APPENDIX 7
Memorandum submitted by W H Handley
I am taking the opportunity of your review of
the remit and funding of the CAA to express my views on those
areas of its activities that I believe need changing. Accepting
that there are areas for which the CAA carries out commendable
work, there are aspects of its operation that I believe do not
effectively serve the public interest or the interests those it
seeks to regulate.
In writing, I would declare my interest as a
private pilot and member of a group operating a light aircraft.
Our experience has been that both the level of regulation and
the costs imposed upon us, with no recourse to appeal, has risen
steadily over the past 15 years and is expected to grow exponentially
over the next few years.
1. OVERVIEW
It is of concern to me that the CAA decides
its own agenda and its actions and priorities are not subject
to oversight by any elected or independent body. This leaves the
CAA in the position where it can decide its own staffing, recruitment
policies, budgets and activities and simply charge them to the
aviation industry. There is a need for a system of oversight which
would require the CAA to justify its activities and costs.
2. SAFETY
The safety record of general aviation needs
to be considered separately to the safety record of commercial
aviation. The UK large public transport operations record is better
than the United States, which is the comparator most frequently
used, the US airline safety record is poorer largely because of
the record of commuter airlines, which have no real parallel in
the UK.
As far as general aviation is concerned, the
UK's safety record is possibly marginally worse than the USA in
spite of the substantially greater burden that the CAA imposes
on general aviation in comparison with the FAA. This demonstrates
that more regulation does not mean more safety. Data from AOPA
supports this. Those countries in Europe, which have almost regulated
general aviation out of existence, generally have the poorest
safety records. Safety is promoted primarily by pilot currency
and practice, and the growing level of costs imposed on general
aviation by the CAA will, if not already, lead to general aviation
pilots becoming less current than they should be. When the proposed
increases in CAA charges are added to the recent substantial cost
increases imposed on general aviation (eg fuel costs) it is likely
that the industry could enter a downward spiral where the funds
that are spent of flying have to be spread further leading to
insolvencies within the industry as a whole as existing narrow
margin are turned to deficit. It is certain that this would be
followed by a rise in the accident rate as pilot currency declines.
3. CAA PRACTICES
The staffing strategy of the CAA gives me great
concern. Their practice of employing retired military officers
and executives on short term contracts means that the level of
commercial awareness within the organisation is lower than it
should be and that those who make decisions frequently do not
have to live with the consequences. Evidence of this is to be
seen in the comment by the current Head of Safety Regulation that
the introduction by the CAA of JAR-FCL was a disaster, for which
he apologised! The executives and managers in the CAA should have
a long term commitment to the industry such that they will be
motivated to consult with their constituents and make decisions
that they are prepared to live with rather than finishing their
contracts and leaving for someone else to sort out.
4. FUNDING OF
THE CAA
Cost charging to the airlines and general aviation
needs to recognise the differences between the two. Airlines are
mainly a leisure industry, with more than 75% of passengers flying
for fun. They are massively subsidised, pay no fuel tax or VAT
on tickets, buy cheap aircraft thanks to government subsidies
to manufacturers, enjoy bilateral deals, which stifle competition,
and even profit from the passenger departure tax, which they bank
for 90 days before passing on. They get direct government handouts
of £2,320,720 a year to keep running unprofitable routes.
They are hugely profitable and all their costs are offset against
any tax on their earnings.
In stark contrast, more than 70% of general
aviation (GA) flights are for business or flight training. GA
pays a full measure of fuel tax and VAT, its margins are close
to non-existent and shrinking. GA pilots, who go on to fly for
the airlines, provide de facto subsidies of between £50,000
and £100,000 each in the cost of training, for which the
airlines once paid. The commercial reality of general aviation
must be recognised by the CAA, and its regulation apportioned
accordingly.
5. MAKING WORK
There must be a more justification to the repetitive
inspections, which look like purely make-money projects. An installation
check on a simulator or an aerodrome may be justified, (although
the level of the charge is probably disproportionate), however
annual and repetitive inspections when nothing has changed are
unnecessary financial impositions on GA, training schools and
student pilots. These inspections should be replaced by user monitoring
coupled with an audit system. There is no justification for requiring
aerodromes to pay thousands of pounds for new surveys every five
years when nothing has changed. Every CAA repetitive inspection
should be scrutinised for value.
Every department of the CAA should be required
to justify its existence. The option of derogating the activities
of each department to the private sector, where the real expertise
lies, should be evaluated. Does the CAA need a medical department,
a legal department, CAAFU etc or could their activities be more
cost-effectively carried out by the private sector with no diminution
of safety?
Does the CAA need offices in Kingsway Gatwick,
as well as regional offices around the country? Should the CAA
subcontract the issue of licences to the DVLA who could probably
do the work more quickly and cost-effectively?
6. RETURN ON
CAPITAL
Requiring the CAA to make a return on top of
their charges for costs is out of line with European practice
as a whole. Further, the activities of GA generate huge sums in
VAT and tax from which the Exchequer benefits. At the very most
this should be brought in line with the norm for the public sector
of 3.5% but I would hope to see the CAA limited to covering its
costs. There is no justification for the regulation of aviation
safety to attract a profit requirement?
I look forward to a positive outcome from your
investigation, leading to improvements in the cost effectiveness
and quality of the activities of the CAA.
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