3 Reform of the Civil Aviation Authority|
The Civil Aviation Authority
54. The CAA was established by the Civil Aviation
Act 1971 as the UK's regulator for aviation and is funded through
charges to industry. Its regulatory remit covers economic, safety,
airspace and consumer protection issues. The CAA has four main
- ensure that UK civil aviation
standards are set and achieved;
- regulate airlines, airports and National Air
Traffic Services economic activities and encourage a diverse and
- manage the UK's principal travel protection scheme,
the Air Travel Organisers' Licensing (ATOL) scheme, license UK
airlines and manage consumer issues, and;
- bring civil and military interests together to
ensure that the airspace needs of all users are met as equitably
55. The draft bill proposes changes to the governance
and powers of the CAA. In particular, the CAA would:
- have concurrent powers with
the Competition Commission to investigate and remedy anti-competitive
behaviour, consistent with the Competition Act powers granted
to other regulators;
- have additional enforcement powers, including
to powers to impose civil sanctions; and
- appoint its own directors.
56. These, and other provisions in the bill, would
give the CAA greater independence from Government and the ability
to act more quickly and flexibly. We received no adverse comments
on these proposals. They were welcomed by a number of witnesses
who commented favourably on the performance of the CAA.
The CAA supported the measures.
57. The draft Civil Aviation Bill includes provisions
for granting environmental and consumer publication duties to
It creates a new duty for the CAA to publish,
or arrange for others to publish, in a format which permits comparisons,
such information and advice as the CAA considers appropriate in
order to: (a) assist users of air transport to compare services
and make more informed choices; and (b) inform the public about
the environmental effects (including emissions and noise) of civil
aviation in the UK and measures taken to limit adverse environmental
This power would be in respect of all airports, not
only designated airports. The powers, under clauses 80 and 81,
are widely drawn and could also apply to a range of service providers,
in addition to airlines and airports.
58. The Minister said that "shining the light
of transparency" on the performance of the aviation industry
would benefit passengers.
The industry, however, raised concerns about this provision. British
While supporting informed consumer choice, we
believe that the CAA's powers to obtain and publish information
are too wide in relation to airlines, where no market failure
has been found. Use of these powers runs the risk of interference
in the air transport market, harming competition and potentially
misleading consumers. We therefore propose safeguards to limit
the use of these powers.
Airports cautioned that giving the CAA additional
publication duties was unnecessary. Gatwick Airport pointed out
that they are already undertaking reporting activities for the
We question whether there is a need to compel
the CAA to perform a function that we are already undertaking
ourselves, and indeed whether it is appropriate for the CAA, rather
than an airport to determine, how best to publish information
around what our environmental impacts are. In many cases, we use
existing CAA data to do just that. There is a danger that the
CAA could replicate the existing activities of airports in this
area. The bill should ensure that this does not happen.
59. The Airport Operators Association was also concerned
about the cost implications, particularly for regional airports.
The Impact Assessment estimates the net costs to business at £0.55
million a year. As the benefits could not be quantified, the Net
Present Value is negative (-£5.9 million over 10 years at
2009 prices). It also states that the proposal assumes that consumers
will make decisions based on the additional information, such
as baggage reclaim times and environmental performance of airlines,
and that airlines will be incentivised to compete on such non-price
factors. The CAA said that market research showed that consumers
wanted more information to enable them to choose between airlines.
However, there is little evidence to show that this would apply
in the majority of cases, and plenty of evidence that the impact
would be a marginal at most. Air passengers make their choices
largely on the basis of ticket prices, flight availability and
airport proximity, not peripheral performance issues, such as
baggage handling times.
(See paragraphs 44 and 55.)
60. Whilst collecting and publishing information
may sound straightforward, there are likely to be complications.
There would be incentives for service providers to "game"
the results; guidelines from the CAA would be needed to ensure
consistency and comparability; audit checks would be needed to
and, as the Minister said, the CAA would need "to qualify
and explain the figures ultimately published".
The Government has generally opposed centrally-imposed reporting
regimeswith associated targets and costs. It has, for example,
abolished the performance indicators regime for local authorities.
61. We encourage providers of air transport services
to be open and transparent in relation to matters of concern to
service users, the local community and the wider environment.
We are concerned, however, that the provisions in clauses 80 and
81, granting powers to the CAA to require publication of consumer
and environmental information, are too widely drawn. They risk
creating bureaucracy and additional costs to the aviation industry
while the benefits are less tangible. We recommend that the Government
specify the types of transport service provider and information
to be brought within these provisions. We also recommend that
the bill make clear that publication requirements should not create
disproportionate burdens for the aviation industry and that the
CAA be required to demonstrate the value to passengers.
Efficiency of CAA
62. The CAA is a public corporation limited by guarantee.
It is the only major economic regulator for which the National
Audit Office (NAO) has no remit. When the CAA was established,
via the 1982 Civil Aviation Act, the Comptroller and Auditor General
was appointed as the CAA's statutory auditor and had statutory
value-for-money access rights. However, the 1984 Civil Aviation
Act (Auditing and Accounts) Order removed the statutory requirement
for the audit of the CAA to be carried out by the Comptroller
and Auditor General and the NAO's value-for-money powers. Although
the draft bill contains various amendments to aspects of the CAA's
governance and constitution, it contains no references to audit
or value for money arrangements. There is no explicit efficiency
duty for the CAA in the draft bill.
63. The Chair of the CAA acknowledged that the NAO
had raised this issue with the DfT on a number of occasions. She
said that as the CAA's costs are met by industry, not the taxpayer,
it would not be appropriate for it to be subject to audit or value-for-money
assessment by the NAO.
CAA Chief Executive Andrew Haines pointed to efficiency savings
made by the CAA and plans for future improvements.
However, other industry regulators, including (ORR, OFGEM, OFCOM,
and OFWAT) are funded by industry but are within the NAO's remit.
64. We recommend that an explicit efficiency duty
for the CAA be inserted in bill. The Government should
explain why the CAA is, apparently, unique among industry regulators
in being outside the remit of the National Audit Office.
71 CAA website, About the CAA, www.caa.co.uk Back
Ev w1 [Chartered Institute of Logistics and Transport]. The exception
was the British Airline Pilots Association - see Ev w7. Back
Ev 42 Back
Draft Civil Aviation Bill: An effective regulatory framework
for UK aviation: Policy Paper, Cm 8234-I, November 2011, p
Q 172 Back
Ev 51 Back
Ev 60 Back
Q 18 [Mr Siddall] Back
Office of National Statistics, Omnibus Survey , February
2010, p 9 Back
The Royal Aeronautical Society says that the data should be peer-reviewed,
published with sources and assumptions and warns against oversimplification,
Ev w1. Back
Q 174 Back
Qq 119-121 Back
Q120. He cited a 20% reduction in CAA costs in real terms over
the past decade. Back