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As requested –

An overview of the Costs and Charges Review set up by the CAA Safety Regulation Group – pre-consultation

For the last two decades the Safety Regulation Finance Advisory Committee has debated the perception, by the major UK airlines, of unfair cross subsidy between charging schemes that have made their contribution to CAA costs larger than they think justified. No agreement has been possible on this subject and eventually pressure on the CAA chairman resulted in the setting up of a review team. This comprised members of the CAA and DfT together with representatives from industry. These included GAMTA (now BBGAA) however a formal approach by AOPA was rejected by the CAA. There was no representation from organisations representing private, sporting and recreational aviation.

The Joint Review Team (JRT) were tasked with assessing the following areas as part of the Costs and Charges Review –
·1. Perceived cross subsidies between charging schemes (in particular the AOC Scheme)
·2. Perceived cross subsidies within the AOC Scheme (between under 15 tonne operators and over 15 tonne operators)
·3. The impact of EASA on the CAA.
·4. SRG’s efficiency.
Following this the JRT produced proposals designed to virtually eliminate the perceived element of cross subsidy between SRG Charging Schemes in particular by “Heavy” AOC companies. The area of the impact of EASA on SRG was, at present, difficult to quantify and the question of efficiency within SRG certainly needs close examination since the benchmarking process undertaken as part of the JRT work is questionable in its relevance.

The basic fundamental principles assumed by the JRT were as follows –
·1. The CAA is required by legislation to fully recover its costs
·2. Costs shall be recovered from those regulated and charges shall be cost related, fair and reasonable
·3. Where costs cannot be recovered in that manner, charges shall be fairly and equitably distributed amongst the beneficiaries of safety regulation
·4. The CAA shall be transparent and provide clear cost information concerning the allocation and apportionment of costs between and within charging schemes
·5. Any material cross subsidies between and within schemes must be clearly identified and best endeavours made to remove such cross subsidies.

The first principle is worthy of examination in that civil aviation is possibly the only area of activity in the UK where the regulatory process is not controlled by a government department where policy aspects are paid for by central government. It could be argued that the Department for Transport should reimburse SRG directly for any costs incurred in policy matters in the same way as they do for the work of the Air Regulation and Enforcement department. If this were to happen then a significant element of SRG costs would not have to be recovered from those regulated by the CAA.

At the start of the JRT’s work the following were areas of significant concern –
·1. the cross subsidy from AOC Scheme to other schemes
·2. the allocation of IT costs to the AOC Scheme
·3. the allocation of some General Aviation Department costs to the AOC Scheme
·4. identifying the impact on the charging schemes of the transition of activities to EASA
·5. the cross subsidies within the AOC Scheme and Aerodrome Licensing/En Route ATS Regulation Schemes

At the end of the process it is stated in the final draft report that –
The primary objective of these proposals is to eliminate cross subsidies between schemes. By the end of the implementation period (with only limited exceptions) each scheme will recover its own costs plus a rate of return (3% of turnover).

It would seem that no account has been taken of possible improvements in the efficiency of SRG or indeed the need to regulate at the present level of cost by SRG. This is shown in stark relief when the CAA’s proposed Scale of Charges is compared with the charges recently published by EASA. It is acknowledged that the EASA charges focus on design and certification issues but many parallels can be drawn. One area where comparisons can be drawn is the man-hour charge. The EASA man-hour charge is €99 per hour whereas the CAA charge for light aircraft is currently £109 and this will increase to £119 (€156 to €170 @ €=£0.7). The CAA must be able to satisfy industry and aircraft owners and operators why its man-hour charges should differ significantly from those levied by EASA.

To justify its level of scrutiny of industry in the area of continued airworthiness, the CAA states that:
“…. It is quite true however, that the majority of other European NAAs have adopted less robust processes, which are not as resource intensive [as] the CAA’s processes. To avoid a reduction in safety standards for the UK during the transition period the CAA intends to continue to apply its current continued airworthiness processes, including continued airworthiness flight testing, until EASA has decided how it intends to discharge these responsibilities”

The CAA continues to maintain that its processes are the best but its stance must be properly justified because of the consequential costs imposed on the General Aviation sector. Is there any evidence that the “less robust” processes of the other European NAAs have resulted in a poorer General Aviation safety record than that of the UK? The lack of vigour in the JRT’s progression of opportunities for improvement of the CAA’s practices is deplored, especially where slavish adherence to outdated methods smacks more of an adversarial relationship comprising regulation by rote rather than forging a partnership and developing a spirit of mutual co-operation with industry and users.

While overall the level of cost recovery across the board in SRG would result in a 4% increase over the proposed period, the cost increases impacting on General Aviation are far greater in percentage terms. That for the General Aviation Scheme would rise, over a 30 month period, by a total of 108% or over 43% per year. This would have a very significant effect on certain aspects of General Aviation activity.

It is proposed that the income from Article 70 air display permissions will increase from £79K to £211K in the 30 month period which represents 167% or over 66% per year. It should be noted that there is a large discrepancy in the figures quoted in the report since it is stated that individual charges for the smallest airshow will rise from £157 to £550 – an increase of 250% or 100% per year. The Air Display industry in the UK produces the second largest public attendance at outdoor events. This must considerably increase aviation awareness in the public to the benefit of aviation generally. The increase proposed would have a potentially catastrophic effect on costs resulting in a probable marked reduction in the number of airshows annually.

Also the income from other forms of exemption and permission is intended to increase from £73K to £140K in the 30 month period. A total increase of 92% or over 36% per year. Most of this requirement for exemptions and permissions arise again from the Air Display industry and the effect would be the same as above.

Many airshows allow pleasure flying for the general public outside the period of the actual display. AOC operators using aircraft weighing less than 15 tonnes carry this out. Swingeing increases are planned in AOC charges for such operators amounting to 144% over 30 months or over 57% per year. This may well decimate the number of such companies in the future thus potentially removing one of the airshow attractions and certainly increasing the cost.

In addition within the Aerodrome Licensing Scheme the smallest category aerodrome of the type mostly used by General Aviation aircraft would have the annual charge for a day only licence increase to £3860 from the present £435 over a 66 month period or over 143% per year and a total increase of 787%. Once again a punitive financial imposition on General Aviation that might well result in a reduction in the number of the smaller licensed aerodromes.

Increases are proposed in the charges made for both the issue and the renewal of all pilots licences, both private and professional, which will have a financial impact on individual pilots. These are fairly small amounting to 9% each year over 30 months for professional pilots and 7% for private pilots. Nevertheless any increase over inflation is to be deplored.

The JRT acknowledges that further changes will be needed to the charges for the Airworthiness Scheme following the adoption of EASA requirements for the so-called non-expiring certificate of airworthiness and the introduction of Airworthiness Review Certificates. However, the JRT proposes substantial increases in the costs of Permits to Fly. Current charges range from £135 to £331 per year dependent on aircraft weight. After five years, these charges would be £383 and £935 respectively, an increase of 183% on current rates. The massive increase in these charges, coupled with the further increases facing aerodrome operators and air display organisers, combine to have a substantial detrimental impact on the future of airshows in the UK.

At the end of the paper the conclusion is drawn that the measures proposed will –
·1. Move towards full recovery of costs of regulatory activities from those regulated
·2. Significantly improve the cost-relatedness of charges
·3. Phase in new charges in all schemes over a period of several years to minimise the impact on charge payers.
·4. Eliminate cross subsidies between schemes and within schemes

While the aims of the JRT task may have been satisfied in terms of the first and last conclusions it is likely that this has been done without regard to the actual cost-relatedness of the charges as they will impact on the UK Air Display industry. Additionally although the phased introduction of the proposed charging structure will soften the financial impact the percentage increases in total will have a highly detrimental effect on this aspect of General Aviation.

Rather than impose these enormous increases on the level of cost recovery in General Aviation many consider it is imperative that considerable effort is put into assessing the level of efficiency within SRG. In addition serious evaluation needs to be made of whether the level of regulation applied to General Aviation by SRG is appropriate and if so whether it could be devolved to industry with resulting cost savings. The advent of EASA and its own scheme of charges will provide industry with an important comparator of costs. The CAA will come under growing pressure if the costs levied on the UK General Aviation sector fail to align with those of EASA.

I would emphasise that the JRT report and recommendations are in draft form only at present and may well alter prior to formal consultation after they have been approval by the CAA board. No further formal meetings by the JRT are planned however there may be suggestions for change by letter or email from members of the team.

It would appear that the formal CAA consultation will start in May and continue until July – possibly a two month period for response and rather more time than usual. It is imperative that all GA representative bodies along with individuals who enjoy the private, sporting and recreational aspects of GA make the maximum effort to oppose these iniquitous proposals that can only damage our interests.

As you can see these proposals are not in any way concerned with paying for ATC facilities – that is another dagger aimed at the heart of GA through the Single European Sky charging proposals.

One major point to bear in mind is that everyone expects a General Election to be held early in May. Prior to then every candidate from every shade of political persuasion will be more than anxious to satisfy points put to them by folk from within their constituencies. After the election then it may well be much more difficult to get them to take notice of a plea from those involved in General Aviation. It is in our best interests to take advantage of the situation to get the politicians on board. The shame is that we may well not know what is finally proposed until after the elections since they will almost certainly predate the start of the consultation period,

No doubt the various GA representative bodies will be orchestrating a comprehensive resistance campaign to oppose these draconian proposals.

Cheers,

Trapper 69

PS – for Damien B: The whole subject is of vital interest to all in GA and especially to those who are passionate about air displays. Perhaps the moderator might like to copy this whole thread over to Historic Aviation in addition so that we might increase awareness among those who follow that forum.

A search using Google on “Angel’s Playmate+Mustang” came up with quite a few hits. Here is a section of one of them –

A Stallion 51 Note:

“We are sad to say that Bruce Carr, long time friend and guest of Stallion 51, passed away in April of 1998 at the age of 74. We are proud to have known this true American hero and fighter pilot.”

Looks like its for real – what a story.

Cheers,
Trapper 69