1 March 2012 COMPLAINT ABOUT NEW CHARGES, FEES, LEVIES, SET BY THE CAA AND EFFECTIVE 01 NOVEMBER 2012 CIVIL AVIATION ACT 1990 REPRINT AS AT 1 JULY 2011 To the Regulations Review Committee Introduction This complaint is from: Blair Boyle Executive summary I am making a complaint about the regulations under the grounds of Standing Order 315(2). My complaint is in three parts, as set out below: 1. The introduction of an exorbitant Medical Application Fee for what is mostly, on the part of the CAA, a purely administrative function. 2. A 109% increase to the hourly rate charged by the CAA from $135.70/hr in 2012 to $284/hr by 2014/15 3. A 309% increase in administrative fees charged for the issuance of various types of aviation licences, even though the written and oral exams, flight tests, etc are carried out by a third party company (Aviation Services Limited). 1
Arguments under specific grounds 1. Medical Application Fee. The medical Unit of CAA appoints independent Doctors as ME s (Medical Examiners) and AME S (Aviation Medical Examiners). With reference to the latter, an AME is authorised and appointed by the CAA to carry out aviation physical examinations. If the candidate is able to meet the required standard, the AME is able to write out a new Medical Certificate for the licence type, period of validity and any waivers that may be required (such as wearing glasses). If the CAA does not have confidence in the AME s that they themselves appoint, then any audit costs should be borne by the CAA. A case could be made for completely eliminating the CAA from all medical decisions (other than setting the standards required by ICAO) and the responsibility should rest with the doctors who issue the certificates. To be required to pay this $313 application fee on top of the cost of the medical examination with an AME, has pushed the level of costs beyond the threshold of affordability for a very large number of pilots. As an example, for a professional pilot of over 40 years of age, where medicals are required to be renewed on a six monthly basis, the yearly medical costs will increase from approximately $450 (two AME consultations of around $250 each) plus two filing fees of $313, making a total of $1076 pa. New Zealand is the only country out of the UK, USA, Canada, and Australia, which requires a six monthly renewal of a Class 1 Medical Certificate for professional pilots aged over 40 years. The other countries have an annual renewal requirement. Even with a six monthly renewal period, a pilot is really only certified as being healthy on the day of the medical examination. At all times outside of that, we are required to self certify our medical fitness on a daily basis and in a responsible manner. There is no reason why that couldn t be extended to a one-year renewal period in line with the other countries. 2
On that basis, there would probably be little statistical difference in medical problems, but there would be a loss by the CAA of $313 per individual in filing fees under this newly introduced levy. Cynically speaking, there would be nothing to stop the CAA doubling the filing fee in order to generate more revenue, as more and more pilots decide to relinquish their Class 2 Medical Certificate and opt out of the CAA medical certification system. After speaking to a number of General Aviation private pilots, the overwhelming view is that they do not intend to renew their Class 2 Medical Certificate, but to continue flying on a RPL licence (Recreational Pilot Licence) with an LTSA Medical Certificate which does not require the CAA involvement and subsequent fees. It is surely nothing short of a blatant rort (and I use the word in its true context) to be charging an administrative fee, which is far in excess of the fee charged by the medical examiner for the actual professional examination. 2. Increase in the hourly rate charged by the CAA. The CAA have increased the hourly charge-out rate from the current $135.70/hr in increments to a rate of $284/hr effective in the 2014/15 year. This amounts to an increase of 109% over current rates and which far exceeds any projected increases in the CPI over that period. A major part of the work that the CAA does for its client base is of a purely administrative nature and does not require any high level of technical expertise. To be charging an across the board fee of $284/hr for data base entry, and general office work is not only outrageous, but will discourage new participants from entering the aviation industry or cause existing operators to leave. In contrast, CASA, the Australian regulatory authority, recognises and differentiates between the charge-out rate for administrative functions and that for work which requires a degree of technical expertise. A comparison of CASA charges is set out in Appendix A attached to this submission. Below, are two examples of administrative functions that should require very little time to process, but which incur a substantial fee. 1. From time to time I am asked to carry out a CAA regulatory requirement and act as a test pilot on home built aircraft, which are in the 3
Experimental Category. Each time this occurs, I have to re-submit an application for a test pilot approval with a resume of my experience on similar types of aircraft before an approval is granted, despite having been through the process numerous times. The CAA charge out rate is always for an hour s work ($135.95) even though the time spent on actioning this should not have taken longer than 15 minutes. 2. I have also been asked to ferry an aircraft on a short, ten minute flight to an airfield for its routine annual inspection. The aircraft was a few weeks outside a period of grace allowed for renewing this annual inspection, and to do this legally, it was necessary to apply for a Special Flight Permit. After receiving a Special Flight Permit, the aircraft must then be certified as being safe to fly by a Licensed Aircraft Maintenance Engineer. There is no CAA involvement in this airworthiness certification process and the responsibility in determining the airworthiness of the aircraft, rests solely with the engineer and not the CAA. The cost of what was once again a principally administrative task, involving perhaps a quick check of the aircraft records on file from the previous year, should have been able to be accomplished in minimal time. However, the invoice for this Special Flight Permit amounted to $169.95 or the equivalent of one and a quarter man-hours at the present charge-out rate. This would increase to $287.50 under the new hourly rate. The General Aviation community has continually suffered by the inefficiency of the CAA and which it would seem, has an undisclosed policy of a minimum of a one hour charge-out by its administrators, for every job regardless of whether the particular task took only a matter of minutes to accomplish. 3. Administrative Fees charged for the issuance of licences and sitting exams. The CAA charges a fee of $56.22 for the administration involved in the issuance of various classes of aviation related licences. This could be considered to be fair and reasonable, however, as of 1 November 2012, this fee is going to increase by 309% to $230, in the case of Flight Crew licences, and to either a greater of lesser degree for Air Traffic Controller or Aircraft Maintenance Engineer licences. An increase of this magnitude is without precedent, is not related to the CPI, and is far in excess of what other aviation regulatory authorities such as CASA charge. The fee for the issuance of a PPL by CASA amounts to 4
NZ$73 and an increase to that same figure, by the CAA would have still amounted to a substantial 30% increase in the issuance fee. In an efficient organisation, the administrative process involved in confirming that the licence issuance criteria has been complied with, should not take the equivalent of 0.75 man hours per applicant. In contrast, the USA aviation regulator, the FAA makes no charge for the issuance of an aviation licence. On the subject of the cost of sitting aviation exams, they also range from being a minimum of 27% more to 254% more (in NZ$ terms) than that which the Australian regulator CASA charges. The CAA has contracted out the regulatory function of aviation exams and flight-testing to an outside company (Aviation Services Ltd). Whereas other regulatory authorities charge a standard rate per subject, (in the case of CASA, NZ$65 per subject) the rates ASL charge are substantially more. The table in Appendix A has a comparison of the rates. Recommendations 1. Medical Application Fee The medical application fee should be cancelled and an in-depth review of the role, operation and overheads of the CAA medical unit be carried out. I would suggest that the current practice of the regulator appointing independent Aviation Medical Examiners (AME s) is an excellent one and should be expanded to use their collective expertise and knowledge. At present, the CAA Principal Medical Officer has the power to refuse an application for a medical certificate on grounds some other ICAO regulatory authorities such as the FAA, CASA etc have no such problem with. In the case of a professional licence holder, who has a medical certificate declined, this amounts to a catastrophic, life-changing event, which can only be challenged through a District Court Appeal and / or a Judicial Appeal. There are several cases where the applicant, and his AME have furnished numerous reports from surgeons, specialists etc in support of the re-issue of a medical certificate, only to have it declined by the PMO. 5
What I would recommend is a tribunal of our most experienced AME s be set up, to examine precedents on a case by case basis, that have been set by other regulators such as the FAA. A recommended course of action that is evidence based, could then be conveyed to the PMO for implementation. Apart from the PMO, it should be possible to trim the CAA Medical Unit down to a predominantly clerical function, and thus substantially reduce overheads and costs to pilots, whilst still maintaining high medical standards. Further efficiency could be achieved by the implementation of an electronic medical filing system such as MedXpress, which is used by the FAA to achieve cost savings. 2. The CAA hourly charge-out rate. The hourly rate should be held at the current level pending a review of the present inequitable system of charging a rate for clerical administrative tasks that is far in excess of what other similar organisations charge. As I have stated before, it is ludicrous to suggest that a charge-out rate of $284/hr for purely clerical administrative tasks is fair and reasonable. The CAA is not taking into account the ability to pay of its client base as a driver for these hourly rate increases and the impact of the multitude of other charges that have also increased, threatens the sustainability of the entire NZ aviation business from recreational pilots through to commercial operators. For the training organizations which endeavour to attract overseas students, this exorbitant increase in charges for audits etc, may well be the tipping point and comes on top of other external factors such as the high exchange rate and escalating fuel and maintenance costs. Many organizations do not have the ability to pass on these cost increases without also risking losing their customer base in what is already a shrinking market, due to other factors such as the recent changes to student loans etc. This is most certainly the case for the general aviation recreational flying sector and is contributing to the expansion of the largely self-regulated sport aviation organizations. These organizations however, cannot provide the same professional level of pilot training that is provided by the regulated flight training organizations that are currently under threat by 6these increased CAA charges. Nor do the sport aviation organizations provide helicopter training, multi engine training, instrument flight training and other specialised ratings.
The increased cost of maintaining a professional Commercial Pilot Licence, Instructor Rating, Instrument Rating etc will ultimately cause many experienced Instructors to re-consider staying in the Flight Training business when they are already on minimal salaries or hourly rates. Once that experience has left the industry, the impact and flow on effect will be significant. I would therefore request an immediate review of the CAA by the Office of the Controller and Auditor General, to examine: 1. The efficiency of the CAA in regard to giving good value for money to its client base. 2. Ensure that the charging of fees for public sector goods and services meets not only good practice guidelines, but also are fair and reasonable and are comparable with other similar aviation regulators. Appendix A Appendix A tabulates the percentage increases in the hourly charge out rate and fees by the CAA pre 1 November 2012 and post 1 November 2012. The percentage increases range from a low of 41.36% to a high of 757.00%. It also compares them to comparable charges made by CASA, converted to NZ $ s and the percentage amount by which the CAA is more than our Trans Tasman regulator. 7
CAA Fees prior to 1 APPENDIX A NZ CAA Fees % Increase in NZ CAA Fees % Increase in After 1 Nov Fees Aust. CASA Fees in NZ $ Aust. CASA Fees in NZ $ NZ v Aust NZ v Aust % cost Hourly rate Admin related work Nov 2012 2012 terms difference $135.70 Flat rate of $208/hr rising to $284/hr in 41.36% rising to 109.28% $121 - $158/hr 72% more Work $135.70 2014 Flat rate of 41.36% rising $194/hr to 7% more needing an $208/hr rising to 109.28% $230/hr experienced Technical to $284/hr in 2014 Officer Medical Processing Fee Nil $313 313% $91 244% more Aviation Services Ltd Exam Fee $83 per No Change $65 per 27% more PPL subject X 5 subject subjects Exam Fee CPL $137 per subject x 7 No Change $65 per subject 110% more subjects $230 per No Change $65 per 254% more Exam Fee ATPL subject x 8 subject subjects Exam Fee $137 per No Change $65 per 111% more Instrument subject x 3 subject Rating subjects Licence Issue Fees Issue of a $56.22 $230 309.10% $73 215% more Private Pilot Licence
Issue of a Commercial $61.33 $230 275% $97 137% more 8
Pilot Licence Issue of an $61.33 $230 275% $121 90% more Airline Transport Pilot Licence Issue of a $56.22 $230 309.10% Recreational Pilot Licence Renewal of a $164.58 $266.00 61.62% $158/hr Maintenance Approval Test Pilot Approval Special Flight Permit $135.70/hr $135.70/hr Flat Rate of $208/hr rising 41.36% rising to 109.28% $158/hr 32% more to $284/hr in 2014 Flat Rate of 41.36% rising $158/hr 32% more $208/hr rising to 109.28% to $284 in 2014 Aircraft Registration Initial $174.80 $296 69.33% $158 87% more Registration Change of Ownership $30.67 $263 757.5% $158 66% more Reservation $30.67 $197 542.3% $79 149% more of Registration Mark Annual Fee $36.80 $99 169.02% Nil 99% more for Maintenance of Register 9