Technology Explained — Agile Gliding Weapon

The aviation industry is clearly demanding that the possible future savings suggested by AirServices are available now and it is up to ASA to provide them rather than simplistically increase its charges to recover increasing costs. In the face of strong industry objections, the CAA Board reduced it to 1.35cpl and, some months later in November 1995, the Parliament went further and disallowed the increase altogether by foregoing, as a one-time concession, the return on assets portion of the excise.

This year, if the Government could be persuaded to again forego its required return on assets, the projected increase in Avgas excise was 0.5cpl. But, if the return on assets was included, the projected increase was almost 3cpl – an unacceptable 17.5% increase in excise. Interestingly, this latest proposed increase was less than that proposed, and rejected, 12 months earlier. Without the Government agreeing to forego its rate of return on assets, and such an agreement would seem to be far from assured, it is difficult to understand how AirServices could argue a 17.5% increase as being less than that of inflation. Certainly the industry did not see it that way.

For the airlines, the argument was much simpler. They were faced with a real increase in enroute charges of 5.6% for 1995/96 which would increase their annual operating costs by millions of dollars. Such real increases had to be unacceptable – particularly since AirServices freely admitted it had made no attempt to include any allowance for the significant efficiencies and expenditure reductions that they expected to put in place during the forthcoming financial year.

Obviously the decreasing costs of previous years, and hence charges, must eventually reach a stage where no further reductions can be made and gradual increases, to at least keep pace with inflation, must be introduced. Whether this point has yet been reached is arguable, but that was clearly not the argument of this most recent budget.

Projected cost increases in some areas went far beyond any inflationary expectation and strongly suggested that previous planning estimates were far too optimistic. Staff costs were projected to increase by almost 16% to $360 million, with most of the $47 million increase being taken up by staff training requirements for TAAATS (The Advanced Australian Air Traffic System) and salary increases based on earlier enterprise bargaining agreements. Other significant increases included a 23% increase in budgeted transport and travel and a 71% increase in services and contracts. Such cost increases necessarily translate into increased industry charges.

For general aviation, the proposed increases in Avgas excise were complicated by the policies of previous years. Twelve months earlier, the then CAA had proposed an increase of 4.15 cents per litre in the Avgas excise.

General Aviation bodies through to the major airlines, represented by the MIA, have all rejected AirService’s proposed price rises.

The Minister’s reported demand for a full briefing on this draft budget would suggest that some amendments are now likely. Hopefully the changes will reflect the industry’s real concerns and expedite some long overdue reforms – particularly the continuing misuse of Avgas fuel excise to fund the control towers at the secondary, and other, airports.

The inequity of all Avgas users paying for services they don’t all use has long been recognised, but little has been done to correct it.

Change is obviously necessary, but who is going to make the “brave” decisions when everyone is understandably bunkered down? Perhaps it is time the Minister provided some defence for his troops so that they can perform their allotted tasks without having to continually duck and weave to avoid the slings and arrows of the discontents.

The previous Minister seemed blissfully unaware of the old axiom that “loyalty is a two-way street” – hopefully this one will be different.