Chapter Two - Issues
Introduction
2.1
The Civil Aviation Legislation Amendment (Mutual
Recognition with New Zealand)
Bill 2005 (the bill) was preceded by a bill of the same title introduced into
the Parliament in 2003. The 2003 bill was the subject of an inquiry by this
committee's predecessor. The report of that inquiry was tabled in the Senate in
June 2004. The inquiry identified a number of issues of concern and the
majority report made two recommendations designed to address these concerns.
2.2
Recommendation 1 proposed that a comparative assessment
of safety records of airlines operating in Australia under both Australian and
New Zealand Air Operator Certificates (AOCs) be conducted 12 months after the
commencement of the mutual recognition of AOCs and that the results of this
assessment be tabled in the Parliament within 18 months of that commencement
date. The Government accepted this recommendation and the committee was
informed that the terms of reference for the safety assessment are currently
being developed by Australia's Civil Aviation Safety Authority (CASA) in
consultation with its New Zealand counterpart[15].
2.3
The second recommendation made in the majority report
was to remove the ability to extend mutual recognition beyond the current
proposal for AOCs by regulation. The 2005 bill has been revised to accommodate
this recommendation.
2.4
During this inquiry, some of those concerns raised in
the 2004 inquiry were revisited. These concerns related primarily to the
underlying tenets and possible unintended consequences of the legislation
rather than the broader policy to be implemented by the bill. The broader
policy is a move towards developing a single Australia-New Zealand aviation
market. It follows the Australian and New Zealand governments' signing of the
Single Aviation Market (SAM) Arrangements in 1996 and an 'open skies' Air
Services Agreement (ASA) in August 2002, which came into effect in August 2003.[16]
2.5
There were no new concerns raised in relation to the
bill. This report makes reference to the 2004 report in the discussion on
issues revisited. These issues include the arguments that mutual recognition
will reduce administrative costs and the possible safety implications for
Australian air travellers.
Administrative efficiencies
2.6
During the 2004 inquiry, the government and Qantas
argued that a mutually recognised AOC would result in improved efficiency by
reducing duplication and complexity and the associated administrative and
financial burdens[17].
2.7
This matter was taken up during this inquiry. A
representative of the Australian Federation of Air Pilots noted that cost savings
arising out of mutual recognition are yet to be identified. 'People are talking
about them. We are yet to see any hard facts that show that there are
substantial savings in relation to this proposal.'[18]
2.8
Qantas noted in their recent submission that they will
gain from the cost savings associated with the flexibility of movement of
aircraft and crews:
...it will provide the ability to transfer aircraft between our
Australian and New Zealand
based fleets to cover matters such as temporary unforeseen maintenance
requirements and seasonal demand, without the need to go through the present
re-registration processes, which are lengthy and attract payment of
export/import taxes.[19]
2.9
However, there is still concern in the industry that
the savings made will have unintended consequences. Concern was expressed that
the implementation of the legislation will result in the reduction in
employment opportunities and conditions for Australian workers.
2.10
The Flight Attendants' Association argued that mutual
recognition may act to encourage operators to shift business to the country
that had more viable cost saving measures for their enterprise:
The airlines now have started employing overseas. Qantas has a
base in New Zealand
of international flight attendants who operate under vastly lower conditions
than their Australian counterparts. They have set up subsidiary airlines in New
Zealand, such as Jetconnect, and there is
evidence that jobs that would normally have gone to young Australians are now
moving overseas, in particular to New Zealand.[20]
2.11
These concerns were supported by evidence from the
Australian Federation of Air Pilots. The representative told the committee of
an agreement they had with Virgin Blue in relation to its New
Zealand operations. The Federation was given
the understanding that their membership would be employed to do the flying.
Despite that agreement, Virgin Blue established its own company within New
Zealand – Pacific Blue. Pacific Blue engages
its pilots through a contractor at a substantially lower rate of pay than the
Virgin Blue pilots receive. The Federation argues, 'Pacific Blue seems, in our
mind, to be a clear example of where things may go in the future if this bill
is passed.'[21]
2.12
The question as to whether airlines will move base to
take advantage of more cost efficient regulatory regimes was answered by a
representative of DOTARS. There is provision in the bill to limit the ability
of operators to pick and choose which regulatory system they will operate
under. Under proposed section 28B, operators will have to base the majority of
their resources in Australia
to be monitored by CASA. In addition, the bill mentions that the location of
training and checking bases would be examined, along with the operator's
headquarters:[22]
...to decide that perhaps the centre of gravity of the operations
has shifted to the extent that it is no longer possible for them to effectively
carry out surveillance, and in that case there would be a conversation between the
two regulators and arrangements would be made.[23]
2.13
Certainly, Australia's
regulatory authority CASA, is not anticipating an increase in administrative
costs as a result of the proposed legislation:
...in terms of costs to CASA, there really is no dramatic change
as to the costs that we currently have in accordance with the costs that we
will have in the future, in the same way that CASA issues AOCs for Australian
airlines operation in New Zealand. We do undertake surveillance tasks et cetera
of those airlines that operate there and those costs are already within our
budget... I do not believe what is being proposed will make CASA incur
significant additional costs.[24]
2.14
A further possible unintended consequence of the
legislation raised during the inquiry was the implications for the regulatory
regimes and safety standards of the airlines. The Flight Attendants'
Association argued that:
What we could have ... is an institutionalised system with one
level of safety for lower cost foreign operators operating in our country. ...
Secondly you would have a higher level of safety if you chose to fly with a
main line Australian carrier operating to Australian standards.[25]
Relative safety standards
2.15
The 2004 report canvassed the impact of a mutual
recognition policy on the safety of Australia's
aviation environment. While it was readily acknowledged that both countries
consistently met International Civil Aviation Organisation (ICAO) safety
standards, a number of aviation organisations questioned whether there was in
fact a comparable level of safety between the two countries.
2.16
The concept of mutual recognition is based on an
acceptance by both Australia
and New Zealand
that their respective aviation safety legislation results in the safe operation
of large capacity aircraft within their jurisdiction.
2.17
However, Mr Steven
Reed, President of the Flight Attendants'
Association of Australia (International Division) argued that:
...there is no evidence that there is an equivalence between
Australian and New Zealand
safety systems. We have not seen anything to indicate that there is an
equivalence, because the methodology used to assess safety equivalence we say
is largely invalid. ... We say that the safety assessment that has been used to
make the assumptions has not been made public for scrutiny and we believe that
it will be appropriate for organisations such as ourselves to have a look at
those reports so that we can have a more detailed examination of them. It is
our view that the bill should not proceed until the assumptions underpinning them
have been scrutinised and indeed tested.[26]
2.18
Mr Guy
Maclean, providing
evidence on behalf of the Flight Attendants' Association of Australia (Domestic
Division), also indicated that there were differences in aviation safety
standards and gave as an example cabin safety auditors:
This is where we have concerns; these are the safety
implications: under this bill, a New Zealand-registered aircraft, for example,
could operate in Australia
solely under the requirements and oversight – indeed, this is what this bill is
about – of the New Zealand
civil aviation safety authority. They do not oversee safety to the same
standard as we do in Australia.
It is not that they cannot do it or that they are no good at it – they just do
not do it. For example – and I think it is a good example – I am not aware that
the New Zealand civil aviation safety authority has any cabin safety auditors
who are specialist cabin safety operators.[27]
2.19
Representatives of Virgin Blue Airlines Pty Ltd
indicated that they did not agree with the arguments proposing that the New
Zealand regulatory regime was of a lower
standard than that of Australia.
The committee was told that Virgin Blue's subsidiary, Pacific Blue is certified
by the New Zealand
authorities and holds an Australian foreign airline operating certificate –
issued by CASA.
2.20
Mr John
Bartlett, Head of Safety Systems for Virgin
Blue Airlines, stated that the operating certificate:
...recognises acceptance of those airline safety standards and,
more importantly, recognises that the state of certification – in this case New
Zealand – has an effective and acceptable
regulatory aviation safety oversight capability. In this regard, the
acceptability of equivalence of safety outcomes between Australia
and New Zealand
is already established and in operation.[28]
2.21
Mr Terry
O'Connell, Executive Director of the
Australian Federation of Air Pilots (AFAP) also raised concerns in relation to
safety regulation. In evidence, he advanced the proposition that harmonisation
of the two regulatory systems should be examined rather than mutual
recognition.[29]
2.22
He was also critical of the use of ICAO to establish
and justify a safety position:
ICAO provides a minimum position – in effect, the lowest common
safety benchmark on a global basis. Aviation safety in Australia
has traditionally been about establishing and maintaining margins of safety
over and above the minimum standards.[30]
2.23
The Department of Transport and Regional Services
maintained that the introduction of the new legislation would not compromise
safety. In the Department's submission, it argued that:
The Australian Government remains committed to aviation safety
and would not enter into an agreement that compromised safety. The Government
has been advised by CASA that Australia
and New Zealand
have comparable safety outcomes.[31]
2.24
In response to criticism of ICAO standards, Ms
Merrilyn Chilvers,
General Manager, Aviation Operations, argued that:
I do not think it is fair to say that ICAO comments on relative
safety. It has a program of safety audits, which it does on a systematic basis,
where it audits each country's compliance with annexes under the Chicago
convention, noting whether or not a country complies and whether differences
have been lodged. But it would not say that one country is safer than another.
It is a matter of compliance with the annexes.
2.25
During the inquiry, concern about the different
regulatory standards and the safety implications of the two regimes focussed on
the issue of cabin crew. It was a matter that was also considered during the
2004 inquiry.
Cabin crew ratios
2.26
Australian and New
Zealand apply different regulatory standards
for cabin crew to passenger ratios.
2.27
Mr Guy
Maclean, representing the
Flight Attendants' Association of Australia, when asked to provide the
committee with an update on the crew to passenger ratios on Australian and New
Zealand aircraft, indicated that there was a
fundamental difference in relation to Australia's
crew to passenger ratio that was not well understood:
... Our ratio is a passenger standard; it refers to one crew member
per 36 passengers. The American, European and New
Zealand ratios are passenger seat standards.
They refer to one to 50 passenger seats. They are like apples and oranges; they
cannot be directly compared but they generally are. What you get is an invalid
comparison between the number 36 and the number 50, which makes us look
artificially low and automatically makes us look at if we are on a great wicket
here with an extremely advantageous crew ratio. In the European, US and New
Zealand standards, because there is a passenger seat ratio, even if there are
two people on the aeroplane there must be the crew ratio of one to 50; in the
Australian ratio that could vary at times and the crew numbers could be
reduced.[32]
2.28
The Flight Attendants' Association indicated that the
possibility of aircraft operating with less cabin crew could create problems in
relation to safety. The committee was told that under New
Zealand regulations, aircraft are able to
operate with less than one crew member per main floor level exit. It was also
told that while traditionally, this practice has not been allowed (or done) in Australia:
...recently we are seeing that the operators are wishing to
operate single-aisle aircraft with less than one crew member per main exit, and
that would obviously entail less than one crew member in command of a raft, for
example, or operating a raft in a ditching. They are now looking for the
flexibility to have, in what they refer to as 'exceptional circumstances', less
than a crew member per door – so, for example, one crew member on a 737 at the
forward end responsible for two doors. We have never done that in this country.
It is just starting to arise.[33]
2.29
The Australian Federation of Air Pilots also raised the
issue of cabin crew ratios and the potential impact on safety. The Federation
indicated support for the Flight Attendants' Association's views in relation to
diminished cabin crew to passenger ratios[34]
and told the committee that in 'relation to levels of safety, we would
certainly argue that it is a diminished safety position.'[35]
2.30
Mr John Bartlett, Head
of Safety Systems, Virgin Blue Airlines Pty Ltd, indicated that as far as the
airline's management was concerned, the management of cabin safety is
underpinned by standard operating procedures approved by CASA. The airline's
approved procedures to deal with in-flight emergencies and evacuations are
predicated on the availability of four flight attendants on all of its aircraft[36]: 'the presence of extra flight
attendants carried to meet the required ratio of one to 36 is not considered
from a safety perspective'.[37]
2.31
In explaining the airline's approach to the management
of risk, Mr Bartlett
argued that it is the culmination of the processes, standards and behaviours
that determine safe outcomes consistently.[38]
He told the committee:
We are talking here from a management perspective about ensuring
that everybody, including our flight attendants, is armed with the procedures,
the documentation, the training and the skill sets to ensure that safe outcomes
are predicated. We cannot just see whether it happens. It is the consistent
application of these procedures that ensures safe outcomes for our passengers,
and not the prescription of any one in particular – for example, the ratio of
cabin crew to passengers.
These considerations firmly and empirically, we believe,
establish the standards to be met in establishing a regime that ensures safe
outcomes for passengers. In New Zealand
– and it happens to be the internationally accepted standard – the standard of
one to 50 clearly meets the criteria. Australia
holds with a ratio of one to 36. Whatever the genesis of this ratio, there is
clearly no safety case to be made to support the proposition.[39]
2.32
The Department of Transport and Regional Services
acknowledged that the number of cabin crew to passengers remains an issue of
concern in relation to the bill. The department, however maintains its 2004
position in relation to cabin crew ratios and argued that:
In the absence of an ICAO standard on the ratio of cabin crew to
passengers, both Australia
and New Zealand
have developed their requirements independently. This has led to a sliding
scale of cabin crew to passengers carried (in the Australian context) or
passenger seats (in the New Zealand
context), based on different criteria. Because of these different approaches it
is not valid to make a direct comparison between the two systems.[40]
2.33
During the hearing on the bill, the committee
questioned the department in relation to the basis on which the determinations
on flight crew and passenger ratios are made. The committee was told that the
basis of the ratio was an historical one and that no further research had been
undertaken in relation to crew ratios and safety issues since the last inquiry.[41]
2.34
The committee questioned whether, based on the evidence
provided in relation to Pacific Blue and Virgin Blue – where there is one fewer
cabin crew member on identical aircraft operated by related companies across
the Tasman – the new legislation would result in a reduction
in cabin crew on Australian flights.
2.35
Mr Arthur
White, Acting Executive Manager, Airline
Operations, CASA, told the committee that CASA had not conducted any research
in relation to cabin crew to passenger ratios, and that the last consultation
had involved a discussion paper released in 2000. A subsequent notice of
proposed rule was released in 2002 and the ratio was maintained at 1:36 – based
largely on submissions put forward by flight attendants' associations.
2.36
Whilst indicating that the Australian airlines were yet
to write to CASA formally seeking a change to the ratio, Ms
Nicola Hinder,
Acting Manager of Corporate Relations, told the committee that:
We have received word from the airlines that at some time they
will be looking to come to CASA with a safety case to demonstrate whether
changes are required. CASA has responded by saying that, while at this stage we
have not made any moves to change the 1:36
ratio, we will look at safety cases if they are presented to us. We remain open
to making changes, but they must be supported by an appropriate safety case to
support the changes.[42]
2.37
The committee also explored the possible implications
for airline security of a decreased cabin crew ratio. When asked specifically
whether a decreased cabin crew to passenger ratio would have an impact on
security, Ms Merrilyn Chilvers,
General Manager, Aviation Operations, told the committee that:
The Australian and New Zealand
situations are different in respect of security because in New
Zealand the security is administered by the
civil aviation authority whereas here it is administered by the Office of
Transport Security within the department. The issue of an AOC by New Zealand
does not cover off the security requirements, so any New Zealand operator
wishing to operate here with the ANZA privileges would be required to have an
aviation security program approved by the Office of Transport Security. What
the Office of Transport Security would be looking at would be the capacity of
the cabin crew to deal with incidents, so they would be looking at the outcome
rather than setting down specific numbers.[43]
Air marshals
2.38
Whilst the issue of air marshals was raised during the
inquiry, the committee notes that there was not the same level of concern
raised as during the previous inquiry.
2.39
Mr Terry
O'Connell, Executive Director of the
Australian Federation of Air Pilots, was asked by the committee about the
Federation's views on the issue of air marshals:
Senator O'Brien – What is your view on the issue of
sky marshals? Does your association have concerns at the prohibition of sky
marshals on aircraft operating under New Zealand AOCs?
Mr O'Connell – The federation does not hold a strong position in relation to
air marshals. We have accepted that they have been introduced into Australian
operations. They do exist within Australia,
as we all know. Our position is that there should have been more consultation,
but we are satisfied now with the operation of the sky marshals. Obviously,
anything that adds to security we are prepared to accept. Our position is that we
would prefer to see sky marshals now than not see them.[44]
2.40
The submission provided by the Department of Transport
and Regional Services indicated that on the issue of air marshals:
...the Office of Transport Security has advised that New
Zealand airlines operating to, from or
within Australia
using a New Zealand AOC with ANZA (Australian and New Zealand
Aviation) privileges will still have to hold an Australian aviation security
programme. In addition, the airlines have their own security manual.[45]
2.41
The committee sought further clarification from the
department and was informed that New Zealand airlines operating domestic
services within Australia would be required to comply with Australia's aviation
security regime including 'allowing air security officers on board'.[46]
Committee comment
2.42
The report on the 2004 inquiry noted that evidence had
been provided during the inquiry on the significant differences between the
employment conditions in Australia
and New Zealand.
Further, it indicated that committee's disappointment if the aviation industry
based in Australia
used mutual recognition as an opportunity to reduce employment opportunities
for Australians in the industry.[47]
2.43
During this inquiry, concerns about employment
conditions and opportunities were again evident. The committee notes that even
without the mutual recognition regime for AOCs in place, the Australian
Federation of Air Pilots cited an example of employment opportunities going
offshore.
2.44
Virgin Blue acknowledged that the difference in cabin
crew ratios between the two countries 'does result, potentially, in a less than
level playing field in both countries, with operators in Australia exposed to a
significant cost penalty'.[48]
2.45
The committee believes that however unintended, it is
inevitable that the proposed legislation will encourage Australian operators to
either reduce standards of employment or employment opportunities for cabin
crew and pilots or encourage operators to move offshore. The committee believes
that in this may not be in the best interests of the industry or the travelling
public, particularly if it results in the reduction of the standard of safety
Australian passengers enjoy.
2.46
The committee notes that work on the 2004 inquiry
recommendation relating to a comparative assessment of the safety records
between Australia and New Zealand has already commenced. It believes that this
assessment should be finalised and considered by Australia's Civil Aviation
Safety Authority (CASA) prior to any changes being made to Australia's
regulatory safety regime relating to large aircraft. Further, CASA, in making
any changes to the regulatory regime relating to large aircraft, should be
required to provide to the Minister for tabling in the Parliament a statement
of reasons for the changes supported by relevant material.
Recommendation
The committee
recommends that the bill be passed.
Senator the Hon. Bill
Heffernan
Chair
Navigation: Previous Page | Contents | Next Page