CAA price increases: Some facts

CAA price increases: Some facts


This article was written by Brian Mackie. The opinions expressed are his own

The nation’s journalists yawned in unison when a press release from Transport Minister Gerry Brownlee landed with a dull thud on their desks on August 28. This was an announcement designed to be a non-event and it got the treatment it seemed to deserve (and probably what its authors prayed for): the editorial spike.

But underneath that spike lay a shocking story.

What the press release – about Civil Aviation Authority cost restructuring – didn’t contain was any mention of costs. Gerry Brownlee’s spin doctor wrote: “The new framework will ensure the CAA is sufficiently resourced to continue delivering air safety benefits in a rapidly changing environment and to provide opportunities for continued economic growth.

“Confidence in the safety and security of the civil aviation system underpins the substantial economic contribution of the aviation sector in New Zealand.”

For those who face these increases – some of them more than 300 percent and one of them more than 750 percent – the details came as a serious shock. And they can see little evidence that so-called cost-recovery measures were linked to Mr Brownlee’s vague description of “rapidly changing environments” or could remotely enhance air safety, security or continued economic growth.

The CAA claims to be cash-strapped and making a loss. As part of its justification, the CAA says that this is the first review of prices in 15 years. Which begs the obvious question: Have the CAA’s bean-counters been asleep on their watch for one and a half decades?

The authority, whose staff between 2010 and 2011 rose by about 20 percent and saw its personnel costs rise from $71.6 million in 2009 to almost $78 million in 2011, moved its operations closer to the Beehive, from Lower Hutt to Featherston St last year. The increased office overhead is said to be costing about $8 million a year. In 2010, it reported cash and cash equivalents of $66,373,000. By 2011, this had fallen to barely more than $37 million.

Little wonder, then, that the flying community suspects these increases in fees and levies, which came into force in November, have more to do with covering CAA internal overheads than its claimed “user must now pay” justification.

There have been plenty of price increases and unwelcome impositions on aviators since some pilots threatened to flour-bomb Parliament over alleged price-gouging in the 1990s. The introduction of fees for flight plans had a negative result: hardly any private pilot now bothers to file one. More recently, the nation’s tiny community of private pilots has been forced to pay for weather information from MetService. The much larger and more vocal constituency of boaties and trampers does not. Also worrying, in terms of air safety, MetService has not revealed how many private pilots are paying more than $100 a year for its MetFlight weather information.

Pilots already pay for Airways services when they enter controlled airspace for a landing. CAA recently withdrew its plan to charge for any and all Airways services to private aviators, claiming that under current conditions, it would be too hard to administer. The truth is that the proposal was ill-considered, unfair and would endanger flight safety because many pilots would simply avoid using Airways services by flying below or around them – and possibly into a mountain.

The CAA is not alone in extracting dramatically increased fees from the industry and private operators. One publicly owned airport company not a million miles from Hastings this year raised landing fees for all aircraft twice in the space of six months, imposing a total increase of more than 60 percent. Gisborne Airport went one better, with a 106 percent increase in landing fees effective from December, making it potentially one of the loneliest airports in New Zealand.

The CAA expects to recover around $4 million more per year from the aviation industry during the next three years, before it takes another look at the cherry. While the fruit might look ripe for the picking today, many private fliers believe it will have long-since rotted on the tree by 2015.

Among the CAA’s new and sometimes draconian increases are:

A 757% increase in the cost of transferring ownership of an aircraft

The cost for this simple piece of paperwork (as easy as the no-fee exercise when selling a car) rises from $30.67 to $263. While the CAA seeks to justify its new costing structure on the basis of user pays, its hugely increased transfer fee is the same for owners of rag-and-tube microlights as for an airline selling a Boeing 747. The airline can pass on its costs to passengers, and claim tax deductions as part of its overheads. A light aircraft owner bears the full impact.

A 410% percent increase in the cost of a pilot’s medical

The CAA will now charge $313 (including GST) to “audit” CAA-approved medical examiners’ reports. This is odd, because some years ago the CAA assigned responsibility for air crew medicals to CAA-authorised examiners. Now it seeks to charge for “auditing” its own approved doctors’ reports, raising the cost of an annual (or sometimes six-monthly) check-up for everyone from a private pilot to an airliner captain from $500 to something just south of $800.

A 59.7% rise in the annual aircraft registration fee as part of an annual charge to aircraft owners that now includes a $1 increase for CAA’s mysterious “participation” levy

The registration fee is for maintaining the CAA’s record of aircraft owners on a small and slightly-less-than-fast-changing database. It’s reasonable to ask why the cost of maintaining such records has risen so swiftly and so sharply – and how this dramatic price rise will aid safety, security, and continued economic growth. Most pilots still do not know what they get for the participation fee.

A monumental increase in the fee for an aircraft’s permit to fly

This simple piece of paper, which until November cost nothing, will now cost you more than $200. If you make any material change to your aircraft – for example, changing its propellor – you’ll have to fork out.

A $120 charge to prove PPL applicants can speak English

Thanks to an ill-considered and badly implemented rule laid down by the International Civil Aviation Organisation (ICAO) – of which our CAA is a compliant member (and some furious users claim the CAA only imposes rules that suit its own interests) – every student applying for a private pilot’s licence must now pay more than $120 to sit an exam proving they can speak English. This bizarrely interpreted regulation, originally intended to deal with non-native-English speakers operating international flights, captures a 65-year-old British-born writer now living in New Zealand, who annually edits about one million words of translations into English from 95 languages, has been a journalist for 40 years and has 600 hours of flight experience. He won’t be applying for a private pilot’s licence any time soon.

Commercial operators will recover most or all of these sometimes dramatic cost increases from customers or from Inland Revenue. Farmers will pay more for crop-dusters, and passengers may not notice the few extra cents on their tickets. You’ll be hard put to spot the changes on your supermarket bill – but rest assured, the inflation will be buried there.

For private flyers, there can be no refunds for increased CAA costs or GST on fuel. These fee increases will hit young students (our future generation of pilots) hardest of all, and will make flight training in New Zealand that little bit less attractive to foreigners. Microlight pilots pay road tax on the petrol that powers their aircraft, but they cannot reclaim tax intended for the highways their aeroplanes will never use. This is not the fault of the CAA. Here, Finance Minister Bill English is to blame for yet another example of poor governance.

In explaining their fee and levy increases, the CAA and Mr Brownlee claim to take a dim view of what they describe as cross-subsidies, expecting us to overlook the fact that most forms of taxation involve a degree of cross-subsidisation, whether it be through rebalancing wealth to the poor in terms of welfare, or paying compensation to Maori for the alleged errors of unidentifiable, long-dead invaders. The Government’s Consolidated Fund contains road taxes, some of which is spent on healthcare. The CAA is a state-owned enterprise, at the beck and call of ministers such as Gerry Brownlee. It is a quasi-governmental organisation, and it holds a stranglehold monopoly over everyone who chooses to fly in New Zealand.

Fewer than 5 percent of the world’s population have ever flown, and a fraction of that tiny minority have piloted an aeroplane. It’s said that only two of the CAA’s board hold any kind of aviation qualification, and Gerry Brownlee has no experience at all. No wonder, then, that aviators are seen as sitting ducks by bureaucrats and politicians who believe that flying is the preserve of the wealthy. But take a look next door. You may find that your neighbour is building a microlight aeroplane in his or her garage.

The small group of private aviators in this country – the folk who fly those little aeroplanes – might appear, on the surface, to be easy targets. They are certainly vulnerable to all sorts of danger. But as the saying goes amongst all pilots facing ground-based politicians, aviation rule-makers and (very rarely) unsympathetic air traffic controllers: Don’t let the bastards get you down.

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