Civil Aviation Amendment Bill: public hearings day 1

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Transport

16 February 2021
Chairperson: Mr M Zwane (ANC)
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Meeting Summary

Video: Portfolio Committee on Transport, February 2021

The Portfolio Committee on Transport convened on a virtual platform to receive submissions on the Civil Aviation Amendment Bill from the Airlines Association of Southern Africa, the Commercial Aviation Association of Southern Africa and Mr Rennie van Zyl, an aviation consultant.

The Airlines Association of South Africa was concerned about proposed amendments to the Bill that would make the Civil Aviation Authority (CAA) the preferential creditor when a business was liquidated, placed under business rescue or placed under administration. Airlines and other stakeholders had all suffered devastating losses due to COVID-19 but the Airlines Association did not agree that the Authority should be the preferential creditor. The Airlines Association also believed that the Aviation Safety Investigation Board should be independent of the Authority.

Members of the Committee inquired about the creditor status of similar entities in other countries and how government could better have supported the aviation industry. They also inquired about the basis for objecting to preferred creditor status for the Aviation Authority, and considered the question of funding an independent investigator.

The Commercial Aviation Association of Southern Africa was concerned about the Civil Aviation Regulations Committee losing its present independence. It warned against creating an impression that the Department of Transport or the Authority was seeking to ring-fence their authority. The Regulations Committee, in its current form, was a model of cooperation between the public and private sectors, and the Association appealed for it to be allowed to continue in this form.

Members of the Committee observed that the independence of the Regulations Committee needed to be balanced against the need to streamline the implementation of regulations. They also inquired about the status of similar committees in other countries.

Mr Rennie van Zyl made comments on numerous clauses. He argued strongly for a completely independent investigating body for the aviation industry, even if this meant funding it through an additional levy on passengers. The need for independence had been underlined by the accident involving an Aviation Authority calibration aircraft in January 2020. Mr van Zyl said that he, himself, had led an investigation into an accident in which he had had to criticise the Aviation Authority, who had contracted him as a consultant. Someone is his position might be reluctant to criticise the Authority.

Members of the Committee asked about the ideal structure for an investigating body and to whom it would report; the reporting of the outcome of investigations to family members of accident victims; progress on the investigation into a recent accident involving an aircraft from the Aviation Authority.

Members also asked about the overall direction of aviation legislation and the role of the Minister of Transport in granting exemptions to the Act and to regulations.

Meeting report

The Chairperson opened the virtual meeting, welcoming the Members, support staff and the delegations from the Airlines Association of Southern Africa (AASA), Commercial Aviation Association of Southern Africa and Mr Rennie van Zyl (an aviation consultant). He acknowledged apologies from Mr K Sithole (IFP) and Ms N Nolutshungu (EFF) before inviting Mr Chris Zweigenthal, Chief Executive Officer (CEO) of AASA, to deliver the first presentation.

Presentation by the Airlines Association of Southern Africa (AASA)
Mr Zweigenthal explained that AASA represented all airlines based in the Southern African Development Community (SADC). His presentation was in response to the proposed amendments to Clause 13 of the Bill, which would make the Civil Aviation Authority (CAA) the preferential creditor when a business was liquidated, placed under business rescue or placed under administration. He said that this proposal was driven by the fact that South African Airways (SAA), SA Express and Comair Limited had gone into business rescue in late 2019 and early 2020, as well as by the liquidity crisis at CAA caused by the disruption to air services due to COVID-19. Airlines and other stakeholders had all suffered devastating losses due to COVID-19 and the sustainability of the South African airline industry was in question. In a crisis, the State, as a shareholder, had a duty to protect the financial stability of its companies. It was thus not clear why the CAA should be the preferential creditor. The view of AASA was that preferential creditor status should not be sought for the CAA and the proposed amendment to Clause 13 should be dropped. If the proposed amendment was included, however, the view of AASA was that the CAA should be the preferential creditor with respect to the Passenger Safety Charge only, as this was the only fee collected by airlines on behalf of the CAA (according to Civil Aviation Regulation 187.02.1(1)). Clause 60 would then need to be amended for consistency. He observed that he had received reports that the CAA had been financially supported by the government, but admitted that these could not be confirmed.

Mr Zweigenthal said that the view of the AASA was that the Aviation Safety Investigation Board (ASIB) should be independent of the CAA, and that there was still a lack of clarity about the role of the Executive responsible for accident investigation appointed by the CAA and the potential for conflicts of interest.

Discussion
Mr C Hunsinger (DA) asked whether the presentation had been circulated among and endorsed by all AASA members. He asked whether there were organisations in other countries equivalent to the CAA that had preferential creditor status. He recognised that COVID-19 had devastated the airline industry and noted that Mr Zweigenthal had claimed that the industry had received little or no support from government. What could government have done to support the industry and what could still be done?

Mr L Mangcu (ANC) asked for clarity on the amendment for consistency that AASA was suggesting. He asked for confirmation that AASA’s resistance to granting the CAA preferential creditor status was a response to the devastation of the industry caused by COVID-19, rather than to the implications of the CAA being the preferential creditor. He also asked what the significance of the unconfirmed fact that the CAA had received financial support from the government was.

Mr L McDonald (ANC) was adamant that the CAA should be the preferential creditor and agreed that this should apply to fees collected by airlines on behalf of the CAA. The CAA was owed large amounts of money by liquidated airlines and it played a very important role in maintaining the safety of South African airspace. He also noted that it was not financially viable to create a completely separate board for the Aviation Safety Investigation Board (ASIB) to guarantee its independence at this stage, and wondered if a compromise could be found to provide it with some autonomy within the CAA.

Responses
Mr Zweigenthal replied that the presentation had not been circulated. However, its contents had been discussed verbally and members had supported the positions taken throughout the last year. He was not aware of international CAA-equivalent organisations with preferential creditor status. In addition, it had never been necessary in the past. If preferential creditor status was granted to the CAA, what was there to prevent it being granted to other state-owned organisations? This would be contrary to the spirit of the Companies Act. Every business involved in air travel was struggling at the moment. The CAA and other state-owned organisations were backed by the State; airlines and passengers could not be expected to solve their financial difficulties. AASA had written to various organs of State to request assistance, including the Department of Transport (DoT), National Treasury and the Department of Trade Industry and Competition.

AASA had requested a waiver of the domestic aviation tax as well as loan guarantees and considered asking for cash injections, equity sharing arrangements and payment holidays. He explained that the consistency sought was to ensure that only fees collected on behalf of the CAA were subject to the latter’s preferential creditor status. The significance of the unconfirmed reports of government assistance given to the CAA was that they proved that the government was prepared to support it. He said AASA was open to finding a compromise for the ASIB but it would be important to preserve the reputation of the aviation industry, and the independence of the ASIB from the CAA was a core issue.

Presentation by the Commercial Aviation Association of Southern Africa (CAASA)
Mr Robert Garbett, Director, CAASA, explained that he would expand on CAASA’s letter of 30 November 2020. He was concerned that if the Civil Aviation Regulations Committee (CARCom) lost its present independence there would be a possibility that its important functions would be overridden by other entities. It was absolutely essential that that the aviation industry was involved in determining industry regulations. Removing sections 157-162 of the Civil Aviation Act, as the Bill sought to do, would undermine the independence of CARCom. He warned against creating an impression that the DoT or the CAA was seeking to ring-fence their authority. The Bill would remove all references to CARCom in the Civil Aviation Act and although the Clause 60 would provide for the establishment of CARCom through regulations, DoT or the CAA, without the involvement of the aviation industry, could change these regulations; this would compromise CARCom’s independence. The Bill would grant the CAA disturbingly wide powers, some of which might even be unconstitutional. CARCom, in its current form, was a model of cooperation between the public and private sectors; he appealed for it to be allowed to continue in this form.

Discussion
Mr Hunsinger noted that Mr Garbett had emphasised the importance of independence as well as checks and balances. What is the current situation of CARCom in this respect? Did its independence not also lead to delays in the implementation of regulations? The other point of view, which is the need to streamline the implementation of regulations, also needed to be considered.

What was the situation of similar committees in other countries, and did other countries have similar structures? What were the international best practices?

Responses
Mr Garbett explained that aviation was a very complex industry with many different facets, all of which needed to work in concert with the CAA. On the other hand, it was unrealistic to expect the CAA to be involved in every facet. Industry players were closer to the ground and directly involved in day-to-day matters. He agreed that there were currently delays in implementing regulation, but CARCom were not solely responsible for them. Also, the regulations were of such importance that delays were a reasonable price to pay in exchange for giving every part of the industry an opportunity to debate and consider them.

He was not sure about the situation in other countries but said he would be surprised if the equivalent to the CAA in other countries did not consult closely with the industry in the development of regulations.

Presentation by Mr Rennie van Zyl
Mr van Zyl, Aviation Consultant and former member of the International Civil Aviation Organisation (ICAO), said that the Bill would determine the direction of the civil aviation sector for the next ten years. He noted that there was a cost implication to changing the designation of the head of civil aviation from “Director” to “Commissioner.” The designation “Director” was also used in many more countries. The amended definition of “Executive responsible for Aircraft Accident and Incident investigation” was problematic insofar as it implied that the CAA appointed this executive.

It was necessary for investigations to be independent of the CAA to avoid possible conflicts of interest. Appointments to the ASIB should also be transparent. The need for independence had been underlined by the accident involving a CAA calibration aircraft in January 2021. Mr van Zyl said that he had led an investigation into an accident in which he had had to criticise the CAA, who had contracted him as a consultant. Someone is his position might be reluctant to criticise the CAA. He suggested that the time might have arrived for the establishment of a multi-modal accident investigation authority, reporting to Parliament and not to the CAA or the Minister of Transport. He drew attention to a possible practical problem with Clause two. Would the Minister of Transport have to give written permission every time a military aircraft carrying conventional arms used a shared military/civilian airport? He discussed the financial implications of investigating a major accident and provisions for search and seizure as part of an investigation. He suggested that an interim statement should be required every 12 months if an investigation took longer than the twelve-month target. The Committee should also bear in mind that the ASIB would hold a monopoly on accident investigations.

He shared AASA’s concerns about designating the CAA as a preferential creditor. He did not support the proposal of Clause 24, which would widen the limitation of liability from the employees of the CAA to the CAA itself. The proposal of Clause 48, which would require the Minister of Transport to issue exemptions to compliance with the Act, would be impractical; he suggested that the Director or Commissioner should grant exemptions to the regulations while the Minister should grant exemptions to the Act itself.

Discussion
Mr McDonald observed that ICAO standards would require the ASIB to be independent of the CAA. He shared Mr van Zyl’s concern about Clause two as well as the massive cost of an investigation into a major accident, noting that the cost of the investigation into Malaysia Airlines Flight 370 had now exceeded US$5bn.

Mr Hunsinger asked what the ideal structure for the accident investigator would be. He indicated that the Committee often received queries from the family members of victims of aviation accidents and that there was currently no obligation to report the outcome of investigations to family members. What does Mr van Zyl think about a fatal accident automatically triggering an inquest? Does he think that the legislation was moving in the right direction? What amendments should the Committee consider in the light of the devastation to the industry as a result of COVID-19?

Mr Mangcu invited Mr van Zyl to expand on comments about the ICAO standards for the reporting structure of the accident investigator, especially insofar as these standards indicated that the investigator should not report to the Minister of Transport. He asked Mr van Zyl to share any international cases. Could he share anything about the investigation into the CAA calibration aircraft accident? What would a fully independent investigator have done differently? He noted that references to the Minister sometimes referred to the Office of the Minister, which would allow the Minister to delegate officials to process exemption requests. Assuming the workload was not an issue, what is Mr van Zyl’s opinion on giving this responsibility to the Minister?

Mr P Mey (FF+) asked if countries generally used local investigators or investigators from other countries.

Responses
Mr van Zyl said that the ideal investigator would be separate from the CAA and report to Parliament. The CAA was a service regulator and it could make mistakes. The intent of an investigation was not to apportion blame but just to determine what went wrong, which might include mistakes made by the CAA. The investigator must be able to question the CAA without fear of victimisation or retribution, and their report must be made public but not for the purpose of punitive action. The challenge was to fund such an investigator.  This was a worldwide problem. Only 70-80 out of 193 ICAO member states had an independent investigator, but some of them had smaller economies than South Africa. Nigeria funded its independent regulator through a passenger levy.

He clarified that while airlines were responsible for informing next of kin in the case of a fatal accident involving a commercial aircraft, this left out fatal accidents involving private aircraft. This should be a function of ASIB. He indicated that fatal accidents did automatically trigger an inquest but it was often not held or delayed. He said that the current policy, according to which the Department was responsible for economic regulation and the CAA was responsible for safety, was the correct distribution of responsibility.

Regarding the calibration aircraft accidents, he thought that the operation of calibration aircraft should be the responsibility of Air Traffic Navigation Services (ATNS) rather than the CAA. He confirmed that he did not think that the Minister should be burdened with the day-to-day running of the aviation industry. The granting of exemptions to the regulations should be delegated to the Director or the Commissioner.

Conclusion
Mr Hunsinger asked the Department to include a comment on the different kinds of charges, fees and levies imposed on the aviation industry in its submission the next day.

Adv Adam Masombuka, Chief Director: Legal Services, DoT, agreed to include this.

The Chairperson thanked the Members, support staff as well as the delegations from AASA and CAASA, Mr van Zyl and other guests for attending the meeting.

The meeting was adjourned.

 

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