matters.

  4.  The CAA in its entirety should also accept electronic documentation. ie permits to fly should be acceptable as digital documents through email services. The CAA website also needs a full review, updating and modernisation as a matter of urgency.


  5.  TUI UK accepts that the CAA was set up to regulate UK air transport, air navigation and operation of aerodromes but would remind the committee that, with the creation and inception of EASA (European Aviation Safety Administration), the CAA's role has moved to that of a compliance monitor and not of a direct regulator and this change should be reflected in a reassessment of the powers of the CAA to add additional requirements onto recognised EASA operational regulation. It is felt by Thomsonfly that the CAA interpretation of EASA requirements tends to be too restrictive and leads to an unnecessarily heavy administrative burden on operators where resources may be better focused on other airworthiness activities eg the present RIE and permit to fly FODCOMS 16-2000 and 28-2005. Thomsonfly would recommend that the CAA should decrease the number of requirements unique to the UK and level the field with the rest of EASA's member states.

  6.  It is also worth noting at this point that the vast majority of the CAA is a nine to five organisation and our operations are 24/7. It is essential to ensure smooth operations that we can be guaranteed swift effective assistance from the CAA. Having to wait until the next working day for CAA approval to ferry a slightly damaged aircraft to our maintenance facilities for repair when we know the aircraft manufacturer has been made technically aware of the scope of the damage and our trained and qualified engineers have inspected the aircraft incurs extra cost and is an unnecessary extra layer of regulation that penalises the UK aviation industry.

  7.  However, conflicting with paragraph 6, some parts of SRG are, or appear to operate on, a 24/7 basis. The Aircraft Registration department in Kingsway is unrivalled when compared to other NAA's Thomsonfly has dealt with and we believe it is possible to register an aircraft in the UK at any time of day or night and their service is excellent. With this as an example we would suggest Out of Office hours are required for Permits to fly and Concessions.


  8.  As mentioned previously the difference between EASA's power as a regulator and the CAA as a compliance monitor and enforcer of these regulations should be clarified. The CAA can no longer conduct rule making committees and subcontract to third parties to assist with extra regulation committees. In this same way the CAA should no longer contract third party organisations to carry out studies in preparation for new regulation as this work must now be authorised and requested by EASA.

  9.  The CAA has too many modes for dissemination of their requirements and it is not well defined as to which appertain to EASA aircraft, eg CAPs, CAAIPS, FODCOMS, Airworthiness Notices, ORS4, Leaflets, Letters to Operators, CAA Specifications, AILs and GRs etc Airworthiness Notices have also been withdrawn for over a year but Thomsonfly are still approached by the CAA with regards to notices that were implemented several years ago to see if we have complied. With the inception of EASA and the withdrawal of Airworthiness Notices, Thomsonfly would argue that this is another example of the UK CAA over regulating the industry when compared to other member states. Thomsonfly would also ask that the CAA provide clear guidance to the industry on what is a rule and what is a recommendation or best practice.

  10.  The biggest disadvantage Thomsonfly suffers under the CAA is the maintenance and operations related Generic Requirements that remain mandatory under the Air Navigation Order as laid down in CAP747 for commercial passenger operations. We still have to comply with minimum seat space GR2 and other issues such as GR3, which our EU colleagues do not have to follow. Imposing additional modifications and maintenance tasks that no other EASA state has to follow makes the transition of aircraft within the EU more difficult where UK imports are concerned. As part of our wider group TUI AG, we operate 122 aircraft and the additional modifications insisted on by the UK adds extra cost and complication for our pan European group to move these aircraft onto the UK register if required.

  11.  The CAA also insists on UK operators having CAA aircraft, engine and modification log books, which no other EU country in our experience has required. Again this is another layer of costs imposed by the UK CAA that the UK industry has to absorb when compared to other countries.

  12.  Another abnormality endured by the UK aviation industry is that the UK CAA still requires the operator to provide closing actions for defects of incidents, which we as operators have no control over. Many of Thomsonfly's technical investigations reveal problems with a part or a manufacturing process, yet it is the operator who is expected to drive the closure when really it is beyond our control and the regulator should put pressure on the manufacturer or the manufacturer's regulator to address the problem.

  13.  A further point that should be reviewed is the CAA scheme of charges. The cost for an initial Certificate of Airworthiness and an export C of A is based upon the weight of the aircraft and not the amount of work required or expended in issuing it. Therefore a 15 year old 737 with a lot of history and multiple previous operators will be a fraction of the price of that of a two year old 767 with one previous operator. Thomsonfly would suggest a scale based on multiples of five years of age and number of engines fitted as these dictate the extent of work, not the size of the fuselage.


  14.  Several areas of the CAA work well. ERG in particular is one area where improvement over the last two years has been noticeable. They have effective communication with stakeholders and are easy to approach and Thomsonfly feels that ERG regulates with the benefit of the industry in mind.

  15.  Another area of the CAA that functions exceptionally well is the engineering personnel licensing division of SRG. They regulate part 147 of EASA ops and are approachable and generally provide immediate access to correct people and provide appropriate guidance when required.

  16.  As outlined in paragraphs 5 and 8, Thomsonfly believes the creation of EASA has altered the role of the CAA and this must be addressed.

  17.  TUI UK is concerned that when legislation becomes onerous and appears to have little added airworthiness value it may lead to situations whereby judgement on items of airworthy concern within the maintenance environment may not be recorded in the accepted manner and therefore be hidden from both CAMO and the authority.


  18.  CPG administers the ATOL (Air Travel Organisers' Licensing) scheme, which was implemented in the 1970s. The travel market at this time was significantly different to the current market as there has been massive growth in the no frills market, with bookings primarily made on line. This growth has led to customers wanting more flexibility in their travel arrangements and there is a large growth in booking of individual holiday components on line or booking dynamic" packages through travel agents.

  19.  There are two statutory regimes that govern financial protection. These are the ATOL regulations (governed by the CAA) and the EU Package Travel Directive, implemented in the UK by the 1992 Package Travel Regulations. These two regimes overlap in places and this causes duplication, confusion and increased regulatory burden especially in relation to air travel. TUI would also add that neither of these regulations has been fully updated to include the changes the Internet has made to the current trading market. This lack of review has resulted in two pieces of legislation that add to increased costs of compliance, uncertainty and confusion in the scope of the regulation.

  20.  The confusion and discrepancy can be illustrated by the following example. A seat-only sale by TUI UK requires protection under the ATOL scheme whereas this is not required under the Package Travel Directive. Although there is no difference in a seat-only sold by TUI UK on a Thomsonfly flight from London Gatwick to Ibiza, when compared to the same flight operated and sold directly by easyJet, easyJet is not required to protect this flight under the ATOL Regulations.

  21.  TUI UK believes it is in the interests of the consumer that there is an urgent need to ensure the current regulatory systems are addressed and the Government needs to create a simple yet coherent compliance system.

  22.  The unprecedented consumer demand for no-frill" airline flights and the growth of the internet as a tool for booking holiday components has led to a dramatic increase in the number of people travelling without the financial protection offered by the ATOL scheme administered by the CAA.

  23.  Furthermore, many tour operators are increasingly organising their business outside of ATOL in order to compete with airlines that do not have to pay for ATOL bonding. As a result of these trends it is likely that the majority of air travellers will be unprotected in two or three years. CAA stats show that by 2010 it is estimated that only 22% of UK international leisure air travellers will be covered by ATOL.

  24.  Coupled with this is the perception of protection. Having been protected previously, consumers are largely unaware that their air travel and holiday arrangements are not protected and the inherent risks this brings to them. In a recent survey the majority of respondents believed they would be covered but CAA stats show only 66% of leisure air travellers are now covered by ATOLs.

  25.  This is an issue that needs to be tackled urgently so that air travellers are not stranded abroad (with all the extra costs this entails) or left out of pocket if their airline goes bankrupt. Airline failure occurs regularly and, in an increasingly volatile sector, no one can accurately predict who will fail or when.

  26.  TUI UK believes that the Consumer Protection Group should be removed from the main CAA body as the CAA has always been aligned with aviation whereas financial protection under the Package Travel Regulations also extends to other forms of transport. This body has the necessary knowledge and understanding of the industry and could become for example a part of the DTI as the department responsible for the Package Travel Regulations.

  27.  An effective single licensing system should be created using the removed CPG to oversee regulation for all travel arrangements including those that fall within the scope of the existing ATOL and Package Travel Regulations. Any operator that undertakes flight and non-air business (such as cruises or rail) must comply with the ATOL scheme, be monitored by the CAA and put in place separate arrangements for non-licensable bonding with a third party. The compliance costs for tour operators who have to undertake both air and non-air business, are substantially increased by having to comply with the two regimes. Although the CAA are primarily limited to aviation, extending this to cover all business that falls under the PTD and ATOLS would be a large step towards deregulation.

  28.  TUI UK would also recommend that the Government should revise the obligations under the ATOL scheme that is regulated by CPG to match those under the Package Travel Directive. This would constitute a major deregulatory step whilst ensuring the best consumer protection at the most appropriate cost.

21 November 2005

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