Civil Aviation Authority (CAA) To Be Stripped Of Financial Authority


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Civil Aviation Authority (CAA) To Be Stripped Of Financial Authority

By Shane Nolan

November 24, 2011 - Passengers' needs are to be put first under new airports legislation published on Wednesday by UK’s Secretary of State for Transport, Justine Greening. The Civil Aviation Bill will replace the current economic regulation duties of the aviation regulator, the Civil Aviation Authority (CAA), with a single primary duty to promote the interests of passengers.  

The CAA will be given more flexibility to set performance measures at major airports, encourage investment in improvements and provide passengers and other airport users such as those sending cargo by air with more information about airline and airport performance. 

Transport Secretary Justine Greening said “The end user in this case the needs of air passengers and businesses must be at the heart of our transport networks. Whether going on holiday, flying for business or transporting goods by air, the customer experience at airports can make or break a trip. 

“By and large passengers give good feedback about airports, but they also say they want things like more seating, better information and additional baggage carousels at busy times these are exactly the matters that the CAA will be able to address more effectively under its new powers. This Bill couples our commitment to make our airports better rather than bigger with the Government's wider agenda on better regulation. It also complements our ongoing work to produce a sustainable policy framework for aviation, a draft of which will be published next spring.” 

The Bill is designed to modernize the key elements of how the industry is regulated and contribute to economic growth. It also extends to aviation security, the 'user pays' principle which exists elsewhere in the sector (e.g. safety regulation). This will involve the transfer of certain aviation security functions, such as monitoring and enforcement, from central Government to the CAA which charges the industry for its activities.  

However, the responsibility for setting aviation security policy and making aviation security directions to the industry will remain with the Secretary of State for Transport. It is estimated that this move could save UK taxpayers over £4m a year whilst seeing a better quality service delivered.


Other measures included in the draft Bill today include: 1) Giving the CAA a role in promoting better public information on customer service and environmental impacts. 2) A switch to a new licensing regime for larger airports: licensing - which is common in many regulated industries - allows greater flexibility than the current uniform system and enables the CAA to target regulatory activity where and when it is needed to protect the interests of consumers. 3) New and streamlined appeal processes that will improve access to justice for those affected by regulatory decisions.

4) A supplementary financing duty on the CAA which will help ensure that efficient airport license holders can finance their activities. Powers for the CAA to impose a range of penalties for breaching licence conditions (going up to 10% of an airport’s annual turnover) to better incentivise compliance and penalize poor performance. 5) Removing unnecessary central Government involvement and bureaucracy from the regulatory process. 6) Modernizing the CAA’s governance and operations. 

The Government had originally announced its intention to introduce this Bill in the next session of Parliament, however an opportunity has now arisen to introduce it earlier most likely early next year. By publishing a draft at this stage, the Government aims to give the Transport Select Committee and wider stakeholders the opportunity to consider the Bill before it is brought before Parliament. 

Much of the legislation surrounding aviation dates back to the 1980s and is in need of modernization. It is possible that the scope of the Bill may be extended before it is introduced. One area which could be included is the reform of the Air Travel Organizers’ License (ATOL), following the recently finished consultation on measures to protect consumers better in the 21st century holiday market and help create a more level regulatory playing field for businesses. 

The CAA currently has four duties for the purposes of economic regulation, they are: 1) To further the reasonable interests of users of airports within the UK, users being defined (in section 82 of the Airports Act) as airlines, passengers and other user of air transport services at the airport, 2) To promote the efficient, economic and profitable operation of such airports, 3) To encourage investment in new facilities at airports in time to satisfy anticipated demands by the users of such airports; and 4) To impose the minimum restrictions that are consistent with the performance by the CAA of its functions under those sections. 

In addition, the CAA also is also required to take account of international obligations. The proposals set out will replace these with a single primary duty and a limited number of further duties. These are, primary duty is to promote the interests of existing and future consumers of passenger and freight services at UK airports, wherever appropriate by promoting effective competition. 

Further duties include, to secure, so far as it is economical to meet them, that all reasonable demands for airport services are met efficiently, ensure that license holders are able to finance the activities which are subject to the relevant license obligations, to have regard to the effect on the environment and on local communities of activities connected with the provision of airport services. 


In addition to take account of guidance issued by the Secretary of State, and to assist in delivery of airport infrastructure consistent with the National Policy Statement on Airports, unless there are compelling reasons not to do so and to have regard to the principles of Better Regulation, any other principles appearing to represent best regulatory practice and to consult with stakeholders, including airlines.

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