Civil Aviation Bill [B73-2008]: public hearings

Meeting report

Civil Aviation Bill: Public Hearings
Mr S Farrow (DA) noted a problem with reference to other documentation listed, and said that it was difficult for him, for this reason, to comment on the submission. He asked if time could be made for the people with access to the Department.

The Chairperson agreed to that. He also referred to additional input submitted by the Cape Bar Council. There had been substantial documents submitted by the Airlines Association. He understood that the details of what had been decided upon in a meeting with the Department of Transport (DoT) would be useful, and he would like to hear from the Department as the matter proceeded. He agreed that Mr Farrow was correct that there were some key parties still needing to raise their concerns. The questions on procedure might be possible to be completed this week.

Webber Wentzel submission: on behalf of Airlines Association of Southern Africa (AASA) and Aviation Co-ordination Services (Pty) Ltd (ACS)
Mr Haydn Davies, Partner, Webber Wentzel, introduced himself and those accompanying him as Mr John Morrison, CEO: Airlines Association and Chairman of Aviation Compliance Solutions, Ms Zeenat Dasoo and Ms Pamela Stein, both partners of Webber Wentzel. The Webber Wentzel submission and presentation was made on behalf of the Airlines Association of Southern Africa (AASA) and Aviation Co-ordination Services (ACS).

He reported that the parties had had a meeting with the DoT on the previous Friday and that the DoT had requested this meeting on receiving the submissions. Much of the content had been agreed upon. Webber Wentzel and their clients would wait to see if their comments had been correctly reflected in the legislation.

The Chairperson asked if there were some textual references from the Department as yet, such as new wording for the Bill according to the agreements reached.

Mr Anwar Gany, Chief Director, Department of Transport, responded that there were no issues of principle, but mainly grammatical differences. The amended documentation would not be available immediately.

Mr Davies then briefed the Committee on the submission on the Civil Aviation Bill (the Bill). The main areas of concern were the Accident Investigation Board, the creation of multiple centres of power, the position and powers of the National Civil Aviation Security Coordinator (Coordinator) and general concerns. He noted that although Webber Wentzel would be presenting on all these areas, their particular concern lay with the creation of multiple centres of power and the position and powers of the Coordinator. He pointed to slide 3 of the presentation as an illustration of the current structure of the Civil Aviation Authority (CAA). This structure raised several issues, such as who would do what , in terms of safety and security and corporate governance), what the CAA was, and how it would be constituted. In respect of the Coordinator, it was suggested that there was no need for this position. He asked for the right to propose additions to the CAA submission.

He noted that Slide 3’s diagram also showed how the Bill created multiple centres of power (see attached presentation). The Board and the Director had overlapping managerial and safety oversight functions in relation to the Authority. The Authority, Board, the Coordinator and the Director also had overlapping security oversight functions. The Director, Board and Coordinator accounted to the Minister separately, and the Co-ordinator was housed in the Department of Transport. Mr Davies contended that this was confusing, and there were too many people doing too many things, with no clear chain of command.

Ms Zeenat Dasoo, Partner, Webber Wentzel, outlined a brief history of the safety oversight function of the CAA. It reposed initially within the DoT and had a direct reporting line to the Minister of Transport (the Minister). This was a very autocratic system, in terms of which a civil servant was essentially making policies that affected the aviation industry. Industry had then sought change and the State conceded to participation. It was submitted that it was useful to have the various industry players involved. However, the legislation was not clear as to who had the ultimate oversight function, was not very well grounded and had room for improvement, although it functioned fairly efficiently. Eventually there was a need to overhaul the civil aviation legislation.

The Civil Aviation legislation that arose took into account the industry attitudes and international best practices, which provided a good starting point and were usually tied to the endemic challenges in each jurisdiction. South Africa had to find its own fit. The legislation needed a thorough overhaul. This Bill, in their opinion, was a rushed job. There should have been broader industry participation and more time was needed. The policies should have been worked out better. The centre of power issues could have been avoided if there had been a green and white paper process. The current drafting was confusing and detrimental and would invite criticism from international auditors’ bodies.

Specifically in relation to the multiple centres of power, there was no accountability or process dealing with the functions of authority. Fiefdoms would be created, giving rise to conflicts where everyone believed they had the final oversight. It did not make sense to have the Coordinator housed in the Department of Transport. Where no party was ultimately accountable, there was no clear chain of command. Disputes could arise over the scope of power, yet there was no appropriate conflict resolution mechanism. There were also foreign and international concerns over inefficiency, confusion and counter-productivity.

Mr John Morrison, CEO, Airlines Association and Chairman of Aviation Compliance Solutions, took the Committee through the section on the Authority. The leadership of the Authority was noteworthy, because ordinarily the Board would bear the responsibility for the carrying out of various functions of the Authority. The Board and Director had the power to discharge obligations of the Authority. Now the Board of Directors reported to the Minister, and the Director no longer reported to the Board. All the industry representatives and experts were bypassed. The Board had no responsibility. Concerns were expressed that the industry input was being taken away. The Bill did not make it clear whether the persons comprising the Authority were employees, directors or Accident Agency. This must be specified, because of the accountability issues.

On safety and security, the proposal was that the Board should report to the DoT. Again, the Board would be bypassed, and the implication was that they should be responsible for policy.

Ms Dasoo pointed out that this begged the question of who was running the structure. It seemed that the Bill sought to denude the Board of the safety and security function, and consign them to issues of corporate governance. Even this was not clearly stated. She submitted that the Board should lead the Authority structure, as was the case with all other regulatory bodies in South Africa. The Board should be the repository of oversight functions. This also would match the trend in most open democracy systems in the world, where there was accountability and participation.

The extraterritorial authority given to the CAA under Clause 72(4) was also of concern. The overlap of functions between the Board and the Directors posed the question of who would arbitrate disputes, which would have the consequence of compromising safety standards.

The objectives of the Board were unclear and once again she stressed the overlap in functions referred to earlier between Director and Coordinator. The attempts elsewhere to denude the Board of safety and security were also not consistent as the Board was given responsibility for certain functions of the “strategic goals Authority”. Furthermore, the composition of the Board should consist of those with specialist civil aviation experience and corporate governance experience. 

Another problem was that the Board members' terms could be extended indefinitely, and this was not healthy. Voting was also an issue, as the Board had seven members, yet only two members had to have civil aviation experience. The other five members only had to have broadly referenced business experience. As the voting quorum was three members, this meant that technical issues could be decided on by three of the five members without any technical experience.
 
Mr Farrow interjected to ask if the General Laws Amendment Bill would not be an overarching piece of legislation and whether the Civil Aviation Bill would not take precedence.

Mr Davies continued to discuss the role of the Director in the Bill. He broadly addressed what kinds of skills the Director should have, as well as the term of appointment, accountability, consultation with stakeholders and the problem posed by the lack of a provision on the removal of the Director.

Mr Morris posed the question if a Board was even needed, as the Bill seemed to be removing all powers from the Board. All the power rested with the Director or the Co-ordinator. These was a different power base that allowed industry no access. He believed that a Board should provide that access to the industry.

Ms Dasoo proposed, in the first instance, that the Board envisaged in the Bill should simply be disbanded. There were too many divergent responsibilities for one individual. They needed the buy-in of industry. The system that existed was inefficient, draconian and closed. It led to tension and there should be a move away from this system to one that was more in line with democratic principles and the Public Finance Management Act (PFMA). Most other regulatory bodies in South Africa had a Board, and it was recognised that it was healthy to have a Board where the members had various skills pertinent to the body. The Members should be  appointed to make serious policy decisions to direct the civil aviation industry. The current structure in the Bill was not consistent with open democracy and corporate governance would also be affected.

Webber Wentzel noted that the proposal for an alternative was set out in Slide 12, headed “Potential DoT structure”. It was possible to build in exigency provisions if the Committee was of the opinion that the process was too convoluted. However, a similar structure worked well abroad and could work well also in South Africa. The proposed structure was a reaction to criticism levelled in an audit that had identified potential problems in the primary legislation. It had not been thought through on the basis of actual or existing problems. The system was functioning perfectly well and the industry was of the opinion that the Bill was being unduly rushed. There was a need to think about the broader policy decisions carefully, and interact more with industry.

Discussion
Mr Farrow asked wherefrom the criticism had emanated.

Ms Dasoo responded that the criticism was levelled in the International Civil Aviation Organisation (ICAO) report and the Federal Aviation Administration (FAA) reports.

Mr Morrison drew Members’ attention to Slide 12.

The Chairperson asked for clarification whether it the concerns expressed in the audit had in fact driven the process, and whether this was related to the principal Act.

Mr Farrow asked if the structure proposed was the model used in other countries. If it was, he asked if it was working well. He also asked if the model now being presented was a hybrid of international structures, adapted for the particular situation in South Africa, and if it was  relevant to South Africa.

Ms Dasoo responded that the proposal did not mirror international models exactly but it did capture the New Zealand and United Kingdom (UK) models. It was most like the UK model.

Mr L Mashile (ANC) remarked that he would have expected the DoT to liase with industry on this. The presentation had pointed to a number of differences. He asked if the DoT and industry had resolved these issues or whether they were still outstanding.

Mr Davies covered the sections on the Position and Powers of the Co-ordinator as well as the associated problems. The bottom line was that no one knew what they were supposed to be doing. There was massive overlap of functions and authority, which was illogical and would have serious implications for international interaction. The Bill had been audited internationally  in the USA and the European Union (EU) and, given that civil aviation involved flying internationally, this legislation could not be drawn in isolation.  Problems were highlighted with the wording of the Bill. South Africa had acceded to The Convention on International Civil Aviation (the Chicago Convention). Annex 17 to that Convention provided for the national aviation security programme to be developed, implemented and maintained by an “appropriate authority” He submitted that  the  “appropriate authority” was the CAA.

He said again that there were incurable overlaps. The result was contrary to South Africa's international obligations. South Africa was failing audits and this could result in a freeze on flights and downgrading of the airlines.

An additional problem with the position and powers of the Co-ordinator was that it was impractical for just one person to discharge these obligations. The legislation as it stood would have a very serious effect on the airlines and therefore, on the national economy. There was no need for all the duplication. The CAA was sufficient otherwise a waste of resources would inevitably result.

Continuation of submission
Ms Pamela Stein, Partner: Webber Wentzel, briefly outlined the section of the presentation pertaining to the Aviation Safety Investigation Board. She noted that the Chicago Convention required that the ASI Board be independent but the Bill was undermining that independence in a number of respects. The Ministerial Board of Inquiry referred to in Clause 68 was a duplication of resources and functions on accident investigation, mandating three bodies (the ASI Board, the Authority and the Inquiry Board) with the same task.  There had already been provision for such investigation in the Constitution, as Section 82 of the Constitution mandated the President to appoint Commissions of Enquiry into matters of public concern. Furthermore the Commissions Act regulated commissions of inquiry. She reiterated that the Bill was unclear as to the inter-relationship between the ASI Board, the Authority, and the Director on safety issues.

Mr Farrow asked if there was a differential between accidents and incidents and the powers that dealt with both.

Ms Stein clarified that she was referring here to events that were defined as “serious incidents”. The question was what was to be investigated by respectively the CAA and ASIB. :

Mr Morrison then moved to highlight the general concerns on the Bill. The issues highlighted here were the wide definition of “registered owner”, the treatment of conflicts of interest in the Bill, and Clause 130(1) which had the potential to deem minor contraventions of civil aviation laws to be criminal offences. A review was recommended. Chapter 15 provided that the Minister may make very detailed regulations concerning a myriad of matters. He submitted that provision should be made for a body, representative of industry and the CAA, to draft regulations that should then be by the Minister.

Discussion
Mr M Swathe (DA) asked for comment on whether organised labour should be part of the CAA Board.

Ms Stein responded that the Bill set out clearly the requirements for appointment to the Board. If a member of organised labour fulfilled the requirements, then there would be no objection. However, if the purpose of the appointment was merely to lobby for labour's interests, then other avenues for that did exist, and it would not be appropriate. Furthermore, she wondered what the purpose of such representation would be, as the Board dealt with matters of civil aviation. There was potential for conflicts of interest on matters of human resources.  She asked how it would benefit the CAA if the person did not comply with the set requirements.
 
The Chairperson pointed that the far bigger issue of the establishment of the Board must first be considered. He asked if the DoT had had sight of the criticisms in the audits, as it would be useful to get that. He commented that the haste in the legislation resulted from the fact that this Bill had been referred to the Committee late.

Mr Gany referred to the Aviation Act of 1962, noting that this Act had the structure of a Commissioner. It was a very technical Act, and the civil aviation standards were fine. The 1998 South African Civil Aviation Act had created the CAA, with the Board and the CEO for oversight. This Bill was envisaging a Commissioner, which should have been in control of the authority. The reason was that if there was an urgent threat the Department wished to be able at short notice to ground a plane.

He also noted that there were issues of manpower and the technical competency of the industry. At that time the Department  had combined the Commissioner and CEO as interim relief, and did recognise that there must be someone in place who had the technical competency. The original legislation was supposed to be autocratic in the short term, but its  long-term implications were that industry would be involved. The Department recognised that the international civil aviation audits could freeze South Africa operating rights or freeze frequencies, thereby paralysing the aviation industry. It also understood that these concerns necessitated an urgent approach on the Bill.

Mr Farrow queried the level of the audit in terms of the cut-off times to achieve the objectives set out,

Mr Gany responded that the Department had a framework pertaining to that from the Federal Aviation Authority. Urgency was of the utmost importance.

Mr Morrison said that this question was answered in their submission, in paragraphs 2.1 of page 2, and paragraph 2.5 on page 4.

Mr Davies said that the FAA had a problem with the split responsibility, which was regarded as a bad idea, and that this was key to the submission made today.

The Chairperson thought that the issue of who was in charge of what was a broad one. He wanted clarity on the SACA Act of 1962, which spoke to a Commissioner being located in the DoT.

Mr Morrison pointed out that this Commissioner reported to the Minister. It was suggested that there was a need for an independent authority housed in the CAA.

Mr Gany countered by saying that the real work rested with the Commissioner.

The Chairperson stated that there was also the issue of exigency considerations, to deal with threats from outside our shores. It was necessary to consider what would happen in emergencies, and the potential confusion that could accompany them. It was necessary to consider both the principal legislation and the challenge of moving rapidly in an emergency. It was desirable that this be done with the democratic participation of skills and competency within the industry.

Mr Davies asked if he was suggesting that a Board could not act quickly. He reiterated that he would regard split responsibility as bad, and that the Co-ordinator could not be doing safety and security. Corporate life showed that the Board system could deal with this.

Ms Dasoo noted that the reason for the confusion was that the AA act of 1998 was drafted in only 30 days. Something that had serious consequences should not be rushed. There had been an undertaking to overhaul this legislation but instead interim measures were put in place. One major question related to the registered owner. This would have a massive impact on aviation finance and could affect the aviation industry commercially, by imposing strict liability on innocent parties. She noted that it was possible to deal with the exigencies referred to and to localise those provisions. However, the Committee must take a view on this issue.
 
Mr Farrow pointed out that the timeframe for the completion of the Bill was 22 October. Major issues had been raised. The DoT needed to look at how they complied with the audits, and he asked if the Department was prepared to consider the submissions made, and revert to the Committee with comments on the items that were not accepted by the following morning. 

Mr M Moss (ANC) pointed that these were substantial criticisms of the Bill, and he did not believe that the DoT had yet answered them fully.

The Chairperson noted that he had not yet afforded the opportunity to the Department to respond. 

Mr Swathe queried the number of submissions that the DoT had received on the Bill.

Mr Gany responded that the audits last year had been significant, and the findings had to be responded to immediately. This was a very time-centred industry. Questions had been raised about how the Board would be structured and what role it would play in the entity. He noted that the PFMA had the ability to accommodate a board structure or a CEO. The DoT’s proposed structure was based on the need to designate responsibility, and show clearly that the CEO was mandated with safety and security functions whilst the Board was responsible for corporate governance. The core purpose of the CAA was to provide safety and security oversight. The Board was to ensure the rules were applied in the day to day running of the authority. Furthermore, a tacit performance agreement was enough to hold the Minister accountable.

The Chairperson noted that there were two divergent positions, which made it quite difficult for the Committee. The Bill nudged in the direction of corporate governance but might to be better worded.

Mr Gany replied that the DoT was responding to the final model.

Mr Morrison referred the Committee to the comparative study on page of the submission, particularly the last paragraph, to clarify the view of the Webber Wentzel delegation

Mr Mashile remarked that the Committee had been made to understand that the bulk of the issues had been resolved. He asked how the DoT thought it might be able to move closer to the alternatives offered. He felt that the Department, instead of responding to the issues raised, was instead merely explaining why these provisions were in the Bill. It might need to be the task of the Committee to bring the two viewpoints more in line, or at least interact to resolve the areas of difference.

Ms Dasoo stated that it seemed the DoT position had not been thought through clearly. A comparative study on international best practice study must be done. The legislation as it stood was not useful in practice. The Department’s proposals were not based on the Bill. She asked if the DoT was proposing a new structure, and whether there would be certainty on that.

Mr Swathe asked if this was the only submission. If so, then he would like to hear the comments on the submission. If there were other submissions, then he would like to hear comments on those as well.

Mr Cronin responded that this had raised broad issues of principle, and it was not a case of whether there was agreement or not with the DoT. He was inclined to agree that there was an overlap in the description of the roles and locations of the functionaries of the CAA.

Mr Moss asked if DoT had previously received this submission, and recommended that the Department be asked to look at the document carefully, formulate replies to the points and then report back to the Committee.

The Chairperson responded that it would help the process if the Committee were to pose salient questions. He referred specifically to the issue of the overall structure and the two divergent views. There was a need to be more specific about matters that would be useful – such as whether the Accident Investigation Board should be independent, and the lines of reporting. He asked if the Department could come up with a clean set of proposals in general and avoid going into details. He remarked that it was surely desirable for the Coordinator to be housed in the CAA and not in the DoT, and he thought that should be provided for, and the appropriate wording drafted. He also sought assurance on how industry was to be included in the process. The Committee, DoT and industry should look at the Board matter, and debate the options. He clarified that there was a need for transparency, buy-in from industry and the benefit of the skills of private sector stakeholders.

Mr Gany responded that in terms of the industry participation, the CAA regulations process could be included in the legislation.

Mr Agente Motake, Company Secretary, CAA, pointed to the concerns raised by the CAA under paragraph 2.1 of page 2. If the audit requirements were not addressed properly, then this would be a futile exercise. There was a need to deal with the fundamental issues. 

The Chairperson agreed that this set out the fundamental challenges.

Mr Swathe insisted on a definitive answer as to the number of submissions the Department had received.

Mr Gany responded that submissions had been received from the Taxi Association of South Africa, the Airline Pilots Association and the Airports Company of South Africa. The submissions presented at this meeting were, however, the most substantial.

Mr Mashile agreed with the proposals for higher interaction to remove obstacles and achieve the Authority necessary. There should be some idea of how it was going to function in terms of reporting lines and accountability, so that conflict and confusion could be avoided in future.

Mr Farrow queried the accountability implications as far as Parliament was concerned, questioning whether the CAA or the Department or the appointees would be held accountable. Accountability for the finance was another issue. If the appointees of Coordinator or Director were to be responsible, then it must be questioned what oversight Parliament could reasonably have over private individuals through the Auditor-General process. The current structure impeded oversight as individuals could not be easily held accountable.

Mr Morrison clarified that Webber Wentzel was representing both the Airlines Association of Southern Africa and Aviation Co-ordination Services. The latter was a company owned jointly by the South African Airlines and foreign airlines. The foreign airlines were in agreement with many of the points made. There were some points on which they could all agree, in respect of regulations, and the other points related to programmes for safety that were not related to regulations, but were for the CAA Board to do.

Mr Gany replied that the regulation processes were to be included in the Bill as primary legislation. He noted that point 1 of the CAA submissions related to legislation. All the other points had been dealt with, as shown in the reassessment of the FAA, where all of the other points were in place.

The Chairperson stated that the Committee had very little time left in this term. The remainder of October and November was set aside for getting legislation to the House. He suspected that these comments should have required a Green Paper and White Paper process, and he was not sure that the Department had all its paradigms in place. The Bill was complicated and was trying to solve problems in all directions. He suggested that the Committee should rather  pursue a small piece of legislation, specifically on how to address the Co-ordinator in a way that was manageable, and that the remainder of the issues around the Board be raised in the next Parliament.

Mr Gany responded that he would take that suggestion back to the Department.

The Chairperson thought that if there was not focus on the smaller intervention, there might be a bigger problem. He asked for an idea of when the Department would be able to respond.

Mr Gany replied that he could see that this was done in the following week.

The Chairperson stated that the public hearings scheduled for the remainder of the week would then be cancelled, and that the Committee would proceed in the following week.

The meeting was adjourned.