Examination of Witnesses (Questions 361-379)|
18 JANUARY 2006
Q361 Chairman: Gentlemen, thank you for
being patient. I am sorry to have made you wait. May I ask you,
firstly, to identify yourselves, starting on my left?
Dr Steeden: Mike Steeden, Director
of Civil Air Transport at the SBAC, which represents about 2,500
companies operating in the civil air transport, defence and space
Mr Draper: Paul Draper, member
of the General Aviation Alliance, which is a grouping of nine
major organisations in general aviation with about 70,000 subscription
Mr Wilson: Mark Wilson. I am the
Chief Executive of the British Business and General Aviation Association.
I am speaking for those companies operating in the general aviation
market and, insofar as it may be of interest to the later questioning,
I am a vice-chairman of the EASA advisory board.
Q362 Chairman: Lucky old you!
Mr Robinson: Martin Robinson.
I am the Chief Executive of the Aircraft Owners and Pilots Association,
representing private aircraft owners, pilots, flight training
organisations, many of which pass their pilots on to the airlines.
Q363 Chairman: Thank you very much.
You are all in the general aviation sector which we all believe
to be very important. Could you tell us why you think your particular
sector is distinct from airlines and other parts of the aviation
Mr Wilson: On the basis we sit
on the cusp between commercial and general aviation, maybe I will
start and my colleagues can follow. Firstly, we must note that
the international standard called general aviation is not what
people would automatically assume. I think most of my colleagues
would agree the definition is that it is everything except for
the airlines and the military. Where it is particularly different
is that general aviation primarily comprises individual or small-
and medium-sized companies, or those companies that share the
characteristics of SMEs. We therefore manage to serve areas that
the scheduled airlines do not, we go where they do not, they cannot
or they will not, and I think we are important in terms of regional
development, certainly as far as my members are concerned and
there are obviously other interests which I will defer to my colleagues
Mr Draper: I think we are also
different in that we not only cover business, we cover the training
of pilots who ultimately many end up within the airlines, but
sports and recreational purposes is of ever-increasing importance
within general aviation.
Q364 Chairman: That is very useful.
Do you know what the contribution of general aviation is to the
Mr Robinson: Currently there is
a study which is being undertaken in conjunction with funding
from the Department for Transport, the results of which we are
waiting to learn.
Q365 Chairman: And its parameters
are about the economic contribution. It is presumably the economics
of the industry.
Mr Robinson: It is indeed, yes.
Q366 Chairman: When do you expect
that to report?
Mr Robinson: We think there will
be a preliminary report available by the end of January and we
can make that available to you.
Q367 Chairman: Have you all contributed
to that in some way?
Mr Robinson: We have.
Dr Steeden: Chairman, may I have
a shot at responding to the initial question just to clarify?
With due respect to my friend's definition of general aviation,
I think there is a commonly accepted usage that tends to distinguish
between the large civil transports that are used by the major
airlines and the lighter aircraft community. As far as the SBAC
is concerned, our members operate across the full range of markets
here. We serve both the airlines in terms of providing components,
systems, air frames into that large civil air transport area and
we also have companies that serve the lighter end of the market.
We range from small- and medium-sized enterprises all the way
up to the large companies such as Rolls Royce, BAe Systems and
Q368 Mr Martlew: On the funding and
the efficiency of the CAA, do you really believe that you get
value for money from the CAA?
Mr Wilson: What we would probably
contend is that the CAA is not the organisation it would be if
it was just there to regulate general aviation and, therefore,
we believe that we are paying a disproportionate sum because the
regulation itself and the body itself is not set there to regulate
general aviation, it is set there, as is laid down in its remit,
to look after the large airlines and particularly to ensure that
the airlines are able to be provide services to UK citizens. It
is a worthy goal but not one we feel we should be paying for.
Q369 Mr Martlew: So what is the solution?
Mr Wilson: You can either have
regulation which is proportional throughout and we recognise that
may place a bureaucratic burden on the CAA itself, but I think
just having a one-size-fits-all level of regulation, such as exists
for commercial operations today, is not useful. It is not sensible
for somebody who wishes to operate pleasure flights round a beach
during the summer to have to approach the same document as British
Airways has to approach.
Q370 Mr Martlew: Do you believe that
the 6% return is justified?
Mr Robinson: No.
Mr Draper: It is really a tax
on safety in effect.
Q371 Mr Martlew: If they do not get
the return then will there not be a tax on the taxpayer.
Mr Draper: Not necessarily because
the CAA is self-funded by the participants and that includes us.
Q372 Mr Martlew: So you are happy
for it to be self-funded and not to pay a return?
Mr Draper: Indeed it should be
self-funded. We do not necessarily need to be a part of that regulation
in that it needs to be risk based and proportionate. Over the
years general aviation in various sectors has been very successfully
self-regulated without a problem, such as the gliding community
for 60 years, the PFA and various other sectors and we believe
that is the way that it should move and there should be more self-regulation
providing it is properly safety based.
Dr Steeden: In terms of value
for money from the CAA, I think I share views that have been frequently
expressed already. As far as our members are concerned the relationship
with the CAA is long standing and it is highly professional. I
do not believe that our members would see an issue. Our area of
concern is primarily the certification of products and services
and so in that area I do not think we have an issue. On the 6%
return, again I share some of the views that have been expressed
here. I believe the actual number this year in terms of the rate
of return on average capital employed is running at something
like 18%, which is something of a catch-up exercise following
the holiday" that followed on from 9/11. I would observe
that from the point of view of companies in our community that
is a very nice arrangement if you can get it. I do not think that
they understand why that sort of facility should be provided.
I think they probably would have some measure of difficulty with
it. I think they would look at the rates that you can achieve
these days on retail savings investments and ask why this particular
privilege is being offered. It is not the biggest issue out there
for us as far as the CAA is concerned but I think those would
probably be the views.
Mr Draper: My colleague has mentioned
an 18% return and that is in an environment where charges from
the CAA to the GA community are increasing and I think questions
need to be asked.
Q373 Clive Efford: Do you believe
that general aviation pays its fair share in terms of recouping
the costs of the services that the CAA provides?
Mr Wilson: I think it does. If
the regulation was proportionate then the user pays principle
can be carried forward. If the regulation is disproportionate
then you end up with a disproportionate impact on particularly
smaller- and medium-sized companies, which I think goes against
the policy not only of this country but within Europe.
Q374 Clive Efford: So you are not
suggesting a charge for the service rendered but on a pro rata
basis based on the size of the organisation?
Mr Wilson: No. I am noting that
if you are a small organisation the amount of burden not only
that you pay in terms of fees to the CAA but that it takes in
terms of your personnel is significantly larger as a proportion
of your turnover than if you were a larger company, and that is
our concern. Because regulation is not proportionate at the present
time the fees cannot be done on a user pays basis. We believe
that general aviation does pay its way.
Q375 Clive Efford: What do you mean
by regulation is not proportionate? Is there not a minimum standard
that everyone is going to have to meet however big they are?
Mr Wilson: That is precisely the
problem. The regulations tend to have been developed with larger
interests in mind, not with general aviation in mind. Our colleagues
across the Atlantic enjoy a completely different set of regulations
for smaller air transport operations to their larger cousins and
we do not have that here, it is one-size-fits-all.
Mr Robinson: In a recent consultation
exercise with the Civil Aviation Authority AOPA initiated, along
with the support of colleagues like the BBGA, an independent report
which was produced by Helios Technology into the actual impact
of the CAA's charges on our sector of the aviation community,
a copy of which we are quite happy to forward to you. This report
bears out a lot of what Mr Wilson has been saying about the fact
that the smaller companies pay a disproportionate level of charges
in relation to their turnover.
Q376 Mrs Ellman: Sir Roy McNulty
admitted he had not paid sufficient attention to general aviation
and he said that was going to be put right, and he referred to
the joint review. Are you confident there will be changes? Where
would you like the major changes to occur?
Mr Draper: I do not think we are
confident that the changes will be made to assist general aviation.
One of the prime changes we would suggest needs to be made is
that general aviation needs to be recognised by having a representative
on the board of the CAA. There is no GA representative on the
board and we believe that, understandably though it is that they
have a remit to look after the airlines, GA is left out of the
picture. It has very little, if any, mention in the CAA Chairman's
annual report and it does not figure in their corporate plan.
We are a large sector and we are a different sector and we need
to be looked after or regulated in a different way.
Mr Wilson: As you will have seen
in our written evidence, we would propose the development of an
actual policy for business on general aviation, something that
we hope could be allied to the review of the aviation White Paper
that is expected to be undertaken this year. We think that would
strengthen the position of the industry and ensure that Sir Roy
and his successors will pay suitable attention to general aviation
in the future. In his defence, Sir Roy has instigated reviews
on general aviation which we are most welcome to be participating
in and we hope they will have a fruitful outcome. Maybe that could
lead towards policy.
Mr Robinson: I welcome Sir Roy's
comment, of course. However, they are probably a little bit too
little, too late with the advent of EASA coming on-stream. In
the future most of our members will be under some form of European
regulation. Perhaps I could quote from an interview we conducted
with Mr Gooding(?). He says in the interview that it is their
intention to reduce the burdens on general aviation which they
are very aware of, and he also goes on to say that we need general
aviation in Europe and we need to promote it because it is weak.
If we could get our own Civil Aviation Authority to come out and
say words like this it would be such a boost to our community.
Q377 Mrs Ellman: Should the CAA be
audited by the National Audit Office?
Mr Robinson: I believe the CAA
does its best through the finance advisory body on which I sit
to be as transparent as possible with its fees and charges. However,
as has been stated previously, I think it would be a good measure
if there was some kind of independent external audit and the National
Audit Office seems the right body to conduct that independent
Q378 Mrs Ellman: The Hampton Report
suggested that regulators move towards risk-based assessments.
Have you seen any changes in relation to general aviation in this
Mr Wilson: Not yet, but all of
us are engaged in discussions with the CAA that are based on some
of the premises of the Hampton Report and we would hope that risk-based
regulations, with proportionality in the way it is brought forward,
would come out of some part of the aforementioned strategic look
at general aviation.
Dr Steeden: As we move towards
EASA and away from the CAA I think the recommendations of Hampton
and the work that has been done generally by the Better Regulation
Task Force need to be taken up by EASA in formulating the way
forward as far as their processes are concerned. That is something
that perhaps has not happened yet, although the Better Regulation
Task Force has already produced reports in the area of regulation
by the European Commission and its agencies. That is where the
emphasis of Hampton and where the emphasis of better regulation
needs to lie now.
Q379 Mrs Ellman: Is there any concern
that light-touch regulation might compromise safety?
Mr Robinson: Not if it is risk-based.
Mr Draper: I would like to endorse
that comment, Chairman.