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5 October 2012

Yesterday it was remarked that our regulators believe they operate the most “flexible” civil aviation regulatory system in the globe.  This one comment was almost enough to make “the boots” trip and fall.  In our world the issue is most definitely not “flexibility” but about identifying the hazards, analyzing the risks, identifying the most appropriate mitigations, putting in place good treatment plans,  and constantly communicating and consulting in a dynamic and ever changing world.

You will notice no mention of the word “flexible”. Our Civil Aviation Act and Rules when written around twenty years ago unleashed a massive improvement in productivity but sadly over time parts of the Act have become dated and Rules in a number of areas simply have not kept pace with the change whether it be in technology, the way we do business or in the way we think about the next generation of safety and economic gain.

Most countries are now rising to the challenge, even that powerhouse of aviation Namibia has looked to New Zealand expertise to design its regulatory framework.  However in applying that New Zealand based expertise you can see the author, one Peter O’Brien, has contextualized the framework to ensure that the operating environment is highly competitive both at home and internationally

It is this passion for creating the most competitive aviation environment whether it be relative to other modes of transport in New Zealand or internationally that seems absent from our regulator’s thinking.

An example to the forefront of “boots thinking” are the announced but yet to be formally published new charges for CAA services.  The most significant increases in licensing medicals and hourly rate charges are designed to eliminate as far as possible cross subsidization.  In economist speak this is a good thing because I don’t want to pay for something I don’t need or want.

However cross subsidization is an inextricable feature of the competitive world we live in. Your mission is to extract that extra dollar from wherever you can.  Our regulator of course does operate in a competitive world – they are monopolies and with monopolies cross subsidization is a no go. Of course coupled with this philosophy is normally the concept of ability to pay – a term which to our knowledge has not been explored in CAA’s most recent pricing consultstions

The “boots” being the good economist she is (yes the terrible secret is out) thought we should critically examine the proposition that CAA is a monopolist. In most respects they are however New Zealand CAR 121 operators can deliver all their services via the Australian registry.  This would lower their payments to CAA as they would not be using CAA services.  Under the Trans Tasman Mutual Recognition Agreement New Zealand pilots and Engineers could do all of their qualifications and medicals if necessary in Australia.  In fact today we have more New Zealand Pilots doing their ATPL in Australia than New Zealand merely because our environment is “uncompetitive”.

Returning to the issue of cross subsidization CAA has always been very clear that the primary reason why our medical/license and hourly rate charges are increasing is because they must remove cross subsidization.  In a monopoly market we think if  this is to the primary pricing philosophy then it should apply to all “customers” not just some.

In looking at the CAA’s recently published statement of Intent one of the biggest cross subsidies going is Industry of government services.  Around $1m of the proposed $30m collected from industry goes to paying for services consumed by government.  These services are called “public good” services and cover such things as providing advice to Minister’s, attending international meetings, rules development and the like.  It is most unusual, in any regulated operating environment in New Zealand or around the world, that industry pays for such things.

And this now gets to the nub of the issue that the competitive environment – domestic or international has not been a central consideration in setting charges yet it is the most critical consideration if we are to achieve our growth and sustainability objectives.

From these comments you can anticipate that we will continue to vigorously debate with all government agencies aspects of their performance which affect the industry’s performance. What we will not do however is engage in a public slanging match.  At the end of the day the rest of the world is rapidly shifting towards open and highly competitive economies and we in this part of the globe must be far more fleet footed.

It’s interesting for example the Brits have just done a deal with their equivalent of our Aviation New Zealand to establish a four year framework of funding and activities.

An Australian medical certificate (Pilots,ATC) costs $A75 per transaction compared to the proposed $315 for NZ; a PPL license issue costs $80 in Australia, $230 in New Zealand.  I think you get the picture!!!

Our key competitors do not impose GST on foreign training.  While New Zealand is making very small tentative steps towards recognizing that foreign pilot training in certain circumstances should be exempt imagine what a wholesale exemption would do for the New Zealand economy.  

To trade our way out of the black hole requires some innovative thinking.  We’ve responded recently to Minister Joyce suggesting we work from common and understood data bases as opposed to “nonsense in nonsense out” click here We hope this will gain some traction as there’s a definite willingness on the part of most government agencies to look toward solutions. 

CAA’s decision to substantially increase charges is seen to a degree as a solution the caveat is that there must be an exponential improvement in their performance and value for money delivered to industry. We have no doubt that these considerations are to the forefront of the Chairman, members of the Board and Director’s minds.  
Until we speak again take care and stay risk aware

Red boots
red boots

What's coming up?


We’ve just completed our second six month review with the AIRCARE auditors, Navigatus, about of how the programme is performing click here.  Some pretty interesting stuff has come out like how 40% of AIRCARE accredited operators display excellence in all aspects of their business and a further 27% are very close to this level of excellence.  We will be sharing this information with our key stakeholders. All information will of course be anonymous so individual companies/operators are not named.
The information also shows that many Operators are tripping up on the Noise Abatement standard. It’s not hard, but there is a bit more to it than attending the noise abatement training course.
Operators need to go through the accreditation process too and time for compliance with DOC is fast running out.

AIRCARE™ Noise Abatement Training Courses
27 Nov. Auckland (PM) venue Green Room
28 Nov. Rangiora (PM) venue Black Hanger
29 Nov. Queenstown (PM) venue or exact location tba
click here to register

AIRCARE™ ACCREDITATION process read here


AIRCARE™ accreditations Click here


Las Vegas Heli expo announcement – airfare prices and capacity have moved substantially, making the charter option totally uncompetitive – that’s the bad news.  The good news is we’ve worked with Stephen Parson’s, House of Travel, and developed the most competitive package available – it’s a short term deal click here

NZ Drug Detection Agency Seminar click here

Members encouraged to fill in business survey – this morning we sent separately to you a survey on the performance of the public service. This is an opportunity for you to raise any concerns you have. Clearly the pending CAA charges are to the forefront of a number of your minds from the comments we have received thus far. We’re urging you to make your views known click here.

Training News - 29-31st October we are concurrently holding two three-day training courses in Wellington; ‘Aviation Risk Management’ and ‘Safety Management Systems’. Immediately after on 1-2nd November an ‘Operational Risk Management’ course will then run. Learning this now places you in a great position to participate in the new regulatory environment heading our way in mid 2013. Its about future proofing your business!!!!

The ‘Aviation Risk Management’ course presents concepts in risk management and give participants the practical skills and knowledge required to apply risk management processes within the context of aviation operations. It caters for all risk areas within the aviation industry, and the course will enable participants to conduct risk assessments and develop a qualitative risk assessment or risk management plan on any activity, project, task or function within their unit.

‘Safety Management Systems’ course is designed to introduce participants to SMS background, definition and application. The course presents leading concepts in SMS, provide insights into industry Best Practice practices from around the globe, and is designed specifically to give participants the practical skills and knowledge to implement or enhance SMS within their organisation. For participants who would also like to take part in the Operational Risk Management course, they can complete this immediately after.

‘Operational Risk Management’ course covers the application of risk management to all operational activities. The information presented will allow trainees to conduct risk assessments and develop qualitative risk management plans on any activity, project, task or function. As a key element of the safety management system, ORM is suitable for supervisors, safety professionals and line staff. To participate in this programme you must have undertaken both SMS and RM programmes.

All courses are strongly focused towards practical outcomes, and participants are encouraged to consider a safety or risk-based initiative they can develop and work on, with assistance from the facilitator, during the course.

Aerosafe Risk Management develops and facilitates all three courses on behalf of the AIA. Aerosafe has significant experience in delivering training to the aviation industry globally, and has had an association with the AIA since 2000. For further information and registration details, go to We recommend you register for the course before 19th October to secure your place as numbers are limited to a maximum of 18 per programme. .

Air New Zealand Aviation Institute secures 10 year engineering training contract with Air Niugini click here

Strong demand on United States routes has led Air New Zealand to add flights from next year click here

The Environment Court has denied Queenstown Airport Corporation (QAC) permission to rezone land click here

Managing airports in rural areas click here

Commission spurs rethink on shipping line, civil aviation regulations click here

Consultations open at present time  click here
EMS NZ and Ambulance Standard click here

Inclusion of unfair contract click here


Early 2013 Activity in Singapore and Indonesia click here

Your October 2012 Tourism & Hospitality Newsflash! click here

Orient Aviation October click here some great stuff on pilot training

LanzaTech lands $15m in new funding click here Lanza Tech are the recipients of the Richard Pearse Award for innovation and Excellence

HAI President's Message click here

Air safety agency proposes new limits on flight duty (EASA) click here

Namibia: Outdated Civil Aviation Act to Be Replaced click here - an absolute parallel of our regulatory environment but with a very different user pays regime

NTSB Chief Promotes 21st Century Aviation Safety Toolkit click here

IATA Financial Forecast Telephone Briefing with Tony Tyler - 1 October 2012 click here - an hour long but the best analysis we've heard of the international environment  

Product Announcement and Information

Exclusive EFTPOS offer for members Click here 

NZ FOREX click here - addressing your foreign exchange requirements

GSB Trade Card click here
AIA members deals
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