Budget and Strategic Plan 2006/07: Civil Aviation Authority; Air Traffic and Navigation Services

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
15 March 2006
BUDGET AND STRATEGIC PLAN 2006/07: CIVIL AVIATION AUTHORITY; AIR TRAFFIC AND NAVIGATION SERVICES

CAA presentation
ATNS presentation

SUMMARY
The Civil Aviation Authority and the Air Traffic and Navigation Services met with the Committee to present strategic goals and financial results. Detail on specific areas of oversight were provided. Information was recounted on current operating programmes and future initiatives. Strategies to improve service delivery were outlined. Detail was provided on budgets.

Members asked various questions including increased salary expenses, progress on forensic audits, increased costs due to additional services, current relationships between the agencies and the Department, progress in terms of Black Economic Empowerment, the role of mentorships to train new recruits, the projected use of surpluses and reasons behind tariff increases.

MINUTES
Civil Aviation Authority (CAA) Presentation
Mr D Morosi (Chairperson) and Ms M Aucamp (Senior Manager-Finance) presented detail on the new mission focused on efficient, effective and economic aviation safety and security. The Authority’s strategic goals and mandate were outlined. The current sources of funding were explained. Further information was provided on the Authority’s specific areas of oversight. Related focus areas included flight operations, airspace, certification, aviation medicine and accidents and incidents investigations. The Authority regulated the civil aviation industry in South Africa. The list of pertinent international conventions was recounted. The strategic plan for 2006/7 was conveyed including the budget and balance sheet. (See document for full presentation)

Discussion
Mr S Farrow (DA) noted that cash receipts were not projected to change but employment costs were likely to rise. He questioned the figure of R30 million associated with the taxi recapitalisation process. He referred to recent forensic audits and asked for further detail on progress. He asked whether the money had been recovered and any action taken against the perpetrators. Costs would increase due to the adoption of the medical certification process and the requisite employment of doctors and the purchase of equipment. Outsourcing would probably remain a cheaper option. He asked whether a policy was in place to sell assets at a depreciated value or to maintain market value.

Mr Morosi replied that an audit had been conducted by Price Waterhouse Coopers and a report had been compiled and was presently with a firm of attorneys. The in-house medical certification process was still to be decided. The Institute of Aviation Medicine had, until then, been involved and the plan was to move away from this arrangement.

Ms Aucamp stated that additional infrastructure expenditure was for furniture and fittings for existing buildings. The sale of assets would be conducted in line with new accounting standards and depreciation could be considered where appropriate.

The Chairperson added that a conference involving carrier groups would be held in May. He sought feedback on the present relationship with the Department and noted that the Authority had remained free of media coverage for some time. He was aware that a recent request for additional funding had been turned down by the Department. An effective relationship was needed between the Department and the Authority. Enhanced oversight over transport agencies was required.

Mr Morosi stated that a conference had been held in February regarding accidents and new commitments for air safety had been set. Greater awareness of best practice to avoid accidents would be communicated within the industry. The Authority would also meet with the leisure component of the aviation industry to discuss safety. The Department participated in strategic planning exercises to impose national objectives and a sound relationship existed with national government.

Ms Khunou requested a report on job creation and asked whether the organisation was being transformed. More progress had to be achieved in terms of Black Economic Empowerment and statistics had to be provided. More clarity was needed on the problem of fronting. Five percent of total staff were participating in an internship programme and she asked whether more blacks could be included.

Mr Morosi asserted that the Authority dealt with a highly complex and skilled profession. Transformation had to occur in an ordered fashion. A training programme for pilots was in place for other airlines. Currently all general managers were non-white. A tender committee was in place to circumvent fronting.

Ms Khunou noted that more contracts in certain specialised fields had to be provided to black businesses.

Mr Farrow reminded Members of the value of mentorships to train new employees. The recruitment programme was welcomed but he wondered where suitable candidates would be sourced from. An increase in aircraft registration and licencing was needed. Concerns remained over the maintenance of aging aircraft fleets. Inspectorates should be improved to monitor aircraft maintenance.

Mr Morosi acknowledged that more vigilant oversight was an imperative. Mentors could be sourced from the ranks of the retirees. Improved oversight would reduce the accident rate. The mandate of the CAA was to regulate the air industry and technical skills were paramount to meet this objective.

Air Traffic and Navigation Services (ATNS) presentation
Ms W Stander (CEO) provided detail on the vision, mission and imperatives of the agency. A key strategic imperative was continuous improvement of the safety performance. Key aspects of the safety management system were outlined. The agency sought to become an employer of choice with staff retention paramount. The remuneration policy would be revamped. Detail was provided on current and future initiatives including a revamped training academy. The service delivery strategy was explained. Safety and performance-driven service delivery were crucial. Long-term financial stability would be a key objective. A strategy was in place to secure ATNS in the global air traffic system and contribute to enhanced networks in Africa. The budget for 2006/7 was explained outlining revenue, sundry income and expenses.

Discussion
Mr Farrow asked what happened to the surplus of approximately R100 million and whether it was reinvested into the agency.

Mr Mashile referred to the tariff increase of 9.2% and asked why there was a need for constant increases given the surplus.

Mr B Dhlamini (IFP) asked whether temporary workers were included in the recruitment drive.

Ms Khunou noted the need to retain staff and asked what steps had been taken to achieve this objective. Contingency plans were needed for air corridor problems if they occurred.

Mr Farrow asked whether the agency paid more than the market value for international air traffic controllers. The need to raise tariffs to meet salary demands could price the agency out of the market. Some control was needed over salaries paid.

Ms Stander responded that a 13% global shortage existed for controllers and many South African controllers were working in the Middle East. Johannesburg International Airport was a busy airspace with a highly technical radar environment. A five-year training programme was needed for staff to acquire the necessary skills to work in that environment. Management had recently considered the reasons for the staff shortage. The South African aviation market was extremely buoyant with growing volumes of 7%. More staff was needed to meet traffic volumes. The agency had to provide a 24-hour service. Offers had recently been made to 18 controllers from the South African Air Force (SAAF). The agency intended to service 72 aircraft per hour by 2008. Demand for the 2010 World Cup should be meet. Mobile radar systems would be deployed to assist in the event. The introduction of new technology would assist in reducing staff demand. No tariff increase would occur in the current year. Tariff increases were strictly regulated and no excessive profits were allowed. Much of the surplus would be used to finance next year’s expenditure. Radar systems would be installed at smaller airports such as East London. New technology would assist in reducing risk within air corridors. New African networks would also increase levels of capacity.

Ms B Dibate (Executive Manager: Service Delivery) stated that all envisaged projects in Africa were carefully assessed for risk. The International Air Transport Authority covered the risk for all projects.

Mr M Moss (ANC) asked for clarity on the stated policy to recruit interns from top schools and asked about other less privileged schools. He asked what steps could be taken to get maths and science students involved. He asked whether the agency had enjoyed success in reducing delays.

Mr Mashile asked why comparative figures were hidden in the budget and tariff increases were helping to reduce the cost of business.

Ms Khunou sought clarity on the nature of the interaction with the Department. She asked for further detail on the envisaged challenges to meet the target of 72 aircraft per hour. Skills transfer from foreign recruits should be mandatory and she asked how revenue was generated.

Ms Stander responded that the SAAF and the agency co-operated in terms of air oversight. Potential controllers were sourced from maths and science graduates due to the need for logic ability. Teachers were invited to attend events to inform them of career opportunities and required skills. A winter maths school would be extended from Gauteng to Limpopo and Mpmumalanga. Schools with the strongest academic results would be focused on first to meet urgent demand and increase chances of success. The agency had not intended to hide certain figures in the budget and the information could be provided to satisfy inquiry. The target of 72 aircraft per hour would require increased co-ordination. A high-speed taxiway at Johannesburg International Airport would be built to increase traffic. Arrival and departure procedures would become more efficient. Increased takeoff manoeuvres would be introduced to speed up numbers of aircraft. The required separation distance between aircraft would be reduced to help to meet the demand. New technology would help to reduce the cost of business.

Ms Dibate added that additional takeoff routes would allow airlines to reduce costs. A new radar system would assist in meeting the target of 72 aircraft per hour. The envisaged changes required co-operation from the Airports Company of South Africa.

Mr M Mabasa (Chairperson) declared that the constant tariff price would allow clients to benefit and help to reduce the cost of business. The investment in new technology would facilitate cost reduction. A more strategic relationship prevailed with the Department and a performance agreement was in place.

Mr Farrow asked whether the surplus was rolled over.

Mr Mabasa stated that the surplus would be reinvested back into the agency in order to create a world-class competitor. No dividend was declared to investors and the excess could be used to fund social development initiatives.

Ms Dibate replied that some delays could be due to poor motivational levels of staff and excessive workloads. New technologies would help to promote efficacy.

Mr Moss referred to a recent trip that involved an extensive airport delay. Attempts to convey concerns to management were unsuccessful.

Ms Stander stated that a distinction had to be made between airline delays and blockages caused by controllers. The anecdote pertained to an airline delay.

Ms Dibate referred to various types of delays such as weather and ACSA-related or controller-related disruptions. The ATNS system was highly dependant on Telkom due to communication needs. Payment to Telkom was a main component of the budget.

Ms Stander declared that revenue was derived from tariffs paid by airline clients, contract services provided to 21 airports, training programmes delivered to foreign countries, airspace design and a satellite communication network.

The Chairperson suggested that communication be maintained with all stakeholders and interns should be recruited from across the country.

The meeting was adjourned.