Newsdesk – General Aviation

The CAA though informs us that the tender was based on the full attributable costs including an overhead cost and a rate of return on assets employed. Basis of the CAA entering into such activity is to earn additional revenue from its Flying Unit and thus ultimately reduce the cost of the CAA to industry. A senior GA company spokesman though stated unequivocally that this new policy of directly competing with the very people who fund the CAA’s bureaucracy could well see the eventual slaughter of the goose that laid the golden egg. Meanwhile, efforts in New Zealand to bring the beleaguered Airways Corporation, their equivalent of our CAA, (refer NZ News, this issue) to a sense of fiscal reality have paid off with the Corporation now rethinking its total pricing formula. Charges for GA will be up to 70% less than previously announced with the Corporation now admitting that it had “got its sums wrong”. Not only affected though was GA, Air New Zealand had been keeping its own accounts on what it owed with the result that a $NZ10m discrepancy evolved. ANZ challenged the Corporation’s accounting methods and won with the result being that the airline will now bill itself! Meanwhile, across the world, the UK’s Office of Fair Trading is investigating the pricing formulas used by the British Airports Authority. their equivalent of our own FAC. OFA criticises the BAA for over charging on almost all of the services it provides with the end aim of the organisation being purely to make money for its new shareholders without any concern for the economic reality of its tenants. Sounds familiar, then turn to our special FAC/CAA charges feature in this issue for an update on our own situation Down Under.

Atc Disruptions at Ksa Destroy- Ing Regional Aviation:

As the Air Traffic Control situation at Sydney’s Kingsford Smith Airport dragged into its fourth month, it was clearly apparent that considerably more damage was being done to airlines relying upon KSA than was initially appreciated. Hit hard in particular, in terms of their total cashflow, were small third level operators such as Easter, Hazeltons and even Air NSW.

Hazeltons cited a traffic loss of between 20 and 30% depending upon the severity of the day’s delays, something that cost the successful NSW regional an estimated $250,000 in lost revenue during April and a further $200,000 in May. To a small regional this is money straight off the bottom line, it is irreplaceable and if the situation continues, as it has, it leads to a customer mentality where the frequent flyer begins to seek out permanent alternatives such as car, coach or rail links into Sydney. During April, some 70% of the carrier’s services were subject to slot controls into KSA with many scheduled services having to be abandoned due to lack of access.

The only thing saving the airline in these circumstances was the timely arrival of its 36 seat Shorts 360 late last year Prior to this the largest aircraft in the 19 aircraft Hazelton fleet was the 19 seat Bandeirante. What the airline does now is to consolidate its regional NSW flights largely into its Orange and Dubbo hubs for on-carriage into KSA. A system that is understandably schedule sensitive to any disruption at Australia’s busiest airport.

 Fac Profit Likely to Create Waves on Already Disturbed Waters:

Verified reports that the FAC has turned in an unaudited operating profit of $45m in its first full year of operation are likely to create calls for a greater degree of cross-subsidisation between the authority’s various airports.

In revealing the not inconsiderable profit, the FAC also verified that the bulk of this profit was derived specifically from non aviation sources. Considering not all of the FAC’s present portfolio of airports were operational and taking into account the unusually high ratio of once only start up costs for the first year or so incur- red in the course of setting up any business, this profit must be looked upon as potentially conservative in companson to what should be earned during the present fiscal year and beyond.

General Aviation airports also operated at a loss of $14m during the period while revenue for 1989/90 from the newly instituted GAIT scheme is expected to gross barely $2m from the GA sector. Without the burden of GA, the FAC would have logged an operating profit in the region of $60m. The FAC has defended its high earning capability by announcing that last year it initiated airport development pro- grammes to the value of $410m with a further $540m scheduled for this year alone. Additionally, despite their constant loss making tradition, the FAC was also investing an additional $6m in improving its various GA airfields through 1989/90.

Despite this there are sure to be calls from the GA industry to share the burden a little more fairly due to the limited ability of the small operator to be able to pay ever increasing FAC (and CAA) charges while the authority itself logs what by any account is a considerable return on assets, most of which has already been long paid for by the taxpayer. To the small charter operator with two Navajos and a 310, the total profit will be less impressive due to that operator’s requirement to continually pay higher airport charges to what is seen by him as largely just another tax reaping apparatus of the Federal Government

A Better Way:

As part of the ever grow- ing resentment within the general aviation industry of the government’s crippling cost recovery policies, the Moorabbin Airport Tenants’ Group has come up with an alternative scheme which, if implemented, would re- duce the majority of problems facing GA under cost recovery while still covering the ‘user pays’ principle, achieving the cost recovery requirement and at the same time allowing the industry to pay as they proceed with almost no paperwork.

According to the Group, the scheme will allow the FAC and CAA to minimise their overheads and risks, allow the regulators to get on with the job of regulating, and make FĂC facilities more attractive and therefore foster general aviation development while minimising the need for owner/operators to cut corners in order to save money.

The proposed scheme assumes that the CAA and FAC would operate as one, more efficient (and less costly) authority, that the regulators be just that and not ‘businessmen entrepreneurs’ and that the principle of 100% cost recovery from GA should be based on real costs and that their calculation is fair to all concerned. The scheme notes that a realistic method of apportioning attributable costs for military, RPT and GA must be developed. Four basic areas of charging would be made: registration fees, sale of printed material, rental/lease income and the fuel levy.

The benefits of the scheme are many and varied and include: an annual registration fee of all aircraft would cover the costs of maintaining the register, maintenance files and an airworthiness safety watch. Income would be instantaneous, confusing charging practices eliminated and safety protected as there would be no incentive to cheat the system to avoid costs. Activity and growth would be allowed to develop naturally rather than be inhibited as it is now, industry cost of recovery would easily be computed for planning purposes and costs spread throughout the year for easier cash flow planning on both sides.

The combining of the CAA and FAC is certainly the key to the scheme’s success with a leaner, more efficient bureaucracy not only costing less to support itself-and thus saving GA money-but also being able to perform its role as a regulator much more effectively. Two problems however face the adoption of a such a scheme. Firstly, the thought of bureaucracy being reduced to an efficient level is naturally abhorrent to a born-and-bred career bureaucrat and secondly, such a scheme could only be implemented by the Minister respons- ible via the Cabinet as the CAA and FAC couldn’t, and undoubtedly wouldn’t, initiate such a move themselves even if that was possible.

AA Comment: Let’s hope they at least have a long hard look and realise what damage is currently being done to a vital part of Australian business, a business that is of great benefit to the community as a whole. Perhaps that’s the first job that should be tackled-selling general aviation to the politicians, the public and the press.

 Bureau Recommends Procedure Improvements After Collision:

The Bureau of Air Safety Investigation, in a report Issued today, has recommended improvements in aircraft movement procedures and other safety control measures following its investigation of a mid air collision near Coolangatta.

Four people – a flying instructor and a pilot under instruction in each aircraft – received fatal injuries in the collision, which occurred on 20 May 1988 The Cessna 172 and Piper PA38, broke up and fell into swampland.

Recommendations from the report have also been forwarded to the CAA. The recommendations include: a review of air traffic services associated with primary control zones around airports, the objective being to reduce the complexity of the task of air traffic controllers, greater emphasis be placed on the need to match the planning and provision of appropriate facilities and staffing at controlled aerodromes with air traffic growth rates, more emphasis be given to training air traffic personnel in how humans process information: alternative methods of achieving aircraft separation in controlled airspace around aero- dromes be considered; consideration be given to a requirement that all registered general aviation aircraft be fitted with multiple, rapid flashing, omnidirectional, white strobe lights, and the feasibility of fitting collision alerting systems on general aviation aircraft be explored.

The Bureau created a computer graphics simulation of the flight paths of all the aircraft in the circuit area at the time of the collision, providing in effect a three dimensional view of what happened. Investigators were able to ‘see’ the sequence of events leading up to the collision from the pilot and copilot positions in each aircraft and from the control tower. This particular simulation system was unique and had proved invaluable in the Coolangatta investigation and in other air safety inquires.

As a result of the Coolangatta collision the Bureau would evaluate the practicability of the ‘see and be seen’ principle in controlled and uncontrolled airspace and prepare a report The report would include a study of the general visibility from light aircraft and examine whether pilots operating in controlled airspace subconsciously delegate their responsibility to avoid collisions to air traffic controllers.

Fac Looking At Airport Tanker Fee:

The FAC is evaluating a proposal to levy on-airport fuel tankers.

Tankers would be levied on the same basis as the present GAIT scheme, thus a 16 tonne tanker would pay $8,000 per annum in a new FAC tanker tax. According to the FAC, the scheme, if it is implemented, would be paid by fuel companies and would not apply to small operators using tankers of less than 1. 5 tonnes in weight. The levy would also only apply to heavy tankers on the FAC’s secondary airfields and would be aimed at recouping funds to repair the tarmac and asphalt damage incurred in the operation of such heavy vehicles at GA airfields. It is expected that a decision on whether or not to implement the new fee will be made during the course of this issue

Ian Bidmeade Where Are You?

On page 6 of May issue we suggested that any GA operators wishing to make contact with a member of the Regulatory Review Task Force (refer Recce May AA) could contact lan Bidmeade at the CAA’s Canberra HQ. Unfortunately lan is not stationed in Canberra (our mistake) and can be contacted at the CAA, GPO Box 2270, Adelaide, 5001. Apparently the Canberra office does not forward on his mail as a number of people who contacted him have rung us to tell us that their letters have been returned. Sorry about the confusion but why doesn’t someone within head office forward on his mail for what is such an important requirement?

Metro V Delayed:

Fairchild has decided to delay development of its Metro V 19 passenger turboprop commuter airliner, a development of the well known Metro III with a taller cabin and T-tail.

Inadequate hot and high performance margins is the reason given for the delay and, consequently, the company is looking at a larger wing and more powerful Garrett TPE331 engines to remedy the problem. First deliveries were onginally to take place in the first quarter of 1991 with first flight scheduled for late this year. New dates have not yet been announced. A total of 77 Metro Vs were on order and option.

People

Mr Maurice Hill has been appointed as the new Chief Executive of Fantasia CRS systems. Mr Alan Woods has been appointed Chairman of the new Australian Defence Industries Pty Ltd (refer Newsdesk) while Russell Fynmore is now Deputy Chairman and Ken Harris is Managing Director. Mr David Jull has taken over the portfolio of shadow minister for Aviation & Tourism, Mr Jull succeeds Charles Blunt who is now Leader of the National Party Mr Jim Carlton becomes the new shadow minister for Defence following the resignation of Peter White. Mr Dick Thompson has been appointed as the new Executive Director of the Regional Airline Association of Australia, Dick succeeds Brian Deveson who has retired. Mr Leo Brogan has been appointed as General Manager of Chappell Salikan Weil Associates Pty Ltd. AVM Hans Roser has replaced AVM Billie Collings as Assistant Chief of Air Force Materiel. AVM Collings has retired.

The Bottom Line

Singapore Airlines has reported a pre-tax operating profit of $51. 1bn for an aftertax profit of $5985m for the year to March 31 1989. Traffic growth increased in RPK by 12% for a revenue load factor of 74. 3% Lufthansa has reported a pre-tax profit of DM 249m for 1988 on revenue of DM 1. 4bn, a 14% increase on the previous year. PanAm lost $US151m in the first quarter this year against a total 1988 loss of $US73m, substantial traffic loss in the wake of Lockerbie being the principal cause of the loss. TNT has reported a nine month operating profit of $A148mon a 7% lift in revenue for the reporting period. Boeing has reported sales of $US4bn for the first quarter of 1989 against $US3. 6bn for the same period last year. Net earnings were $US161m, reduced by ongoing delays in several key projects which affected cash flow during the period.