2.1
The chapter examines the amendment to the Implementation Procedures for Airworthiness covering Design Approval, Production Activities, Export Airworthiness Approval, Post Design Approval Activities, and Technical Assistance between the Government of Australia and the Government of the United States of America (known as the Implementation Procedures) made under the Agreement on the Promotion of Aviation Safety between the Government of Australia and the Government of the United States of America, more commonly known as the Bilateral Aviation Safety Agreement, and add an addendum to these procedures.
2.2
Specifically, the proposed treaty action will bring into force the following instruments:
Amendment 1 of Revision 1 of the Implementation Procedures for Airworthiness between the Government of Australia and the Government of the United States of America; and
Addendum to the Implementation Procedures for Airworthiness between the Government of Australia and the Government of the United States of America.
2.3
The purpose of the Bilateral Aviation Safety Agreement is to ensure an equivalent level of aviation safety between Australia and the United States so that products that meet the aviation safety standard in one country are permitted for use in the other. This involves accepting the other party’s regulatory approvals, evaluation and monitoring of civil aeronautical products, personnel and facilities.
2.4
The Implementation Procedures are treaty level instruments made under the Bilateral Aviation Safety Agreement directed at recognising each party’s regulatory arrangements in specific areas of aviation safety.
2.5
So far, Implementation Procedures have been agreed only in the area of airworthiness. These Implementation Procedures have been subsequently revised in Revision 1 of the Implementation Procedures.
2.6
The treaty actions being considered here identify additional Civil Aviation Safety Authority (CASA) design approvals which will be accepted by the United States as the basis for Federal Aviation Administration (FAA) design approvals.
2.7
In doing so, the treaty actions will address an imbalance whereby the FAA currently recognises fewer CASA approvals.
Airworthiness regulation in Australia
2.8
Civil aviation safety in Australia is regulated by the Civil Aviation Safety Regulations 1998 (the Regulations). In relation to civil aviation airworthiness, the Regulations divide the aviation sector into a number of classifications covered by different sets of regulations. Each classification is named for the relevant part of the Regulations. The relevant regulatory parts for this treaty action are:
Part 23 - Airworthiness standard for airplanes in the transport category (aircraft of less than 5700kg of weight and are capable of carrying up to nine passengers);
Part 25 – Airworthiness standard for airplanes in the transport category (multi engine aircraft of more than 5700kg weight and without passenger number limitations);
Part 27 – Airworthiness standards for helicopters in the normal category (helicopters of less than 2750kg weight); and
Part 29 – Airworthiness standards for helicopters in the transport category (helicopters without a weight restriction).
2.9
The treaty actions will require the FAA to recognise CASA approvals of major modifications to aircraft defined under parts 25, 27 and 29, with some limitations.
2.10
Part 21 of the Regulations sets out the types and requirements for various airworthiness approvals. Major modifications are regulated using a mechanism called a Supplemental Type Certificate or STC. At the time of writing, STCs are defined in Part 21-15 v.3 of the Regulations.
2.11
Specifically, an STC is a certificate of approval for a design change to a type certificated aircraft, aircraft engine or propeller. In other words, persons wishing to manufacture and sell an improvement to an aircraft, aircraft engine or propeller in Australia must obtain an STC to do so.
FAA recognition
2.12
The Australian Government has a policy of negotiating for the recognition of Australian airworthiness approvals in other countries, and for reciprocal recognition of the airworthiness approvals of other countries.
2.13
In accordance with this policy, CASA and the FAA have developed these amendments in order to increase the range of Australian design approvals and Australian manufactured aviation products accepted by the FAA.
These proposed amendments will provide significant benefits to Australian manufacturers of aeronautical parts and appliances by enabling them to export Australian certified aeronautical parts directly to the United States. The benefits will extend to owners and operators of transport category aircraft, normal category helicopters and transport category helicopters as well.
2.15
According to CASA, the process of negotiating Amendment 1 of Revision 1 was lengthy. The process involved CASA providing a number of STCs to the FAA to demonstrate CASA’s competency in making airworthiness approvals. The FAA agreed to the competency of the STCs CASA provided without further validation.
Specific provisions
2.16
Under the current Implementation Procedures, CASA already accepts specific design approvals from the FAA. These amendments provide an opportunity to balance the acceptance of design approvals. Under the amendments, the FAA will accept more design approvals by CASA. No additional regulatory acceptance is required by CASA.
2.17
The current procedures only allow for the export of designs and products for normal categories of aeroplanes as defined by Part 23 of the Regulations.
2.18
STC issued for these designs make up less than 43 per cent of all STCs issued in Australia.
2.19
The Implementation Procedures will apply to certain STCs issued for aircraft defined by Parts 25, 27 and 29 of the Civil Aviation Safety Regulations, making it easier for manufacturers of modifications for these aircraft, and owners of aircraft so modified to export their aircraft to the United States.
2.20
At present, exports to the United States in these categories need to be approved by an FAA approved design organisation to validate the CASA approved STCs.
2.21
The amendments are expected to eliminate the significant costs associated with this design validation.
2.22
The treaty actions will also remove limitations on the FAA recognition of STCs for aircraft designed in a country other than the United States. These are called ‘State of Design’ limitations.
2.23
At present the FAA will only accept CASA STCs for Part 23 aircraft where these aircraft are designed in the United States. The amendments will mean that the FAA can accept CASA STCs for Part 23 aircraft that are not designed in the United States.
2.24
The treaty action will separate applicable CASA STCs into two tiers of acceptance by the FAA. The first tier includes the STCs that will be automatically accepted. FAA direct acceptance of CASA STCs will be limited to areas where it has been deemed that Australian industry and CASA demonstrated a sufficient level of experience through existing or already approved STCs.
2.25
The second tier applies to all other STCs, which will be subject to negotiation between the FAA and CASA were the FAA feels it is necessary to examine the compliance of an STC more thoroughly.
2.26
For example, at the public hearing on 2 May 2016, the Committee expressed interest in whether a firm that manufactured landing gear for commercial aircraft under a CASA STC would be able to export to the United States without further FAA approval. CASA witnesses were of the view that this sort of product would require further FAA investigation of the CASA STC, and would not be included in the first tier automatic approval arrangements. The depth of additional examination by the FAA would be a matter of negotiation.
2.27
However, under the current arrangements the firm would be required to obtain approval through an FAA design organisation – a significantly more costly process.
Australian parts and appliances—which include any instrument, mechanism, equipment, part, apparatus, appurtenance or accessory, including communication equipment, that is used or intended to be used in operating or controlling an aircraft in flight, is installed in or attached to the aircraft and is not part of the airframe, the engine or propeller—will no longer have to undergo additional often duplicated manufacturing certification by American authorities when exporting to the United States.
2.29
Every STC accepted by the FAA will enable the relevant modifications to be installed on US registered aircraft. In other words, approved parts manufactured in Australia can be installed on US registered aircraft.
2.30
According to CASA, the first tier covers probably 80 to 90 per cent of the work currently being done in Australia. In relation to particular types of aircraft, such as those defined as category 25 and 29, the percentage is likely to be higher.
2.31
The treaty actions could apply to 57 per cent of CASA STCs. In addition, 69 per cent of STC applications currently being processed could benefit from these amendments.
2.32
The treaty actions will apply to the products of up to 45 design businesses and up to 85 manufacturers in Australia.
2.33
For people or organisations certified to operate aircraft and the owners of aircraft in Australia, the proposed amendments could result in significant cost savings should they wish to export their aircraft to the United States with relevant CASA approved STCs.
2.34
According to CASA, the newly accepted STCs include the manufacture and installation of things like cabin refurbishments and emergency medical fitouts for medical and emergency helicopters.
2.35
CASA reported that Qantas and Virgin have estimated savings from the proposed treaty actions at between $4 and $5 million.
Australian obligations
2.36
No changes to the Australian Regulations will be necessary as a result of this amendment as Australian legislation and Civil Aviation Safety Regulations already allow for the acceptance of certain FAA approvals. The amendments do not include any changes to Australian commitments under the Agreement and Implementation Procedures and do not include any new commitments for Australia.
2.37
Accordingly, there are no foreseeable costs to Australia arising out of this treaty action. However, CASA expect that the cost of Australian aviation businesses doing business in the United States may be reduced as a result of this treaty action.
Resourcing and demand
2.38
During the public hearing on 2 May, CASA noted that the industry, being aware of the impending changes, had been making increasing numbers of applications for STCs. At the time of the public hearing, CASA stated that it had about 40 applications pending.
2.39
Concern has been expressed that CASA is not adequately resourced to handle its current workload with regard to applications for STCs:
… it often takes CASA a long time to approve complex STCs and similar modifications. The fundamental reason is that in a small aviation manufacturing country like Australia, CASA cannot hope to attract and retain the calibre and quantity of people required to fulfil the task required. Nor can it afford to do so. These limitations apply equally across the spectrum of CASA’s activities. The problem is exacerbated by the lack of trust between CASA and industry as noted in the ASRR (Aviation Safety Regulation Review), which denies CASA assistance from industry to acquire at least some of the required knowledge.
2.40
The Committee discussed with CASA witnesses whether the agency has the resources it needs to assess the pending applications in a timely manner. Asked for the specific number of STC applications outstanding for various periods, CASA supplied the following details:
as at 30 April 2016: 18 STC applications outstanding;
as at 30 June 2016: 21 STC applications outstanding; and
as at 15 September 2016: 23 STC applications outstanding.
2.41
The CASA witnesses argued that the time taken to assess each STC application varied based on the complexity of the application:
All STC applications are usually assessed and accepted with a response provided to the applicant within 2 to 3 business days. It should be noted that this process relates to the administrative assessment of the application form and initial supporting documentation. Once the STC application is accepted the STC process begins and the time spent on each application will depend on the complexity of the modification, required involvement of CASA officers and the quality of documentation provided by the applicant.
2.42
In general terms, CASA indicated that at present it has sufficient resources to deal with the additional applications for STCs, but that if the number of applications increased in future, CASA may experience some resource pressure.
2.43
Under Part 21-J01 v1.0 of the Regulations, CASA has the ability to approve organisations and people to carry out certification work on its behalf. According to CASA:
…the model of part 21 – to the maximum extent possible have experts and industry undertake those types of design and approval processes. In terms of our obligations as a regulator, there are some things that we will obviously need to continue to be involved in.
2.44
In terms of the degree of work done on certification by approved organisations, CASA indicated the about 100 per cent of certifications for minor modifications and minor repairs is done by approved organisations. For more complex work, the certification work would be delegated on a case by case basis to either approved organisations or to CASA itself.However, there is concern that CASA has not been adequately utilising this avenue for approvals and has been reducing the use of delegations, contributing to the time taken to obtain approvals.Asked to quantify the number of approved design organisations, CASA said that two organisations have been approved, one is finalising its assessment, one is in the middle of its assessment and three are at the beginning of the process.
2.45
CASA also advised that as a result of a review of Part 21–J01 of the Regulations, CASA was working with industry advisers to find a workable alternative for general aviation design approvals.
2.46
The Committee notes that, given the degree of interest from Australian design bureau and manufacturers in obtaining relevant STCs, it will be important for CASA to ensure the STC process proceeds as smoothly and quickly as possible.
Conclusion
2.47
The Committee supports the ratification of the treaty actions.
2.48
The Committee supports the following two treaty actions and recommends that binding treaty action be taken:
Amendment 1 of Revision 1 of the Implementation Procedures for Airworthiness between the Government of Australia and the Government of the United States of America; and
the Addendum to the Implementation Procedures for Airworthiness between the Government of Australia and the Government of the United States of America.