Civil Aviation Authority & Air Transport Navigation Services Annual Reports 2008/09

Meeting report

South African Civil Aviation Authority (SACAA) Annual Report Briefing 
Captain Colin Jordaan, Chief Executive Officer,  SACAA, and Commissioner for Civil Aviation, briefed the Portfolio Committee on the mandate of the SACAA, its vision, mission, their structure, strategic objectives determined by the board, key functions, key achievements during the previous financial year, its operational performance during the previous financial year and finally the financial performance in the previous financial year. 
 
Captain Jordaan explained that SACAA’s objectives for the year were to control and regulate civil aviation, to oversee functioning and development of the civil aviation industry, and specifically to control, regulate and promote civil aviation safety and security. He explained that the vision was to be a credible and dynamic world-class aviation regulator. SACAA’s mission was to promote and maintain a safe, secure and sustainable civil aviation environment while adhering to international standards. It aimed to regulate and oversee the functioning and development of the industry in an efficient, cost effective and customer friendly manner and to promote an enabling environment for transformation and development in the aviation industry.

The strategic objectives were to comply with legislation and international civil aviation standards and recommended practices, to accelerate transformation and promote a value based organisation, to improve corporate governance, financial sustainability and empowerment, to attract, develop and retain skilled human capital, to improve international systems and processes, to increase assistance for the improvement of Africa's civil aviation capacity and to improve stakeholder relations.  
 
The board of SACAA had concentrated on governance issues within the SACAA, which included compliance with the Public Finance Management Act (PFMA) compliance and financial liquidity, critical vacancies filled and confirmed. SACAA received an unqualified audit report  for the 2008/2009 financial year with no significant findings. 
 
The current reserve position was indicated as stable. The authorities had reserved a fund for three to five months expenditure with no income, as compared to the internationally recommended reserve to cater for 30-days expenditure, and an estimated R10 million provision for capital expenditure. At the end of the financial year SACAA had a total of R98 million in reserves and sufficient money for capital expenditure. That put SACAA at a very healthy financial position.
 
Key achievements during the financial year were that the status of aviation legislation in South Africa was brought to a point where the primary legislation complied fully with all international requirements. The General Aviation Security Initiative (GASI) was introduced as it was realised that majority of the accidents occurred in the general aviation sector. That initiative had been in place for over a year and, together with other initiatives, was working very well. The number of staff leaving the organisation had significantly reduced in the last six months, with people mostly leaving because they no longer wanted to do that job. They had been replaced with confident people. Customer relations had also improved considerably in the last financial year. A programme with the objective of a wider industry presence throughout the country was started, by providing regional offices. The first regional office was opened at the Cape Town International Airport on 1 September 2009. Additional industry security as well as non-scheduled operators and aircraft maintenance organisations were also introduced.   
 
In 2005 the international civil organisation started a process known as the Universal Safety Oversight Programme. Eight elements were identified – namely, primary aviation legislation, specific operating regulations, civil aviation system and safety oversight function, qualification and training of technical staff, procedures and technical guidance, licensing and certification obligations, surveillance obligations and resolution of safety concerns. Since 2005, countries around the world had been audited to identify their level of compliance with those eight critical elements. At the end of 2007 the 108 African states that were audited did not do too well, but the global average however was not much better. South Africa was above the global average (see document). A programme was put into place so that South Africa could try to surpass the best in the world, and having run these measures, an average of 94% compliance across all eight critical elements had been achieved. In many of the eight elements the SACAA board were planning on being at 100% by the end of the next financial year. That would put SACAA into the top 2% to 3% of the aviation organisation authorities worldwide. A recent analysis showed that the carriers were pleased with the state of the SACAA.    
 
The number of aircrafts on the South African Aviation Register had more than doubled in the last 28 years. The number of accidents from 2009 had dropped considerably compared to those in 2003 (see document). Contributing factors were that almost double the numbers of inspectors were employed in all areas of flight operators, maintenance organisations and three times the numbers of audits were being conducted, compared to previous years.  
 
In terms of the promotion of aviation careers, it was discovered that aviation did not seem to appeal to black youths, and the new community based programme was put in place, which involved the building and flying of model aircraft.  
 
The financial performance of the SACAA was then summarised. The employee expenses increased considerably because of the additional number of inspectors who were employed. The year ended with a deficit of R13.6 million compared to a budgeted deficit of R9. 7 million. SACAA had budgeted for an income deficit, because the number of passengers in the financial year had dropped 18%, which affected revenue stream considerably. Costs however were retained at the same levels. The figure included a R4 million subsidy from the SACAA to the Department of Transport. It cost approximately R12 million a year to run the accident investigation division and the Department of Transport was meant to refund the R4 million. The authority had done very well in containing other costs. Generally it was in a strong financial position.   
 
Discussion 
Mr S Farrow (DA) noted that the SACAA had R95 million in reserves, which was definitely a necessity in terms of its mandate. However, the R4 million that the Department of Transport had required should be claimed back. If there were to be a major accident were to occur, SACAA needed to ensure that it had sufficient funds to deal with the matter.  
 
Mr Jordaan said that SACAA planned to get the R4 million back from the Department of Transport within the financial year. One of the reasons they had entertained this request was that in the previous financial year SACAA received a grant of R21.75 million from the Department of Transport. Later in the same year it was asked to fund the R4 million to the Department of Transport.  
 
Mr Farrow raised the concern that the trend of various entities was to impose tax on people, and every time that a ticket was purchased, a levy must be paid. The problem with going into deficit was that it resulted in the man in the street having to pay levies. He said it was frightening to see that 90% of the cost of the ticket was attributed either to tariffs or levies.  
 
Mr Jordaan responded that every time a passenger flew into, out of, or within South Africa, the only money that was collected was R11,00, which went towards funding the activities of the SACAA. That R11,00 levy in fact added up to 75% of the SACAA revenue. 
 
Mr Farrow said that he was also concerned with the scarcity and the standard of aviation training. He wanted to know whether SACAA should not be investing in that area, in terms of its reserves, and in training disadvantaged people and encouraging them into the career.  
 
Mr Jordaan said that SACAA did set the standards by setting the syllabus and monitoring the exams. There was not an overall shortage of pilots in South Africa, but there was a shortage of previously disadvantaged black pilots. SACAA had gone on a campaign and held a press conference which evoked a good reaction throughout the country. SACAA approached the Director of the Transport Sector Education and Training Authority TETA last year, and instructed him to approach the National Skills Fund as a matter of urgency, to provide additional funding for the training of maintenance engineers. The general problem, however, was the low success rate, which was mainly due to a lack of discipline in the youth being trained. The programme which was implemented then took the youth into the military arena to train them under military conditions, in order to instill the necessary strict discipline. He said that there was a desperate need for a national pilot scheme where trainees would be trained right up to pilot standards. That would serve as a method to get people from the historically disadvantaged areas into the pilot industry.  
 
Mr Farrow asked what the SACAA was doing in terms of aviation and security and the audits undertaken in relation to that. Mention was made of the crew who went through the gates with drugs. He asked whether SAACA adhered to the International Civil Aviation Organisation (ICAO) condition which said that airports needed to have certain numbers of fire men and certain equipment. 
 
Mr E Lucas (IFP) wanted to know how the crew had gone through without being caught with the drugs. 
 
Mr Jordaan replied that SACAA was responsible for aviation security, and the x-ray machines at the airports were in place to detect weapons or explosive devices which might be used on board airplanes. They were not designed to detect drugs. The cabin crew that went through Heathrow went through a privately authorised screen at their crew centre, which was audited by SACAA personnel, but which, once again, was primarily to ensure that no dangerous weapons or explosive device were on the planes. Drugs fell in the domain of South African Police Service (SAPS).

In regard to the fire service, the audit was done with the fire department. Service provision at Cape Town International Airport met international standards. The SACAA mandate was to ensure that the  fire services at their airports met with international requirements, which they did.
 
Mr Farrow referred to page 14 of the document regarding Broad based black economic empowerment (BBBEE) targets. Mention was made that aircraft and spares could only be purchased internationally. He asked whether such an industry could not be developed in South Africa. 
 
Mr Jordaan said that aircrafts were manufactured internationally, mainly in Europe or in United States of America. The manufacturers made the spares and sometimes they would outsource them. They did not use pirated parts in the aviation industry because every part of an aircraft was manufactured to the highest tolerance and to the highest level in order to make sure it was completely safe. It was impossible to manufacture these numbers of spares in South Africa.

Mr Lucas asked whether the youth from the disadvantaged areas were being informed about aviation as a career. 
 
Mr Jordaan answered that SACAA went to two disadvantaged schools each week, specifically in the rural areas. 
 
The Chairperson, referring to promotion of aviation careers, said there were provinces which were left out and were not covered by many programmes, and stressed that the Committee would like to see the promotion of aviation careers extending to all provinces, especially rural areas. She further mentioned employment equity and asked whether SACAA met the 2% disability requirement. 
 
Mr Jordaan admitted that SACAA was experiencing certain challenges in that regard. It had held two disability workshops and emphasised that it was very much aware of this, and was currently working with disability organisations. 
 
The Chairperson said that many other issues needed to be followed up, and would be looked into.

The Air Traffic Navigation Services (ATNS) Annual report briefing 
Mr Patrick Dlamini, Chief Aviation Officer, Air Traffic Navigation Services, explained that the ATNS provided an aeronautical satellite communication network which serviced 28 African and Middle Eastern states. ATNS’s vision was to be the preferred supplier of air traffic, navigational and associated services to the African continent and surrounding regions. Its mission was to provide safe, orderly, expeditious and efficient air traffic, navigation and associated services. Its strategic imperatives were to continue improvement of air safety performance, which was the  main focus. ATNS also wanted to become a transformative organisation that invested in its people, provided efficient air navigation services which met the needs of its clients, maintained long term financial sustainability, played a leading in the development of air navigation services on the Continent, and that also deployed and used leading technologies to the benefit of its clients.  
 
ATNS managed 10% of the world's airspace (see document). That included the South African airspace and oceanic airspace. Some of the major airports which it was operating included Cape Town, George, Port Elizabeth, East London and Durban International Airport.  
 
By playing a leading role in the development of air navigation services in Africa, it was discovered that some of the air spaces in which aircraft were flying became very dangerous, due to a lack of good communication with air inspectors on the ground. It was not possible to tell, in these instances, that navigation was safe, nor which planes flew at what level, to avoid unnecessary collision. A discussion was held to decide on the possibility of employing some of the technology. The ATNS then deployed its satellite network, which was able to interconnect with the Southern African Development Community (SADC) region, which included countries on the western side of the African continent.  
 
A study was done in terms of the upper airspace control centre for the SADC region. There had been a ministerial meeting and a treaty was signed by the ministers agreeing to look at ways to make the airspace in the region more efficient. There had been investigation into the possibility of an upper airspace centre. The Committee, which was chaired by ATNS, submitted a recommendation to the Committee in Namibia, in May 2008. The Ministers made a few recommendations on location for the airport as the entity’s centre. It would be feasible, and the entity should be able to fund its own infrastructure development. ATNS was currently waiting for direction from the SADC region.

In terms of deployment, and the use of leading technologies for the benefit of clients, ATNS had recently completed its safety case and given it to SACAA for approval. That was obtained for the operational use of Wide Area Multilateral Surveillance Systems. SACAA also deployed the Advanced System Movement Guidance and Control Systems, which were installed at OR Tambo and Cape Town International Airports, the busiest airports in the country, which had visibility problems. Secondary radar was installed at George, which would help for the African continent as a whole, as the coverage and visibility, because of rain in George, had made it quite difficult for flying in the past.

On 25 September 2008, ATNS had been able to introduce the Reduced Vertical Separation Minima, which reduced the space between aircraft from 2 000 feet to 1 000 feet, which effectively allowed for double capacity of aircraft in the same airspace. This innovation was operating well and was highly appreciated by the airlines.

ATNS was also currently busy with finalising the SADC acceptance testing of the Central Airspace Movement Unit (CAMU), which it was planning to implement before the 2010 Soccer World Cup. It would be easier to manage the slot allocation for aircraft flying between airports in South Africa. An aircraft wishing to fly between Cape Town and Johannesburg would apply for a slot, which would be automatically allocated. This fitted in very well with the airspace arrangement that ATNS had with the military airforce. If the military wanted to use the airspace, it would inform ATNS, who would allocate such space, and while the military was using the airspace, ATNS could declare it restricted to other air traffic.

ATNS described its financial position at the end of March 2009. Revenue was at R656 million compared to R485 million in the previous year. Its expenditure was R483 million in 2009, compared to R445 million in 2008. Its asset base was at R1,172 billion in 2009, compared to R1,73 billion the previous year. It was important to understand that the R39 million differences between 2009 and 2008 net working capitals was threatening insolvency for the organisation,  and its ability to meet its financial obligations was under threat. ATNS had, however, been working well with the Department of Transport in relation to debt issues and was raising its own funds to sustain its finance. Despite all of these problems, it had managed to end up with a profit of R61 million in 2009.  
 
The safety ratios, which measured the number of safety incidents, were targeted for 3 per 100 000 airborne movements, and it had achieved 3.73 per 100 000 airborne movements.

ATNS noted that in respect of BBBEE it had achieved its own targets of 49% expenditure.  In terms of capital expenditure the target for 2009 was 10%, and ATNS had achieved 42%. Finally, on employment equity, it had targeted a 51% target and reached 53.13%.  
 
The key challenges which ATNS faced were around the core and critical skills, specifically with regard to air traffic controllers. ATNS had lost approximately 150 air traffic controllers, mostly to the Middle East, who left for a higher salary. Retention schemes had been put in place to try to address this issue. For the 2010 Soccer World Cup, a plan was being put in place to make sure that the events would be accessible, and it was ensuring that there were sufficient air traffic controllers by also sourcing them from other areas of the country.

ATNS was also aware of climate change issues, and noted that cleaning technologies for their environment were gaining strong momentum. ATNS had started an initiative that targeted reducing the amount of carbon use in the airspace, and it should be in place by the end of the financial year.  
 
Discussion 
Mr Lukas raised his concern about the 2010 World Cup. He said that there were going to be a large number of people, and asked whether ATNS was prepared for that. He also asked whether language was a problem with regard to training.  
 
Mr Dlamini said that ATNS was quite fortunate with the number of movements done throughout the globe, which actually had a positive impact on ATNS. It had given it the extra capacity to handle any increase. With regards to the language issue, ICAO had made it easy for international flights because this made the official language of communication English.  
 
Mr Lukas also said that something needed to be done about the poaching of skilled people. He pointed out that ATNS were training and spending money on people, but could not retain them through lack of funding. He suggested that some other methods should be found to be able to retain They trained them and spent money on them but then could not sustain them due to a lack of funds.  He suggested that a method must be thought up in order to be able to retain skilled people.  
 
Mr Dlamini agreed that the poaching of staff was a critical issue, but assured the Committee that ATNS was really making an effort to redeem those numbers so that it did not find itself in a position where staffing issues impacted on the operational side of the ATNS. 
 
The Acting Chairperson said that the report seemed to infer that a cash injection was needed. Capital spending, however, showed a slight under-spend. She asked what the reason for this had been, because the request for capital was at odds with underspending.

 Mr Dlamini said that the under spending was in relation to certain projects in that financial year and the invoicing of suppliers who had not performed the work. Invoices only took into account the work done to that date. With regard to the cash injection ATNS would like to have an organisation that was thoroughly responsive to the safety needs of the aviation industry. 
 
The meeting was adjourned.