House of Commons Transport Committee The Work of the Civil Aviation Authority Thirteenth Report of Session 2005–06 Report, together with formal minutes, oral and written evidence Ordered by The House of Commons to be printed 25 October 2006 HC 809 Published on 8 November 2006 by authority of the House of Commons London: The Stationery Office Limited £30.00 The Transport Committee The Transport Committee is appointed by the House of Commons to examine the expenditure, administration and policy of the Department for Transport and its associated public bodies. Current membership Mrs Gwyneth Dunwoody MP (Labour, Crewe) (Chairman) Mr David Clelland MP (Labour, Tyne Bridge) Mr Jeffrey M. Donaldson MP (Democratic Unionist, Lagan Valley) Clive Efford MP (Labour, Eltham) Mrs Louise Ellman MP (Labour/Co-operative, Liverpool Riverside) Mr Robert Goodwill MP (Conservative, Scarborough & Whitby) Mr John Leech MP (Liberal Democrat, Manchester, Withington) Mr Eric Martlew MP (Labour, Carlisle) Mr Lee Scott MP (Conservative, Ilford North) Mr Graham Stringer MP (Labour, Manchester Blackley) Mr David Wilshire MP (Conservative, Spelthorne) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/transcom. A list of Reports of the Committee in the present Parliament is at the back of this volume. Committee staff The current staff of the Committee are Tom (Clerk), Annette Toft (Second Clerk), Clare Maltby (Committee Specialist), Louise Butcher (Inquiry Manager), Tony Catinella (Committee Assistant), Ronnie Jefferson (Secretary), Henry Ayi-Hyde (Senior Office Clerk) and Laura Kibby (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Transport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6263; the Committee’s email address is [email protected] 1 Contents Report Page 1 Introduction 3 Our inquiry 3 2 Management of the CAA 6 Appropriateness of the CAA’s structure 6 Remit of the CAA 6 Governance of the CAA 7 Structure of the CAA 7 Potential conflict of priorities 8 Extending the CAA’s remit 10 Relationship with the Department for Transport 10 3 European Aviation Safety Agency 13 Establishment and remit of EASA 13 Background 13 Continuing role of the CAA 14 Principle of EASA 14 Current effectiveness of EASA 15 Operational problems faced by EASA 15 Potential impact on safety in the UK 16 Safety research 16 Resolving the operational problems faced by EASA 18 Transfer of responsibilities to EASA 19 Impact on CAA staff 20 4 Performance of the CAA 23 Performance and efficiency 23 Performance indicators 23 Performance targets 25 Technical efficiency 27 Transparency and accountability 28 Good practice 28 Accessibility of information 28 Appeals 29 Better regulation agenda 29 Regulatory impact assessments 32 Quality and effectiveness of RIAs 32 Appropriate use of RIAs 33 5 The CAA’s resources 34 The CAA’s funding model 34 External audit 35 Joint Review Team review of the Safety Regulation Group’s costs and charges 37 Rate of return 37 2 Value for money and financial accountability 39 Recruitment and retention 40 6 Economic regulation of airports 42 Airport price control reviews 42 Background 42 Effectiveness of the CAA’s reviews 43 Designation 44 Competition Commission 45 Constructive engagement 46 BAA dominance of London airports market 49 7 Airspace regulation and aviation sustainability 50 Environmental constraints on aviation growth 50 Air navigation functions and the CAA’s environmental remit 50 Background 50 Balancing environmental objectives in developing airspace policy 51 Scope for extending the CAA’s environmental remit 53 8 General aviation 55 Definition 55 General aviation issues 55 CAA focus on general aviation 55 Burden of regulation on general aviation 55 Delegation of regulation 56 Flight training and skilled labour 56 Access to airspace and airports 56 The CAA’s strategic and regulatory reviews of general aviation 57 9 Conclusion 59 List of recommendations 60 Formal minutes 66 Witnesses 68 List of written evidence 69 3 1 Introduction Our inquiry 1. The Civil Aviation Authority (CAA) is the independent regulator for civil aviation in the UK. It was set up in 1972 as a public corporation responsible for: x economic regulation of the aviation industry; x air safety regulation; x airspace regulation; and x aviation consumer protection. In addition, the CAA advises the Government on aviation issues, produces statistical data and provides specialist services.1 The specific objectives and functions of the CAA are set out in the Civil Aviation Act 1982, the Airports Act 1986, the Transport Act 2000 and the directions given under section 66 of the Transport Act 2000.2 2. In October 2005, we announced that we intended to undertake an inquiry into the work of the CAA.3 We sought to consider the full scope of the CAA’s operations other than its involvement in the financial protection of air travellers—which we had previously looked at.4 More specifically, we intended to consider: x the remit, structure and powers of the CAA; x the performance of the CAA in relation to its statutory objectives and functions; x the effectiveness and efficiency of the CAA’s regulatory framework; x the effectiveness and efficiency of the CAA in the general discharge of its duties; and x the effect of growing international and European Union co-operation on the work of the CAA. We received memoranda from 64 organisations and individuals and a list of those giving oral evidence is provided on page 68. We are grateful for the assistance provided throughout this inquiry by the Scrutiny Unit and by our specialist advisers: Mr Peter Morrell, Director of Research at Cranfield University’s School of Engineering, and Mr Peter Vass, Senior Lecturer at the University of Bath’s School of Management. 1 Corporate information, http://www.caa.co.uk 2 Department for Transport, Sponsorship Statement for the Civil Aviation Authority, para 2.1 3 “The work of the Civil Aviation Authority”, Transport Committee press release, Press Notice 9 Session 2005–06, 13 October 2005 4 See Transport Committee, Second Report of Session 2005–06, Financial Protection for Air Travellers: Second Report Abandoning Effective Protection, HC 636. 4 3. The civil aviation sector has grown substantially in size since the establishment of the CAA: between 1972 and 2005, the number of civil air traffic movements at UK airports increased from 0.7 million to 2.3 million, while the number of passengers travelling to and from UK airports rose from 57 million to 228 million.5 The remit of the CAA has also changed somewhat in recent years, particularly following the privatisation and separation from the CAA of National Air Traffic Services (NATS) in 2001 and the establishment of the European Aviation Safety Agency (EASA) in 2003. The Government’s recent Air Transport White Paper also has significant implications for aviation.6 4. The Sponsorship Statement for the CAA, first formulated in 2002, includes a duty for the Department for Transport and the CAA to review critically the CAA at unspecified intervals to examine the continuing need for the CAA’s regulatory activity and the extent to which its functions, could be more effectively undertaken in other ways, as well as considering the efficiency and effectiveness with which the CAA carries out its functions and uses its resources.7 We were unable to identify such a critical review having ever taken place. The Chairman of the CAA, Sir Roy McNulty, explained to us that, while the CAA undertook an annual review process, a more in-depth consideration of whether its statutory framework remained appropriate had not been embarked upon.8 We were further told by the Department that, while a strategic review of the CAA’s role might happen in time, particularly in reaction to the current change in the regulatory framework in the EU, it had no specific plans to undertake this in the immediate future.9 5. The aviation sector has undergone significant changes since the creation of the CAA, but there have been few adjustments to the CAA’s framework. The Government has been negligent in its failure to undertake strategic reviews of the role, remit and objectives of the CAA as required by the Sponsorship Statement. We recommend that the Department for Transport carry out a root and branch review to examine the continuing need for the CAA and the extent to which its functions could be more effectively undertaken in other ways. We expect the Department to carry out a similar review at least once every ten years. 6. While operating generally well against its remit, our inquiry identified a number of challenges for the CAA resulting from the ongoing development of the UK aviation sector. The CAA must modify its role and its structure due to the transfer of responsibilities to EASA, for example. However, the present inability of EASA to satisfactorily undertake many of these responsibilities complicates the situation and makes it vital that the CAA does not relinquish control of any aspect of safety regulation in the UK prior to EASA achieving a suitable standard of operability. In addition, the overall expansion in the market means that the CAA must serve, communicate with and be accountable to, an 5 Department for Transport, Transport Statistics: Great Britain 2004, Table 2.1; Civil Aviation Authority, UK Airport Statistics 2005, Tables 2.3 & 13.2 6 The Government’s White Paper, The Future of Air Transport, published in December 2003, set out a strategic framework for the development of airport capacity in the UK over the next 30 years, designed to inform decisions on future planning applications.