Annual Report 2011/12 Contents 1. Vision and Mission 2 2. Chairperson’s Report 3 - 6 3. Director of Civil Aviation’s Report 7 - 10 4. Board of the South African Civil Aviation Authority (SACAA) 11 5. Corporate Governance Report 12 - 17 6. Executive Management Committee 18 7. Strategic Risks 19 - 20 8. Performance Information 21 - 33 9. Operational Review 34 - 83 10. Financial Review 84 - 144 11. Acronyms 145 - 146 Annual Report 2011/12 1 Vision A model enabler of a safe, secure and environmentally cognisant aviation industry. Mission • To promote aviation safety and security in civil aviation through oversight and regulation in line with international standards; • To minimize the impact of the aviation industry on the environment; and • To promote transformation, development and sustainability in partnership with industry players. 2 South African Civil Aviation Authority Chairperson’s Report 1. Introduction It gives me pleasure to present the strategic overview and results of the South African Civil Aviation Authority (SACAA) for the end of March 2012. Of particular note is an improvement trend in both technical operations and support functions, although much still needs to be accomplished. Let me take this opportunity to thank the Department of Transport (DoT), fellow Board members experiencing their fi rst operational cycle, and management and employees for having contributed to the organisational upswing. May I also take this opportunity to welcome the recently appointed Director of Civil Aviation (DCA), Mr Zakhele Thwala. SACAA welcomes the appointment of the Honourable Minister Ben Martins, MP and the Honourable Deputy Minister Ms Sindisiwe Chikunga, MP and trusts that this will increase velocity in both organisational and national delivery. Let me extend our appreciation to the Hon. Minister Sibusiso J Ndebele, MP for his immense contribution, and I trust that he will continue to add value to the fi ght for service delivery. 2. Strategic Focus One of the fi rst Board assignments was to review the organisation’s strategic objectives, and this was done in a highly consultative manner with inputs from management, industry, and DoT representatives. Organisational outcomes from the above strategic session were further aligned to the DoT’s and culminated in the following organisational goals: • Active participation infl uencing national, regional and continental aviation development • A continuously improving safety and security environment (operations, aircraft, aviation, security, and infrastructure) • Infl uence on the breadth and pace of the industry development and transformation agenda • Reduced impact of aviation on the environment • Embedded principles of corporate governance, underpinning the work of every SACAA team member and service • Resilient organisational capability and capacity that embraces a high-performance culture. Annual Report 2011/12 3 The above organisational goals were aligned to the DoT Aviation Strategy under the following four out of a possible six outcomes: Outcome 1 – An effi cient and integrated transport network for social and economic development Outcome 2 – A transport sector that is safe and secure Outcome 5 – An increased contribution to job creation Outcome 6 – An increased contribution by transport to environmental protection. 3. Regional Contribution South Africa has a responsibility to contribute to the Southern African Development Community (SADC) and the greater African Indian Ocean (AFI) region. A positive milestone in this direction was the African states’ agreement to improve aviation security in the region, in line with the International Civil Aviation Organisation (ICAO) 2010 Assembly Security Declaration. Further service to the African brotherhood was concluded by a Memorandum of Understanding (MOU) with the New Partnership for Africa’s Development (NEPAD). This agreement solicits SACAA to train people from various countries in diverse aviation-related professions. I am encouraged by the ongoing work of the Cooperative Development of Operational Safety and Continuing Airworthiness Programme (COSCAP-SADC), a regional organisation earmarked to consolidate aviation safety oversight. While the current model separates the above safety-oriented organisation from another regional Civil Aviation Security Project (CASP), a security model; SACAA believes that amalgamating the two means taking an effi cient route that will limit overhead costs and enhance cross-functional coordination. 4. Industry Transformational Footprint A lack of industry transformation is a major concern. The table below indicates 72% dominance by South African white males. South African Historically Disadvantaged Individuals (HDIs) add up to 8.2%, indicating unsatisfactory equity levels. Naturally this racial slant manifests itself in all technical aviation areas. In order to contribute to a transformed aviation, SACAA is enforcing adherence to BBBEE codes when dealing with aviation-related institutions. I realise that it will take more than SACAA’s efforts to effect meaningful industry-wide change; hence the organisation is pursuing greater cooperation with relevant national stakeholders. African Male Coloured Male Indian Male White Male South South South South Foreign Foreign Foreign Foreign Total African African African African National National National National 2011/2012 National National National National Aeroplane Licence 204 900 68 60 129 390 9384 1154 12289 Helicopter Licence 44 95 16 2 18 5 1897 194 2271 Other Licences 860 489 203 8 168 39 3900 833 6500 Total 1108 1484 287 70 315 434 15181 2181 21060 % 5.3% 7% 1.4% .33% 1.5% 2% 72% 10.4% 100% 4 South African Civil Aviation Authority 5. Organisational Sustainability Organisational sustainability covers a wide area and this was a challenge in the past, particularly from a fi nancial sustainability perspective. History links fi nancial defi cits with ad-hoc tariff increases. However, the 2011/12 fi nancial year indicates positive results with a fi ve-year fi nancial model implemented to ensure organisational sustainability. SACAA is already experiencing the benefi ts from such an exercise. A steady passenger activity growth is paramount, as 75% of the revenue generated by the organisation results from passenger ticket sales. R25.00 R20.00 R15.00 R10.00 R5.00 R0.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 The above table indicates the historical and futuristic growth of the Passenger Safety Charge (PSC), and is based on steady passenger growth numbers. This futuristic view culminated with the PSC increasing in March 2012 from R12 to R16, mainly to fi nance amongst others, the long-neglected IT infrastructure. From a going concern perspective, the sky is the limit. 6. Performance Management System A simplistic Performance Management System (PMS) was adopted for the 2011/12 fi nancial year, replacing a historic system with serious defi ciencies. This approach was preferred in order to reward hard-working employees in a competitive aviation sector, dictated by both local and international demands. However, the future looks bright with the process of procuring a system at its fi nal stages, and it is believed that this will contribute to employee retention. 7. Fraud Hotline It gives me great joy to place another brick in the foundation of proper governance through the implementation of a hotline. This tool is of benefi t to the organisation, as a number of successful investigations were initiated through it. A trend of note is the declining number of reports, indicating a change in behaviour patterns, hopefully for the best, as these could also be attributed to employees being discreet about their indiscretions. 8. Parting Shot Looking in the rear-view mirror, a number of important events come to mind that I must mention. The departure of fellow Board members, Dr Sangweni and Sello Motau, is a loss to the organisation and I can only wish them well in their future endeavours. Reappointments are a top priority, to ensure that the Board quorates due to limited member numbers. Yes, there has been robust debate, but all in the interests of the organisation, and therefore I would like to express my sincere appreciation of all involved, including the machinery that makes the Board function. Annual Report 2011/12 5 Though a signifi cant all-round improvement has been witnessed during the year under review, there are specifi c areas of improvement, particularly structural alignment to business processes. Systems integration and processes in the interests of effi ciency maximization, enhanced record-keeping, and maintenance of the audit trail are essential when operating in a security environment. SACAA is walking the talk by ring-fencing funds for capex, at an unprecedented level. As we enter 2012/13, I trust that we will give our utmost for organisational benefi t. P Riba Chairperson 6 South African Civil Aviation Authority Director of Civil Aviation’s Report A full year in the realm of aviation does seem like a moment; looking back I am pleased with the achievements of dedicated SACAA employees, albeit under trying circumstances. Organisational results speak for themselves in both technical and support functions, and due accolades must be given to DoT and the Board. 1. Organisational Performance Organisational performance from a support function perspective can be traced to the Auditor-General’s results, which is an independent assessment. Once again an unqualifi ed audit opinion, expression of a going concern, and unqualifi ed performance opinion is welcome. Let me take this