Select Committee on Transport Minutes of Evidence

Supplementary memorandum submitted by the Society of British Aerospace Companies

  We spoke briefly immediately following the Transport Committee 18 January 2005 oral evidence session. I said that SBAC was delighted to have been invited to give evidence on the work of the Civil Aviation Authority (CAA). I was, however, concerned that the tight schedule faced you faced and the emphasis in questioning on the GA sector, may have left the Committee less than satisfied that the opportunity to follow up on SBAC written evidence had been fully exploited. You very kindly invited me to write to you with further advice on the evidence already submitted and I am therefore doing so.

  I made the point during the session that in representing 2,500 companies supplying the civil air transport, aerospace defence, homeland security and space markets the SBAC has an interest in, but by no means limited to, the GA sector. The primary interaction between SBAC members and the CAA is in the safety and certification of both civil and military aircraft and equipment of all types inclusive of large civil air transports during design, manufacture and subsequent in-service maintenance. These processes are fundamental to the safety of all aircraft flying, whether in the GA sector, or in the military or in use by the major airlines to carry fare-paying passengers. Our membership includes Rolls-Royce, BAESYSTEMS, Airbus UK as well most of the UK systems and component suppliers and SMEs operating in the major aircraft manufacturing supply chains. SBAC is the only UK national trade association representing companies in this area. The certification of components and equipment designed, built and maintained by the sector is the only area of operation that EASA has thus far taken over from the CAA, with work already under way on major type certification projects inclusive of the Airbus A380 and A400M and the Rolls-Royce Trent 1000 engine. The sector is therefore exceptionally well placed to assist the Committee on the basis of practical experience of the impact of transferring regulatory activity from the CAA to EASA, a process that we intended our evidence to highlight as perhaps the major challenge currently facing the aviation community, the CAA and concerned decision-makers in the area of safety regulation.


  Our written evidence of 14 November 2005 commented on the lack of clarity evident with respect to CAA and EASA financing arrangements during the current period of transition. The situation has since moved on. The Committee has heard evidence from the CAA concerning a significant problem with the EASA budget. It was suggested that the Agency could slow down or stop certification activities and that funding might run out in six months". If true, this is wholly unacceptable to industry both in financial and contractual terms and more importantly in terms of the possible implications for the certification and safety of aircraft and their components in the European Union. SBAC representatives were present at an EASA briefing to industry in Cologne on 17 November 2005 at which the Executive Director of the Agency, Patrick Goudou, acknowledged that EASA was in trouble on the budget". Attendees were told of a forecast €13loss on an expected income of €45 million in 2005, with only €10 million thus far invoiced to industry at that point in time.

  It is not clear how the funding shortfall has occurred. Poor planning and forecasting, administrative and process inefficiencies, inadequate support from the Commission and possibly the costs of outsourcing audits and inspections to National Authorities may all have contributed.

  The experience of our member companies would tend to suggest that process inefficiencies consequent on the way in which the Commission has required EASA to implement the EASA regulations are a particular problem. The way in which the financial management of fees and charges has apparently had to be integrated into the process of applying for and obtaining equipment certification has impacted seriously on costs, timescales and cash management for both the Agency and its customers. SBAC takes the view that this is a matter requiring urgent attention. If necessary and appropriate, changes to the relevant regulations to assist EASA and the Commission in establishing a realistic budget for 2006 and a fees and charges regime should be implemented now.

  On 16 November 2005 the European Commission adopted a proposal to extend EASA's remit during 2006 to include operation rules, flight-crew licensing and training and third-country operator aircraft. It is also expected that EASA will soon take over safety-related aspects of air traffic management. It is estimated that an increase in staffing levels from 200 to 800 in 2010 will be required to accommodate these changes. In budgetary terms this could correspond to an increase from €71 million in 2005 to €137 million in 2010. Nothwithstanding a recent assertion by the Secretary of State to the effect that EASA has enough money", it is not clear to industry how this will be financed. SBAC therefore supports the position that the current situation must be seen to be capable of early resolution before additional responsibilities are taken on.


  EASA relies more on the internal policing" of regulatory frameworks by industry itself than in the past. This requires that TC holders regulate their supply chains, more rigorously, than in the past and incurs additional costs. It is only in the former context that SBAC recognises the term light touch" as in any way relevant to the regulation and certification of aviation products and components. The overall impact is no less rigorous in assuring aviation safety and clearly both right and important that this should be so.

  The demand for high safety standards is not solely driven by regulation, but by the demand of airlines for reliable equipment that transport passengers in a safe environment and by the recognition that companies are fully accountable in this respect. Safety of aircraft is an absolute priority in the manufacture of components and equipment which contribute to the construction of whole aircraft. That UK aircraft and air systems suppliers continue to deliver on safety is therefore critical to their survival in a fiercely competitive international market. The industry's record of safe operation alongside commercial success speaks for itself.

  Given the international character of the industry and its regulatory framework and the particular technical challenges of aviation safety, SBAC is by no means convinced of the relevance of the concept of a single UK transport regulator arising out of Hampton's recommendation in favour of thematic consolidation".

  Of more relevance to a better regulation" agenda would be a review of the way in which the recommendations of the Better Regulation Task Force in relation to improving EU regulation might impact on EASA. SBAC would be pleased to support work in this area.


  SBAC is in direct dialogue with EASA in relation to concerns within the industry. A first formal meeting took place in Cologne with Dr Norbert Lohl and his colleagues in the Certification Directorate on 19January 2006. Representations have previously been channelled through the Aerospace and Defence Industries Association of Europe (ASD), based in Brussels, and through the EASA Advisory Board. We would be very happy to provide additional information to the committee on the issues to be taken forward as a result of this direct interaction. Should you feel that a private briefing to Members would be helpful and appropriate in this respect, or in relation to any of the other matters highlighted above and in our written evidence, we would be more than happy to oblige.

19 January 2006

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