CAA Strategy and Policy
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1 CAA Strategy and Policy Ms Tamara Goodwin Senior Air Services Negotiator Department for Transport Great Minster House Zone 1/26 33 Horseferry Road London SW1P 4DR 14 July 2017 Dear Tamara APPLICATION BY BRITISH AIRWAYS PLC TO LEASE FOREIGN-REGISTERED AIRCRAFT 1. Thank you for your of 10 July 2017 asking us to provide advice as to whether this application complies with Article 13.3 of Regulation 1008/2008. Details of the application and our reasoning are set out below. Applicant: British Airways plc Lessor: Qatar Airways Aircraft: Nine Airbus A320, registrations A7-LAA, A7-ADA, A7-ADB, A7- ADC, A7-ADD, A7-ADE, A7-ADF, A7-ADG and A7-ADI Type of lease: Wet Duration of lease: 17 July to 1 August 2017 inclusive, an extension of a previous wet lease of the same aircraft from 1 July to 16 July Publication in CAA Official Record series 2: 7 July 2017 Objections/representations 2. The period for objections or representations ran until midnight on 13 July We have received comments on the application from six stakeholders, which have been copied to the Department. EU Regulation 1008/ Article 13.3 of Regulation 1008/2008 states that A Community air carrier wet leasing aircraft registered in a third country from another undertaking shall obtain prior approval for the operation from the competent licensing authority. It then sets out the conditions which must be met for the competent authority to grant an approval. Civil Aviation Authority CAA House 4th floor Kingsway London WC2B 6TE Telephone +44 (0)
2 4. Article 13.3(a) relates to safety and requires the Community air carrier to demonstrate to the satisfaction of the competent authority that all safety standards equivalent to those imposed by Community or national law are met. I confirm that the CAA is satisfied in this respect. 5. We are forwarding to the Department the CAA s lease approvals issued under the EASA Air Operations Regulation 965/2012, an exemption under Article 14.4 of Regulation 216/2008 from the need for third-country pilot licence validations under Annex III of the EASA Aircrew Regulation 1178/2011, and the CAA s foreign carrier permit issued under Article 250 of UK Air Navigation Order Qatar Airways already holds a CAA foreign carrier permit in respect of its UK/Qatar services and an EASA Third Country Operator certificate. 6. Article 13.3(b) requires that one of three conditions must be fulfilled for a Community air carrier to use a wet-leased aircraft registered in a third country. In this case BA states that the application conforms with condition (i) in that the lease is justified on the basis of exceptional needs. BA states that the application is in relation to the same aircraft and on the same terms as that which has been approved (subject to all necessary changes in relation to dates and flights to be flown), and subject to the same conditions as have been imposed by the CAA and Secretary of State for Transport in relation to that wet lease. 7. BA states that it seeks approval of this wet lease in order to minimise the significant impact on the consumer that would otherwise occur by reason of cancellation and delay due to the unavailability of Mixed Fleet cabin crew members of Unite. Operation of Air Services in the Community Regulations In accordance with Regulation 15, the Secretary of State is the competent authority for the purpose of granting an approval under Article 13.3 of Regulation 1008/2008, for determining whether one of the conditions set out in Article 13.3(b) is fulfilled, and for the purposes of Article In accordance with Regulation 16, the CAA is the competent authority for the purpose of determining whether the safety standards set out in Article 13.3(a) are met. Reciprocity 9. The Department confirmed in its of 10 July 2017 that it did not intend to refuse this application on the grounds of a lack of reciprocity with Qatar (Article 13.4 of Regulation 1008/2008). Background 10. I refer to my letter of 30 June 2017 concerning the previous period of industrial action by Mixed Fleet Unite cabin crew between 1 July and 16 July BA has now applied for a wet lease between 17 July and 1 August inclusive to cover a further period of industrial action between 19 July and 1 August inclusive Although this is not the first occasion that there has been industrial action during this dispute, we understand that on earlier occasions prior to July 2017 BA has wet leased aircraft solely from within the EU. Because Regulation 1008/2008 states that EU carriers may freely operate wet leased aircraft registered within the EU except where this 1 BA s original application stated that the industrial action covered the period 17 July to 31 July 2017, but BA amended this by on 11 July 2017 attributing the change to a notification error which we understand was an error within BA itself. Continued (2 of 7 pages)
3 would lead to endangering safety, the procedure followed for those wet leases was different from the case now under consideration. 12. As with the previous application, the proposed industrial action takes place in a peak seasonal period (now including school summer holidays) when it is more difficult to lease in alternative capacity from an EU carrier. BA states that it has again sought to secure aircraft capacity for the period in question from EU operators. It has established that one EU operator has availability for a total of nine days within this period, but BA says this is not continuous and does not fulfil its operational need. BA says there is no availability from other EU carriers. BA says that the lack of adequate EU aircraft for lease over this period is the only reason that this application is being made. 13. The impact of cancellations on consumers is also compounded by the higher load factors in the peak season, meaning that fewer alternative seats are available. This would become cumulative as the disruption period continues, with further cancellations impacting greater numbers of passengers and even further reduced availability. 14. BA s application to wet lease the nine Qatar Airways aircraft also covers the period 17 to 18 July It therefore runs consecutively from the previous period. But no industrial action is planned for those two days. 15. BA originally stated that it had included the period 17 to 18 July 2017 in the proposed lease period: because the removal of Qatar Airways from the operation at the expiry of the currently approved wet lease and its re-introduction only on the commencement of the further strike action on 19 July, presents British Airways with both operational and safety risks that will be avoided if it is able to utilise wet lease cover to bridge this gap. In order for British Airways to minimise these risks at this time of year, when the aviation infrastructure is subject to high numbers of movements, passengers and restrictions throughout Europe, it is proposed that British Airways continues to utilise Qatar Airways in this period. 16. BA subsequently submitted an amended justification for including these two days in the lease period. BA advised us on 12 July that it is not looking to cover the Interim Disruption Period 17 th and 18 th July with Qatar operated aircraft. However, at this time it is not clear as to how many mixed fleet cabin crew staff will report for duty and therefore it is important that we are in a position to be able to provide as full a schedule as possible and to be able to continue flying our passengers to their destinations. Therefore the requirement to have the Qatar operated aircraft available for use is still a priority all be it in a standby capacity over the two day period. CAA leasing procedures 17. The proposed lease is an extension of an existing lease, and the total period exceeds one month. The CAA s standard procedure for non-eu lease applications therefore applies. 18. Where a leasing application needs to be determined more quickly than our standard procedure would allow (i.e. allowing 10 working days for objections or representations), the CAA adjusts the period of time for submission of comments on a case-by-case basis. In each case the CAA will identify a period that is, in its reasonable opinion, appropriate. Continued (3 of 7 pages)
4 19. In this case, BA was notified of the industrial action on 5 July. BA submitted its application to extend the wet lease on 7 July. We accept that BA would have required time to establish what wet-lease capacity would be available in the EU market. This situation has therefore arisen relatively quickly, and consequently the CAA has decided to reduce the usual period for objections or representations since there would be insufficient time for the Secretary of State to consider the CAA s advice and make a decision, bearing in mind that the lease is proposed to begin on Monday 17 July. The CAA nevertheless needed to give sufficient time for us to be made aware of all the representations or objections that stakeholders want us to take into account. 20. When we published this application on 7 July, we therefore gave until pm on 13 July to allow the maximum time for responses consistent with these considerations. Comments received on the application 21. The CAA has received responses from BALPA and five individuals, a total of six, objecting to the application. These have been copied to the Department. CAA advice 22. As explained above, for a Community air carrier to use a wet-leased aircraft registered in a third country, the applicant must satisfy the CAA on safety requirements, pursuant to Article 13.3(a) of Regulation 1008/2008, which it has done, as explained earlier in this letter. The Regulation also requires that one of the three conditions must be fulfilled. 23. BA has justified the application on the grounds of exceptional needs under Article 13.3(b)(i) ( exceptional needs ). Exceptional needs is not defined in the Regulation. There is, as far as we are aware, no case law relating to what this term means in the context of the Article. There is however some UK case law on what exceptional means in different legal contexts, indicating that it means, in its normal usage in the English language, out of the ordinary, not commonplace, departing from a general rule. 24. The CAA believes that airlines should be free to choose the aircraft they employ, and, subject to the provisions of EU law, will advocate a liberal policy when advising the Department on applications for the use of aircraft not registered in the UK. 2 The CAA s advice is therefore confined to whether the application meets Article 13.3(b)(i) of Regulation 1008/ Recital 8 of the Regulation states: In order to avoid excessive recourse to lease agreements of aircraft registered in third countries, especially wet lease, these possibilities should only be allowed in exceptional circumstances, such as a lack of adequate aircraft on the Community market, and they should be strictly limited in time and fulfil safety standards equivalent to the safety rules of Community and national legislation. 26. The European Commission has produced an Information Note to help Member States interpret this Regulation, although this Note states that it is not adopted or in any way approved by the European Commission and should not be relied upon as a statement of the Commission s views. 2 CAA Official Record Series 1, Annex 6: Statement of Policies on Route and Air Transport Licensing Continued (4 of 7 pages)
5 27. The Information Note states that the applicant and the licensing authority have to evaluate the exceptionality of the needs on a case-by-case basis. It says that consideration should be given to the nature of the need (a service or activity that is not stable or definitive) and its expected duration (limitation in time, suitable to be properly addressed within the timeframe of the authorisation maximum 14 months). It gives examples, which do not include industrial action. 28. We note that leasing in aircraft to cover for industrial action will help to mitigate the consequent disruption to consumers and reduce the strain on Heathrow s infrastructure at a time of peak seasonal demand. In respect of the previous lease we accepted BA s assertion that the scale of passengers impacted over the period would be in the order of thousands, and that if BA is forced to cancel flights the impact is cumulative as available alternatives reduce and rebooking becomes significantly more difficult. Our view on the previous application was that this can be considered an exceptional need, in that the disruption will mean that BA is unable to use some of its own fleet from causes which are unusual and unlikely to happen frequently and that the need flowing from this, in the context of the peak family holiday season, is exceptional. We take the same view in respect of the current application, as the circumstances giving rise to the exceptional needs are essentially the same. We do not agree that BA being a party to the industrial dispute and having been given notice of the action means it is not an exceptional need. We think therefore that in this case, as with the previous application, there is an exceptional need. 29. Our position described above clearly relates to the period of the industrial action, 19 July to 1 August However, there is one element of this application which is different from the previous one, which is the first two days of the lease on 17 and 18 July. We have considered whether these two days require a separate justification on the grounds of exceptional needs, given that there is no industrial action on these two days. BA wishes to have the Qatar aircraft on standby in case cabin crew do not report for work on these two days (which fall between the two periods of industrial action). But BA has justified the lease on the grounds of exceptional needs. While we understand BA s commercial need to maintain its schedule, and the potential disruption for passengers that a crew shortage may cause, the Department has asked us to assess BA s application against the EU Regulation. In that context, we found the argument advanced by BA unconvincing, without any evidence to back up its assertion that these circumstances, and therefore the exceptional needs, will (or will be likely) in the event to arise. 30. We therefore conclude that it is difficult for us to accept the grounds of exceptional needs for the two days 17 and 18 July without further evidence from BA. If a problem does emerge on either of these days, then it remains open for BA to justify an expedited application to wet lease aircraft, including potentially the Qatar aircraft, for the CAA and the Secretary of State to consider. CAA views on comments received 31. This advice takes into account the comments we have received about this application. However, as the aviation regulator, our comments necessarily focus on the aviation rather than industrial relations aspects of the points raised. 32. It is argued that BA's need is an ongoing requirement and not in any respect exceptional, as evidenced by the second application to extend the wet lease, and that if industrial action occurs next month or the following month BA will lodge another wet lease request. The CAA s position is that we will always treat these applications on their individual merits. Continued (5 of 7 pages)
6 33. It is argued that BA has not adequately explored the possibility of leasing in aircraft from within the EU. Unlike the other criteria of Article 13.3(b) (ii) and (iii), Article 13.3(b)(i) of the Regulation does not explicitly require BA to give a preference to leasing EU-registered aircraft, and we do not see Recital 8 as contradicting that. Nevertheless, BA s application states that it is unable to source sufficient EU aircraft and provides some evidence of its efforts in this respect. BA states that the only EU-registered aircraft available is a single aircraft with limited availability across the period, and attempting to integrate this single aircraft into its schedule on the ad-hoc occasions when it is available would be operationally difficult and in no way meet the requirements for disruption coverage. 34. It is argued by BALPA that exceptional needs within Article 13(3)(b)(i) should be interpreted narrowly and must be limited to an airline s need for an aircraft, whereas BA s actual need is not for aircraft, but for cabin crew with which to operate such aircraft. The CAA does not agree that the Regulation should be applied in this way. Article 13(3) provides a mechanism to allow an EU carrier to substitute wet-leased capacity, namely a package of aircraft, crew and associated support, when, for example, such package elements of its own capacity are, for whatever, reason unavailable. It is also noted that the approval to be obtained under Article 13(3) is for the operation which implicitly must relate to the whole package, including crew in the case of a wet lease. 35. It is further contended that BA has provided no evidence of seeking alternative solutions to third country wet leasing, such as using cabin crew from other airlines (either from BA associated companies or other airlines). Whilst the CAA would encourage BA to think constructively in exploring alternatives to wet leasing, there is no such requirement within Article 13(3))(b)(i) of the Regulation and the European Commission Information Note (paragraph 18 of my letter of 30 June 2017 refers) is silent on this issue. We do not think this is a legal condition needed to be fulfilled by BA. 36. BALPA also raise two other points: circumvention of the Employment Agencies Regulations 2003 and Article 11 of the Convention on Human Rights (the right of assembly). The CAA does not think that these points are of relevance to the application for approval of the proposed operation submitted by BA. In the case of the 2003 Regulations, the prohibition in those Regulations is on an employment agency, not on an employer or another employer, such as Qatar Airlines. The point in relation to Article 11 is not relevant since the approval, if granted, would not limit or restrict the right of industrial action by the mixed fleet cabin crew. 37. It is argued that the proposed lease raises safety considerations. As part of the process for approving the previous wet lease, BA conducted a safety audit of Qatar Airways, which it submitted to the CAA and which we evaluated together with any independently derived safety information we may hold. Qatar Airways also currently holds an EASA Third Country Operator certificate and a seasonal CAA foreign carrier permit in respect of its existing operations to the UK. As required by Regulation, Article 13.3(a) of 1008/2008, BA has demonstrated to our satisfaction that all safety standards equivalent to those imposed by Community or national law have been met and will continue to be so. The flights in question will be conducted in accordance with the current BA approved flight time limitations scheme. Recommendation 38. The CAA has considered the circumstances of this case, including the comments that have been submitted. Based on the evidence submitted to us, we are satisfied that BA has justified the proposed lease for the period 19 July to 1 August 2017 on the basis of exceptional needs. Continued (6 of 7 pages)
7 39. The CAA would require further evidence in order to be satisfied that the proposed lease for the period 17 July to 18 July 2017 has been justified on the basis of exceptional needs. 40. The CAA is satisfied that BA has demonstrated that all safety standards equivalent to those imposed by Community or national law are met. 41. The Secretary of State may therefore wish to take this advice into account in making his decision under Article This advice does not contain information that is subject to Section 23 of the Civil Aviation Act Yours sincerely Trevor Metson Continued (7 of 7 pages)
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