Memorandum by the Civil Aviation Authority |
1. The Civil Aviation Authority (CAA) is
responsible for the regulation of civil aviation in the United
Kingdom and has specific responsibility for aviation safety, airspace
policy, consumer protection and economic regulation.
(1) What are the legal bases for regulators;
what are the nature of their powers and how do they exercise them;
how could their powers be revoked; from where do they obtain their
financial and administrative support?
2. The constitution of the CAA is set out
in Section 2 of the Civil Aviation Act 1982 ("the 1982 Act").
The 1982 Act is a consolidating statute which replaced the Civil
Aviation Act 1971 which established the CAA on 1 April 1972. The
CAA took on a number of aviation
functions previously carried out by Central Government and by
certain independent Boards including the Air Registration Board
and the Airline Transport Licensing Board.
3. The CAA's functions are set out in primary
legislation. The main provisions are:
Section 3 1982 Actlicensing
of air transport, licensing the provision of accommodation in
aircraft (air travel organisers' licensing), the provision of
air navigation services, the operation of aerodromes and the provision
of assistance and information together with such safety regulatory
functions as are conferred on the CAA by Air Navigations Orders;
Part IV Airports Act 1986economic
regulation of airports;
Part I Transport Act 2000regulation
of air traffic services (other than safety).
4. Detailed regulatory provisions are contained
in secondary legislation made by the Secretary of State, for example
the Air Navigation Order 2000 (safety regulation) and the Civil
Aviation (Air Travel Organisers' Licensing) Regulations 1995 (regulation
of tour operators selling in the UK). A number of these provisions
implement the UK's obligations under European law, for example
the Licensing of Air Carriers Regulations 1992 implement Council
Regulation (EEC) 2407/92. CAA's airspace policy functions stem
from Directions given to it by the Secretary of State under Section
66 of the Transport Act 2000.
Exercise of powers
5. The manner in which the CAA exercises
its powers is governed by statute. Section 4 of the 1982 Act sets
general objectives for the CAA. These general objectives are disapplied
and replaced by specific duties for the economic regulation of
airports (Section 39(2) Airports Act 1986) and for the regulation
of air traffic service providers (Section 2 Transport Act 2000).
Revocation of powers
6. CAA's powers can only be revoked by primary
legislation or in circumstances governed by Section 2(2) of the
European Communities Act 1972.
Financial and administrative support
7. Sections 8 to 15 of the 1982 Act contain
financial provisions in relation to the CAA. The CAA, after consultation
with the Secretary of State, may make schemes for determining
the charges that are to be paid to it in respect of the performance
of its statutory functions. In addition, the CAA obtains a slice
of the UK's share of income from the Eurocontrol charging arrangements
for air navigation services in respect of its airspace policy
functions. Section 10 gives power to the CAA to borrow money from
the Secretary of State or with his consent from the Commissioner
of the European Communities or the European Investment Bank. Section
12 empowers the Secretary of State to make grants and loans to
8. Schedule 1 of the 1982 Act contains provisions
enabling the CAA to employ staff, pay pensions and to negotiate
with Trade Union organisations. The CAA provides its own administrative
(2) By whom and how is the continuing
need for regulators measured; how is their role changed or ended?
Continuing need for CAA
9. The United Kingdom is bound by International
Treaty with Organisations such as the International Civil Aviation
Organisation (ICAO), the Joint Aviation Authorities (JAA) and
the EC to meet specific aviation standards and obligations. As
the UK's aviation regulator, the CAA fulfils the UK's commitment
to meeting the regulatory standards and obligations laid down
by those Organisations.
Changing role of CAA
10. The CAA was established in 1972 as both
a regulatory and a service provider. Changes to the CAA's regulatory
functions would require amendment to or revocation of the appropriate
primary or secondary legislation. The CAA's aerodromes in the
Highlands and Islands of Scotland were hived down to a subsidiary
company, Highlands and Islands Airport Ltd, which was transferred
to the Secretary of State for Scotland in 1995. The CAA's Strategic
Business Units were disposed of to the private sector in 1996.
The air traffic services provider, National Air Traffic Services
Limited, was the subject of a Public Private Partnership under
the Transport Act 2000. Coincident with this, the Directorate
of Airspace Policy changed from being a joint civil/military organisation
to an integral part of the CAA, with military staff seconded from
(3) Who are the members of regulatory
bodies; how are they appointed; are they adequately representative;
do Nolan principles operate?
CAA Members and their appointment
11. Section 2 of the 1982 Act as amended
by Section 72 of the Airports Act 1986 provides that the CAA shall
consist of not less than six nor more than 16 members. Members
are appointed by the Secretary of State for Transport. The Secretary
of State may appoint one Member to be Chairman and not more than
two Members to be Deputy Chairman. Currently the CAA has a Chairman
and 10 other Members, five of whom are full time executives and
five are part time non-executives. One executive Member is nominated
by the Secretary of State to perform certain air navigation functions
on behalf of the CAA. One non-executive Member is nominated by
the Secretary of State for national security purposes.
12. Apart from the national security nominee
who is an MoD serving officer, all Member appointments to the
CAA are publicly advertised in accordance with Nolan principles.
(4) What are regulators set up to achieve;
to what extent do regulators achieve their purposes without adverse
consequences; how is their effectiveness assessed?
Purpose of CAA
13. The CAA's general objectives are set
by the 1982 Act which requires the CAA to perform its functions
in the manner it considers best calculated "to secure that
British airlines provide services which satisfy all substantial
categories of public demand . . ., at the lowest possible charge
consistent with a high standard of safety in operating the services
and an economic return to efficient operators on the sums invested
in providing the services and with securing the sound development
of the civil air transport industry in the UK; and to further
the reasonable interests of users of air transport services".
Objectives specific to the CAA's regulatory functions are set
out in section 68(1) of the 1982 Act, Section 39(2) of the Airports
Act 1986 and Sections 2, 70 and 87 of the Transport Act 2000.
14. The CAA actively reviews all new regulation
to judge the impact on and benefits to the industry. The CAA recognises
the balance that needs to be struck between its regulatory objectives
and the impact that regulatory changes have on those it regulates.
Assessment of effectiveness
15. On a general level, the Secretary of
State for Transport, in consultation where appropriate with the
Secretary of State for Defence, will agree overall priorities
and objectives each year with the CAA and will monitor performance
of the CAA in relation to agreed objectives. For specific elements
of the CAA's responsibilities, methods of assessment vary. For
example, the Safety Regulation Group is subject to regular audit
under the ICAO Safety Oversight Programme and the Joint Air Navigation
Services Council, established by the Air Navigation Directions,
oversees the joint and integrated nature of civil/military air
traffic service provision in the UK. The CAA's economic regulation
of airports processes were investigated in 2001 by the Better
Regulation Task Force and were found to be satisfactory.
(5) To what extent are regulators both
prosecutors and juries on an issue; what rights of appeal are
there against decisions made by regulators?
Rights of appeal against CAA decisions
16. In the case of safety regulatory decisions
taken for the purposes of the Air Navigation Order, Regulation
6 of the CAA Regulations 1991, as amended, provides that if an
official of the CAA proposes to refuse an application for the
grant of a licence or certificate, the person concerned has the
right to request that the case be reviewed by a Member of the
CAA appointed by the Secretary of State. Similarly, if an official
of the CAA proposes to revoke, suspend or vary a certificate or
licence otherwise than on the application of the holder, the person
concerned has the right to request that the case be decided by
a Member of the CAA appointed by the Secretary of State. For these
purposes a panel of two Members is formed and that panel must
act as a quasi judicial tribunal. If the CAA's decision is that
a person is not a fit person to hold a personnel licence, the
Air Navigation Order provides a right of appeal to the County
Court of the Sheriff Court in Scotland.
17. Similar provisions apply to the regulation
of tour operators selling in the UK. The Civil Aviation (Air Travel
Organisers' Licensing) Regulations provide that any decision to
refuse or revoke a licence must be made by a Member of the CAA.
If it is decided that a person is not a fit person to hold a licence,
there is a right of appeal to the County Court or the Sheriff
Court in Scotland.
18. In the case of the CAA's functions relating
to Air Transport Licences and Route Licences, Regulation 27 of
the CAA Regulations 1991, as amended, provides for a right of
appeal to the Secretary of State. In respect of its powers to
revoke an Operating Licence, Regulation 19 of The Licensing of
Air Carriers Regulations 1992 also allows an appeal to the Secretary
19. In the case of regulation of air traffic
service providers under Part I of the Transport Act 2000, Section
14 of that Act makes provision for the CAA to make a reference
to the Competition Commission requiring the Commission to investigate
and report on whether any matters which are specified in the reference
and which relate to the provision of air traffic services by or
on behalf of a licence holder, operate against the public interest
or may be expected to do so. The CAA has a similar power to make
a reference to the Competition Commission when exercising its
competition functions under Chapter V of Part I of the Transport
20. All decisions of the CAA are subject
to judicial review by the high Courts in London and Belfast and
the Court of Session in Edinburgh. Since 1999, the CAA has been
subject to the jurisdiction of the Parliamentary Commissioner
(6) How are regulators held to account
by Parliament; what other accountability do regulators have to
auditors, Government departments or other public bodies?
21. While the CAA's functions are conferred
by Act of Parliament, it is sponsored by the Department for Transport
and the Secretary of State is accountable to Parliament for the
CAA's proper discharge of its duties.
22. Section 15(1) of the 1982 Act requires
the CAA to keep proper accounts and proper records in relation
to the accounts. The CAA (Auditing of Accounts) Order 1984, which
modifies Section 15(1) and (2), provides that the Secretary of
State shall appoint annually independent auditors to audit the
CAA's accounts. The CAA is required to submit its statement of
accounts together with a copy of any report of the auditors to
the Secretary of State who shall lay them before each House of
23. Section 7(3) of the 1982 Act provides
that the CAA shall be a tribunal for certain purposes and that
its working and constitutions are to be kept under review and
reported on by the Council on Tribunals.
24. The Air Travel Insolvency Protection
and Advisory Committee (ATIPAC) advises on financial protection
arrangements for air travellers and, in its annual report to the
Secretary of State for Transport, gives an account of the workings
of the Air Travel Organisers' Licence (ATOL) scheme over the previous
(7) How are regulators accountable
to those whom they regulate; what is the impact of regulation
on the economy; how transparent are their methods of working?
Accountability to regulatees
25. Industry pays for regulation and the
CAA's activities and costs are subject to constant scrutiny by
regulatees. There should be no doubt that the unique method of
funding aviation regulation in the UK is a key factor in the CAA's
continued drive for efficiency and cost effectiveness.
26. As previously stated, the CAA's duties
and responsibilities are largely set out in legislation. The CAA
works within the principles of the Better Regulation Guide and
a number of fora exist to ensure that regular dialogue takes place
with industry. Examples include the Airworthiness Requirements
Board (ARB), the Operations Advisory Committee (OAC), ATIPAC,
the National Air Traffic Management Advisory Committee (NATMAC)
and the Safety Regulation Finance Advisory Committee (SRFAC).
They all meet on a regular basis and exchange views on new and
existing regulatory and financial issues.
Impact on the economy
27. The UK airline industry is the leader
in Europe and the success of UK aviation has played and continues
to play an important role in the UK economy. The South East airport
infrastructure contributes significantly to London's position
as a world city, bringing both economic and social benefits to
London and the UK as a whole. The UK has a mature and responsible
aviation industry that is both innovative and in possession of
a strong safety culture. The CAA contributes widely to this through
its safety oversight of the industry, coherent policy on economic
and airspace issues, and protection of the public against insolvency
by tour operators. Economic regulation is seen as a second best
proxy for competition and provides some of the same benefits,
although not to the same degree. Setting a maximum limit on prices
for monopoly services reduces the ability for regulated firms
to earn excess profits and fixing such maximum prices ex ante
for a fixed period (eg five years) gives regulated companies an
incentive to improve efficiency.
28. The CAA has a duty to recover its costs
from those it regulates and this places a financial burden on
the aviation industry that is not mirrored in most other countries.
However, the very high safety standards that are set and achieved
by the CAA in partnership with industry have enabled UK aviation
to mature and flourish. Similarly, the public's confidence that
advance payments made to tour operators are safe has assisted
the development of the tour operation industry.
Transparency of working
29. The CAA operates an open and fair regulatory
regime and makes every effort to be transparent in all its dealings.
The CAA aims to produce material, including technical papers,
that is written in a way that can be generally understood by those
not necessarily possessing a high degree of technical expertise.
Its practice is to publish material widely, making use of the
internet whenever possible. Material published includes consultation
papers, responses to consultation (where confidentiality is not
an issue), policy decisions and reasons for reaching decisions,
safety related technical information and guidance material for
applicants for licences, certificates etc. The CAA holds seminars,
workshops and safety promotion evenings and regular meetings with
major stakeholders and representative organisations.
30. The CAA works within a number of charters,
including the Airspace Charter and the codes of practice for Safety
Regulation and Consumer Protection. It abides by the principles
of the Better Regulation Task Force and produces Regulatory Impact
Assessments and Environmental Statements as required by the Department
(8) How are regulators accountable
to the public other than through Parliament; what opportunities
do the public have to express particular concerns to regulators;
how do regulatory bodies relate to their associated consumer watch-dogs?
31. It is open to both the aviation industry
and the public to approach the CAA with their concerns and the
CAA will address these where it has the necessary powers to do
so. The CAA publishes on the internet guidance on the nature of
its regulatory powers and how complaints can be made to it, including
details of individual points of contact.
32. The Air Transport Users Council (AUC)
is the consumer watchdog for the airline industry. The Council
acts as the independent representative of air passengers and complements
and assists the CAA in its duties to further the reasonable interests
of such passengers. The functions of the AUC are funded by the
CAA and the CAA undertakes to respect the AUC's freedom to propose
changes in its Term of Reference, determine policies and establish
priorities in the performance of its functions within the framework
of agreed operational and financial objectives.
(9) How effective is public consultation
by regulators; what opportunities do the public have to contribute;
to what extent do the public make use of those opportunities?
33. For the most part, the aviation industry
is the CAA's "public" and consultation on both regulatory
and financial issues takes place extensively with individual companies
and with representative organisations. The CAA consults widely
both on its general regulatory policies and on specific proposals
and frequently exceeds the minimum legal requirements to consult.
It also advises a large number of interested parties when it issues
consultation papers giving information on their subject matter
and where they may be located. For major consultations, such as
on a periodic price review, the CAA will also issue a press release
and provide briefings. Those who respond are generally those with
the most immediate interest in the outcome (airports, NATS, airlines
and their representative organisations) although other groups
do actively participate where issues are narrowly defined. The
CAA often conducts a two stage processa written consultation
followed by hearings with industry participants.
34. The CAA also initiates public consultations
when considering changes in the legal framework, for example with
respect to the terms of air travel organisers' licences or changes
in licensing policies. The consultations are promulgated through
press notices issued to the general media, and although interest
tends to be concentrated in the trade press, there is usually
some coverage in the consumer pages of other newspapers.
35. The CAA regularly reviews the effectiveness
of its consultation processes and considers them to be sound.
They are reviewed internally but do involve stakeholders and may
be benchmarked against external sources.
(10) To what extent do the needs or
concerns of the public guide the work of regulators; are regulators
instruments of Government or representatives of the public?
36. The CAA is a statutory body and has
to operate within the relevant legislation. It has been given
objectives relating to the interests of those who use airports
and air traffic services on the one hand and to the interests
of the regulated companies on the other. The CAA has to give the
appropriate weight to each of its objectives. However, the CAA
has an overriding duty to maintain safety, which is of principal
concern to the travelling public.
(11) How independent are regulators
of Government; what factors do or might compromise their independence?
37. The CAA's decision making process is
independent of Government and Government respects that independence.
The CAA was set up following the Edwards Report into British Air
Transport in the 70s and an advantage noted by Edwards was that
the CAA Chairman would be able to speak on and for civil aviation
with greater freedom than civil servants. The CAA must exercise
its functions in accordance with the general objectives and particular
duties set out in the statutes which confer those functions. The
CAA has agreed a Sponsorship Statement with the Department for
Transport, its sponsoring department. The statement sets out frameworks
for policy, structure, planning and financial matters, external
accountability, monitoring and review matters. The Sponsorship
Statement recognises that while the Department for Transport may
issue guidance to the CAA on general and specific areas of Government
policy, that guidance will take full account of the CAA's statutory
duties and must not conflict with these.
38. Section 2(4) of the 1982 Act provides
that the CAA is not to be regarded as a servant or agent of the
Crown or as enjoying any status, privilege or immunity of the
Crown. For administrative purposes the CAA is classified by the
Machinery of Government and Standards Group, Cabinet Office as
a Public Co-operation. In the national accounts the CAA is classified
as a Public Corporation in the public sector.
39. The Secretary of State has power in
Section 6 of the 1982 Act to give Directions to the CAA in the
interests of national security, international relations and environmental
matters. Section 66 of the Transport Act 2000 empowers the Secretary
of State to give Directions to the CAA imposing duties or conferring
powers on it with regard to air navigation. Section 92 of that
Act empowers the Secretary of State to give Directions indicating
considerations to which the CAA is to have particular regard in
deciding whether an dhow to exercise its functions under Part
I of the Transport Act 2000. Section 93 empowers the Secretary
of State to give Directions to the CAA and others in any time
of actual or imminent hostilities or of severe international tension
or of great national emergency.
Sir Roy McNulty, CBE
Civil Aviation Authority
28 March 2003
13 Where reference is made to aviation in this memorandum,
this should be read as covering the full range of activities within
the CAA's remit, including air travel. Back