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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 809-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE TRANSPORT COMMITTEE
THE WORK OF THE CIVIL AVIATION AUTHORITY
Wednesday 11 January 2006 SIR ROY McNULTY, MR JOHN ARSCOTT, MR MICHAEL BELL and DR HARRY BUSH
MR JOHN EAGLES, CAPTAIN MERVYN GRANSHAW and MR DAVID LUXTON Evidence heard in Public Questions 1 - 227
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Transport Committee on Wednesday 11 January 2006 Members present Mrs Gwyneth Dunwoody, in the Chair Mr David Clelland Clive Efford Mrs Louise Ellman Mr Robert Goodwill Mr John Leech Mr Lee Scott Graham Stringer Mr David Wilshire ________________
Memorandum submitted by Civil Aviation Authority Examination of Witnesses Witnesses: Sir Roy McNulty, Chairman, Mr John Arscott, Group Director, Airspace Policy, Mr Michael Bell, Group Director, Safety Regulation, and Dr Harry Bush, Group Director, Economic Regulation, Civil Aviation Authority, gave evidence. Chairman: Good afternoon gentlemen. You are most warmly welcome. We have one piece of housekeeping before we begin and that is members having an interest to declare. Mr Clelland: I am a member of AMICUS. Clive Efford: I am a member of the Transport and General Workers Union. Chairman: I am a member of ASLEF. Mrs Ellman: I am a member of the Transport and General Workers Union. Mr Wilshire: I do not have union membership but I do have parts of Heathrow in my constituency which might be relevant. Graham Stringer: I am a member of AMICUS. Q1 Chairman: Thank you very much. Perhaps it would be helpful for those of you who have not been with us before to say before we start that the microphones in front of you record your words, they do not project them and so I am afraid you are going to have to speak up. I should also point out to you that we have just recently concluded an inquiry into the financial protection of air passengers so I do not think we will be questioning any of you on that matter today. May I begin by wishing everybody a long, peaceful and happy new year. Sir Roy, I am going to ask you first to identify yourself for the record and also your colleagues. Sir Roy McNulty: I am Roy McNulty, the Chairman of the Civil Aviation Authority. On my far left is John Arscott who is the Group Director of Airspace Policy, next to him is Harry Bush who is the Group Director of Economic Regulation, and on my right is Mike Bell who is the Group Director of Safety Regulation. Q2 Chairman: Did you have something you wanted to say to the Committee before we begin the questions? Sir Roy McNulty: I have some brief opening remarks if I may. The CAA is the independent regulator of UK civil aviation and we believe it is also regarded by many other regulators as a leader in most aspects of aviation regulation. We are also in a somewhat unique position as the only aviation regulator in Europe tasked by its government with recovering all of its costs including a return on capital employed from the regulation industry it regulates, a matter which no doubt some of our 'regulatees' may have commented to you on in their submissions. Secondly, I would like to emphasise that safety will always remain paramount for the CAA. Although, having recently re-looked at it all, our statutory framework perhaps does not make that very clear, the paramount importance of safety is very clear in the guidance that we get from the Government, in all of our board's policies and in the day-to-day work of the Authority. We have, as we were requested, set out in our submission our understanding of the CAA's remit, structure and powers together with our assessments of what we do in pursuance of those statutory objectives and functions, our view on the effectiveness of the regulatory framework and the effectiveness of the CAA in discharging its duties. We hope we have been able to make all of that clear, although the fact that we are only one of the players in a fairly complicated regulatory scene is a factor in understanding it all. We have also commented on the effect of growing European involvement in aviation regulatory matters. Clearly an increasingly important part of our job is trying to keep track of and trying to influence regulatory developments in Europe. We hope that the four people we have present can answer most of your questions. However, if we do not have the information to hand we would like to have the opportunity to provide supplementary information at a later stage. Finally, I would like to emphasise that we genuinely welcome this inquiry. We believe that the CAA does a good job. The UK has a safety record that is second to none and that is not only due to what we do but also obviously the considerable efforts that the Department for Transport makes and the efforts that the industry makes in working with us. We are recognised in Europe as the leaders in economic regulation and in airspace policy and our consumer protection regime is the best developed in Europe, although, as you well know, we feel this could be even better. However, our statutory framework has evolved over some 30 years or so and we recognise there are areas where it could be clearer or perhaps better adapted to today's world. We also recognise that although we believe the CAA does its job well, we are by no means perfect and we are not complacent and we will welcome any ideas that come out of this inquiry that can help us further improve the job we do. Q3 Chairman: Sir Roy, it comes as a great shock to me to know you are not perfect but I will try and overcome that. Sir Roy McNulty: I thought we should make full disclosure to the Committee! Q4 Chairman: Very wise. You are not just unique in the way that you get your money but you are unique in other ways as well. How do you think the Civil Aviation Authority is going to look in 20 years' time? Sir Roy McNulty: I think some of its roles will be different, particularly in relation to Europe. Obviously we are embarked on some significant changes in relation to the Single European Sky, in relation to EASA and other regulatory matters that the Commission has embarked on or is likely to embark on. All of those impinge in one way or another on the Civil Aviation Authority. I would expect that in 20 years' time there will still be a significant role to play in the implementation of a lot of that rule making and there will still be a role for a national authority such as us. Q5 Chairman: When did you last undertake an in-depth review of what you do? Sir Roy McNulty: We review what we do annually. As part of the normal planning process we sit down in June of each year and start from what are the basic main objectives we are trying to pursue, what are the strategies we follow for that, what are the plans we have got and what are the resources we need, but I would accept that we start that planning process within the existing statutory framework, we do not sit down and try to invent a different one. Q6 Chairman: I understand that. Various people have commented, as you would expect, on the conflicting demands of four different areas of regulation. As you yourself said, you have both the economic and the safety without the other aspects of regulation. Do you think that causes you any difficulty? Sir Roy McNulty: No. Sometimes it gives us issues that need to be addressed or managed, but they are issues which would need to be addressed in some other way even if we did not have all four under our umbrella. Q7 Chairman: Would it be a good idea to transfer some of your economic and commercial activities to a single transport economic regulator for everyone? Sir Roy McNulty: We do not think that that is a good idea. Q8 Chairman: Why not? Sir Roy McNulty: It has been said to us and to you on many occasions that the industry sees advantages in having a one-stop shop for all of its regulation. In a number of respects the various regulatory activities need to work together, for example airspace policy and the Single European Sky, some economic aspects of that and in our opinion it will work much better in one place rather than if it was split up in several places. Q9 Mr Wilshire: Presumably you would accept that judgments on economic regulation would require the people regulated to make decisions based upon what they can charge and what they cannot charge, so in making economic judgments you are in the commercial business of what can be afforded and yet at the same time you are setting safety standards which, I would have thought, cannot or should not be subjected to economic regulation. How can you possibly do both of those activities at the same time? Sir Roy McNulty: If you accept, as I hope you would, that both of those activities should be done, I think it is best that they are done in one place where judgments can be made as to what is done in economic regulatory terms while at the same time never crossing the line that they would adversely impinge on safety. Q10 Mr Wilshire: Would it not be better done by two independent bodies so that there was no risk whatsoever of those two activities being confused? Sir Roy McNulty: I do not think we confuse them. As I said in my opening remarks, it is very clear in our minds that safety is paramount. In the legislation for the NATS PPP that was written into the legislation safety is paramount, but it is implicit in all of the other things we do as well. We will always ensure that we do not do anything either in economic regulation or in airspace policy that cuts across the safety objectives that we see as paramount. Q11 Mrs Ellman: Sir Roy, you said that you are unique in having to recover your costs from the industry plus your return in capital. Does that not make you over-dependent on that industry at the expense of environmental concerns or passenger interests? Sir Roy McNulty: In some respects we are completely dependent in that all of our income comes from that industry. The record shows that it does not influence the CAA in taking decisions. The decisions we take are without fear or favour. We seek to make the right safety judgments and the safety record shows that we have been reasonably successful at that. We make economic regulation judgments which often the regulatees do not like at all. I do not think there is a history of the CAA being unduly influenced or influenced at all by who pays the charges. Dr Bush: It is also worth adding that in the economic regulation context it is not unusual for economic regulators to charge the people in the industry. I think the uniqueness relates to aviation in Europe. Q12 Mrs Ellman: What about the position of general aviation? You have been criticised for not paying enough attention to that sector. Sir Roy McNulty: I do not understand. In what sense related to general aviation? Q13 Mrs Ellman: We have received some evidence criticising you and saying that you are more interested in the major commercial airlines than any other civil aviation. Sir Roy McNulty: I have heard that criticism many times. It is probably true that the CAA pays more attention to the airlines than it does to general aviation. I would guess that that can be traced back to the original legislation which has the airline aspect of our activities front and centre and does not mention general aviation. We are conscious of the fact that perhaps we should pay more attention to general aviation, which is why in the middle of last year we embarked on a joint review together with the GA sector of all the strategic issues that relate to GA. Perhaps it has not had as much attention in the past as it should. We are intent on trying to rectify that. Q14 Mrs Ellman: Why are regulatory costs in the UK higher than in other countries? Sir Roy McNulty: As I said at the beginning, we are the only regulator who has to charge fully all of its costs. A lot of the activities that we do are done in France, for example, and no charge is made, they are met from general taxation. So I do not think you can say that we are more expensive than the others when we are comparing two completely different economic systems. Q15 Chairman: Is that because they will do more things through the Armee de l'Air in France? Sir Roy McNulty: They do some of those things, but even the DTAC, the civil part, does not charge. As of 1 January they are beginning to introduce some charging mechanisms, but this is their first step in that direction. In many of the other countries there are no charges whatsoever. We are certainly more expensive. If you charge fully all of your costs you are going to be a lot more expensive than people who do not charge at all. Q16 Mrs Ellman: Would you prefer a different method of funding? Sir Roy McNulty: There are days when I could heartily wish it because at times it causes a degree of disagreement with our charge payers, but I would have to say, standing back from it, that I think it is for the better because what it does is it places a clear obligation on us to try to deliver decent value for money. There are a number of consultations and reviews not least by the Safety Regulation Finance Advisory Committee which is completely unheard of in other countries. When we have benchmarked what the CAA does in each of our regulatory activities it keeps telling us that the CAA as a regulator is relatively efficient compared to other regulators. That may not be the summit of one's ambition, but compared to other regulators the CAA does its job quite efficiently. Q17 Mrs Ellman: How do we know whether you deliver value for money? The National Audit Office cannot scrutinise your finances, can it? Sir Roy McNulty: The assurance we have comes from several sources. We review the budgets very carefully. The majority of the board are non-executive people, they come mostly from the private sector and have a business background and we review the budgets very thoroughly every year. We do benchmarking quite frequently both of the regulatory activities and our support activities and where we find areas that we can improve against a benchmark population, we go after those things and that is why our costs for the last four or five years have come down consistently. Q18 Mrs Ellman: Do you have any proposals to improve scrutiny to your customers and also to Parliament? Sir Roy McNulty: I think some of the lessons we have learned over the last 18 months to two years from the costs and charges review suggest that the scrutiny review, consultation, transparency and so on could be improved further and we will work at those things. Obviously with the general government drive for better regulation and more transparency and whatever we may address other issues whilst working together with the Department. Q19 Mrs Ellman: Do you have any specific proposals for improving scrutiny? Sir Roy McNulty: Not right now. What was apparent from the joint review team that we ran for the past two years was that things that we thought everybody understood were not well understood by a lot of people. That suggests that the work, for example, of the Finance Advisory Committee can be improved and we will be looking at that. Q20 Mrs Ellman: Is the six per cent rate of return fair? Sir Roy McNulty: I think it is. It reflects the fact that there are capital assets in the business. Capital assets do not come for free. Although people refer to this as a six per cent profit, it is really recognising the costs of those assets in the business. I do not think that is unreasonable. Q21 Mr Scott: You expect employment costs to rise in real terms from £55.8 million in 2004/05 to £65.7 million in 2009/10 despite a reduction in your staff numbers. Are you planning higher than inflation wage increases? Sir Roy McNulty: No. Q22 Chairman: What is the difference? Mr Scott is a man of great faith; he believes every word you say. I do but I want to think about it. Sir Roy McNulty: We plan for an inflation level increase. There is some movement within the grades. By people acquiring seniority in their job they can progress a bit through the grades, so there is some increase from that. Other than that, there is no hidden big handout or anything of that nature. We can provide you with an analysis of the causes of that variation in the figures if you wish. Q23 Mr Scott: Thank you. What contingency plans do you have in place should your assumptions upon which you base your financial planning be wrong? Sir Roy McNulty: The whole system works on an annual basis. Although what we show in there is our current forecast of costs, we levy our charges annually. So if there was, as there was 15 years ago, a sudden kick up in inflation then sadly the charges go up accordingly. We make a budget, we assess through our budgeting system what charges we need through the different charging schemes and we calculate the resultant charge to the regulatees. Q24 Chairman: Regulatees, Sir Roy? Sir Roy McNulty: It is a word we invented. I am sorry about it. It is shorthand for all those people who enjoy being regulated by us! Chairman: It is not my definition of shorthand. You might like to give a re-think to that. Q25 Graham Stringer: As the Chairman and Mrs Ellman have said, there are a number of unique features about the structure of the CAA. One of those unique features is that when you have decided on what prices airports can charge for landing and when you have gone through the economic regulation process that is subject to an appeal to the Competition Commission. Do any other regulators have that extra appeal and, if so, is it a good idea? Sir Roy McNulty: No other regulators as a matter of routine to my knowledge. Dr Bush: It is very different from other regulators. It is not an appeal, it goes automatically to the Competition Commission, whereas in other cases it is an appeal mechanism once the regulator has determined the charges. As to whether it is a good idea, I think it causes us some issues around the length of time for the process; it probably extends it by six to 12 months. There is obviously the possibility of duplication of effort, although we try, by working with the Competition Commission staff, to reduce that. There is possibly the thought that people who are subject to our process will store up some of the issues and not vent them with us until it goes to the Competition Commission. There is always the problem that you get a little bit of grit in the regulatory decision-making oyster. We can make it work. It has worked. We would prefer a different system. We would prefer something that was nearer what other regulators had, but it has worked for a number of years, a number of regulatory periods and reviews and we are stuck with it at this time. Q26 Graham Stringer: What extra costs does it mean to the four regulated airports? Dr Bush: The last time the Competition Commission charged around £1.5 million each to BA and Manchester. Some of that would be work that we would otherwise have had to undertake. The net figure will be less than £1.5 million, it might even be substantially less than £1.5 million, it rather depends. This time, for instance, we will be doing a lot more of the work in terms of invigilating the airports' costs than was done by the CAA last time so I would expect our costs to be higher and theirs to be commensurately lower. Q27 Graham Stringer: You said you would like to get rid of the automatic referral to the Competition Commission. Can you expand on what you would like to see in its place? Dr Bush: I think we would like to see what I might call the normal UK regulatory system which applies in the NATS case, where we reach a view and then it is for the regulated company to decide whether or not it effectively wishes to appeal that. The difficulty this appears to create for the airlines is that they would not have a right of appeal under that system and so they may feel that they get at least a second bite of the cherry under this system relative to what they would have under what I would prefer. Q28 Graham Stringer: Prices to passengers have been falling quite dramatically over the last five or ten years. This Committee has received evidence that there is competition between the United Kingdom and European airports. Why are you necessary if prices to the ultimate consumer are falling due to other economic factors? Why do we need economic regulation of the airports? Dr Bush: Across the vast bulk of the industry we are not needed and we are not there. Most airports are not regulated and that is welcome and good. Q29 Graham Stringer: In volume of passenger terms you regulate the majority of passengers, do you not? Dr Bush: Yes, because of the scale of the London airports and Manchester we regulate airports used by the majority of passengers but we do not get involved in the details of the other airports. Heathrow is a natural monopoly because of its network characteristics. Gatwick is pretty much full up and therefore has a certain degree of pricing power potentially. There may be growing question marks in some ways around Stansted and Manchester and certainly these are issues that we have said we would consider if people wished to raise them, but ultimately it is a matter for the Government. Q30 Graham Stringer: You advise the Government on a lot of the aviation affairs. Dr Bush: We do indeed. Q31 Graham Stringer: I am raising the matter and I am asking you to answer that question now. Do you think, given the decline in fares to passengers, that Manchester, Stansted and indeed Gatwick and Heathrow, if they were regulated separately or in separate companies, should be regulated economically? Dr Bush: I am not sure that the decline in fares paid by passengers is necessarily relevant. The question is whether the airports would be able, in the absence of economic regulation, to raise their charges to the airlines, particularly where the airlines do not necessarily have a choice. In the Heathrow case that is probably true and it may be true for certain elements of Gatwick, but it might be less true for some elements of Stansted and Manchester. Certainly for two of the airports I suspect there is still quite a strong case. Q32 Graham Stringer: It is an interesting point. Who is the ultimate customer, is it the passenger or is it the airlines? Whose interest are you serving? Dr Bush: Our statutory duty is to look after the interests of both. Users incorporate both passengers and the airlines. Clearly to the extent that we are protecting the airlines from charges going up at airports above where they might otherwise be then actually that ought to be of benefit to passengers as well. Q33 Graham Stringer: I am not clear what process you will follow if you believe there is evidence that Manchester and Stansted do not need regulating. Dr Bush: As part of the current review, as we set out in the document we published just before Christmas, we are doing some market analysis which will look at the market for each of the airports. As a result of that, if we came up with a view that said there is sufficient competition, for example, around Manchester, I think we would at that point have discussions with the Government about whether it would be appropriate at some point for the Government to think about de-designation, but I think we need to assemble that evidence and look at it and see what the prospects are. It rather depends on how much competition there is and how fast it has been growing around Manchester and there has been quite a big increase, but Manchester in size terms is still fairly dominant in that area. Q34 Mr Leech: Sir Roy, you said that you felt the current funding arrangements were the best option. Do you not feel that the current funding arrangements lead to people being under the impression that you are beholden to the wills of the airlines and the airports? Sir Roy McNulty: That has occasionally been said, I have occasionally read it, but no evidence has been put forward that supports such a statement. I can honestly say from my four years in the CAA that I have seen no case where the judgment being made in any of the regulatory arms was influenced by the fact that the people whom we regulate pay their charges to us. Q35 Mr Leech: The Campaign for Rural England suggested that environmental concerns had been perhaps sidelined because of the need to keep the airlines and the airport groups onside. Sir Roy McNulty: I cannot understand the basis for such a statement. The CAA has limited responsibilities in relation to the environment. Probably the principal area relates to the environmental guidance which the Secretary of State gives us for application in dealing with airspace changes. We also have a technical advisory role in noise measurement and we have a few relatively minor duties in relation to the noise characteristics of engines. In none of that is there any flavour of being nice to the airlines or being nice to aviation or doing other than what the Secretary of State has asked us to do. Q36 Mr Leech: Do you think there could be a conflict if your role within the environmental concerns was expanded? Sir Roy McNulty: I think it would all depend on the basis on which it expanded and the remit that we were given. At the moment we strive conscientiously to follow the remit we are given, particularly in relation to the environmental guidance on airspace changes. As regulators we try to do what we have been asked to do either in terms of statutory objectives or guidance from the government. Q37 Clive Efford: Sir Roy, I want to take you back to your answer on the figures relating to employment. I understand that you are going to cut the number of staff over the next five years. The figures that were quoted to you were £55.8 million in 2004/05 rising to £65.7 million in 2009/10 for employment costs. I did not really understand the answer. Perhaps it is me being dim. Why is there the above inflation increase at a time when you are reducing staff numbers? Sir Roy McNulty: We will provide a detailed break down of the movement in those figures. Secondly, the existing plan as of last spring does not fully reflect the reductions that we know we are going to have to make mainly because the plans that EASA has have not been clear enough. We are a bit clearer nine months later what they are trying to do and how fast they are trying to do it and I think the plan that we produce in March/April coming will show a further reduction in staff and a further reduction in those wages costs. Q38 Clive Efford: Does it mean any changes in operation for the CAA? We have had some evidence that suggests that it is a bit of a nine to five service and that a 24/7 service would assist the industry more. Are there costs involved in that? Are you intending to address that complaint? Sir Roy McNulty: The plan will reflect such plans and strategies as we have for improving our service. If there is a need in some parts of the industry for a 24/7 service, I have no doubt that we would provide that, that is not an issue. Q39 Clive Efford: Can you explain the fluctuations in the profits and loss of different groups? For instance, the European Regulation Group had improvements that were significantly higher in 2005 than 2004 and yet the Consumer Protection Group made a loss in 2005 compared with a profit in 2004. Why the two situations? Sir Roy McNulty: It goes back to the charges setting mechanism that I described earlier. We set our charges about six months before a year starts and obviously it is a forecast, it is an estimate and life does not always turn out like that, something comes along that needs done. Maybe something needs a 24/7 service that we did not expect and we put it in place and that is an additional cost or maybe the industry volumes do better than we had expected so we have a gain. It almost never turns out exactly the way we expected, but usually the swings and roundabouts balance out and we have never got into serious difficulties. Q40 Clive Efford: They are big swings and roundabouts. The Economic Regulation Group achieved a profit of £1 million for the year ended 31 March 2005 compared with just £49,000 in the previous year; that is a significant difference. Dr Bush: I think one of the problems you have got here is the law of small numbers. The Economic Regulation Group is a pretty small operation and it has some big projects, the timing of which is uncertain sometimes, washing through it, for instance the price review which is the biggest thing that we do. If the timing of that changes or the need for consultancy, which is actually a major thing that washes through it, changes that will affect those figures very substantially. I think the figures you are referring to are basically because of that. It came about around the time of the NATS price review. Q41 Clive Efford: What issues has the Audit Commission raised with management in the last 12 months? Sir Roy McNulty: We have no involvement with the Audit Commission. We are required to have external auditors in the way that a normal limited company would have. Q42 Clive Efford: I am sorry, I should have said the Audit Committee. Sir Roy McNulty: The Audit Committee reviews the plans that the external auditors have, it reviews the plans that our internal auditor has, it reviews with the auditor at the end of the accounts any issues they wish to raise, it looks at the management letter which the auditors provide us with of things that we ought to improve in our accounting processes in one way or another, and it basically provides us with the assurance that everything that should be done from an audit and an accounting point of view is being done properly. Q43 Clive Efford: You told us in your submission of "The CAA's ability to attract, retain, develop and motivate high quality staff with appropriate skills, knowledge, experience and competencies will determine current and future success." We have heard from Prospect that you are having difficulty recruiting in the Air Traffic Services Investigation arm of the CAA. Would you care to comment on that? Sir Roy McNulty: I do not think today we have major difficulties. Sometimes we have a few posts not filled. We are in the same position as any organisation in that when somebody leaves you have got to go out and hire them and you have some vacancies for a period. In 1999 this Committee had a review of the safety aspects of the CAA and there were major problems at that time, particularly in relation to air traffic controllers and pilots. Since then, working with the Department for Transport, we have had a degree of flexibility to move towards market rates and the salary imbalance is not a serious problem anymore in terms of recruitment. Q44 Clive Efford: Prospect has said to us that the issue is a difficulty in recruiting staff because of lower salaries paid by the CAA and that that continues to be a problem. Sir Roy McNulty: We have the flexibility to add market supplements to our normal salary ranges and compete. The trouble is that the market is always moving slightly ahead of us. Prospect has been very successful in various negotiating venues so they certainly are usually a bit ahead of us, but we have the ability to catch up using market supplements and it is not a major issue for us today. Mr Bell: Within the last year we have arranged a market supplement for air traffic controllers specifically to address this issue. I was advised only this morning that we are now fully up to complement in that area. Q45 Chairman: Do you mean you have given them more money? Mr Bell: Yes. Q46 Clive Efford: We have been told that within the past 18 months there have been two separate recruitment exercises which failed to attract sufficient suitable candidates thus leaving posts unfilled. Are you saying that problem has now been resolved? Mr Bell: I am, yes. Q47 Clive Efford: Is there a problem in maintaining a balance in your workforce? Is there a danger of taking on too many ex-Service people at the expense of the civil aviation? Sir Roy McNulty: No, I do not think so. The main area where we have ex-Service people is in airspace policy. Perhaps I might ask John Arscott to comment on that. Q48 Chairman: It has been said to us there are too many people with an ex-Service background because they do not have immediate knowledge of civil aviation. Sir Roy McNulty: That is a particularly difficult question for Mr Arscott to answer as he came from there! Mr Arscott: We always approach the task from the point of view of adopting the best person to fill the job and fortunately in this country we have such a joint and integrated air traffic management system that broadly speaking, whether the individual comes from the civil community or the military community, certainly in the area radar context there is a general understanding across both specialisations. As Sir Roy said, where we have specific jobs where we need particular skills which can only be found in one or the other, for example fighter pilots as opposed to civil air traffic controllers, we have a mechanism to pay market supplements to get the expertise and the skills base that we need and we do that. Sir Roy McNulty: For the sake of completeness I should say also that in the Safety Regulation Group there are some ex-military people, but it would be in the range of five to ten per cent of the total, it is not large. Q49 Clive Efford: The fact that their experience is from the military rather than civil aviation does not present problems, does it? Sir Roy McNulty: Absolutely. They are ex-military but they have a specialist discipline perhaps in air traffic control, airspace planning, it may be in maintenance or something like that. They have the disciplines that we look to recruit. Q50 Clive Efford: Finally, have you determined what the environmental implications of the Aviation White Paper are for the Airspace Policy Department? What steps have you taken to recruit the relevant levels of expertise and how have you budgeted for this? Mr Arscott: We are working very closely with the department, BAA and the various other interest groups on the development of the Government's White Paper. The environmental research and consultancy department, a group of people who work for me who are essentially noise and environmental experts, are doing a lot of work to contribute to this, but at the moment the evaluation is not complete, work is still going on and I am sure at an appropriate time the balance between operational imperative and environmental impact will have to be made, but likely as not it will be made by the Government. Q51 Mr Wilshire: I wanted to go back to a point that Mr Efford was touching on in terms of finance. I am conscious this is the Transport Committee, but I read your annual report and accounts and I realised that we need to be a finance committee to get involved in some of the detail that is there and we are not that. On page 60, where you have got your auditor's report, it says, "We are not required to consider whether the board's statements on internal control cover all risks and controls or form an opinion on the effectiveness of the group's corporate governance procedures or the group's internal controls." You are a public corporation. As a member of the Transport Committee I would look to the Public Accounts Committee to tell me whether or not your financial performance was efficient and effective rather than legal, which is what I take Pricewaterhouse to be saying, that this is a legal set of accounts. You are unable to be checked over by the National Audit Office and therefore be brought before the Public Accounts Committee. How can I and my constituents at Heathrow, who are utterly dependent upon your safety regulations to live happily in my constituency, be sure that you are efficient and effective if we cannot get at the audit of your accounts because you are somehow the exception to the rule of being checked over by the NAO? Sir Roy McNulty: I honestly do not know the background as to why it is as it is. As you know, the CAA is set up as a statutory corporation. It is required to have an audit rather like a limited company would have and we have that with PWC. I do not understand why the NAO is not involved, but we can get the background researched and provide a note to the Committee on why it is like it is. Q52 Mr Wilshire: Do I understand from that that you would be content for the NAO to be able to look at your accounts? Sir Roy McNulty: I do not have a view on it. It is not an issue. Q53 Mr Wilshire: Could I encourage you to have a view? Sir Roy McNulty: We will look at that as well. We will provide a note explaining the background and we will give you our views about the NAO being involved. Mr Wilshire: My understanding is that the Government is arguing - and I do not know whether it is the current or previous government - that because you are financed by the airlines somehow you are different. Chairman: I do not want to labour this point too much because we have got a lot of things to do. Q54 Mrs Ellman: Your safety performance indicators include upper limits and target rates. What is that all about? Surely you should just be looking at zero in terms of that. Mr Bell: What we have done is take a pragmatic look at the safety record which, as I have said to the Committee when they visited the Safety Regulation Group, is second to none in Europe and twice as good as the Americans. What we have done is not take the unrealistic proposal that we should have no accidents because the only way you can achieve zero accidents is by grounding aircraft. What we are doing is taking a pragmatic look at the current achieved safety levels, estimating what would happen if they were not improved and setting a set of targets to reduce those. You will notice that the indicator boundaries that are published reflect a reduction. Our aim is to continue to improve and to reduce but we do not want to set an unrealistic target of zero and then fail to meet it. This is something that the FAA did a few years ago at the end of the Nineties and then they dropped it very quickly when they discovered the sheer impossibility of it. If you look at the graph that we supplied in relation to the number of Western built jets and passenger fatalities, we have only had one since 1989. In effect the one that we do focus the majority of our effort and our resource on, as Sir Roy said, where large numbers of passengers are carried, is where the risk to the people underneath is significant and in that area we have been very successful. Q55 Mrs Ellman: Are you confident that you can maintain that standard if there is a move to light touch regulation? Mr Bell: Yes. I think this question of a move to light touch regulation is quite emotive. It is not something that I recognise as having been said recently with any particular relevance, it has been something that we have been engaged in for as long as I have been in the CAA and that has been a continual reduction in the number of people dealing with an ever increasing number of companies and an increasing reliance on the companies to introduce self-regulatory systems such as safety management systems and safety related quality systems which enable us to satisfy ourselves with less of an audit. To some people that does represent an unacceptable phase of progress but for us it seems the only practical way to go forward, to maintain the safety level while reducing our number of staff. Q56 Chairman: British Airways, who were always looked upon as being extremely careful and safe, has been criticised very strongly recently for their maintenance procedure. Is it not true that relying on the reputation of a company and its self-regulation might in itself throw up some rather difficult questions? Mr Bell: I would accept that that is an issue. At the time British Airways suffered these problems which were widely reported in the press a few weeks ago there were a number of issues associated with a large reduction in their engineering staff. We were working on the problem throughout and I can assure you that that particular issue was addressed about a year before the report actually was published. Q57 Chairman: One would hope so, Mr Bell, because it was not exactly a new thing for lots of us who had watched the steady deterioration of a lot of their aircraft, particularly on their domestic routes and been told by many people about the problems in the engineering division and, therefore, it seems rather sad that it took over 12 months before there was any kind of open and firm criticism. Mr Bell: We do run a process of monitoring with some 10,000 reports a year and these are open and transparent. Q58 Chairman: Where does the line lie between self-regulation and the light touch and removing yourself from a situation where you could come up with an immediate and quite firm opinion that would safeguard the passenger? Mr Bell: That is a very complicated question. Defining that line is a matter of expert judgment. Q59 Chairman: Life and death are quite complicated. The end is simple, you are or you are not. Mr Bell: We have the option of removing the Air Operator's Certificate from a company and there are examples of us doing that over a number of years. Q60 Chairman: How often have you done that in the last ten years? Mr Bell: I could not give you the total but I could supply that information. On average it is two per year. Q61 Chairman: Are they big airlines? Mr Bell: Some of them have significant implications, yes. The number of options we have available to us when dealing with an airline which is not performing is quite varied. We can query the activity and the post holder could be replaced and restrictions could be placed on their operation. Chairman: Mr Bell, in the note you will give me you are going to explain how often you have done that in the last five years, not to be too cruel, and what types of imposition has come from you to the companies concerned. Q62 Mrs Ellman: Are you telling us that safety standards will not be compromised? Mr Bell: We have no intention of compromising safety standards and we work to the best of our ability to ensure that they are not compromised and I stand by our record. Sir Roy McNulty: Perhaps I might add a comment on the British Airways case that you raised. I think it is correct to say that we identified from our surveillance of BA a number of matters of concern before even the first of those incidents took place. We raised those with BA, I personally met with Rod Eddington to explain our concerns and action has been taken, which is very evident from their record in the last 12 to 18 months, and it has got a lot better. I do not like the light touch phrase. I think we have put heavy reliance on the safety management systems that companies operate. We expect them to have a good safety management system and we check that they do and then we monitor how it is going. If we see that the system is not working as intended or if we see drop-offs, we raise that quite quickly from the surveillance which we intend to keep. It is not light touch, withdrawing, hands off or whatever. We get far more complaints from people that we are still too intrusive than we do from people who say we are not doing enough. Q63 Mrs Ellman: Has your work been affected by the Better Regulation Commission? Sir Roy McNulty: In some respects it has and in other respects there is quite a lot still to come. As you know, there are many initiatives that we are all going to benefit from over the next year or so arising from the Hampton Report, the Better Regulation Task Force and we are working together with the Department for Transport on a number of aspects of that. We had a major seminar with industry just before Christmas looking for their ideas and we will address all the relevant aspects of both of those reports. What we will try also to ensure is that none of that cuts across the obligations that we have stemming from ICAO or other requirements in due course from Europe or indeed that it cuts across the statutory duties we have. We can always improve. As I fully and freely admitted earlier, we are not perfect and if better regulation can be applied in the CAA we will do so. Q64 Mrs Ellman: How many Regulatory Impact Assessments have you produced? Sir Roy McNulty: I would need to research that but it is very many. It is our standard policy when there is a change in regulation to do a Regulatory Impact Assessment, but we can get a count down of that over the last several years and supply that to the Committee. Q65 Mrs Ellman: Are there any regulatory policies of the CAA which have not been covered by a Regulatory Impact Assessment? Sir Roy McNulty: I would need to research that. In the last three or four years it has been our universal habit to do Regulatory Impact Assessments but there are perhaps exceptions and one of those, for example, is economic regulation, where the whole process of consultation, debate and so on is so full that there is no need to do a special Regulatory Impact Assessment at the end of it all, everybody understands perfectly well what is involved. Q66 Mrs Ellman: What changes have you made in response to the Hampton Report? Sir Roy McNulty: As yet none, but quite a number of the recommendations in the Hampton Report, for example risk-based regulation, are things that we already have in our policies and approach. As I said, in the last few months we have begun to review that ourselves, we are discussing it with the Department and I have no doubt that a full response and a full action plan will result of things that are relevant to us, but not all of it is. Q67 Graham Stringer: Can I just have one last bite at the BA cherry? What you seemed to be saying is that there was a problem at BA, you took action and now everything is as safe as it ever was at BA. You were also saying that there was a period when these incidents that were reported in the newspapers took place and passengers were at risk. What have you learned and how you will improve the performance so that you intervene before those passengers are at risk? Sir Roy McNulty: What we and BA learnt was that in the downsizing that they had to undertake post-9/11 they perhaps went at it a bit too quickly and without adequate attention to the supervision of certain maintenance tasks. I think that is a lesson they have taken on board, it is a lesson we certainly have taken on board and we will watch very carefully any similar situation in the future. Q68 Graham Stringer: That is slightly missing the point of my question. Sir Roy McNulty: My apologies. Q69 Graham Stringer: You are saying that something went wrong, you understand that now and you will keep an eye on it. What I am really trying to get at is how you intervene earlier when something is going wrong. Passengers were at risk because the intervention came later than it should have done, were they not? Sir Roy McNulty: I think the solution lies in perhaps having got into earlier dialogue with BA about exactly how they were going to implement the organisational changes that they did. Having said that, it was not so much the changes that they made that were wrong, it was in some aspects of the implementation of it that things did not work out as planned. Q70 Graham Stringer: Can you assure us that the low cost carriers who have incredibly quick turnaround times are not putting passengers at risk? Sir Roy McNulty: We are certainly satisfied with the safety regimes of the low cost carriers registered in this country whom we supervise. Q71 Chairman: That is not quite the same thing, is it? That is a rather careful use of the English language. You are saying you are satisfied with the safety regulations which the ones that are based in this country have put in place. Do you have any way of checking their safety regulations if they are based somewhere else, like in Ireland or Latvia? Sir Roy McNulty: The only way we have of checking is from the Safety of Foreign Aircraft process or from incidents that happen within this country, but we have limited reach in relation to airlines registered elsewhere. To come back to Mr Stringer's question, the safety surveillance that we exercise is exactly the same for low cost airlines as it is for traditional airlines. Our experience has been that the low cost airlines take safety very seriously and they take maintenance very seriously because if you are going to achieve the utilisation that they aim for and the turnarounds that they aim for then the last thing you need is a maintenance problem getting in your way. Q72 Graham Stringer: When we visited your headquarters before Christmas we had a discussion about the impact of the European air safety organisation and I want to paraphrase the discussion. It was that while southern states and new states within the European Union are being brought up to standard no improvements are taking place and many of the improvements you might wish to see or we might wish to see have not taken place. Is that the case, Sir Roy? Sir Roy McNulty: I think it is the case, as we mentioned in our memorandum to the Committee, that EASA is experiencing significant difficulties in getting itself set up and operating in a satisfactory way for a range of reasons and some may be to do with organisational difficulties, some may be to do with staffing difficulties and some may be to do with management of planning difficulties, I do not know, we are not inside the organisation. I think so far we are a bit disappointed with the way it has got going. Q73 Graham Stringer: So it is slowing down the improvement of safety regulations. Sir Roy McNulty: For example, the JAA had a rule making programme aimed at keeping up with safety issues in the industry and technology issues and that rule making programme has certainly slowed down. I do not think at the moment safety rule making and safety standards setting is getting as much attention as it was and we do not think that is a good situation. Q74 Graham Stringer: In some of the written evidence that has been presented to the Committee you are accused of being slow to embrace new technologies such as LED, by which I assume they mean light emitting dials although they do not say that. It is claimed that that is better for airfield lighting than current technologies. You are accused of being slow to change the regulations applying to the heights of buildings around airports, you are accused of applying rules that applied to aeroplanes that operated just after the Second World War, and you are also accused of not giving as much support to airports when they are developing new technologies as was the case in the past. Would you care to comment on those criticisms? Sir Roy McNulty: I will ask Mike Bell to comment on the specifics. I think it is probably true that we are cautious. That is not an entirely undesirable characteristic for a safety regulator but, more importantly, most of the things that you refer to relate to safety standards which are international standards. Quite a number of the standards that we aim to see in place in this country stem from ICAO and ICAO move quite slowly. We are now in a situation where rule making and standards setting for aviation is handled by EASA on a pan-European basis and so it will not move very fast. We have little freedom of manoeuvre in the areas you have described, but I will ask Mike Bell to comment on the specifics. Mr Bell: In relation to the embracing of new technologies, I just did not know where that was coming from. We have embraced new technologies in the CAA at a pace driven largely by manufacturers from 1988, for example, when the Airbus fly-by-wire aircraft was first introduced. When the cathode tube technology came in at the same time we embraced that and when that changed to the LCD screens which are currently fitted to the triple seven we embraced that as well. I do not really recognise that. If there is an issue concerning airports, I will find out about that and answer it. As regards the height of buildings, our only input into that is as part of the airspace implications if it infringes a safety surface and there is a planning application where an airport has objected to the height of a building, for example, that is planned to be built near to it, which is quite relevant in this area, and it has an implication on the traffic patterns and the safety of aircraft flying into other airports or the airport itself. Q75 Graham Stringer: You wrote an excellent report on allowing regional airports to have freedoms for airlines landing there. The Government adopted that policy in late September, early October of last year and I think Ministers are keen, you are obviously keen and regional airports are keen, but I am less sure that officials at the Department for Transport are keen. Would you monitor the implementation of that policy, is that part of your role and part of your advice to Government? Dr Bush: As you know, we published a report on regional airports overall last February, so we see this as an important part of the information base that the CAA should be maintaining, and I would anticipate that in a year or two we will be looking at how the freedom change that you are talking about had been implemented and what issues might have arisen in the meantime. Q76 Mr Scott: Sir Roy, I want to go back to what you were saying about some of the budget price carriers. If a carrier is not registered in this country but is predominantly using our airports for flying to other European destinations, do you believe it may be helpful if they came under the same jurisdiction as carriers who are registered in this country? Sir Roy McNulty: I think that is arguable, but certainly the system that is set up is based on the state of registry so that all airlines and aircraft that are registered in the UK, we follow their safety affairs no matter where they fly in the world and, similarly, aircraft flying in here from other jurisdictions are registered and supervised by the regulatory authorities in those countries. You would need to pull the whole thing up by the roots and approach it in a different way if you wished to follow the line of thought that you have, but the difficulty is that aircraft are very movable things and you would have a very difficult job of trying to regulate every aircraft that flies in and out of this country. Q77 Mr Scott: I was not actually referring to every aircraft that flies in and out of this country, but there are certain carriers who predominantly may be registered abroad, but they are using British airports the whole time to fly their customers and surely they should come under your jurisdiction. Sir Roy McNulty: Well, as I say, if the ---- Q78 Chairman: Sir Roy, can I just stop you there. This point has concerned, as you know, this Committee before and you do have the power, do you not, to do airport checks? Sir Roy McNulty: Absolutely and we do random checks, as we call them, on specific aircraft, picked, I was going to say "at random", but actually it is not at random and I think it is quite carefully targeted on where we think there might be issues and we can carry out those checks if we have concerns. Q79 Mr Goodwill: Yes, that was the point I wanted to develop because it is apparent that every new former Soviet Republic has got its own airline and many people are concerned about the resources available to those airlines to maintain high safety standards. As I take it from your previous answer, it is slightly more than a tyre-kicking exercise, but there is very limited time in which you can inspect these aircraft when they are on the ground. Is that true? Sir Roy McNulty: That is true. Can I ask Mr Bell to expand a little bit on what we do? Q80 Chairman: Very briefly, Mr Bell, because I do want to get on to the European angle. Mr Bell: We currently conduct around 200 of these a year and the plan is to increase that substantially in the years ahead. When we do them, we check the crews' licences, we check the condition of the aircraft and we do what we can without actually flying it. Suffice to say, it is, as you say, not the in-depth inspection that we might wish, but, without interfering with the schedules of the airlines for no real purpose, it would be quite difficult to do more. I think I ought to say that our main source of intelligence of the serviceability or otherwise of these comes through our current reporting system. If the maintenance organisations dealing with them or the aircraft control people who are running the service on the day pick up the problem, then we will target that aircraft. Q81 Mr Goodwill: Do you think it would be useful in circumstances where you pick up serious question marks about a particular airline to suggest that you be invited to their home airport where you can maybe have a more in-depth scrutiny of their services and facilities, their records, their staff training and the rest will follow where maybe you finally put them on a blacklist? Mr Bell: I think that is a very interesting point, but I think that politically it would be very difficult to do. It would open us up of course to the reciprocal inspection regime and we would be quite interested. Sir Roy McNulty: But I think it is a relevant point to what Europe does eventually. As you probably know, the United States has a programme whereby it reviews the regulatory set-up and regime in all of the countries which fly into the United States and that is a big exercise. The United States does it and I believe eventually Europe will have to do it because blacklists and spot-checks are only a part of the solution. The main thing that needs to be done is to satisfy yourself that the regulatory regimes in the countries from which these aircraft come are sound and in a condition as we would wish. Q82 Chairman: I want to ask you about that because to get that sort of sweeping power that the FAA have, which is what you are talking about, which has been expanded over the last five or six years, we come back to this Single European Sky. You say you strongly support it, but you also say that the Commission often fails, or sometimes fails, to follow best regulatory practice in developing legislation. What do you mean by that? Sir Roy McNulty: Might I ask John Arscott to comment on that? Mr Arscott: We have been involved with the Department from the outset with the Single European Sky and I think we envisaged when Madam Palacio was in the Chair in Brussels a much lighter regime than the one that is emerging now, but we seek to mitigate the effects of the European legislation to as great an extent as possible ---- Q83 Chairman: How? Mr Arscott: ---- and, generally speaking, I think we have been successful, although there are some significant hotspots in terms of perhaps charging and perhaps overly prescriptive regulation in some parts of the Single European Sky legislation. Q84 Chairman: Well, how well is the European Commission managing all these constituent parts? Mr Arscott: Well, the fact that they are able to get rules through the majority of states in the Single Sky Committee and there has been no dissension to date I think they would consider to be a great success, but our objectives in a European regulatory context are subtly different from a number of other states'. Q85 Chairman: So do the Government not support you or are they simply not very effective in getting what they want through? Mr Arscott: The Government take the lead and we in fact support them in this regard and I think, as I say, that the Government in the lead and the team that we have put together in Europe in the Single European Sky has been effective given the very differing views of the Member States of the European Union. Q86 Chairman: So when the Association of Licensed Aircraft Engineers say your relationship is a "master/servant" situation, that is not an accurate description? Mr Arscott: I am not familiar with that particular topic, but it is not a situation that I would recognise in the areas in which I have expertise. Q87 Chairman: I see. They say, "It would appear to us that apart from Annex 2 aircraft the task of safety regulation falls upon the EASA...In our opinion it is this change of direction from being a stand-alone authority...to that of a competent national authority under the control of EU commissioners... that does need an inquiry as to what the remit of the...CAA should be". Sir Roy McNulty: Perhaps I might comment on that because we mistook the earlier question relating to the Single European Sky. It is true that there is a change in the regulatory structure in Europe, but the CAA has not been a stand-alone regulator for a very long time. Q88 Chairman: Well, then let me ask you, is EASA fit for purpose? Sir Roy McNulty: That is a different question and my answer to that is so far not yet. Q89 Chairman: So what is it? Is it its structure, is it its management, is it its resources? What is wrong with it? Sir Roy McNulty: I think it is in varying degrees all of those things. I think the setting up of EASA was not well handled and it acquired significant responsibilities in September 2003 at a time when it only had a handful of staff and that is not a great way to start up an important regulatory agency. Q90 Chairman: So what happens if we finish up with in effect the lowest common denominator in safety regulation? Sir Roy McNulty: I do not think we are necessarily headed towards the lowest common denominator thing. EASA inherited a body of rules agreed through the JAA system, which this Committee I am sure is familiar with, which had been built up over many years. It took over certification responsibilities which the JAA had and was intended to start a standardisation programme which is really a system of audit and review of all of the regulatory set-ups in the various Member States. To date, it has proceeded with the certification work, but has had to get the national aviation authorities to do most of the work and, because of the staffing and resource difficulties, it has struggled with that certification work. The rule-making, as I ----- Q91 Chairman: Has it slowed it down or is it working at the same speed as it would have done when you had total control? Sir Roy McNulty: It has slowed things down compared to the JAA system. There is no doubt that EASA has brought into the certification and approval system a range of additional bureaucratic steps, added to its own resource difficulties which are causing significant delays to manufacturers in this country. They say that tasks which the CAA used to complete in days, and nobody ever suggested we were the fastest thing the world had ever seen, but things that the CAA did in days are taking EASA months at times to do and this is imposing significant problems on industry. Q92 Chairman: So what are the Government and what are you doing in order to change that situation? Sir Roy McNulty: We have been uncomfortable about the way in which EASA was evolving for a bit over a year now. We have been in dialogue with the Department and I think the Department view, I hope they will tell you, is much the same as our view, that this thing is not evolving satisfactorily. We have had dialogue with EASA on many occasions. They have sought to improve some things, but others have in turn got worse. We have had dialogue with the Commission and the Commission initially were resistant to the idea that anything was amiss. I think they are coming ---- Q93 Chairman: They really thought they were perfect - is that it? Sir Roy McNulty: They thought they were perfect and that we were whingeing poms, which is the phrase which comes to mind, but the Commission would never say anything as rude as that. Basically we have been trying to persuade both EASA and the Commission that there is a problem and what we need from both of them is action to deal with the difficulties. All of those difficulties have been exacerbated in recent times because EASA has a significant budget problem. The budget that they produced at the end of last year for 2006 showed a big income shortfall. They proposed that this be solved by slowing down or completely stopping a lot of the certification work due to be carried out this year. The Management Board very sensibly said, "Get lost! That's a ridiculous idea", and basically they are proceeding at the moment with a budget which runs out of money in three or four months' time. Q94 Chairman: But this is bizarre, is it not, really? You are telling us that they have taken over responsibilities which they cannot exercise, they have not got the staff, they have not got the money and, in order to be able to say that they are doing the job, they are seriously suggesting slowing down the work which has a direct impact upon companies in this country and their only solution is to go cheerfully on until they run out of money half way through the year. Is that what is happening? Sir Roy McNulty: That is a modest summary of where we are. Q95 Chairman: And what is the Government's attitude to this? They are taking the work away from you or are they continuing to give you more work? Sir Roy McNulty: We are still doing a lot of the work, but essentially under sub-contract to EASA. Q96 Chairman: What does that do to your charging regimes? Sir Roy McNulty: It has not affected our charging regimes in a significant way because we charge the full cost to EASA. Q97 Chairman: So do the companies feel they are being double-charged? Sir Roy McNulty: They occasionally say it, but it is not correct. Q98 Chairman: But it must have some effect on your financial forecast, must it not, in the Corporate Plan? Sir Roy McNulty: The Corporate Plan reflects as of last spring our best guess as to the reduction in our workload. As I said earlier, the plan that we are currently finalising will show a somewhat accentuated reduction in our workload, but we will reduce our resources as our workload goes down. That is not a problem. Chairman: Now you have started the dogs of war running! Q99 Mr Leech: Can you foresee a situation where you will be being asked to charge less for the work you are currently doing? Sir Roy McNulty: Asked by EASA to charge less? Q100 Mr Leech: Yes. Sir Roy McNulty: They have already asked us to charge less and we have said we cannot. Q101 Mr Leech: But can you foresee a situation where you will be forced to do that? Sir Roy McNulty: No. Q102 Mr Goodwill: Would you say that the United Kingdom made a mistake in signing up to this EASA system as opposed to our own system which you have already said is second to none and twice as safe as the United States'? Sir Roy McNulty: No, but I think you must remember, as I referred to earlier, that we have not moved from a UK completely self-sufficient system to EASA. The UK was already very much engaged in Europe with the Joint Aviation Authorities which was a sort of club, if you will, on a voluntary basis agreed the rules which are applied here and the JAA handled the certification activities on a co-operative basis, so a lot of aviation certification and rule-making has been done in Europe for 20 years or more. We all thought, and I still believe, that the JAA had had significant defects due to the voluntary basis. It could not enforce the rules, so those countries that did not like the rules just ignored them and it was not a very efficient way to proceed and I think the 1999 hearing that this Committee had into aviation safety underlined that quite emphatically. Therefore, EASA, which is a body which has the legal powers to enforce, which has the ability to standardise and audit what is going on in the Member States and was intended to put together the resources to handle the certification more efficiently, ought to be a better solution. What nobody, I think, imagined was how much difficulty they would have in getting the show up and running, but none of the problems that they have is insoluble with proper management, proper governance, proper planning and a proper way of running the operation. Q103 Chairman: But that is exactly what they have not got. Sir Roy McNulty: That has, I think, been the problem, but I do not regard it as an insoluble problem. I think if the Commission ---- Q104 Chairman: One can always pray for better governance. It does not necessarily do a lot. Sir Roy McNulty: Well, it has been done and achieved in many organisations in the past and the improvements follow quite quickly. This one urgently needs attention in those areas. Chairman: So if we have not got any other hope, we have got God! Q105 Mr Wilshire: I am going to amaze myself, Chairman, by resisting the temptation to have a swipe at the EU on this one, even though it is an easy target because it is far too serious. What I am hearing is that the system is slowing down, so certain things are not being done, some things cannot be done because there are not the resources and the system is not well governed and managed. What I want to hear from you is: can you assure me that this change has no safety implications whatsoever for my constituents living near Heathrow because what I am hearing suggests that the safety is being compromised by the problems you are listing and I should be going back to my constituents and telling them that they are at greater risk tonight than they were before I heard what you had to say? Sir Roy McNulty: We certainly are not aware of anything that should give your constituents cause for concern today, but we know and this Committee has ----- Q106 Mr Wilshire: How about tomorrow? Sir Roy McNulty: Tomorrow is certainly okay, but if EASA was allowed, and I am sure it will not be allowed, to continue along the course it is currently on, I think you could predict some way down the road that safety problems will ensue somewhere. If you have slowed down your rule-making, if you are causing companies problems in getting modest, technical changes processed, if you have not put in place the standardisation and audit of all the regulatory regimes within the European Union, you are asking for trouble some day. I should add though that we are monitoring the implications and effects of all of this in the UK quite carefully and there is within the EASA regulation the option for a country, where it sees an immediate safety problem, to take immediate action itself and sort it out later with EASA. If we saw a case of them doing something or something happening as a result, we would take that emergency action. Q107 Mr Wilshire: Would you tell this Committee or tell Parliament that you had done so? Sir Roy McNulty: If it is this Committee's wish to be told, we will tell you. Q108 Mr Wilshire: It would certainly be this MP's wish. For the benefit of the record, can I be absolutely clear that I have heard what I think I have heard and that is that if something is not done about this problem, the safety of my constituents at some stage in the future is going to be compromised? Sir Roy McNulty: That is what you heard. Q109 Chairman: Can I just ask you whether it is correct that, when EASA was set up, you scrapped several thousand additional requirements for import regulations? Sir Roy McNulty: I can get you a note of the exact number and 7,000 does not ring a bell, but thousands is the case. The CAA had created a significant amount of additional requirements, particularly for imported aircraft. When EASA came into being, technically all of those were wiped away, but we went through them very carefully and we came up with a list of, I think, between 50 and 100 which we thought were absolutely essential, and EASA has agreed to keep those, but all of the rest have gone and we will get you the exact number. Q110 Chairman: So what numbers are we talking about? One witness said 4,000 UK regulations, somebody else said 3,000 plus. Sir Roy McNulty: Can I ask Mr Bell for the exact numbers? Q111 Chairman: Mr Bell, have you abandoned 3,000 regulations and, if so, why? Mr Bell: I am glad to get the opportunity to answer this question because, like a lot of questions, it is certainly not simple. At the onset of EASA ---- Q112 Chairman: Mr Bell, nothing in connection with this Committee is simple! Mr Bell: In 2002, we undertook a review of all existing additional requirements for import and additionally our directives which were extant at the time. What we found was that a number of them, when we did an in-depth analysis, had been replaced by manufacturing change and were no longer required. We also lumped a number together into generic groups and then, when EASA arrived and they were removed immediately by the regulation, we replaced them using Article 10(1) of Regulation 1592 to ensure that maintenance of these requirements in the UK continued until the dialogue with EASA could take place. We did that ---- Q113 Chairman: Wait a minute. You abandoned how many - 3,000, according to our witnesses? Is that accurate? Mr Bell: We brought this down to a number of around 50 to 60. Q114 Chairman: You looked at them because they had been around for many years and you discovered that many of them were not necessary anymore because of changes in manufacture? Mr Bell: Correct. Q115 Chairman: But you did not let them go, you just said, "We'll put them down in a different form"? Mr Bell: We put them down in a different form and held on to them until we had a dialogue with EASA in each case and EASA has accepted all of the requirements that we felt were essential and some of them, they decided on a legal basis, were outside their jurisdiction, not being air-worthiness, and we apply these by means of operational rules at the moment. Some of these will be very familiar to you. Q116 Chairman: So I think it is called, "Whatever you do, you're going to win". It is an admirable idea. Mr Bell: It is ensuring safety is maintained in the transition and that was our key message throughout. Q117 Chairman: Sir Roy, what about transparency? How transparent are the changes? These are very good publications with some very becoming pictures, but supposing this Committee wanted a list of those changes which have come about because of the creation of EASA and the impact on existing rules, where would we find that? Sir Roy McNulty: You could find it by asking us. Q118 Chairman: I am quite capable of doing that, Sir Roy, but supposing I did not enjoy the helpful, constructive and highly informative relationship that I have with you, how would I find that? Sir Roy McNulty: On the website. Mr Bell: If you were a customer or a person who is coming to us with an aircraft to register, you would be able to gain that information directly from us. Q119 Chairman: And it is quite clear from the website exactly how you are moving away from your existing series of regulations? Mr Bell: No, the website ---- Q120 Chairman: No, I did not think it was. Mr Bell: ---- gives the current existing standard and, if you felt obliged, you would need to compare that to the standard that was in existence pre-EASA and I think we could make a very good case that we had removed a significant number of regulations which we had decided ourselves were obsolete before we entered the final process. Mr Wilshire: Could we ask for a paper on that very subject? Q121 Chairman: Well, what I was going to say to you is that I think we need to know a little bit more about transparency generally, do we not, because we have seen evidence saying that the Safety Regulation Group is running down its Safety Research Department because you think it is going to be part of the European remit in the future? Is that true? Sir Roy McNulty: I will ask Mr Bell first of all to comment. Q122 Chairman: Mr Bell, now you have started on the slippery slope, is it true? Mr Bell: Yes. Q123 Chairman: Why? Mr Bell: Because the EASA Regulation does provide for EASA itself to conduct appropriate safety-based research in the future. Q124 Chairman: And it also provides for all of these other things which they are not doing and you have, from your own experience, a clear indication that they are not even capable of doing all the things that they are supposed to be doing, so why would you run down your Research Department before there is very clear evidence that an alternative exists? Mr Bell: I think really the simplest way I can answer that is to state that the Regulation which came into force on 28 September 2003 took away from us the power to effect the certification requirements. Q125 Chairman: Wait a minute, let me be clear. Say that again - it took away from you? Mr Bell: The authority, the legal requirement to effect the certification requirements. Q126 Chairman: There is a difference between a legal requirement and an authority, is there not? They may not ask you to follow a persistent programme of research, but presumably, from your own point of view, you would at least like to know what is happening in safety regulation when you know that there is a problem with European institutions. Mr Bell: Yes, but, if I may say, the issue is if regulation research is taking place into an area of responsibility of EASA, in our dialogue with our charge-payers and our internal examination of process, we decided we would need to refocus our research project on areas where the CAA had regulatory responsibility and, with that transfer of regulatory responsibility to EASA, there was a very uncomfortable decision, but one which we took, that future regulation on the areas of aircraft certification is EASA's responsibility. Q127 Chairman: But it is not working, Mr Bell. Mr Bell: It has not started yet is the fact and we are very disappointed about that point. Q128 Chairman: Yes, we are all disappointed, Mr Bell, but there is a difference between being disappointed and being safe. I am frequently disappointed. Life disappoints me every day, but it does not mean to say that I take decisions based on that. I do my best to make sure that they based on fact. Mr Bell: This is where the Chairman and myself are in full agreement about the uncomfortable situation we are in today and why we were able to say that safety is not being compromised today, but there is an unfortunate interregnum which has occurred in the European countries. Chairman: I do not like interregnums, Mr Bell. They make me very unhappy. Q129 Mr Wilshire: Chairman, I heard the CAA say they are not doing something because of Regulations. For the record again, can we be clear, do those Regulations say that you do not have to do it or you must not do it? Sir Roy McNulty: To the best of my recollection, and I will check, the Regulation we referred to does not forbid us from doing research, but I think it undermines the point of doing the research if it is research into a subject over which we have no jurisdiction. Q130 Mr Wilshire: So, in that case, you have chosen not to do research into safety, knowing that the people taking it over will not do it either? Is that correct? Sir Roy McNulty: No, I think in the expectation that, perhaps rather slower than we would wish, they will get round to it. Q131 Graham Stringer: I think what might help the Committee is if you could tell us, knowing what you know now about the performance, or lack of it, of EASA, what you would have done in the light of that knowledge that you did not have? Sir Roy McNulty: What we would have done? Q132 Graham Stringer: Yes. Would you have kept the research going on? Sir Roy McNulty: I think we would probably have been reducing the research anyway and the CAA over many years has been reducing research because almost all technical advances and regulatory advances in aviation have been done on a co-operative basis and I do not think there is a very strong argument for the UK having a complete and independent research capability in things like this. If we may, we will provide a note on the research programme and, when you see that, I think you will see that these are very long-term issues that we are tending to look at in our research programme. They are not near-term safety issues. They are things that are being looked at with a view to rules that might emanate five to ten years hence. Q133 Chairman: But there may be aviation technologies that are emerging with new innovative approaches, may there not? Sir Roy McNulty: Some of them are, some of them are to do with operational issues. We will provide the Committee with a note. Q134 Chairman: Yes, we will need to have a note on that, Sir Roy. Sir Roy McNulty: I think we would have given the wrong impression if we were saying we had stopped it altogether. We are continuing ---- Chairman: No, you have made it very clear that you are running it down and we are also equally clear that we do not think it is a brilliant idea, but we will read what you have got to say. Q135 Mr Scott: Can I just clarify that EASA have not started doing this - is that correct? Sir Roy McNulty: To the best of my knowledge, they have not started any research yet. Q136 Mr Scott: So you are running it down and you have said that you envisage that EASA will not be able to do this role adequately anyway? Sir Roy McNulty: No, I have not said that. I think, with proper planning, proper management and proper resources, this is a job that EASA should be capable of doing properly. As of today, they cannot, but bear in mind the conversation that we had earlier about charges, our consultation on charges and the industry's views of our charges. I think we would have great difficulty if we proposed to UK industry today that we keep on with a research programme into activities over which we have no jurisdiction today and keep on working as though nothing has happened. That is exactly what people keep accusing us of doing and actually it is not what we do. We are trying to handle quite a difficult transition in a sensible way, recognising the charges that we levy on the industry. Q137 Mr Scott: But these savings which would be made would obviously be helpful. Sir Roy McNulty: Yes, it is money which the industry would have to pay for, but we will provide a note on the nature of the research activities, the costs of the research activities ---- Q138 Chairman: You are not altogether convincing us, Sir Roy. I know that will come as a surprise! Sir Roy McNulty: I rather sense that! Q139 Mrs Ellman: What influence does the CAA have on what EASA will do? At the beginning of your statement earlier on, you said that you could have influence on regulatory matters in Europe. Now, what kind of influence will there be on EASA from the CAA in regard to these aspects? Sir Roy McNulty: I want to be sure that I have heard that - what influence will the CAA have on EASA? Q140 Mrs Ellman: Yes. Sir Roy McNulty: The CAA indirectly has no influence other than we are obviously a player in the European aviation regulatory system and we do some work for EASA, but the primary influence on EASA comes from two sources: one is the European Commission itself; and the other is the EASA Management Board. It is through the UK representation on the Management Board that we have the most opportunity to influence things, but, as I have said in my recital of problems to do with EASA, that Management Board and the governance it provides is not yet up to standard. Q141 Chairman: You are one vote in 23, Sir Roy? Is that what you are telling us? Sir Roy McNulty: We are one vote in 23. Chairman: Thank you, as long as we can establish that. Q142 Mr Goodwill: How many of your opposite numbers in these other EU Member States share your reservations and would we have allies if we got a degree of back-tracking before we got ourselves into this parlous situation which you forecast? Sir Roy McNulty: I think a year ago I would have said almost nobody. Today I think there are perhaps five to ten countries that are getting to have a view similar to ours. There are a lot of countries, particularly the new Accession States, who are not in the same area as we are in terms of regulatory experience or anything like that. They do not have aviation industries the size that we in the UK have or France has or Germany has, but I think there is an emerging coalition of view, an emerging common view that there are some serious problems and they need to be addressed, but as yet I would not say the Commission are fully on board and they are obviously very important in this. Q143 Chairman: I want to allow you to escape, but we have got so much we could continue to ask you. Have you done any work on the health of cabin crews and crews generally in relation to air quality? Mr Bell: You are referring, Madam Chairman, to the air quality issue that has been raised in a number of forums? Q144 Chairman: Yes. This Committee was actually on one where air in the cabin became somewhat ---- Mr Bell: We fully recognise that this issue is one of considerable concern to quite a number of people. What we are seeking is better evidence and we have instituted or joined in on a research project which has been conducted and we have an Aviation Health Working Group. Q145 Chairman: Have you made that clear to everybody because the pilots did not seem to know it and did not seem to be too happy? Mr Bell: Well, I think the problem we have got here is that the UK CAA in this area has not got a specific responsibility any longer for the design of the aircraft and we have instituted requests to EASA to take a look at this as well, as have the pilots' group. Q146 Chairman: Have you told anybody what you are doing or is it a secret? Mr Bell: No, it is not a secret, but I think it is fair to say that those who have requested us to do something are not satisfied with what we are doing. Q147 Chairman: Yes, I do wonder why! What is your approach to complaints on the grounds of abuse of dominant position by an airport operator outside the airports review process? Dr Bush: Well, if there were such a complaint, we would consider it under section 41 of the Civil Aviation Act, but there are alternative opportunities for people which would also be to go to the OFT which has Competition Act powers in respect of airports. Q148 Chairman: You let BAA get its £105 million back on the new runway at Stansted, did you not? Dr Bush: Actually no decision has been made about that at all. I know this is probably what you are being told by certain airlines at Stansted, but it is not the case. At the moment we are out to consultation on the criteria we might use in the current airports review to determine how much of that money they will get. Q149 Chairman: So it is not correct that you backed off as soon as you were threatened with legal action? Dr Bush: We have not backed off anything. We are out to consultation and that is what it means; we have had some responses in and we are now considering them. Q150 Chairman: Do you think the regulatory reviews are too expensive and take too long? Dr Bush: Well, it comes back to the point that we made earlier, that the Competition Commission element means that they are longer than they might otherwise be and they are probably more expensive than they might otherwise be. Q151 Chairman: So is it true to say that you do not understand the economic models underlying modern, low-cost aviation? Dr Bush: Well, I do not think it is true to say that. Actually we have published only in December a review of what we think the drivers of demand in the UK are, whether it be price or whether it be income, so we are actually engaged with the underlying economics of the aviation industry there, so I think that accusation is unfounded. Q152 Chairman: The Airlines' Consultative Committee at Stansted says that there is no appropriate structure for dealing with airline complaints regarding the abuse of dominant position by airports. Dr Bush: Well, that is simply untrue. They can either complain to us or they can complain to the OFT which has the role in relation to the Competition Act, and they have not. Q153 Chairman: I think what really, Sir Roy, is very clear is that we are going to have to send you a series of other questions and I would be grateful for a quick turnaround and to have the answers quite quickly. Sir Roy McNulty: We will do our very best, Madam Chairman. Q154 Chairman: Can I say to you all that you have been very patient and very helpful. I do not know that you have entirely reassured us. In fact, and you will forgive me for saying this, I think you have put the wind up several of us, but we are grateful to you for coming and doubtless we shall meet again, as the witches say in Macbeth. Thank you very much. Sir Roy McNulty: We will look forward to that. Chairman: I do not know many almost perfect men! Memoranda submitted by the Association of Licensed Aircraft Engineers, the British Air Line Pilots Association and Prospect
Examination of Witnesses
Witnesses: Mr John Eagles, Technical Chairman, Executive Committee, Association of Licensed Aircraft Engineers; Captain Mervyn Granshaw, Chairman, British Air Line Pilots Association; and Mr David Luxton, National Secretary, Prospect, gave evidence. Q155 Chairman: Gentlemen, you are most warmly welcome. I apologise for making you wait, but I am afraid, as you probably realise, we had a number of questions that we wished to ask our previous set of witnesses. Would you be kind enough to identify yourselves for the record. Mr Eagles: I am John Eagles, the Technical Chairman for the Association of Licensed Aircraft Engineers. We are the union for the licensed aircraft maintenance engineers. Captain Granshaw: Good afternoon, Madam Chairman. My name is Mervyn Granshaw and I am the Chairman of the British Air Line Pilots Association. I have been employed in the aviation industry for 29 years and I hold a seat on the CAA's Fixed Wing Advisory Group as a scheduling expert and I am serving my third term as their elected Chairman. I am still an active pilot. Mr Luxton: I am David Luxton, National Secretary of the trade union Prospect and we represent specialists working within the Civil Aviation Authority and also all of the air traffic controllers and air traffic engineers working for NATS. Q156 Chairman: Does anybody have something they want to say briefly before we start? Can we go straight to questions then. I am very grateful to you for coming this afternoon. You may have heard some of the questions that we were putting to the previous set of witnesses. Prospect and BALPA have both argued that there are conflicts between the objectives of the CAA, and BALPA has suggested transferring the economic and commercial activities of the CAA to a transport economic regulator, that this would be more efficient, and Prospect has called for greater horizontal integration of the separate organisational structures. What are the relative merits of each of these approaches? Mr Luxton: If I may start, Madam Chairman, our concern about the way in which the CAA is organised is that we do sense that there is a sort of stove-pipe approach to their organisational structures so that we have economic regulation, safety regulation and consumer protection regulation, all of that acting independently and there is a feeling ---- Q157 Chairman: Independently, so you are suggesting they all operate in parallel lines? Mr Luxton: Yes, in this stove-pipe approach. Our view is that there is a case for much closer integration, to have a more joined-up CAA which we believe would be more effective then in fulfilling its overall requirements. The specific example that we have drawn attention to in our submission relates to delayed penalties that were imposed on NATS through the economic regulation and our concern is that that raises a number of safety concerns which we have detailed in our paper and we are not as yet convinced that there has been a full, rigorous safety assessment of that economic regulation requirement and, for that reason, it underpins our view that there needs to be better horizontal integration between the different strands of the CAA. Captain Granshaw: I endorse the description, it is very powerful in the Prospect submission, but I think our view is slightly different. We have heard from the CAA today about the difficulties they have had in covering their broad panorama which has led them to, I suggest as a reaction, adopt a lighter touch as opposed to a proactive strategy, and we will probably come on to that later because we have great reservations that the one-size-fits-all type of regulation is suitable for aviation where safety is so important. We feel that they should really focus on their primary role which is of a safety policeman and there is a conflict and it does in addition, through the charges structure, in our view, lead to the airlines having a dominant influence that is difficult and is in competition with safety in the way it is structured at the moment. Q158 Chairman: But supposing in fact there was an independent regulator that covered everything, do you not think it would be possible that that body could create policies that were in direct conflict with the need for safety in aviation? Captain Granshaw: I think that would be better handled if the organisations were separate because the role of the separate and independent safety regulator would be paramount. I think we all sense, and I sense, here that there is this feeling of diluted safety and it is there. We have not felt it yet, but it is there. Q159 Chairman: Is there any evidence? Is there real, hard evidence of a conflict of interest because the case that you are making really only makes sense, and it is the same for Mr Luxton, if you can actually say, "This is more than a gut feeling. We actually can demonstrate that they are moving towards a situation where there is a conflict of interest"? Captain Granshaw: Well, an example, and there are several, is in the harmonisation which has happened in Europe with the Scheduling Regulations for my colleagues, flight crew. I think we know empirically that we are the safest industry and we are fortunate to have a good safety regulator, but that it cannot do better and be structured better is the matter in question. When we have harmonised our Scheduling Regulations, what we have actually done is harmonised down, so there is evidence that, against a fairly aggressive attack from employer trade groups, the economic side does have a very powerful and influencing voice. Q160 Chairman: Mr Luxton, did you want to comment on that? You would not disagree with that presumably? Mr Luxton: No, I would not, I endorse those comments. Chairman: Mrs Ellman? Q161 Mrs Ellman: What are the problems that you see with EASA? Captain Granshaw: They have been described very eloquently by Sir Roy. It did have an unfortunate start. I think one thing that he was perhaps unable to say is that it is currently badly led. He may have just implied that. It is under-resourced, it is under-funded. It is the way to go and what we have to appeal to you and Government to do is to make sure that the resource is there and the funding is there. Q162 Chairman: Badly led in what sense? One person's general facing the wrong way could be somebody else's saviour. Captain Granshaw: Yes, I think it is becoming recognised generally, and I think Sir Roy suggested that whilst he and his team were a lone voice a year ago, they are not so now. Regulation is not even throughout Europe. There are experienced regulators in very small numbers in places and in places no regulators, but the major experienced regulators in Europe now have serious doubts about their capabilities. I think we all feel it is right to move in that direction but not to move ahead of their capabilities, which is clearly evident now, and the point that was made quite eloquently about stopping research before the other one is there is clearly ridiculous. Q163 Mrs Ellman: What have been the most important reasons for moving in this direction? Captain Granshaw: I think we did it with the car some years ago. To produce a car and then have to have it tested in every European state is, frankly, a waste of time and money, and the same thing with aircraft time weightings and so on and so forth. If you can agree a single standard then one test for it should pass it across all of Europe. We are one body with one set of standards. As was explained, this has been going on. It started with the design of Concorde which was an English/French arrangement through the JAA and there has been a lot of work that has been done quite successfully. The problem with the JAA is that it has no legal basis and the problem with EASA is that it is running ahead. I have an additional problem with EASA and that is that one senses the CAA, if it is possible for an organisation to have one of these, does have a conscience. There is a sense of responsibility and accountability. I sense in EASA that if the rule book is written and the rule book is followed then that is as far as they feel they need to be accountable and there is no conscience that anybody I speak to is able to detect in EASA, and in safety I think that is an important omission. Q164 Mrs Ellman: You are saying that you are not opposed to the principle; it is how it is being done and how it is being run? Captain Granshaw: Absolutely. Mr Eagles: I would agree with that. EASA was formed with very little debate rather hurriedly and it is proving it as it is becoming more used. For instance, the top four levels of management of EASA are non-aviation people. Q165 Chairman: EASA? Mr Eagles: Yes. Q166 Chairman: Non-aviation people? Mr Eagles: Yes. Q167 Chairman: Do we know what they are, Mr Eagles? Mr Eagles: The head of it, M Goudou, came from the French defence industry, nothing to do with aviation, and I think now we can begin to see the problems that the CAA and we are having as well. Q168 Mrs Ellman: How big is the problem of CAA staff leaving in anticipation of the work that EASA is going to do? Captain Granshaw: That is a question best directed to them but certainly from our point of view attracting competent people into certain areas in the CAA has always been difficult. It is very difficult to find anyone from among my colleagues who fly. There are no market rates of pay so to attract experienced captains to go in to monitor the safety regulation has proved almost impossible. With this new dimension, frankly, it is way out of alignment. There are also educational restrictions and various other limitations that mean the right people who may have spent 25 years in the industry and have an enormous amount of experience because they may not have some particular tick in some particular box are not eligible to apply to EASA, so I think there are some fairly fundamental flaws in its structural and human resources requirements. Mr Eagles: If I can give an example there. If an engineer from the CAA wants a position within EASA, the EASA requirements are first of all a degree and secondly experience. Most European engineers have to have a degree before they can practise. We adopt a more practical approach in that our engineers are practical people. Q169 Chairman: You like them to know a bit about engineering? Mr Eagles: Yes. Q170 Chairman: Strange! Mr Eagles: They are more practical. To get a job within EASA the qualification is first of all a degree followed by so many years experience. Consequently our engineers from the CAA are at a disadvantage so we are not getting the people from the CAA into EASA that we would like. Q171 Mr Leech: Just on that point, so are you suggesting then that the best people - and I presume we have the best people in this country - may not be getting jobs purely because they do not have degrees? Mr Eagles: Yes. Q172 Chairman: There is no recognition of comparable engineering qualifications; is this what you are telling us? Mr Eagles: That is right, yes, it is only from the degree and from that time onwards does their practical experience count. Q173 Chairman: Oh, so you could be 30 years doing the job but if you have not got a degree or you worked for the École Nationale then ---? Mr Eagles: Yes, that is correct. Q174 Chairman: Has anybody pointed out that this is a mild form of discrimination? Mr Eagles: It is indeed, yes. Mr Luxton: If it helps, Chairman, we had a similar problem over the licensing of air traffic controllers. I know it is not specific to this inquiry but there the initial proposal was that every air traffic controller would need to have a degree whereas of course the requirement is more about practical aptitude and spatial awareness and things that are not related to academic qualifications. Chairman: I do not find it entirely surprising that Europe does not require any knowledge of the subject but I find it a little unusual and at least we could have made it clear that we did not think this was the way forward. Q175 Mrs Ellman: Is this issue being pursued by Prospect? Mr Luxton: Certainly in the example I gave we have pursued that successfully in terms of the European licensing and there is not the strict requirement now for the degree level in terms of the licensing arrangements that will be introduced shortly, but I thought it is relevant to this discussion. Q176 Mr Leech: If you have been successful, Mr Luxton, is there any likelihood, Mr Eagles, that you will be successful in terms of the engineers? Mr Eagles: Possibly. The main body of people is coming from the Civil Aviation Authority and I would think that they are going to push that idea forward. Q177 Mr Leech: So are you aware that the CAA is pursuing this? Mr Eagles: I know that they are aware of the problem. I do not know what action they are taking to pursue it. Q178 Mrs Ellman: BALPA have said that the CAA ignores aircraft crews' and cabin crews' health and safety requirements. What was the evidence for that? Captain Granshaw: It was news to me what was described earlier in evidence about research. There is very serious research underway with the FAA that we have appealed to the CAA to join in with and as far as I am aware they have resisted that. We have also appealed for support into research to collect better data, to collect better evidence, to better understand the issues. The facts are, of course, that the oils that run in a jet engine are extremely toxic and when engines are either poorly maintained or seals fail or other problems occur, which happens from time to time, it is that air that is bled off and you breathe as a passenger or crew member in the aeroplane, and some individuals when there are these episodic moments (and they are not that common but they are more common on some engine types and some aeroplanes) are seriously and permanently affected, but it is so episodic as to be difficult to track. The reports are probably not collated properly and it is our belief that we should be looking into this now. Q179 Mrs Ellman: You believe that this is a serious problem? Captain Granshaw: Yes. We have a number of members who have lost their medical licences and are unable to continue with their careers as a result, we believe, of organophosphate poisoning. Q180 Mr Scott: From what you were just saying would you agree that for an airline which is not registered in Britain, as a number of budget airlines are not, if they came within the jurisdiction of the Civil Aviation Authority that would alleviate some of this problem you have just mentioned through proper servicing of the aircraft? Captain Granshaw: I think Sir Roy did describe the problem with it, that altering the way we currently regulate in that context would be like pulling the roots up. Q181 Chairman: Is that not an IATA recommendation? Captain Granshaw: I am not sure where the recommendation comes from but what I would say is that not all regulation is the same. ICAO are the overall regulator and it does conduct an audit and there are marks and measures given, but we are aware that some of the airlines - we now call them trans-national airlines - operate in a regulatory twilight zone and their choice of place of regulation is determined more by the cost of that regulation and the difficulty of being stopped from regulating. It is far easier to be regulated over there and then operate somewhere completely different. It is an area that needs addressing. It would be ideal for us to be stronger in that arena. I do not think it is possible in an aeroplane that arrives into UK territory for half an hour or an hour, with the best will in the world you could flood it with engineers but actually could you get to the core of just how safe that airline is; the answer is probably not. I think there was a definition that was missing in European law which was "principal place of business" and I think that if your principal place of business is in the UK or you have a significant place of business in the UK you probably should be regulated in the UK. We have seen what happened with the merchant fleets and flags of convenience. We are drifting into that twilight zone. Q182 Mr Goodwill: A question for Mr Eagles really. Whilst reference has been made to airlines that operate in many countries but are flagged out for reasons of convenience, there are a number of emerging airlines flying from countries that people had not heard of ten years ago into the UK. Is it your opinion that some of these airlines would fail inspections were they to be based in the UK and subject to the rigorous regime of inspection and engineering expertise that you can give flag carriers in this country? Mr Eagles: Yes, there are a number of aeroplanes, and it applies also in general aviation, where British owners of aircraft register their aircraft in, in particular, the United States where because their National Airworthiness Authority does not have to get its finance from the industry, in other words the state pays, therefore the aircraft are operated cheaper, and we have quite a lot of American-registered aeroplanes - Bahamian, British Virgin Islands - just operating on a flag of convenience. Coming back to your other question --- Q183 Chairman: Can I just you there for a second, Mr Eagles, because Captain Granshaw made the important point that we are drifting into this equivalent of flag of convenience. Quite apart from the actual registration of the individual flights, is there any individual check made by the CAA of the numbers of times in which primary services are operated within the United Kingdom for aircraft registered elsewhere? Mr Eagles: I am not sure of this but certainly British aeroplanes can be maintained in any European state now and some of the emerging European Union States' maintenance facilities are probably not as good as they should be. Q184 Mr Goodwill: This is not anything to do with the fact that their engineers are paid much less than engineers in the United Kingdom? Is it a genuine safety issue or a protectionist issue in connection with your members? Mr Eagles: No, it is a genuine safety issue. On the safety issue that was mentioned earlier on, one of the problems we feel is that the CAA are not strong enough in making British Airways or national carriers regulate their maintenance. For instance, the licensed engineer was always present at the departure of an airliner and that now has been withdrawn, so that now for an aircraft of British Airways departing from Gatwick or Heathrow there is not a licensed maintenance engineer in attendance. One is available but he is not in attendance on the ramp as we feel he should be. The Australians had a similar problem and their union kicked up about it and managed to preserve the licensed engineer on the ramp. Q185 Mr Goodwill: Do you think there is enough communication between engineers in new Member States with regards to the blacklisting of certain airlines and do you think the blacklisting system is too blunt a tool and it could be refined in some way? Mr Eagles: I think it is too blunt a tool. I do not quite know its legality. Can we stop another European state's engineering company looking after an aeroplane? I do not think we can. Mr Goodwill: I was thinking more in terms of an airline from, say, an African country or a central European country which has had concerns raised about it. There seems to be no halfway house. Either nobody knows a thing about that airline or all of a sudden they are blacklisted. How does that work in that period between concerns being raised and that blacklisting? Q186 Chairman: Do you know the Federal Aviation Authority's methods of operation in relation to third countries? Are you aware of way that the FAA discipline and control third country aircraft and would you think that was a better system? Mr Eagles: I would think it is, yes. Q187 Chairman: Captain Granshaw? Captain Granshaw: Absolutely, the blacklist is a very crude tool and will not actually solve the core symptoms. Q188 Clive Efford: Can I just follow that up. Just enlighten me, what is the situation if a plane is considered defective in any way? Presumably we have the authority to ground it? Mr Eagles: In our own country, yes. Q189 Clive Efford: So even if it has been maintained elsewhere if it is not deemed safe it would not be allowed to take off again if it landed in the UK? Mr Eagles: It would be the Civil Aviation Authority inspector. Q190 Clive Efford: How effective is that in maintaining standards even for aircraft that are not maintained in the UK under the CAA's standards? Mr Eagles: I do not think it occurs very often but it is there and it does happen. Q191 Clive Efford: In your opinion, does it have an effect on other airlines that use the UK? Mr Eagles: Yes. Q192 Clive Efford: So in a sense they are applying UK standards? Mr Eagles: That is right. I believe it makes them think twice about sending defective aeroplanes here. Q193 Clive Efford: Can I move on to staffing. Prospect has told us that there are unfilled professional posts in the Air Traffic Services Investigation arm of the CAA and has suggested that there are some key posts that have remained unfilled because of the lower salaries that the CAA pay in comparison to NATS. We asked questions about that earlier on. I do not know if you heard the answers but we were told that that situation is being resolved. Would you care to comment on that? Mr Luxton: I can confirm that as of today there are still 70 unfilled vacancies within the Civil Aviation Authority within the Safety Regulation Group. That is around ten per cent of those in that area. That was information I was given as of this afternoon. The point we were making there about the market rates is simply that there is a recognition that in order to attract the people who are going to be regulating effectively NATS on the air traffic side, you need to have very experienced air traffic controllers coming in, obviously with that relevant experience, and there is a widening of the gap between NATS' salaries and those at the CAA. I would like to put that down to my negotiating skills on behalf of the air traffic controllers in NATS but there is the fact that we have not managed to maintain those same salary levels within the CAA. The way we attempt to bridge that gap is through market supplements and we have negotiated with the Civil Aviation Authority on market supplements. Our issue there is that we do not believe the CAA has sufficient resources to plug the gaps that are needed to bridge those gaps in every area and it does mean that they have recruitment campaigns that fail to get the necessary people in that they require. Q194 Clive Efford: Just so that is clear because you have said in your evidence that "within the past 18 months there have been two separate recruitment exercises which failed to attract sufficient suitable candidates, leaving the posts unfilled"; you are saying that is still the case? Mr Luxton: That is still the case. Clearly there is a lot of fluidity within that, that you get some posts that have been filled but you get gaps elsewhere and then other people leave, so you have got these constant gaps and it is difficult for the CAA to staff up to their full cadre. Our issue here is that it is important that they have the resources and the market rates appropriate to get the right people in. Whether it be the air traffic inspectors or the flight operations inspectors, it is essential that we have the right salaries to attract the best calibre of people for those roles. Q195 Clive Efford: It is not a question of there not being people out there with the appropriate skills; it is a question purely of market forces not paying enough? Mr Luxton: It is a market forces issue. Q196 Clive Efford: Is there an issue - and this is an open question to any of you - about the experience with which people come to work for the CAA concerning over-reliance on former military personnel rather than people with civilian experience? Is that an issue at all? Mr Luxton: We did not articulate that in our evidence but there is certainly an undercurrent there, a feeling that there is too much reliance on ex-RAF rather than --- Q197 Chairman: You heard the suggestion, which we know is of course an accurate one, that they work alongside your own traffic controllers, do they not? Mr Luxton: Yes, they do. Q198 Chairman: So why should there be automatically, to be devil's advocate, a gap between their knowledge of how the system works and your own controllers' knowledge about the system? They may have different functions but they do work alongside one another. Mr Luxton: They do. Our concern is that there is an over-loyalty towards the needs of the military users. Q199 Chairman: So it is perceived. You cannot necessarily demonstrate there is a problem; it is perceived? Mr Luxton: That is fair comment. It is the perception that there is not sufficient experience. Q200 Chairman: Captain Granshaw wants to add something. Captain Granshaw: As a receiver of the service - and I have received both because one occasionally has to fly into military-controlled airports like Gibraltar and also the civil-controlled airports around the UK and worldwide - there is a very great difference between the demands and requirements placed upon a military air traffic controller and a civil air traffic controller and we in the UK are a very small island with a tremendous amount of congested airspace. It is great that they work together but I went to Swanwick Centre late last year for a tour round and it is not quite as together as you would imagine. It is not side-by-side together. Q201 Chairman: They do in some areas work on the same consoles, do they not? Captain Granshaw: In some areas, yes, but I would advocate that if you do not draw a broad spectrum, and the same applies to flight operations inspectors from aircrew, there is a difference. There is a difference between somebody who can ride on a roller-skate and somebody who drives an HGV, although they may both have wheels on, and the same with aircraft. Q202 Chairman: That is an interesting definition! Mr Eagles: The engineering recruitment for the CAA is from engineers who have been involved with airlines mainly, and of course we have got the two fields, the airlines and general aviation, general aviation being all aviation other than commercial transport, and in consequence most of the CAA surveyors come from airlines and know very little about general aviation, light aeroplanes, small aeroplanes, so we have a problem and always have had that problem. Q203 Chairman: Did you hear Sir Roy, he rather indicated that although that might necessarily be true this was partly because of the difference in the volume of work. In other words, general aviation in this country would not constitute the bulk of the work done by those who were having to regulate its functions. Would you accept that or do you think that that is an overplay? Mr Eagles: There are far more general aviation aeroplanes that are regulated than there are airliners. If you add to this the CAA also regulate gliders and home builds through the various organisations, general aviation has a lot of aeroplanes. Q204 Clive Efford: Could the CAA's recruitment difficulties be eased by an increasing delegation of work to suitably qualified and experienced organisations or people? Mr Eagles: Yes, it could indeed, as they delegate the regulation of gliders to the British Gliding Association and the home builds to the Popular Flying Association. Q205 Chairman: Do you mind if we move on. Could I ask you very quickly about EASA, do you mind if we move on. Is it fit for purpose? Mr Luxton: I would say not. There is one issue that I think is of particular concern at the moment and that is the effect of no aviation research being done by the CAA. Q206 Chairman: You simply mentioned that in your evidence but you notice the suggestion was that, yes, this was true because they would not have any legal status in the matter after the transfer of responsibilities to EASA. Mr Luxton: I note that the CAA have undertaken now to give you a list of what research they are still undertaking but what I am arguing is that there are serious gaps developing now in the research. I will give one specific example. We did refer in our submission to research into offshore helicopter operations. That may not be a big priority for EASA because it is primarily something that occurs in the UK with our North Sea interests, but there is a considerable amount of research that the CAA had been doing in trying to get better protection for helicopters when they upturn in the strong winds and volatile conditions of the North Sea. A research programme that has been stopped was research that was developing techniques for the helicopter to flip sideways to allow people to escape rather than to flip upside down, as it does at the present time. That was one of our safety research people who was given the full information about that. It concerns me that what to me seems a very important area of research is now lost, fallen between the two stools of CAA and EASA. Q207 Chairman: Captain Granshaw, you said specifically you thought the CAA had got a blind sport on the health and safety of aircraft crews? Captain Granshaw: Yes. Q208 Chairman: What scientific evidence is there that would support that? Captain Granshaw: As I say, we do have some evidence which we are currently sharing. Q209 Chairman: You were not aware that the CAA were undertaking this inquiry or at least a preliminary examination? Captain Granshaw: Absolutely not, no. In fact, we believed that when we appealed to them to join in with the $2 million FAA research programme they actually said no to us. Q210 Chairman: How long ago was that? Captain Granshaw: In the last three months. Q211 Chairman: In the last three months? Captain Granshaw: Yes. Q212 Chairman: So it has been quite a rapid decision? Captain Granshaw: It is a very topical issue. Q213 Chairman: Can you explain to us when you are talking about the relationship between EASA and CAA as being "almost a master servant situation" what you had in mind, Mr Eagles? Mr Eagles: Yes, the ultimate responsibility originally was the Civil Aviation Authority. EASA was brought about rather hurriedly and rashly. It now overrules the CAA and in fact EASA regulations overrule the Air Navigation Order which is a British statutory instrument, so already we have the situation where the CAA cannot move without the go-ahead of EASA, so EASA is the master and the CAA is the servant. Q214 Chairman: Prospect, have you got any evidence about the numbers of experienced people who are leaving because of the uncertainty because of this interregnum that we have been talking about? Mr Luxton: No specific figures. It is anecdotal from people who talk to me and convey feelings of colleagues. Q215 Chairman: So is the morale level low? Mr Luxton: The morale level is very low at the moment with all the uncertainty created with the transition to EASA. I think a lot of this is about transition. It seems to me that there has not been sufficient attention given to giving EASA its role and having it up and running and fit ready to take over its new roles. I think those are issues of leadership and direction and having the necessary resources in place. To put it into context, EASA has a staff of around 200; the Safety Regulation Group of the CAA has a staff of around 700. So there is a huge disparity and when the CAA are examining 10,000 separate safety-related incidents each year through their Safety Data Unit and analysing that data, that gives an indication of the size of the task to keep monitoring safety. Q216 Chairman: Have you any clear exposition of what the changes in staff numbers or the transfer of responsibilities or the access to European-wide facilities would be which would affect materially your staff? Mr Luxton: I have not no clear visibility of that but I do know that there is a lot of uncertainty now as to how it is all going to work in the future. As I say, I think these are very serious problems of transition. There is clearly a case for EASA in terms of having better co-ordination of safety across Europe, so the concept is not flawed; it is the way in which this organisation has been set up and, as I say, the leadership and other issues that have caused the current problem. Q217 Chairman: From all of your points of view, are the interests of consumers and airlines the same when it comes to regulation of airport charges? Mr Luxton: If I may, on safety, the interests of all are the same and it is a question of interpretation in terms of value for money and risk assessment and the investment required to ensure safety. We have made an argument that, if anything, consumers should be paying more in terms of departure tax as a way of funding the CAA to ensure that it has the necessary funding it requires for the work it needs to undertake on behalf of the industry. Q218 Chairman: Captain Granshaw, are you aware of the height and location of flight paths being changed on a piecemeal basis? Captain Granshaw: Not on a piecemeal basis but certainly not with the co-ordination that we think would be sensible. Q219 Chairman: Is sufficient notice taken of the environmental impacts of aviation, particularly flight paths? Captain Granshaw: Environment is a very topical subject and I think aviation can be proud of its record. The issue is one of safety. If you invent a new environmental standard you have to allow us time to develop an engineering practice that will deliver it safely and introduce it. If I look back over my nearly 30 years in the industry and I look at the noise footprint, constituents around Heathrow do not have to wear earplugs for Tridents and 111s any more and fuel efficiency is enormous. I am told anecdotally --- Q220 Chairman: They are not always persuaded of course of the improvement in their condition given the extra numbers of flights but I accept what you say. Captain Granshaw: And we do not resist it. The industry does not resist the continuing environmental improvements, but at the end of the day it is not the industry that drives itself; the consumer drives the industry and the consumer wants to travel. Q221 Chairman: They are usually the ones who go home having got off a plane to write a letter of complaint. Do you think the CAA offers a 24-hour service on a sufficient basis right the way across all of its responsibilities or do you think that too much of it is done on a nine to five basis? Mr Eagles: No, on the contrary, I have known Civil Aviation Authority surveyors who have stayed long after hours to finish an aeroplane for me. So certainly the engineering staff are very dedicated to their jobs. Q222 Chairman: You did say at one point that there was a not very efficient electronic answering service which means contacting the personnel licensing departments could be very difficult indeed. Was that particularly what you were thinking of? Mr Eagles: Yes it was really. Just try it, it is very hard, you just go round and round and round. Q223 Chairman: That unfortunately does not make it unique. Mr Eagles: No. Q224 Chairman: Finally, do you think the CAA is sufficiently accountable to the people it regulates, what Sir Roy called the regulatees? Captain Granshaw: Do we think it is sufficiently? Q225 Chairman: Accountable? Captain Granshaw: My colleagues and I have an issue in the sense that if we were doctors we would regulate our own profession and here we are as safety professionals and we do not regulate our own profession. Sometimes one feels that one attends as a guest, as an observer but not as an equal stakeholder. Q226 Chairman: How could that be affected by this so-called called "light touch"? Captain Granshaw: I do not think the light touch is right for aviation. I think that there is a difference between regulating a biscuit factory and regulating something where safety is in the core of everything you do. I question seriously whether lighter regulation is better for aviation. I think from time to time you need to have a random check, not just one because you have heard something, and really the underpinning suggestions of lighter regulation do leave me wondering whether we are doing the right thing here. When I heard the CAA say they were doing it because it was probably the only way given their resources and staff they could achieve it, it did strike me that it was not their primary, preferred method of regulation, just how they have to do it. It is all spread a little too thin. Mr Luxton: I would certainly endorse that. Q227 Chairman: Do you think that it would help if the recommendations of the Hampton Report were carried into existence on risk assessment and on concentrating resources in the areas where they are most needed? Captain Granshaw: We do not like risk in aviation so the idea of assessing the risk and working that way round is completely wrong for aviation. Chairman: You have all been very helpful, gentlemen, and we are enormously grateful to you not only for your written evidence but for what you have said today. |