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28 September 2012

The “boots” are very price conscious and it’s good to see so many members now engaging with us over the CAA charges.  In case you thought you hadn't been consulted well, we did a consultation at the end of 2010. Documents were posted and communications with CAA were called for on a number of pricing options. A period of about 18 months elapsed while a value-for-money review was undertaken and then pricing proposals were finalised.
 
There were two charges which AIA objected to - the medical charge and the proposed escalation in audit charge beyond the level of $200 in year one. We conveyed these objections to the Government, who like CAA, are between a rock and a hard place. Government took the view that Industry should pay. In this respect, it’s a bit like a tax and the question becomes that for the dollar you pay, will the restructured CAA actually add more value to you business? This is what they are promising.
 
At this point you may think we have given up the debate. All I can say is absolutely not! This week we have been strongly suggesting to CAA that they accelerate the restructuring of the medical certification unit because essentially what we are being asked to pay for is an inefficient system. In a competitive market such inefficiencies could not be gotten away with because the customer would simply buy from the most efficient source. 
 
CAA is essentially devoid of this pressure but that doesn't mean to say that they can ignore their customers. In fact, we know they cannot! History clearly demonstrates that. In speaking to an Industry gathering yesterday, the Director was very clear that if CAA didn't deliver value for money then customers would be annoyed. So that is the challenge for them and we have an opportunity to influence that proposition both in the way we run our businesses and the type of advice we provide to Government on what the real value drivers are.
 
While it is not one of the direct price pressures we deal with everyday, it is a powerful influence provided we are very clear as to our expectations of delivery.  On a number of levels we see change within the CAA. The question is whether these changes are in the right direction and it’s up to Industry to provide some guidance.
 
We would like to hear from you as to what the major sticking points are with the CAA and it would be even better if you can put a price on some of those barriers. This week a member rang to tell me about a bracket he'd put on a mod four years ago that had cost him $4k. Today the same mod would cost him $27k. The cost differential is being driven by changes to the CAA certification process and the requirement for an STC. He also commented about the time delays associated with the new process. This is an example of what we'd like to hear about because it is these types of costs and process failures that are the real impediments to making this Industry more competitive.
 
Yesterday I attended a seminar conducted by the new CAA and I must say it was impressive. The content was spot on as was the construction of the presentations. It was good to hear Captain Bob Guard speaking on removing political correctness from the flight deck. His presentation was about dealing with issues in a considered and measured way as opposed to resorting to litigation.
 
An issue the “boots” had failed to appreciate was just how much work the UK has done on risk profiling. It was good to hear the Director confirm again that sector risk profiling will be extended to all in industry. He acknowledged that Ag aviation was the leader in the critical element of developing CAA's risk based audit tool further. This will mean a high risk ranking business will result in more frequent and intensive audits. This gives the incentive to participate robustly in the development of the profile and its application to your businesses.
 
Our work in the weeks ahead will be on the growth agenda. We had an excellent discussion with the Director over streamlining New Zealand syllabus for pilot and engineers to make them internationally competitive. Of course this is only one part of the competitiveness equation and we hope to see some significant progress out of CAA/MOT over the Rules for 141 and 147 in the next week.
 
On 18 October we'll have our first formal meeting of Aviation Training New Zealand. This group is about bringing a NZ Inc approach to both the international and domestic markets. There is no question that the opportunities to access the international training market are vast but we also have to have a well performing and highly credible domestic market supplying the right skills and right numbers to ensure we have sustainable businesses. If you are interested in joining this group contact admin1@aia.org.nz
 
Work is also progressing on developing the Aviation New Zealand brand and we hope to be able to share this work with you towards the end of the year.  In its own right you may not directly see the relevance of having a strong Aviation New Zealand brand but we do think there are some things we do uniquely that we can sell to the rest of the world.
 
Until we speak again take care and stay risk aware

Red boots
red boots

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