air transport sector restructuring
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Air Transport Sector Restructuring. Victor Craig Director Air Transport Halcrow AirPlan - Malaysia. Air Transport Sector Restructuring. What is Restructuring in Air Transportation ? “ Any change in form of administration, function, operation and ownership… - PowerPoint PPT PresentationTRANSCRIPT
Air Transport Sector Restructuring
Victor Craig
Director Air Transport
Halcrow AirPlan - Malaysia
Air Transport Sector Restructuring
What is Restructuring in Air Transportation ?
“Any change in form of administration, function, operation and ownership…
...to achieve improved service delivery, staff productivity and financial performance”
Air Transport Sector Restructuring
Who are the Principal Candidates ?
• National Air Carriers
• Civil Aviation Administrations
• Airport Administrations
Air Transport Sector Restructuring
Why Restructure Civil Aviation ?
• Improve delivery of services to users
• Improve financial performance
• Remove counter productive constraints imposed by Government structures
but
- Radical change not always best solution
- Issues & Implications must be studied
- What has been done elsewhere may not suit another application
Air Transport Sector Restructuring
National Air Carrier Restructuring
• Many National Carriers have been restructured
• Moved away from Government control
• Reinforced commercial focus
• Involved ownership change - full or partial
privatization
• Involved major route, service and fleet rationalization
• Involved improving staff productivity
Air Transport Sector Restructuring
Restructuring Civil Aviation Administration
• Several Developed Nations have restructured Civil Aviation & Airports Administration
• ICAO has taken initiative to implement restructuring in Developing Nations
Restructuring Civil Aviation Administration
Form of Restructuring Differs
1. By Corporate / Legislative Concept
• Government Entity
• Autonomous Entity
• Private Entity
2. By Function
• All Civil Aviation Functions Retained
• All Except Specific Functions (e.g Accident Investigation)
• Only Specific Functions (i.e. separate ATS or Airports)
Restructuring Civil Aviation Administration
Typical Options
• Restructure within Government
• Separate Parastatal Agency
• Separate Not-For-Profit Corporation
• Hybrid Structure - Government & Commercial
Government Regulator & Single or Multiple Commercial Agencies for Specific Functions
No single solution suits all cases
Over time, one option may evolve to another
Restructuring Civil Aviation Administration
Typical Evaluation Criteria
• Safety & Security • Ability to Raise Capital
• Staffing • Commercial Self-Sufficiency
• Functional Overlap • Max Commercial Potential
• Reduced Govt Funding • Future Flexibility
• Transition Costs • Balance Profit Motive &Public Interest
Restructuring Civil Aviation Administration
Restructuring Considerations for Airports
1. Can airport(s) be self-sustaining - now or in the future ? Positive cash flow for ROI ?
2. Is privatization appropriate, rather than commercially-focused public corporation ?
3. What are the motives for privatization ?
4. Privatization traps present ?
(profit motive effect, competing markets and environmental management conflict)
Restructuring Civil Aviation Administration
Restructuring in Other Countries
Developed Nations
UK, Australia, New Zealand, Canada
Developing Nations - 2 Examples
Botswana (Africa) & Jordan (Middle East)
Restructuring Civil Aviation Administration
Developed Nations - United Kingdom
• Dept. of Transport - International Affairs• Civil Aviation Authority - Regulation (Parastatal)• Air Traffic Services (NATS)
- Parastatal - to be Privatized Later• National Airports
- Originally British Airports Authority (Parastatal)
- Privatized in 1986 - now BAA plc.• Other Major Airports - Now Privatized Corporations
- Major Investors & Airport Developers
Restructuring Civil Aviation Administration
Developed Nations - Australia
• DOT - International Affairs, Aviation Security• Civil Aviation Safety Authority - Regulation (Parastatal)• Air Services Australia - Parastatal Agency• Bureau of Air Safety Investigations - Parastatal• National Airports - Recently Privatized (except SYD)
- Consortia of Investors incl. Foreign Airports BAA AMS• Other Airports - Municipal & Private
Restructuring Civil Aviation Administration
Developed Nations - New Zealand
• Civil Aviation Authority - Regulation (Parastatal)• Airways Corporation - ATS (Corporation)• National Airports
- Initially corporatized within government
- Now privatized - major investors or public shares
Restructuring Civil Aviation Administration
Developed Nations - Canada
• Transport Canada - Regulation (Government Dept)
• Transportation Safety Board - Accident Investigation
• NAVCANADA - ATS/ANS (Not-for-profit Corporation)
• National Airports - Devolution to Local Levels
- Primary now Airport Authorities (NFP Corporations)
- Lower Level transferred to Local Authorities etc.
Restructuring Civil Aviation Administration
Developing Nations - Botswana
• Department of Civil Aviation (Government)
950 staff - 6 Divisions + 4 Administrative Sections
• Reliance on services “bought-in” from Government
• Confused divisional roles & cost structure
• All revenues to National Treasury
Restructuring with ICAO assistance
Source : Feasibilty Study for Establishment of a Civil Aviation Authorityt
ICAO : TCB : BOT / 92 / 001
Sypher : Mueller International Inc & AirPlan Aviation Technical Services Inc
Restructuring Civil Aviation Administration
Developing Nations - Botswana
Recommended restructure as parastatal CAA
• ICAO managed project• 4 options examined• Parastatal Civil Aviation Authority preferred• Responsible for all functions• Revenues to be retained by CAA• Staffing reduced to 917 in 5 Directorates
Source : Feasibilty Study for Establishment of a Civil Aviation Authorityt
ICAO : TCB : BOT / 92 / 001
Sypher : Mueller International Inc & AirPlan Aviation Technical Services Inc
Restructuring Civil Aviation Administration
Developing Nations - Kingdom of Jordan
• Civil Aviation Administration (Government)
1480 staff - 20 Departments• Theoretically profitable due to overflight revenues• All revenues to National Treasury• Inadequate budget to maintain infrastructure
Restructuring under Canadian (CIDA) Funding
Source : Feasibilty Study for Restructuring of a Civil Aviation Authorityt
Architects Crang & Boake Inc, Sypher: Mueller International Inc.
and AirPlan Aviation Technical Services Inc
Restructuring Civil Aviation Administration
Developing Nations - Kingdom of Jordan
Recommended restructure as corporate CAA
• Canadian funding for consultants• 5 options examined• Corporatized Civil Aviation Authority preferred• Responsible for all functions• Revenues to be retained• Staffing down to 870 in 5 Business Units
Source : Feasibilty Study for Restructuring of a Civil Aviation Authorityt
Architects Crang & Boake Inc, Sypher: Mueller International Inc.
and AirPlan Aviation Technical Services Inc
Implementing a Civil Aviation Authority
Requires :
• Proper study of options & functions
- full definition of CAA concept
• Review staffing & develop job descriptions
• Establish salary scales & benefit schemes
• 5-Year capital & operating budget, & implementation funding for transition process
• Prepare necessary legislation
• Appoint “Facilitation Team” to manage transition process
Restructuring Civil Aviation Administration
Final Thoughts
1. Restructuring can be approached in stages
2. Can create Independent Authority first -
devolve or privatize elements later - if appropriate
3. Many airports will likely never qualify as commercially self-sufficient - need to be retained
in CAA or in Airports Authority for subsidy