commonwealth of australia official committee hansard · reference: air safety—airspace 2000 and...

COMMONWEALTH OF AUSTRALIA

Official Committee Hansard

SENATERURAL AND REGIONAL AFFAIRS AND TRANSPORT

REFERENCES COMMITTEE

Reference: Air Safety—Airspace 2000 and Related Issues

MONDAY, 1 MAY 2000

CANBERRA

BY AUTHORITY OF THE SENATE

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SENATE

RURAL AND REGIONAL AFFAIRS AND TRANSPORT REFERENCES COMMITTEE

Monday, 1 May 2000

Members: Senator Woodley (Chair), Senator Crane (Deputy Chair), Senators Ferris, Forshaw, Mackay andO’Brien

Participating members: Senators Abetz, Bartlett, Boswell, Brown, Brownhill, Calvert, Chapman, Coonan,Crossin, Eggleston, Faulkner, Ferguson, Gibson, Harradine, Hutchins, Knowles, Lightfoot, Mason,McGauran, McKiernan, McLucas, Murphy, Payne, Tchen, Tierney, Watson and West

Senators in attendance: Senators Ferris, Forshaw, O’Brien and Woodley

Terms of reference for the inquiry:To inquire into and report on:

(a) the impact of Airspace 2000 on airspace users, operators and providers, including its safety implications;

(b) the application of competition policy to services provided by Airservices Australia;

(c) the impact of location specific pricing; and

(d) the examination of air safety, with particular reference to cabin air quality in BAe-146 aircraft.

WITNESSES

BRAMICH, Mr James David, Vice President Administrative, Civil Air Operations Associationof Australia ........................................................................................................................................................31

DUMSA, Mr Adrian Gerard, Head Air Traffic Controller, Airservices Australia ......................................3

DUMSA, Mr Adrian Gerard, Head Air Traffic Controller, Airservices Australia ....................................57

FLEMING, Mr Andrew Selby, Chief Financial Officer, Airservices Australia ............................................3

FLEMING, Mr Andrew Selby, Chief Financial Officer, Airservices Australia ..........................................57

GRIGGS, Mr Kenneth Felton, Branch Secretary, Government Employees Branch, UnitedFirefighters Union of Australia ........................................................................................................................10

HENNESSY, Ms Aminta, Co-Convenor Bankstown Airport Users Group ................................................42

LANG, Mr Edward Rowley Roy, Vice President Professional, Civil Air Operations Associationof Australia ........................................................................................................................................................31

O’CONNELL, Mr Adrian Gerard, Secretary, Communications Section, Community and PublicSector Union ......................................................................................................................................................21

O’DEA, Mr Gerard Francis, Camden Tower Representative, Civil Air Operations OfficersAssociation of Australia ....................................................................................................................................31

ROBERTS, Mr Craig, Assistant Chief Officer, Aviation Rescue and Fire Fighting, AirservicesAustralia.............................................................................................................................................................57

SMITH, Mr Bernard Ross, Chief Operating Officer, Airservices Australia.................................................3

SMITH, Mr Bernard Ross, Chief Operating Officer, Airservices Australia...............................................57

TIPPETT, Mr Alan Raymond, Co-Convenor, Bankstown Airport Users Group.......................................42

UEDWARDS, Mr Bevan George, Airport Manager, Coffs Harbour City Council, Coffs Harbour.........50

WARD, Mr Darrin Richard, Co-Convenor, Bankstown Airport Users Group ..........................................42

WATERS, Mr Alistair John, National Organiser, Communications Section, Community andPublic Sector Union...........................................................................................................................................21

Monday, 1 May 2000 SENATE—References RRA&T 1

RURAL AND REGIONAL AFFAIRS AND TRANSPORT

Committee met at 9.32 a.m.

CHAIR—I welcome everyone to this public hearing of the Senate Rural and RegionalAffairs and Transport References Committee and declare the hearing open. The committeetoday commences its inquiry into Airspace 2000 and related issues. On 22 March 1999, theSenate referred the following matters to the committee for inquiry and report:

(a) the impact of Airspace 2000 on airspace users, operators and providers,including its safety implications;

(b) the application of competition policy to services provided by AirservicesAustralia;

(c) the impact of location specific pricing; and

(d) the examination of air safety, with particular reference to cabin air quality inBAe146 aircraft.

The inquiry was widely advertised throughout Australia in mid-July 1999. It became apparentas submissions were received by the committee that there was a great deal of interest in theBAe146 element of the inquiry and, as a result, it was decided to deal with item (d) separately.The report on this matter is expected to be tabled in the Senate within the next month.

To date, the committee has received a total of 30 submissions to the inquiry. Thesesubmissions have come from individuals, unions, local government and companies involved inthe aviation industry, as well as from Airservices Australia. The committee has previouslyauthorised the publication of submissions 1 to 28 and, if there are no objections, authorises thepublication of submission 29. There being no objection, that is so ordered.

A Hansard transcript of the proceedings is being made and the Hansard will be availableshortly in hard copy format from the committee secretariat or via the Parliament House Internethome page. It should be noted that the committee has authorised the recording, broadcasting andrebroadcasting of these proceedings in accordance with the rules contained in the order of theSenate of 23 August 1990 concerning the broadcasting of committee proceedings.

Before the committee commences taking evidence, let me place on record that all witnessesare protected by parliamentary privilege with respect to submissions made to the committee andevidence given before it. Parliamentary privilege means the special rights and immunitiesattached to the parliament or its members and others necessary for the discharge of functions ofthe parliament without obstruction and without fear of prosecution. Any act by any personwhich may operate to the disadvantage of a witness on account of evidence given by him or herbefore the Senate or any committee of the Senate is treated as a breach of privilege.

While the committee prefers to hear all evidence in public, a witness may seek to giveevidence in camera. If the committee accedes to such a request the committee will take thatevidence in camera and record that evidence. Should the committee take evidence in thismanner, I remind the committee and those present that it is still within the power of thecommittee at a later date to publish or present all of that evidence to the Senate. The Senate also

RRA&T 2 SENATE—References Monday, 1 May 2000


has the power to order production and/or publication of such evidence. I should add that anydecision regarding publication of in camera evidence or confidential submissions would not betaken by the committee without prior reference to the person whose evidence the committeemay consider publishing.

We will now commence with representatives of Airservices Australia who will also appearlater in the afternoon. As officers of a Commonwealth department you will not be required toanswer questions that seek opinions on matters of policy or the reasons for policy decisions oron advice you may have tendered in its formulation. If you wish, you might refer questionsasked by the committee to the minister. That is per resolution 16.



[9.36 a.m.]

DUMSA, Mr Adrian Gerard, Head Air Traffic Controller, Airservices Australia

FLEMING, Mr Andrew Selby, Chief Financial Officer, Airservices Australia

SMITH, Mr Bernard Ross, Chief Operating Officer, Airservices Australia

CHAIR—Thank you for coming. If you have any opening remarks, we welcome those now.

Mr Smith—Thanks for the opportunity. We think it is worth while bringing the committee upto date with a couple of points before we go on. In October 1999, the Hon. John Anderson MP,the Minister for Transport and Regional Services, released a major policy statement entitled AMeasured Approach to Aviation Safety Reform. In his statement and the attached charter letter tothe Airservices board, the minister explained how the government sees National CompetitionPolicy applying to Airservices. The government has clearly indicated that it believes Airservicesshould be corporatised and that this change in our status is contingent on the introduction of asuitable regulatory framework for air traffic control and rescue and firefighting serviceproviders by CASA. In a notice of proposed rule making issued on 29 February 2000, CASAhas indicated that it is on target to prepare such requirements by 30 June 2000 as necessary forthe passing of any legislation. It foreshadows, however, that the implementation process couldtake a further 12 months to complete. This phase may of course include such requirements asthe passing of suitable legislative changes and obtaining the cooperation of airport owners toparticipate in local specific terminal navigation charges.

Airservices supports the concept of the phased introduction of competition into air trafficcontrol tower services. We see this initiative as having the potential to provide new options toairport owners and managers which were not previously available but which may serve toreduce the cost of these services compared with the current levels. Airservices intends to be anactive competitor within this framework consistent with its charter from the government to actin a more commercial manner. Airservices first introduced local specific firefighting charges in1997 and location specific terminal charges in 1998.

This fundamental change in the way we charge our customers for services provided wasbrought about by a number of factors: firstly, the Federal Court judgment in the Compass casewhich decided that network pricing was invalid; secondly, indications from the PricesSurveillance Authority, now the ACCC, that it had a strong preference for a pricing structurethat related to the differences in costs and services provided to different customers in differentlocations; thirdly, a commercial imperative within Airservices to better understand our businessand our market. This has caused us to segment our chart of accounts so that a profit and loss foreach major service can be developed.

As a postscript, senators would be interested to know that in 1999 in a landmark judgment theHigh Court ruled that Airservices is entitled to use network pricing, that our charges are not inthe nature of taxation and that statutory liens are constitutionally valid. Notwithstanding thisHigh Court decision on network pricing, Airservices, its major customers and the governmentsupport the concept of location specific prices as a means of encouraging efficiency and the bestuse of limited resources.



Airservices initiated the reform of its pricing structure through the publication of a discussionpaper ‘Airways service costs’ to industry in September 1996. Throughout 1997 and early 1998Airservices met with regional and GA airport authorities, aircraft owners and pilotsassociations, regional airlines and private fliers at the local level to discuss the issues.Concurrently, media exposure was achieved by targeting aviation related publications as well asmajor newspapers. Throughout this period Airservices also responded directly to hundreds ofqueries in writing and by telephone.

The consultation process highlighted the concerns of the GA and regional airport sectors withthe negative financial impact that the new pricing structure would have on their operations. Themost vocal customers were those GA operators who most frequently utilised Airservices’services. However, it was also clear that a large proportion of the GA and regional sectorssupported the proposals, specifically those who used Airservices infrequently but whonevertheless were at the time required to pay the avgas levy.

Airservices brokered a series of transitional relief measures in order to mitigate the negativeimpact that local specific pricing may have on some sections of the general aviation andregional sectors. Airservices agreed to a reduced profit target over the period of the transition. Asingle landing charge for a session of circuits was introduced at all Airservices servicedaerodromes, excluding Sydney, Melbourne, Perth, Adelaide and Brisbane. A single rescue andfirefighting charge for each session of circuits was introduced at all non-capital city aerodromesserviced by the ARFF, and a terminal navigation capped rate of $6.75 for general aviationaircraft—that is, aircraft below 5.7 tonnes—operated at all Airservices ports—

CHAIR—What was that cost again?

Mr Smith—It was $6.75 for aircraft below 5.7 tonnes and operated at all Airservices ports,excluding the major capital city airports of Sydney, Melbourne, Perth, Adelaide and Brisbanewhere alternative sites existed to cater for general aviation.

The committee may also be aware that Airservices received a subsidy from the government in1999-2000 of some $11 million which is planned to reduce to $7 million in 2000-01, based onthe 1999 budget forecasts. The subsidy was introduced by the government to smooth out theimpact of the Airservices location specific pricing program on the users of certain regional andgeneral aviation aerodromes. Our understanding is that the subsidy is a temporary measure,pending the achievement of cost reductions flowing from either Airservices internal businesstransformation process or from the introduction of external competition from alternative toweror aviation rescue and firefighting providers.

The subsidy allowed the cost of terminal charges at regional and GA airports to be capped at$6.75 per tonne landed. In some locations, the real cost of service provisions would besignificantly higher if location specific pricing had been introduced without that subsidy. Forexample, the real cost at Albury is $14.64 per tonne. At Parafield the real cost is $23.48 pertonne. It can therefore be said that this initiative by the government has provided a considerablebenefit to regional operators at these locations.

Notwithstanding that the process for introducing competition is thorough and measured,Airservices has not simply been idly sitting by whilst the regulatory framework has been under



development by CASA. Under our business transformation program, we have reviewed thecustomer requirements, manning levels and cost structures of a large number of our smaller airtraffic control towers. Our approach has been to consider changes to operating practices atcandidate airports within the context of a safety assessment and an assessment of customerrequirements. This approach has enabled Airservices to reassess air traffic control requirementsin terms of personnel and tower operating hours at a limited number of airports. In each case, asafety assessment has been undertaken to ensure that the proposed changes would not beprejudicial to safety.

In addition to the government directly applying national competition policy to the towerservices provided to external customers, Airservices has also focused on the opportunity toachieve increased productivity in the provision of internal support services. This program iscalled contestability. Contestability involves management examining the scope for internalsupport functions such as installation and maintenance of navigation aids, payroll, financialservices, human resource management, et cetera, to be competed against external suppliers inthe marketplace. From 1 July 2000, specific functions will be analysed against set criteria to seewhether market testing should be considered. Any move to market test a particular function willbe accompanied by a fully supported internal bid which will allow our employees todemonstrate how they believe the function can be made more productive in the future. In fact,significant productivity gains have already been made by Airservices’ internal support functionsover the last year in the lead-up to this contestability. Decisions to contract out will only betaken where this will produce a substantial additional benefit to Airservices and its customersover the medium to long haul, while maintaining the primacy of safety.

In October 1999, the government also confirmed that Airservices should continue, for thetime being, to hold responsibility for the design, declaration and management of airspace. OnceAirservices is corporatised under the process described previously then the government willconsider how airspace should best be managed, particularly when multiple air traffic controlproviders are competing for tower business. CASA’s role throughout will be to set the minimumsafety standards for each type of airspace classification. Again, pending these changes,Airservices has developed, at the request of the minister, a program of internationallyharmonised low-level airspace reform which reflects the views and needs of key stakeholders,including CASA, the airlines, the Department of Defence and others.

Airspace reform is being taken in stages. Firstly, Airservices is transitioning the currentdirected traffic information services in the TAAATS environment. This is being progressivelyaccomplished during this calendar year. Most of the east coast radar environment is alreadytransitioned, with air traffic controllers providing improved services using all available radarinformation and the display and alerting capabilities of the TAAAT system. There are safetybenefits and efficiencies involved and integrating these services into our TAAATS based airtraffic control system also provides the platform for future reforms. These changes are beingmade progressively to mitigate risks and reduce the strains on our resources. A separate flightinformation service is being finalised in parallel with the transitioning. This service providespre- and in-flight briefing and the relay of information through HF communications channels.

In managing these changes, Airservices follows its safety management processes which havebeen vetted and endorsed by CASA. Formal risk analyses, the development of mitigationstrategies and the preparation of safety cases are used to ensure that changes are made in an



orderly, structured and, most importantly, safe manner. Concerns from staff, management andunions are considered. Risks are identified and mitigating strategies are developed asappropriate. The safety cases, the risks and mitigation require sign-offs from all levels ofsupervision and management involved with the changes. We are experienced with theseprocesses and we are confident that they are robust.

The development of the end state airspace reform model continues to work towards animplementation date of 30 June 2001. The changes envisaged in this model have broad industrysupport in principle, although some of the details for the June 2001 changes are currently beingthrashed out by an expert working group comprising Airservices, industry and Air Forcerepresentatives. Each of the initiatives detailed above—airspace reform, its terms of referenceA, application of competition policy and location specific pricing—are being undertaken byAirservices in a manner which is consistent with the government’s requirements contained inthe minister’s October 1999 charter letter to the Airservices board. That is, Airservicesrecognises the importance the government places on the future of small business which isdependent on air traffic services in regional and rural areas—for example, flying trainingschools. Airservices, CASA and the Australian Transport Safety Bureau are working closelytogether to ensure the tripartite structure for providing safe aviation is preserved andstrengthened. Airservices’ business transformation process is being implemented in a mannerthat is consistent with the announced structural reform process involving a strong customerrelations focus and preserving a professional, highly skilled and motivated work force. Wewould be happy to elaborate further on any of the above and answer any questions that thecommittee might have.

CHAIR—Thank you, Mr Smith. I just indicate to the committee that you will be back againthis afternoon from 3.00 to 4.00 and I presume, having had information from other witnesses,that that is when we will really need to go into detailed questions, but we will have a bit of apreliminary run at it now. Senator O’Brien, perhaps you have some questions.

Senator O’BRIEN—Mr Smith, given you were reading from a prepared text, can we have acopy of that? It will assist us to be more precise with our questions, given we have limited time.

Mr Smith—Yes, certainly.

Senator O’BRIEN—If we can get that document some time this morning, that will give us achance to have a look at it over the lunch break rather than try and pick it up on the run. Thereare a couple of questions that I have stemming from points that you made. If I understood youcorrectly, it has now been clearly established that it is Airservices and not CASA who have theresponsibility of designing and implementing new air space arrangements. Is that correct?

Mr Smith—No, Senator. The responsibility is Airservices. CASA have the responsibility toassess the safety.

Senator O’BRIEN—Airservices, not CASA, have that responsibility?

Mr Smith—Yes, correct.



Senator O’BRIEN—And that is consistent with the advice that Airservices had some timeago during the G class air space trial.

Mr Smith—I am not sure what advice you are referring to.

Senator O’BRIEN—It was the advice that we received from Mr Pollard on 1 December lastyear regarding that situation in estimates on 1 December. I do not have a page reference. In anycase, we have cleared that up. It has therefore been established that CASA had no legal basis torun the G class trial, but it went ahead and did that because Airservices was busy with theTAAAT system implementation. Is that correct?

Mr Smith—Airservices had, at that time, taken a decision that to try and run an air spacereform program, or to initiate such a program, whilst introducing such a large and complexsystem was not in the best interests of the industry.

Senator O’BRIEN—Did you say Airservices had taken that decision?

Mr Smith—Airservices took that decision.

Senator O’BRIEN—The other thing that I picked up was that it seems that it has now beenestablished at law that network pricing is a mechanism available to Airservices in relation to itscharging regime—

Mr Smith—That is correct.

Senator O’BRIEN—and that continued pursuit of location specific pricing is a matter ofgovernment policy. Is that correct?

Mr Smith—Location specific pricing will operate in the context of the legal decision towhich we referred. It is a matter of what legal mechanism is required—whether it is acontractual arrangement with the customer or whether it is a statutory availability. So locationspecific pricing can work under either scenario.

Senator O’BRIEN—So it is available, but as to whether it is used is a matter forgovernment. Is that what you are telling the committee?

Mr Smith—No. What I am saying is that as I understand that legal arrangement, it is possiblefor Airservices to simply impose charges on customers in various ways. Airservices, however,chooses to continue with the contractual arrangements.

Senator O’BRIEN—So it is Airservices’ decision and not a decision of government?


Senator O’BRIEN—Is that because of a legislative requirement?



Mr Smith—No, it is really because we have a direction now that is based on customer focusand pursuing the commercial concepts of relationships with customers. Using a contractualprocess means that we have the opportunity to determine what the customers want, get theirinput to it and have an agreement, finally, that suits both parties. We just find it is a better wayto work.

Senator O’BRIEN—I have quite a number of questions, but there may be others who wantto put questions.

CHAIR—We might do that because the hour this afternoon will, I presume, be all questions,although you may have some preliminary comments to make this afternoon as well, havingheard other evidence. Senator Ferris?

Senator FERRIS—I do not have any questions at this stage.

CHAIR—I do not know if this question I want to raise comes into the area of policy, but it iscommented on in your written submission where you say:

Airservices philosophically supports the application of competition policy to the service it provides, but only incircumstances where safety is not compromised.

This is a debate that continues in the community as well as within this place. The question Ihave always is that it seems to me you cannot run competition and safety as partners, that theyend up being the competitors themselves—in other words, competition policy, by definition,interferes with a commitment to air safety. I know it is perhaps a policy issue, but you havecommented on it in your submission and I wonder if you would like to make a general commentnow about that.

Mr Smith—It is fair to say that we do not see a conflict—perhaps a healthy tension, but not aconflict. There are a number of situations, if we look at airlines throughout the world, forinstance, where they are all competing heavily with each other but safety is paramount in anygood operation. That clearly is the intent of the Airservices board. Safety is the number oneissue for Airservices. We are saying in our statement there that, philosophically, we are notresisting the competition policy that the government has said it wishes to pursue and we believethat we can act appropriately and safely within that environment.

CHAIR—It is good to get that reassurance. I imagine that it will nevertheless still be debatedat fair length and probably debated today, so I thought I would just raise that at the beginning.As there are no further questions we will conclude now in the interests of trying to keep to ourtime schedule, but I imagine that this afternoon we will have a fairly extended dialogue withyou, if that is okay?

Mr Smith—Yes.

CHAIR—Thank you for your evidence.



[9.59 a.m.]

GRIGGS, Mr Kenneth Felton, Branch Secretary, Government Employees Branch, UnitedFirefighters Union of Australia

CHAIR—Welcome, Mr Griggs. Do you have any comments to make on the capacity inwhich you appear?

Mr Griggs—Thank you. I am the elected secretary of the Government Employees Branch ofthe United Firefighters Union of Australia, which is essentially the aviation branch.

CHAIR—We have your written statement so there is no need to read that, but if you wouldlike to make some comments, please do so.

Mr Griggs—I have two other documents. One of them is simply an updated version of theaircraft statistics, which you already have on the back of the submission. It is simply justslightly updated as far as the numbers are concerned—even though it is October 1998, I thinkthose are the latest figures that are available. I thought you might find that interesting.

CHAIR—That would be good if you would table that.

Mr Griggs—The second document is simply a letter from Airservices Australia to me. Thesubject is the dispensation of the BAe 146 200 series aircraft, which is in relation to a loweringof category for that particular aircraft, which I thought may be relevant to this inquiry given itsvibe.

CHAIR—I expect it will be. You have raised my interest already.

Mr Griggs—I hope so.

CHAIR—Thank you. The committee is pleased to receive those documents. Are there anycomments you would like to make?

Mr Griggs—I am not really sure. I have written the submission, and frankly I was not quitesure what my role here today would be—if it would be to simply to answer questions orwhatever. But the more I thought about it and looked at recent events in relation to CASA,safety and privatisation, I thought that half an hour is not going to be enough; I need about twohours today. I am not really sure what role you want me to do, but if you like I will just try totalk to the document that I have submitted, if that is okay.

CHAIR—Thank you.

Mr Griggs—The first thing is I have attempted to look at only two parts of your inquiry. Thefirst part is in the application of competition policy for Airservices Australia and the second partis in relation to location specific pricing. I would like to say that, from my perspective, Iprobably disagree with almost everything Mr Smith has said before me in relation to most of thethings to do with competition and all of that. As far as this organisation is concerned, we believe



competition has actually been one of the keys that have reduced safety standards. It is certainlyan attitude change within Airservices Australia and CASA. I think we can show that quiteclearly with recent CASA regulations that have been proposed.

In relation to site location specific pricing I would just like to make a couple of points. Firstly,for about the last eight years the fire service inside Airservices Australia have continuallyreduced the costs to industry. I think about eight years ago it was an average of about $2.50 perlanded tonne for fire service throughout Australia at the 16 airports that actually have a fireservice. Over the next five years that was reduced to about $1.80-odd by internal reductions,changes and different mechanisms. At that stage every airport in Australia was charged thesame. Then, of course, location specific charging was introduced. The results of that were thatthe fire service cost at Sydney, for example, was dropped to between 50c and 60c—it wasdropped enormously—but at places like Rockhampton and Mackay it went up to $7 or $8, andat places like Port Hedland and Karratha it went up to $12 or $15. So the results of locationspecific pricing meant that the rural sector was carrying a huge burden, whereas the majorcentres like Sydney, Brisbane and Melbourne were reduced. Of course, the main beneficiaries ofthat were the international movers. Where international aircraft coming into Sydney previouslypaid X amount of money based on $1.80 per landed tonne, all of a sudden they were coming inand charged less than 60c per landed tonne. The international movers were getting away with ahuge profit increase based on one change by the fire service, but the poor old domesticpassenger who flew from Rockhampton to Mackay or Rockhampton to Cairns—

CHAIR—As they do regularly.

Mr Griggs—was charged an enormous increase in their airport charges. From myperspective, the site specific or location specific charging dramatically increased the cost to theAustralian domestic passenger and the internal passenger. The big winners were theinternational airlines. I am sure Qantas and Ansett also made a good whack out of that, butmainly the other international airlines, I think, were the big winners. Site specific pricing didnot achieve what it wanted to achieve or what it set out to achieve in the first place.

As far as competition is concerned, the firefighters within Airservices Australia are absolutelyopposed to competition because we have seen what it does with the airports. The introduction ofprivate airport owners taking over the airports that used to be run by Airservices Australia didnot result in cost savings for the public, and it did not result in better or cheaper airports. In fact,in almost every case it has resulted in increased costs. The flying public coming into an airportnow has large landing charge increases, based on an airport’s own surcharges or taxes they puton. There are even simple things like a $2 extra charge at Canberra Airport that the public nowhas to pay for every taxi they get. That is only a tiny thing, but it certainly indicates thatcompetition, or the privatisation concept, has not been a good thing for the average public. Itmight be a wonderful thing for the people who own the airport, but not for the average public. Ibelieve that is what it was all meant to be about in the first place, and it has not resulted in that.

While Airservices Australia claim that safety is paramount, I have some concerns with that.With the fire service, in the name of competition and the fear of competition, we—thefirefighters—are being pressured into cost cutting right across the board. I do not believe thatcost cutting enhances safety in many cases—quite the opposite: I believe it reduces it. To datethere are only 16 airports in the whole of Australia that have a recognised fire service, audited



by CASA; whereas years ago there were substantially more. Up to 50-odd airports aroundAustralia had fire service at one time or another, and, over the last 25 years, they have beenreduced bit by bit. Even 15 years ago, secondary airports like Bankstown and Parafield had afire service—very small but they certainly had one—and because of government decisions thoseairport fire stations were closed. The result is that we have got a situation at Bankstown, thebusiest airport in Australia by far with many more landings and takeoffs than Sydney—admittedly they are small aircraft—where there is no fire service coverage whatsoever. Thenearest fire station is the Bankstown fire service, which is 10 to 15 minutes away; if thefirefighters happen to be at the fire station and not out fighting a fire.

One has to remember that there is nothing in the figures which are supplied by the departmentof transport that relates to those smaller airports. They are considered GA airports, not majorairports, and therefore there are no figures taken. So in fact no-one knows how many passengersfly in and out of Bankstown every year. If you talk to people from Bankstown, they will say,‘Oh, they are only little aircraft.’ But they are not all little aircraft. There are an awful lot of 12-seaters and light commercial aircraft that operate out of that airport, and I would suggest thatwell over a million people each year fly in and out of that airport, without any doubtwhatsoever. But there is no fire service provided because of government decisions over theyears that continually removed them and reduced them in the name of cost benefits. In myexperience in the airport fire service, I have not, in the last 20-odd years, seen a cost benefitanalysis on safety to show how they justify this.

Senator FORSHAW—Could you describe what you mean by ‘a fire service’ as distinct fromwhere there is not a fire service? I assume there may be other firefighting arrangements.

Mr Griggs—Take Maroochydore, Bankstown or one of those places. There is no fire serviceat those airports.

Senator FORSHAW—There is no tender or—

Mr Griggs—There are no fire engines, no firefighters—no fire service whatsoever atMaroochydore, Bankstown, Parafield, Archerfield and many other airports. In fact, that list youhave shows with a large black dot the 16 airports that have fire service, and it also identifies acouple of RAAF airports that have fire service. Other than there, there is no fire service at anyother airport in Australia.

Senator FORSHAW—A fire service would be a truck and qualified firefighters?

Mr Griggs—And a crew; that is right. In places that do not have fire services, likeMaroochydore, for example—and Albury is a good example—the local fire brigade respond ifthere is an emergency. Unfortunately—and I will be a bit basic here—because they are so faraway, by the time they get to the airport, it is all over; there is no ability to save life becausethey could not get there in time.

Senator FORSHAW—Whilst there may not be a truck and a designated crew, in the event ofa fire on a small aircraft at, say Bankstown or somewhere, is there emergency fire fightingequipment available that the persons operating that service can get access to?



Mr Griggs—I would not doubt that there would probably be hand-held fire extinguishersaround; I would imagine so.

Senator FORSHAW—I am not saying that that is necessarily sufficient, I am just trying todistinguish—

Mr Griggs—I would imagine that, at most airports, around the tarmac they would have hand-held fire extinguishers. I am certain that all the building would have hose reels or something tothat effect. As you pointed out, they are completely useless against an aircraft fire. ICAO, theInternational Civil Aviation Organisation, demands that a fire service at an airport has torespond and be at any part of the airport within three minutes, absolute maximum. The reasonfor that is because an aircraft is a firefighter’s nightmare. It is an aluminium tube which burnsquickly and breaks up easily; it is crammed pack with a 100 people all sitting in tiny little seatswith the very minimum of exits and surrounded by fuel. Slam that onto the ground, throw a fewbroken bodies and flames around it and you have got a catastrophic situation. So a fire servicehas to arrive at a very minimum time and produce enormous amounts of foam in order to get thefire out, otherwise you are simply there to clean up the mess afterwards.

That is what would happen with a local brigade turning out to an airport. They do not havethe capacity to fight an aviation fire. They do have some foam; they usually carry 20 litres in aplastic drum. They have no real method of applying the foam at the correct rate and theycertainly would not be there in time. Maroochydore had an accident I think last year wheresome people were killed. The local fire brigade arrived within about 12 minutes. All they arearriving for is to clean up the mess; there is no way they can save a life.

The only other things I would like to mention would be in relation to the Civil AviationSafety Authority. I have given you a letter there in relation to BAe146. My concern with CASAis that they have a very clear agenda to ‘Australianise’—that is the term that some people withinCASA have used—international standards. Now I would have no objection to Australianisingstandards if it meant to increase safety and better the minimum standards of ICAO. In fact, quitethe opposite is the attitude. Dealings I have had with CASA and some of their management haveclearly stated that the Australianisation of CASA’s role is to reduce those international standardsfor Australian domestic. When I have had disagreements with them—and this BAe146 200series is a classic example—CASA has taken the cheaper option in every case. To me, CASAseems to have lost its way as the safety watchdog and has now turned around and looks after itscustomer which they— the same as Airservices Australia—see as being the industry. Now Iconsider the customers are the people who actually fly in the aircraft—the passengers—as thereal customer, but no-one asks them their opinion and no-one checks on what they think aboutreduced costs, reduced standards, et cetera.

CHAIR—Except that there are some customers here who have a concern.

Mr Griggs—There are some customers here. Myself, I fly regularly and I can assure you I donot like the thought of landing at airports with no fire service.

This letter that I have produced shows that CASA has recognised the BAe146 200 series as acategory 5 aircraft, where in fact quite clearly the international standard shows it as a category 6aircraft. They have done that quite openly and honestly in an aim to reduce costs at small



airports—at small domestic airports, small rural domestic airports. So, quite clearly, it is therural domestic passenger who is having their standards of safety reduced simply as a matter of acost reduction. Again, to make it easier for Airservices Australia to compete, they will reducethe cost wherever they can, and this is a good example of it.

This ‘Australianisation’ of ICAO cannot be achieved at international airports, because theyhave to follow the ICAO regulations, but everywhere they can reduce it, at domestic airports,they do. I find it quite frightening and I do not believe the public are aware of it.

CHAIR—We might ask you some more questions about that in a moment.

Mr Griggs—I think that is probably all I really have.

CHAIR—While we are on that let us pursue it. What you are saying is that the reduction ofdispensation given to BAe 146 aircraft is because they fly into these secondary airports. That isthe reason. It is related to the fact that they are the aircraft that fly into secondary airports, ratherthan any defect in the aircraft itself. It has to do with the fact that they are the aircraft that fly in.

Mr Griggs—That is right. If this aircraft—this BAe 146 200 series—operates out of Hobart,which is an international airport, it has to be considered to be category 6 and has to have safetyprovisions applicable. But if it flies from Hobart to Launceston, because Launceston is adomestic airport it can be considered as a category 5 aircraft, so there is much more of areduction. In Hobart for category 6 you would have to have two fire engines, one officer andfour firefighters. So you would have a substantial hitting power and ability. At category 5,which is only one category below, you only have one fire vehicle, one fire officer and twofirefighters, so you have reduced enormously your capacity for the same aircraft operating atvirtually twin airports, but one is domestic and one is international so they cut the cost there.Places like Rockhampton and Mackay are other darn good examples where the cost is the maincriteria, so they use this to reduce the cost at those airports. But I do not believe the public areaware of it. In fact, airline companies gain out of it, not the public, who are totally unaware.And, of course, any cost reduction does not reflect in the ticket. Is no cheaper to fly toRockhampton today—

CHAIR—It is dearer. Let me assure you.

Mr Griggs—than it was this time last year. In fact, it is dearer. That is right.

CHAIR—I find that really interesting. What Airservices Australia are actually suggesting toyou in their letter—and, really, that is dependent on CASA’s agreement—is that you can have alower standard for fire fighting. It is the firefighting that the category 6 and the category 5 applyto.

Mr Griggs—Absolutely. That is all I know about. I would not know anything about the airtraffic controlling or anything like that.

CHAIR—We would like to. It is a very interesting proposition that air safety is actuallydependent on things other than air safety. It seems to me that that is what you are suggesting.



Mr Griggs—That is exactly what I am suggesting. I believe that CASA even allows thesystem to show certain things when in fact they do not apply. For example, Broome airport inthe notams has advice that it has a fire service but in fact it only has a very token fire service.The firefighters are the bag handlers on the airport and one trained fire officer. There might notbe anything wrong with that if they are trained to the standards, but the reality is they onlyactually man that fire vehicle and have their equipment ready for international movements. Assoon as those international movements land and then take off it is back to normal and you canthen have as many domestic flights in and out with the same size aircraft but there is no fireservice provided. That is just a way of getting around the requirements.

It is the same in places like Hamilton Island. ERSA—Enroute Supplement Australia—showsthat Hamilton Island has fire services, whereas in fact Hamilton Island has two fire trucks, nofirefighters and no ability to fight a fire, because there is no-one trained at the airport and theyhave no standards whatsoever. They simply have a couple of fire trucks. CASA allows this sortof thing to happen. Further, normally when you have reductions of staffing at airports within thefire service and you drop your standards you put a notam out to advise the airlines and theairmen that there is the reduction in the category at the airport. But CASA allows no notam if itis only going to be temporary and there are no wide bodied or large airport aircraft operating.Aircraft drop in all the time at airports. Darwin is a very good example. At Darwin there areregularly reductions to category, no need to notam because there are no scheduled aircraft atwider category, and aircraft drop in all the time that are major aircraft that should have the fullprovision of service but do not, because CASA allows this flexibility and it continually catchesthe aircraft out.

CHAIR—We had better move to some other questions.

Senator FERRIS—I am interested to explore this question of regional safety. Is thatsomething you wanted to take up yourself, Chair?

CHAIR—No, you do it. You will do it just as well.

Senator FERRIS—Perhaps we might do it together. I am interested to explore whether yourunion believes that passengers landing at regional airports around Australia are in fact offered alower level of safety than those arriving at airports where a firefighting service is actuallyprovided. If that is the case, to what extent have you tried to draw that to the attention of thosepassengers?

Mr Griggs—It is very difficult to get to the passengers. Last year our branch of the union dida campaign we called ‘Three minutes to live’, and we put out a very small brochure. Thefirefighters and I circulated 20,000 of those brochures at the different airports around Australia.It was a small but fairly hard-hitting brochure which showed an aircraft crash on the front. Wefigured that we had to get someone’s attention sooner or later. We got a very good response.People sent those brochures back to the minister saying that they did not want further reductionsto fire services. We do not really know how many went back—that has never been divulged—but we did get a great deal of support. It is very difficult to bring the public’s attention toreduced safety levels at airports. I do not think it would be nice of us to go to an airport such asRockhampton and say to the passengers, ‘Do you realise you are flying with lower standards ofsafety than anyone else?’ They might not get on the aircraft. I do not think it is our role to scare



people. However, in answer to the other part of your question on whether they are being offeredlower standards, yes, they are—absolutely. If you fly from Rockhampton in a BAe146-200series, you fly at category 5. If you land that same aircraft in Cairns or Brisbane, it is covered toa greater degree of category simply because they are international as opposed to domesticairports.

Senator FERRIS—Are you able to give us any information on whether there have beenincreased alerts at those airports and whether the lack of service there has in any wayjeopardised the safety of that landing aircraft that may have had a difficulty that you previouslycould have covered and now cannot?

Mr Griggs—I certainly could not give you those figures. Airservices Australia could giveyou those figures about the actual emergencies.

Senator FERRIS—Are you aware of whether there have been any of those circumstances?

Mr Griggs—There certainly has been. Within the 16 airports we have, we have turned out towell over 3,000 incidents in the last 12 months. We turn out very regularly. Every day at everyairport there are emergencies even if they do not turn into the real thing—for example, fuelspills and aircraft landing with only two lights instead of three. There are regular incidents everyday at airports. The good side is that very few of those turn into catastrophes. I might add thatsomething like 14 per cent of those incidents relate to commercial aircraft, so it is not just thelittle ones that have the problems.

Senator FORSHAW—Can I follow up on this issue. I think you do have everyone’sattention. I recall the campaign that you ran last year or the year before.

Mr Griggs—It was about a year ago.

Senator FORSHAW—I certainly remember it. What about airports such as Coffs Harbourand Grafton? Coffs Harbour is a bit busier than Grafton, certainly, but what of those regionalairports where you do not have planes landing and taking off regularly but where there may bepeak times in the mornings and in the afternoons? How would you see airports like those beinggiven appropriate fire service cover?

Mr Griggs—Karratha does have a fire service. Admittedly it is only a category 5.

Senator FORSHAW—I did not mention Karratha. I mentioned Grafton and Coffs Harbour.

Mr Griggs—Sorry, I thought you said Karratha. It is interesting that in the whole of NewSouth Wales the only airport that has an airport fire service is Sydney. Albury, which has a bigmix of commercial aircraft, training aircraft and private aircraft, has no fire service. The localbrigade provides that service. Coffs Harbour is a good example of an airport with a largenumber of mixed aircraft coming and going. I think it is the mixture that makes for difficultiestoo. If there is an actual aircraft crash at one of those airports that has no fire service, the realityis—and I think it is a nasty way of saying it—the aircraft will crash and burn because there is noability at all to rescue.



Senator FORSHAW—From what you are saying, the implication is that effectively, in orderto have absolute cover, you would need a fire service crew at every single regional airport.

Mr Griggs—No, I do not think there is an ability to do that. It is interesting that the UK has afire service at every airport that has commercial aircraft. Australia could not afford that; wewould actually end up with 120 airports around Australia with a fire service. It would just be anastronomical cost. America has a fire service at every airport that has 30 or more POB,passengers on board, the aircraft. If we followed that, we would have something like 90 airportsaround Australia with a fire service. New Zealand have different criteria. If we followed theircriteria, we would have about 36 airports. In fact, we follow our own, which has 16.

Senator FORSHAW—You have raised the issue, Mr Griggs, but does the union have abottom line position in respect of where a fire service crew on the airport site should be located,whether it is operated 24 hours a day or for the periods of time when—

Mr Griggs—We do not all operate 24 hours a day, I can assure you of that. There are only afew of the majors that operate 24 hours. I would hate to say what the bottom line is. I do notknow how you put a price to a life. What worries me is that places like Hamilton Island andMaroochydore and Albury-Wodonga have a large volume of aircraft, a large volume of mixedpassengers, and no fire service whatsoever. If you landed at Hamilton Island and had anaccident, there is absolutely nothing—no backup, no ambulance, no local brigade—and youhave over 300,000 passengers. I might add that the figures you have are incorrect. They are1998 figures and they also do not show military personnel. They do not show staff on board theaircraft, and you have six or more staff on some aircraft. They do not show infants or babies.None of that is shown in any of those figures. Those figures are very much out of date and veryincorrect. They simply show the passengers that pay, so those figures are very wrong.

Senator FORSHAW—A lot of these airports, particularly the rural and regional ones, areused by local charter firms, by individuals who have their own plane for crop-dusting services,et cetera. That is the case at Bankstown as well in respect of charter and personnel and flyingschools and so on. Who should be picking up the cost if you were to provide a fire service forthose? Bankstown is a good example—I might be wrong on this, but I think I am right. A largeproportion of the flying that is done out of Bankstown, particularly on weekends, is by flyingschools and hobby flying rather than commercial and charter operations.

Mr Griggs—In 1998 there was a fire service provided at airports like Bankstown,Archerfield, Moorabbin, Essendon, Parafield—those secondary airports to the majorinternationals. The fire services were removed from all those airports. They were only small fireservices, but they did actually provide a reasonable service. It was mainly at the pressure ofAOPA, who used their pressure on the government to change that standard. So all of thoseservices were removed. The local brigades were supposed to take over as we withdrew. In fact,they took the responsibility; they have no change of vehicles and they are no closer to theairport. In fact, there was nothing changed whatsoever, except we walked away. So thoseairports are very exposed. Interestingly enough, most of the accidents that happen with GAhappen at those airports. There was a very small government charge within the fuel levy at GAairports, and that was removed a long time ago as well. With the charging, you asked whatwould be the way to do it—



Senator FORSHAW—I suppose I am looking at the responsibility as well. If you have avery busy airport but it is being operated essentially for recreational flying, I am interested inwho should have the responsibility to provide the emergency fire service there, if it is to beother than the local fire brigade in Bankstown. That is what I am intrigued about.

Mr Griggs—It is a problem with funding: if you try and put in real safety standards, you thenhave to look at the funding side of it. At the moment, the average person who flies pays only70c in their ticket for the fire service—be that ticket from Cairns to Brisbane to Melbourne andreturn, it only pays 70c for fire service. If it was a government regulation that, for example, alltickets included $1 per passenger per flight, you would be able to provide a fire service in everymajor airport in Australia—and I mean major rural airports like Mackay and places like that—without any troubles at all. Places like Albury would be able to afford a fire service. All thosethings could happen with the very minor increase of $1 per flying passenger. That could all beachieved very easily, but the regulations do not allow that as they stand today. That is the basisof the problem: the cost is borne by the public which is collected by the airlines and they think itcomes out of their pocket but it does not.

Senator O’BRIEN—You discussed the risk downgrading, if I can call it that, of the BAe146200 series to category 5 for certain airports. I would like you to explain for us the basis onwhich ICAO categorises aircraft from a fire safety point of view.

Mr Griggs—They have a set standard for size of airports and requirements for size ofaircraft. The whole thing is set down in black and white. Aircraft categorisation is based on theirlength and width. If you look up the ICAO guidelines in annex 14 you will see a whole lot ofaircraft set down. If it reaches a certain length it is in one category; if it goes over that length, itis category something else. Many aircraft fall in or out of a different category by 0.2 of acentimetre.

The difference between this aircraft, the 200 series, and the 100 series, for example, is only0.6 of a metre, but the 200 series falls quite clearly into category 6 and the 100 series falls intocategory 5. With an application from Airservices Australia to CASA, CASA agreed to reducethat standard for that particular aircraft. I might add there are many aircraft that are a lot closerto that category change than this particular aircraft. It is purely a matter of the size of the aircraftand the width of the aircraft.

Senator O’BRIEN—And where the aircraft is going in this case, I take it?

Mr Griggs—In this case it is whether it is a domestic or an international, but that is notsupposed to be.

Senator O’BRIEN—You talked about the provision of different services and you used aQueensland example. I am a senator from Tasmania so I was going to rely on a Tasmanianexample. Is it the case that there are two fire units at Hobart airport but only one at Launceston?

Mr Griggs—At the moment, Hobart is category 7, so it has gone up slightly. Up until veryrecently, Hobart and Launceston were exactly the same—both category 6, Hobart beinginternational and Launceston being domestic. CASA have adopted an attitude that they have tomeet the international requirements under ICAO 14 for international but they can Australianise



that for domestic airports. Where they get that I do not know, but they come up with this all thetime. The result is that the standards in Launceston are being reduced by June. They arelowering them bit by bit. Rockhampton and Mackay have already been reduced, based on this,and Launceston is on its way down. The interesting thing about Tasmania, you might realise, isthat once upon a time there was a fire service at Burnie and also at Devonport. They are nolonger there, so they have been removed over the years as well.

Senator O’BRIEN—If there was an aircraft emergency, if a plane travelling from Sydney orMelbourne to Hobart had to divert to Launceston because there was an emergency and theywere not certain they would reach Hobart, does that mean—

Mr Griggs—They would arrive at a lower category because there is no—

Senator O’BRIEN—Even though if it might be a 767, for example?

Mr Griggs—Yes. If a 767 flying from Melbourne to Hobart had to divert to Launceston, itwould find itself at a much lesser category. A 767 is category 8. Hobart is category 7 now.Launceston is moving to category 5, so it will be way below.

Senator O’BRIEN—I am not sure of the aircraft type and what the future is in terms of whattype of aircraft will be on those particular routes.

Mr Griggs—You were not wrong—that is quite possible.

Senator O’BRIEN—Do you know what the category is for the Kendell CRJ aircraft?

Mr Griggs—That is the new Canada Air. It is category 5.

Senator O’BRIEN—It is category 5 as well, is it?

Mr Griggs—Yes.

Senator O’BRIEN—I think most of my other questions have been dealt with in your earlieranswers. The only other thing is that it seems to me that the type of fuel—that is the differencebetween avtur and avgas—would be irrelevant to the issue of firefighting.

Mr Griggs—It is irrelevant to us because we carry so much foam at the major airports that itdoes not make any difference. It would certainly make the difference if you were a local brigadebecause the small aircraft actually just use a refined petrol, which is an awful lot moreflammable than the refined kerosene that the big jets use. It is relevant if you are at Parafield,Bankstown or one of those places, yes.

Senator O’BRIEN—So the flammability is higher for avgas than avtur?

Mr Griggs—Not much. One is a refined petrol and one is a refined kerosene. The kerosenethat they use in the big jets is nowhere near as inflammable or explosive as the refined petrolthat is used in small aircraft.



CHAIR—Are there any other questions? Thank you very much for your evidence. It hasbeen very valuable. I am sure it actually raises a whole lot of other questions that we might askother people.

Mr Griggs—Thank you very much.

CHAIR—We will now have a short break for morning tea.

Proceedings suspended from 10.36 a.m. to 10.54 a.m.



O’CONNELL, Mr Adrian Gerard, Secretary, Communications Section, Community andPublic Sector Union

WATERS, Mr Alistair John, National Organiser, Communications Section, Communityand Public Sector Union

CHAIR —Welcome. We have your written submission and a further submission which wastabled this morning. I presume there is no objection to that being published. If not, it is soordered. We do not need you to read those but if either or both of you would like to make someopening comments, we would be very happy to hear those.

Mr O’Connell —Thank you, Senator. We will take that opportunity. The CPSU in variousforms has been involved in civil aviation in Australia since its inception and we do appreciatethe opportunity to give further evidence to the inquiry today. It is the clear view of the CPSUthat Airservices management, with the support of the government, are acting on the basis ofgiving priority to profit generation in contracting out ahead of the general public good andaviation safety.

There has been no broad public debate or discussion about the advisability of contracting outor of cutting safety services to increase Airservices’ profitability. There has been no applicationof the public benefit or public interest test in determining the change to Airservices’ focus onprofitability. In line with recommendation 7 and 8 contained in our submission to the inquiry,the CPSU seeks the committee firstly to require Airservices to provide the safety case andpublicly justify the benefits and costs of their competition contracting out and privatisationagenda and, secondly, to ensure that the public interest and public benefit test established in theCompetition Principles Agreement at clause 1.3 are applied to Airservices’ agenda in a fullytransparent review. We draw your attention particularly to page 21 of our submission. Untilthese proceedings are complete no part of Airservices should be subjected to contracting out orprivatisation.

Airservices have embarked on an agenda of recklessly cutting jobs and services particularlyin regional Australia. Members directly involved in providing all aspects of these safetyservices have advised the CPSU of many concerns with Airservices’ approach to aviation safety.The Australian community cannot afford to find out if Airservices has gone too far when it istoo late to do anything about it. The national airways system is a vital national transportinfrastructure. The risk of catastrophic failure requires absolute assurance that the safetystandards come before making money.

The examples of catastrophic failures due to cost cutting in other major infrastructurehighlight the risks such as the electricity transmission breakdowns, the train accidents and thegas shutdown in Melbourne following the Longford gas explosion. These examples are relevantto what is occurring in Airservices. The interim report of the Senate Select Committee on theSocio-Economic Consequences of the National Competition Policy provides data on job lossesin the electricity, gas, rail and telephone industries. The job cuts in these industries are in theorder of 35 per cent, according to the report. In Airservices, since 1990, the cuts to the technicaland engineering jobs are in the order of 60 per cent. Airservices continues to ruthlessly pursuejob cuts. A further overall reduction of 12 per cent is planned for next year.



With staffing cuts of this magnitude the possibility for error and system failure is, in our view,very significant. Airservices’ cuts means that maintenance and installation staff numbers aresignificantly below those of comparable countries such as Canada, a country that has verysimilar geographic features and population features to Australia.

The risks from these cuts is magnified by the management structure Airservices has adoptedrecently. The structure creates the asset owning Commercial Operations Group, known as COG,and an Operations Support Group which provides labour to the Commercial Operations Group.The structure is a contrivance to facilitate contracting out.

The structure itself, in our view, is dangerous with decisions on the key assets of the nationalairways system being made by the owner—that is the Commercial Operations Group—whilethe staff with the technical and the engineering expertise for these assets work in the threatenedOperations Support Group. COG managers have been very bullish in their push for contractingout without having the technical competency to fully understand the impact of this direction.Airservices is also risking aviation safety through its ongoing push to cut services and its refusalto consider providing services which are necessary for safety reasons but do not attract acommercial rate of return.

Contracting out risks the quality of the facilities which make up the national airways system,the mandated level of maintenance for these facilities, and the quality of the techniciansmaintaining these facilities. In line with the recommendations in our submission, the CPSUrequests that the committee recommends that the facilities and the maintenance standards aredetermined independently of the providers and that the technicians are required to passindependent checks for certification or for licensing.

Airservices also has plans to remove directed traffic information services from regional andrural Australia. Airservices plans to provide a transitionary G class airspace directed trafficinformation service from TAAATS until its ‘end state model is adopted for G class airspace.’Significant sections of airspace were transferred into TAAATS in March this year with almostall further airspace to be transferred in June this year. Cuts in service levels have occurredalready in these sectors. On 16 April this year, flight information services from TAAATS wereunavailable to pilots for a period of six hours in the Sandon sector. The Sandon sector includesairspace over Mudgee, Armidale and Coonabarabran. Flight Service never left regionalAustralia without a flight information service.

The service for regional Australia will continue to deteriorate with Airservices proposing tocut the number of domestic, high frequency outlets from 17 sites to approximately eight, andAirservices establishing a relay of radio communications for much of Australia through fouroperators working on multiple HF channels and relaying information backwards and forwardsfrom pilots to air traffic controllers and vice versa. Of course, Airservices ‘end state’ cuts all ofthis directed traffic information services for most of Australia outside of the east coast.

The directed traffic information transition project has also highlighted the problems with non-experts making key decisions about the national airways system, the technical infrastructure thatunderpins the delivery of aviation safety services throughout Australia. This particular projectwas unscheduled and unplanned. The board approved it only in November of last year, it is due



for completion in June, and the safety case for the project has not been widely available to thetechnical practitioners in Airservices.

The technical program signed off by the Commercial Operations Group also involvesdowngrading the reliability of communications systems used for flightwatch and HF directedtraffic information services from class B to class G. In effect, rather than duplicate acommunications system to maintain reliability, the Commercial Operations Group which nowowns the assets has decided to downgrade communications provided to over half Australia’sland mass to a single unduplicated line. Testing already shows that the number ofcommunications outages will increase dramatically.

This is an example only; there are many other instances of Airservices seeking to cut servicesto regional and rural Australia. Chair, you are no doubt aware of the Airservices’ proposal totransfer responsibility of the ground based navigational aids. That was a matter that was raisedin Estimates, and a halt was put to that.

Sixty per cent of aviation movements in Australia occur in class G airspace. This is the areaAirservices is cutting services to the most. We call on the committee to recommend thatAirservices be required to maintain current service levels until there is agreement amongst allinterested parties as detailed in the recommendations contained in our submissions. The CPSUalso calls the committee’s attention to the CPSU’s AFIS proposals, a copy of which has beentendered again this morning in an updated copy, and the CAGRO proposal.

The CPSU understands that Airservices was approached to provide air traffic service atUluru, Ayers Rock, and refused on the grounds that Airservices ‘does not want to be in that endof the market.’ CASA claims that the service is not an air traffic service and can be provided bya person with very limited training.

The service as described in CASA’s own publications is clearly an air traffic service and aflight advisory service within the meaning of annex 11 of the Chicago convention, the ICAOdocument used as the basis for Australia’s air traffic service provisions. In our view,Airservices’ refusal to provide such a service flies in the face of Airservices’ legislativeresponsibility to make all decisions on the basis of safety first.

The CPSU recommends its AFIS proposal to the committee. As I said, an updated copy hasbeen provided. The proposal is in line with ICAO standards and is equivalent to the level ofservice which is currently available in the United Kingdom, the United States of America,Canada, New Zealand and South Africa. Utilising AFIS one and two services, Airservices canprovide a far better safety level at busy aerodromes than can possibly be provided by unalerted‘see and avoid’ or radio alerted ‘see and avoid’ techniques. BASI has highlighted the safetyrisks of these approaches. An Australian AFIS service would bring Australia in line withcomparable countries by providing an air traffic service for busy airports that do not require acontrol service.

Chair, I hope that we will be able to assist the committee with answers to any questions youhave regarding the opening comments or our submission. Thank you.

CHAIR—Mr Waters, did you want to add anything?



Mr Waters—No, I will not at this stage, thank you.

Senator O’BRIEN—You have made some comments on the arrangements related to thedirected traffic information and the TAAATS systems that came into effect on 23 March. Yousaid on page 9 of your submission that the current—that was as at September 1999—traffic andflight information service met the provisions of the Air Services Act and the Chicagoconvention administered by ICAO. Do these new arrangements, the 23 March arrangements,also comply with the act?

Mr Waters—My understanding is that they do.

Senator O’BRIEN—Was the CPSU consulted in your view properly on the changes thatcame into effect on 23 March before they happened? That is the first part of the question.Secondly, are you aware of any problems with the new arrangements in the last four weeks?

Mr Waters—We certainly were consulted prior to the changes occurring. Airservices firstgave the union a briefing in about July last year and there have been a number of verysignificant changes to Airservices’ proposals since that time, one of the most fundamental onesbeing the retention of the high frequency provision.

CHAIR—Radio?

Mr Waters—Yes, radio communications across a lot of Australia. That was something thatAirservices had initially planned to get rid of altogether. We have some very serious concernsabout the manner in which they are retaining that HF service, which was something that theindustry essentially told them that they had to retain. They are still proceeding with cuts to thenumber of high frequency communication outlets. I am not a technical operative, but highfrequency radio is very iffy at the best of times and for coverage you normally need to have asignal coming out of a number of different sites to ensure that in any particular piece of airspacewhere a plane might be it will be able to pick up a particular signal. They are reducing thenumber of outlets. They are reducing the number of channels available. And because thedirected traffic information service is now being provided from within TAAATS, which has nocapacity to deal with high frequency radio, there is going to be a process by which messages arerelayed from pilots to a high frequency radio operator, formerly a flight service officer, who willthen relay that information to an ATC, who will then pass the information back to the radiooperator, who will pass it on to the pilot.

At the moment, Airservices’ plan—as we understand it—is for there to be four consolescovering the whole of Australia to perform that function. We consider that to be a verysignificant safety risk, either because messages will be missed or there may be an error intranslating a message from the pilot to the air traffic controller. The radio operators are going tobe expected to be monitoring multiple channels. It is clear from comments BASI have madepreviously about problems with radio congestion that that is going to be a problem that is goingto be confronted in that particular aspect of the system.

There are further safety concerns and they are driven essentially by Airservices’ ‘end state’model, which is effectively, as I understand it, the same as the Airspace 2000 proposals, whichis to remove directed traffic information from G airspace. On that basis, Airservices and the



commercial operations group in particular are making changes to the technology, to the highfrequency outlets in particular, which are downgrading the level of reliability of those servicesfor when they are not an air traffic service. They seem to be making some decisions that assumethat the ‘end state’ model is going to be agreed to by the industry. That may be the case—I donot know; but I do know that the industry has rejected Airservices’ proposals to get rid ofdirected traffic information across the vast part of Australia’s land mass on at least four or fiveoccasions now. Maybe they are wearing the industry down.

Senator O’BRIEN—In relation to the arrangements trialled at Uluru airport, on page 13 ofyour submission you say that you had not received a response from Mr Toller or the minister tothe letters you sent them. Subsequent to that submission, have you received a reply?

Mr Waters—Yes, we have received a reply from both Mr Toller and the minister. Theresponse is effectively that CASA does not consider the service to be an air traffic service andtherefore does not feel constrained by the requirements that we set out with regard to licensingrequirements for air traffic services. The minister’s comment—I do not have his letter in frontof me, but this is my recollection—is that he indicates that it is CASA’s view that it is not an airtraffic service.

Senator O’BRIEN—Can the committee have copies of correspondence relating to that?

Mr Waters—Yes.

Senator O’BRIEN—Thank you. Can you update the committee on where the exercisefinished up from CPSU’s point of view?

Mr Waters—Our position remains that the services that are being provided are an air trafficservice and, as such, should be provided by licensed officers. CASA has recently put out anotice of proposed rule making which reiterates its position that the service is not an air trafficservice. We will be responding to that—responses close on 12 May—and once againchallenging the basis on which they are making those statements. We have done some work inobtaining some legal advice to form a view about whether the services that are provided by theCAGRO do fall within the meaning of an air traffic service, both within the Australianlegislation and also within the Chicago Convention. The legal advice that has been given to usdoes indicate quite clearly that the services that are being provided by the CAGRO, particularlyat Ayers Rock, and also in their notice of proposed rule making, do fall within the definitions ofan air traffic service. As such, we continue to hold the view that it is vital that licensed officersare providing those services.

Senator O’BRIEN—You might wish to take this question on notice. Is the CPSU happy tosupply to the committee a copy of that legal advice?

Mr Waters—We will take that on notice.

Senator O’BRIEN—As I understand it, you are saying that the certified air ground operatorproposal—that is, CAGRO—is a dangerous proposal.

Mr Waters—Yes, we are.



Senator O’BRIEN—In your opinion, why is that so?

Mr Waters—One of the most fundamentally dangerous things about it is the cuts in the levelof training and licensing that are required for people to perform the function. At the moment thepeople who are being used at Ayers Rock are ex flight service officers who used to be employedby Airservices. They have gone through the full training process and have had many yearsexperience in providing a flight service. However, under CASA’s requirements, there is norequirement for a person to have been trained as a flight service officer, an air traffic controlleror anything else. I do not have the figure in front of me but, from recollection, I think thetraining involved is as low as 14 to 16 hours—it may go up to 20 hours—to become an airground radio operator providing directed traffic information to aircraft at one of the most busyand difficult points, which is obviously coming into and out of an aerodrome where there is anawful lot happening and an awful lot of aircraft converging on that particular point.

Another thing that is very dangerous is that the CAGRO proposal encompasses for the firsttime a fundamental shift in the way Airservices views the provision of aviation safety. It shifts itfrom it being provided by the public sector as a public benefit or in the public interest to being aservice that is provided by private interests for private benefit. The decisions about whether aCAGRO is provided are not going to be made on the basis of need or the requirements for thesafety of the airport or for the travelling public, but are going to be made on the basis of whetherthere is a commercial operator who is prepared to pay for the service directly at that airport andon the basis of the commercial decisions that those operators make. Those commercial decisionsmay relate to whether commercial operators want to be able to land straight into an airportrather than having to fly around it.

There are further risks as well. Because it is being defined as not being part of an air trafficservice, it is not actually connected to the information flow that is provided within the air trafficservice network through the national airways system—if you like, the communication flowsabout aircraft that are approaching the airport and aircraft that are moving out of the zone. Sothere is not the level of communication between the area controlled by the CAGRO and the restof the national communications system because it is being defined as not being an air trafficservice—it is something lesser than an air traffic service. Therefore, the need forcommunication about what is happening in the neighbouring areas is not required—which itwould be if it was defined as an air traffic service.

Senator O’BRIEN—With respect to the CPSU’s AFIS—Aerodrome Flight InformationService—firstly, is that proposal in accordance with ICAO standards; secondly, are those typesof services currently being provided in other comparable aviation countries; and, thirdly, whyshould we use it?

Mr Waters—Yes, it is in accordance with ICAO standards. The ICAO standards—I think inannex 11—detail two forms of AFIS service: either an AFIS service which is provided at anaerodrome or a centralised AFIS service that is provided remotely from an aerodrome and mayservice a number of aerodromes, which is something that Airservices is uniquely placed to beable to provide.

AFIS type services—they have different names—are currently working in the UnitedKingdom, the United States, New Zealand and South Africa, as well as Canada. It is a very



common service provided to airports that are busy, but not busy enough to require an air trafficcontrol tower. It is very important in the CPSU’s view that it is available in Australia. Perhaps Icould compare it with the road system in Australia: when we come to an intersection, we haveeither lights or police or right turn arrows and left turn arrows—an air traffic control service thatyou might have at a very major intersection. We have either that service or we have a gravelroad without give way signs—without anything. At the moment, aerodromes in Australia haveeither an air traffic control tower system or nothing. They are the two levels of service available.So without having that middle road available, BASI, in its regional airlines report which cameout last year, identified at least 12 airports where the pilots were concerned about breakdowns inseparation occurring.

BASI have documented on a number of occasions how important it is to have third partycommunications because ‘see and avoid’ techniques—pilots looking for other planes—do notwork for a whole range of reasons. This is particularly so when planes are coming intoaerodromes and there is so much else to do. BASI have made the point that ‘see and avoid’ doesnot work if two planes are on a conflicting path. They do not actually move in either of thewindscreens of the pilots and so they become even more difficult to see. It is one of the reasonsit is vital to have a third party radio service available at busy aerodromes like Bundaberg andPort Macquarie. There are a number of aerodromes listed in our submission.

Senator O’BRIEN—Has Airservices continued to operate cohesively within its newmanagement structure?

Mr Waters—No, it has not. I have been involved with Airservices for 10 years and I havenever seen the level of breakdown in management communications that currently exists in thisorganisation. For example, I attended the industry briefing on pricing provided to industry andother interested parties before Easter. At that meeting, Bernie Smith, the chief operating officerand head of the commercial operations group, highlighted a number of capital works programsplanned for next year, including the higher frequency rationalisation program. It has beenannounced to industry that, from figures contained in the industry consultation informationbooklet, the program is worth $2½ million for next year and that it has been signed off.Information about the projects for next year has been provided to the OSG and to the areas thatlook after projects—in particular, the implementation of those projects and the installation ofnew equipment. They were making changes as recently as a week before Easter, but after theindustry briefing they remained unaware that COG had signed off or was committed in any wayshape or form to the HF rationalisation program for next year. They did not know it was goingto necessarily be happening next year.

The levels of tension within the organisation are palpable because the whole organisation,with the exception of TAAATS, has basically been told that it is subject to competition orcontracting out. People are worried about their futures and their jobs. That flows right frommost senior management levels down through the organisation. The structure is damaging to theorganisational health of Airservices. It takes people who have the expertise away from beingable to make informed decisions in the areas of their expertise and forces them into a compliantrole as a contract provider. Rather than operating as a team, the organisation is focusing moreand more on contract compliance within the organisation. All the advantages that theorganisation has in its flexibility are being lost because everybody is focusing on whether there



is a written agreement about whether one area will provide a particular service to another area inthe same organisation.

CHAIR—So what you are saying is that competition between various sectors in theorganisation stops information flows, et cetera.

Mr Waters—Yes, there is competition and effectively a move to a contractual basis. If youdo not have a written contract to provide something for another area, you no longer provide it tothem until you have an agreement on how they are going to pay you to provide that service.

Senator O’BRIEN—I have one brief question relating to your Aerodrome FlightInformation Service proposal—and I take it that you put the proposal to Airservices formally.You said on page 14 of your submission that Airservices was willing to consider the plan. Didthat happen?

Mr Waters—Airservices has given us a response—I think it occurred at the last nationalconsultative council meeting—which, again, was effectively along the lines that it was not anarea of the market in which Airservices wants to position itself.

Senator O’BRIEN—It was not a written response?

Mr Waters—At the moment I do not recall whether or not we had a written response. I willcheck.

Senator O’BRIEN—If there is one, the committee would appreciate a copy.

Mr Waters—Yes.

CHAIR—Budget estimates are going to be very interesting.

Senator O’BRIEN—Thank you.

CHAIR—Can I just take up on a couple of issues. Early in your verbal opening statementyou said that there was a 60 per cent loss of jobs in regional Australia since 1990. Do you haveany figures that show where the jobs have been lost and so on?

Mr Waters—The cuts of 60 per cent were in technical and engineering jobs across the board.I do not have the job figures in front of me for technical officers, but my recollection is that theyhave gone from about 1,350 or 1,400 jobs down to about 500 jobs.

Mr O’Connell —We can certainly provide that information to you.

CHAIR—If you can, that would be useful. I am not asking you to do a massive exercise, butI presume that those percentages were based on actual figures. They would be useful to us,thank you very much. Again, I am trying to interpret what you said so tell me if I haveinterpreted wrongly. I think you said that safety issues or regulations should be determinedindependently of the providers of the service. I would have thought that that was CASA’s role



and that they therefore should be independent of Airservices. Does the union believe that theyare still too close in their relationship and that they are not independent? First of all, am Icorrectly interpreting what you said?

Mr O’Connell —In my opening submission I was specifically talking about the regulation ofthe technical and engineering aspects of the work; that there should be independent standards ifthat work is to be contracted out and that those standards should not be set by the providers,whether Airservices Australia or anybody else.

CHAIR—Okay, that is clear. So we are not talking about CASA necessarily?

Mr Waters—We are not necessarily talking about CASA. If you look at the notices ofproposed rule making on these matters that CASA has recently released, they have basicallypicked up what occurs in Airservices at the moment and just said, ‘That is what happens inAirservices in terms of a system. We will just say that, if other people use a system similar tothe one in Airservices, it will be all right.’ They have not picked up any of the standards that areused in Airservices at the same time, such as aeronautical engineering instructions. CASA maybe an appropriate body for setting those as an independent body but it would seem to us that, ifyou are moving from a system that is government run through a government owned corporationor GBE to one with private sector providers, you need to do more than just simply pick up thesystem that worked okay for the government provider and expect the same sorts of internalstandards to be maintained by private sector providers. As we have indicated in our submission,we are seeing those standards declining in Airservices.

CHAIR—This is fairly important. We probably will pursue it again later. It opens up a fairlylarge debate about how we regulate those kinds of things. On another matter altogether, I noticein reading your submission that you make reference to the whole issue of TAAATS and class Gairspace, et cetera. You will be aware, I am sure, that in recent days in the press there has been afair bit of debate—a lot of it initiated by Mr Dick Smith—criticising this committee and otherpeople. I notice that you said his proposal was called Airspace 2000 and it would effectively getrid of low level DTI sectors—that is what we were discussing before—directed trafficinformation from the TAAATS system. Crudely, in that debate one proposition was put—I donot know if it was put by Dick Smith or somebody else—and I know it is not simple. I havetried to get my head around this Airspace 2000 and G class airspace for months and I think I amjust starting to get hold of it now. One of the oversimplifications which was made though wassaying we are trying to get rid of an outmoded radio system and replace it with radar. That is thesort of claim which has been made on a number of occasions in the Senate and other places, asthough, in other words, we are trying to replace something which is 1950s with somethingwhich is 2000 and beyond. That is not how you see it, obviously, because you are proposing thatthe directed traffic information is still a very important part of any air safety network inAustralia.

Mr Waters—It absolutely is. I think our members would fully support use of radar when it isavailable and extension of the use of radar where radar is available. That is essentially along theeast coast. I am aware of members who have been pushing for the last 10 years to be able to getaccess to some bits where there was radar coverage but they were not able to access that. That isessentially along the east coast of Australia and it does not affect the broad mass of theAustralian landmass which is not going to have radar coverage at any time soon. To me, the



proposal is better characterised by saying that what they are proposing is to only provide aservice where there is a radar coverage rather than saying that they are increasing the service toa radar coverage. It is a limitation and a pullback to be getting rid of those procedural trafficservices that have been available for a very long time and continue to be essential.

Mr O’Connell —Could I add something on that point about your initial comment about itbeing hard to get your head around the class G service. I understand that all of this is oftensmothered with technical detail. In simple terms, an analogy would be if Telstra, as anorganisation providing communications across Australia, said, ‘We only want to be in the STDand local call business for city to city communications and we do not want to be in the businessof providing services to rural and regional Australia where the return on investment is less andthe actual capital investment in the business is high.’ If that were to happen—and Telstra may betrying to move down that path anyway—

CHAIR—That is another debate we are having.

Mr O’Connell —there is naturally community outrage. What is happening in Airservices—and where our frustration is—is that there has been no public debate about Airservices trying tomove in exactly that direction, and they have got a lot further than Telstra has ever got. Whatthey want to be in is the high-end business—that is, providing en route traffic informationservice to what they call the ‘heavy tender’ big planes flying up and down the profitableroutes—and they do not want to be in the business of providing services to those parts ofAustralia where it is a much more capital intensive proposition. The way they are doing that isto say that there is no justification for providing services. So, to get out of a business that theydo not want to be in, they are building a case to say that you do not need to provide services outof there. That is essentially what it is about. We dispute that. We say that 60 per cent of aviationmovements occur in class G airspace. In any event, there is a public good in terms of providingthose services to rural and regional Australia and that is what Airservices was established to do,not to go out and necessarily just consider the profit motive, which is where they have headedwithout any public debate.

CHAIR—I am quoting you again, where you said, in relation to the Uluru service, thatAirservices Australia do not want to be in that end of the market; is that the kind of thing thatyou base it on?

Mr O’Connell —Exactly.

CHAIR—Thank you very much for your evidence. As with everyone’s evidence, it is veryvaluable and, quite clearly, it gives grist to the mill and information for the debate which I amsure will continue on a number of issues. It looks as though the regional and rural debate hasanother element to it.



[11.39 a.m.]

BRAMICH, Mr James David, Vice President Administrative, Civil Air OperationsAssociation of Australia

LANG, Mr Edward Rowley Roy, Vice President Professional, Civil Air OperationsAssociation of Australia

O’DEA, Mr Gerard Francis, Camden Tower Representative, Civil Air Operations OfficersAssociation of Australia

CHAIR —We welcome representatives from Civil Air. Do you have any comments to makeon the capacity in which you appear?

Mr O’Dea—I am also an aviation economist.

Mr Lang—I am also a practising air traffic control instructor in Brisbane.

CHAIR—If one of you would like to make an opening statement and the others to makecomments, we would be happy to hear that.

Mr Lang—We have provided for you an update to our original submission. Obviously thatwas written some time ago and, in the aviation industry, things do tend to change fairly quickly.I will not go through the submission completely; I will just draw your attention to a few pointsof relevance. We will start by discussing stage 1, which was completed in December 1999.

CHAIR—That submission has been received, and I presume there is no objection to it beingpublished. There are a couple of other attachments which we will also receive and have copiedfor the rest of the committee.

Mr Bramich—Unfortunately, with the other two papers—one was an Archerfield cost-benefit analysis and the other was a paper written by Gerard on location specific pricing—wethought only yesterday that you may be interested in them, so we have provided only one copyof each.

CHAIR—I am sure we will be interested in those, and we can copy them. Mr Lang, sorry tointerrupt you.

Mr Lang—The first transition was mainly done in the north of Queensland. We havedescribed it as minor, but there were some fairly important lessons that came out of that processwhich we have gone through and listed there. Certainly there are some critical issues which wehave listed. The use of simulation training must be realistic, for example, and the informationthat flight service officers are going to provide is a critical issue. There were some points therethat some of what we called the HMI—the human machine interface—and the TAAATSequipment itself has been designed as an en route system and is not necessarily effective inapplication to this DTI process.



So these were a couple of the lessons that came out of it, particularly the last two points there,5 and 6, were of critical issue to the transition in the Hunter Valley region, which was stage 2.Concurrently, there were changes in the Melbourne centre operations area—the southern areasof Australia that looked after areas over Tasmania and between Sydney and Melbourne. Thesewere not considered to be high density traffic areas so we were reasonably comfortable with thetransition in those areas, although there were some issues with the HMI that we were concernedabout. The Hunter Valley area is a fairly busy area, as I am sure you are aware, and the lack ofthe HMI was mitigated through safety case by additional positions and support staff. We wereof the opinion, though, that really that should not have gone ahead at that stage without theHMI.

Stage 3 is the critical one. It is the transition of basically all of regional Australia outside ofradar coverage. We have listed some of the problems there. You will find on page 3 that theseconcerns have been identified to Airservices. Obviously the critical one is the HMI issue. Wefound, using data that Airservices were basing their sectorisation on, that they underestimatedthe level of traffic by around 40 per cent. So the workload of the controllers was not accuratelypredicted. That same data was used to work out which flight service sectorisation the controllerswould take over. We have found in some areas that where the work was done by three flightservice officers it is now to be done by one air traffic controller.

The remainder of the submission on pages 3, 4 and 5 effectively refers to the originalsubmission on page 7. That was a bit of crystal balling when we were first advised that thisprocess was going to start, and I have just listed some of the issues in hindsight. We talk aboutthe consultation with the industry. For example, Airservices has consulted with us in a limitedcapacity. In one aspect, CASA actually invited us to a meeting. We thought we were going to bediscussing safety cases parts 1 and 2—Airservices’ submission to CASA—unfortunately it wasa discussion about the end state requirements. We were quite surprised to find out that, after allof the trouble we were going to go through to get DTI into TAAATS, one year down the line allof that pain and misery was going to be the end state with no DTI on TAAATS.

Basically, the other two areas we have discussed. There is an update on the competitionpolicy. We have provided Gerard’s work on location specific pricing. Also, here is a costing ofArcherfield. The Archerfield submission does not necessarily agree with Airservices costings.We have listed a couple of overseas developments there and also a couple of points on locationspecific pricing, which you can address.

CHAIR—Does anyone else want to add any comments?

Mr Bramich—I would just like to cover with some comments on competition policy. CivilAir agrees with some earlier points that were put that if you introduce competition into safetyrelated services, something must give. The only way another provider can provide a service at acheaper price and therefore get the contract is by reducing something. You have to reducewages, you have to reduce training and you have to reduce staff. In the United States, wherethey have quite an extensive contract tower arrangement, effectively what happened when theyintroduced the contract arrangements was that they hired staff who were former air trafficcontrollers, gave them minimal training and reduced the staff. Our major concern withcompetition policy is that it will have a great effect on safety. We cannot see how a competitor



could provide the same level of service that Airservices does unless they cut somethingsomewhere.

With regard to location specific pricing, in the original paper we provided we gave a coupleof options as alternatives, such as cross-sharing of the costs right across Airservices. In otherwords, I guess you would call it network pricing as opposed to location specific pricing. Wealso provided an option of community service obligation payments by the government. Gerard’spaper, which we have provided you with, also addresses the fuel levy in a different way towhich it has been presented previously. Those are all of my comments.

Mr O’Dea—I guess my role here is to answer any questions that you may have of the unionon the matter. Suffice to say that a lot has been discussed about competition and about costs. Inotice that Airservices made mention today of the costs of Archerfield and Parafield, statingthat the real cost per tonne landed was $14 and $23 a tonne respectively. One of the papersthere, entitled ‘ASA and GA’, highlights the fact that their costing methodology may not beworld’s best practice. It tends to be based on average pricing rather than on a marginal costingbasis. The simple assumption is that there will be an air traffic control system in place inAustralia to take care of the international and domestic airlines, regardless of what happens withgeneral aviation or regional airports. If we take that as being assumed or a given, then we cancomfortably say that the only price that Airservices should charge or should need to charge forthe general aviation airports and the regional airports is the marginal cost or the incrementalcost of providing those services. The first couple of pages of the ‘ASA and GA’ documenthighlight that, in particular, Airservices’ average costing for Camden was $1.17 million. Wefind that the incremental cost of that or the marginal cost was only $355,000 per year. Therehave been cost savings on top of that already.

With regard to where this is heading, the problem with introducing competition and bringingother competitors into the market when we have inaccurate cost data, or we have an assumptionthat we have to base it on average costing as a single business unit rather than an adjunct or anincremental part of a business, is that if the government were to decide to provide a subsidy foroutside interests to run ATC or an air traffic service provision in different parts of the country,Airservices would bid a price that was somewhere close to their average cost whereas outsideproviders may bid somewhere between the marginal cost and the average cost. What ends uphappening is that the Commonwealth unnecessarily transfer funds from the public purse toprivate individuals when Airservices would be doing it significantly cheaper and providing asignificantly greater benefit to the Commonwealth.

CHAIR—It depends on how you do your accounts, doesn’t it?

Mr O’Dea—Correct.

CHAIR—All right, I just have one question, and perhaps it is to you, Mr O’Dea. In terms ofthe Archerfield study that you did, did you do that in consultation at all with the current ownerof Archerfield?

Mr O’Dea—No, I did not. I was asked by the union to do the work. I guess that is because Iwas the cheapest person available—I did it for nothing.



CHAIR—Cheap but good, we hear.

Mr O’Dea—Indeed. I received the information from Archerfield. It was not necessary for meto go and ask them what they thought. That process had been gone through. Mine was atechnical analysis based on work that had been done in the US in 1990. What I did receive fromthem was accurate movement data over a time series, which was not reflected in the Airservicesdocument but which I believe should have been.

CHAIR—I am tempted to go down a track, but I think it would go way beyond this inquiryin terms of Archerfield airfield, but I have been given a whole of lot of information aboutArcherfield. Perhaps I will resist that.

Senator FERRIS—I was going to pursue that question as well, but I think probably if we aregoing to get a copy of Mr O’Dea’s analysis then I do not think I really need to pursue it here.

CHAIR—Yes, it is coming.

Senator FERRIS—In time, we will have a look at that.

Senator O’BRIEN—I take it that the concern you expressed in your September submissionthat short cuts would be taken in the TAAATS process and that safety would be compromised isstill the view of the organisation?

Mr Lang—Airservices has adhered fairly strictly to the safety case process. We, through ourconsultative process, have highlighted a number of issues that we were concerned about.Probably the third stage of the transition is the major concern. Because the other two areas wereunder radar coverage, the controller can actually see what the aircraft are doing. In the TAAATSenvironment beyond radar coverage, we are relying completely on communication and thesystem processing to be able to provide information to us. Because that has not been doneanywhere in the world, there is a safety risk involved with that.

We have made some submissions to Airservices to get some improvements to the HMI.Because the system was never designed to do the function we are asking it to do, we felt itprudent that at least the controller should have a fighting chance by getting the systemupgraded. At the present time, a controller, if he does not have the information on the aircraftpresented in front of him, can take up to about 20-odd mouse clicks—the computer mouse—toactually get the information in front of him. If four or five aeroplanes are doing that, taxiing atone time, you can see that straightaway the controller is inundated with work.

One of the enhancements that we have asked for is that through a single mouse click theinformation can be presented to the controller. Initially, it was given that that improvement wasnot an option because of the tight time lines and the contractor not being able to meet thoseobligations; we are still waiting, subject to our further submission that it might be possible toget one or two elements of that whole process moved forward. So there are, absolutely, safetyconcerns. We certainly are raising them.

The safety case aspect of it that Airservices follows is a process that I guess is open tointerpretation as well. Certainly, the FIS safety case that has been presented to us lists a risk of



coordination between the operator who is operating the HF frequency as a low risk if he istrying to give the air traffic controller information, whereas the subject matter experts who aredeveloping the simulation and the procedures list that as a category A risk. So, as I say, it isopen to interpretation. However, it is up to Airservices to provide a process to mitigate the riskthat we have identified.

Senator O’BRIEN—Category A means high risk, does it?

Mr Lang—It means ‘don’t go’. It should not proceed. The head air traffic controller has theauthority to sign off a category B risk. A category C risk can be signed off by a local manager.Obviously, it is far better to deal with a C risk than an A or a B.

Senator O’BRIEN—When you say ‘don’t go’, that is the instruction, is it?

Mr Lang—It means ‘do not progress with the project’. It stops until that risk is fixed.

Senator O’BRIEN—With regard to the changes to the provision of directed trafficinformation services, was your organisation adequately consulted on its view of the process?

Mr Bramich—One of our major complaints listed in the original paper was that Ted wasinvited to a briefing in Brisbane and was basically told what was going to happen. It was notconsultation. From our point of view, consultation is saying, ‘We want to do this; let’s gettogether and talk about the best way we can achieve it so that everyone is happy.’ But this was acase of saying, ‘Here it is, this is our proposal; the board has agreed to it in principle and it is onthe way. Here are the dates.’ We do not really consider that consultation. Subsequent to that,there have been regular meetings, et cetera, where we have been able to give input.

Senator O’BRIEN—On the subject of location specific pricing, on page 3 of yoursubmission you say that a number of general aviation aircraft owners and operators are alreadyexperiencing financial difficulties as a result of the introduction of LSP. That was your view inSeptember last year. Can you provide the committee with as much detail as possible about theoperators that have been hit by LSP and update us on how many more are in trouble as a resultof LSP since September? If you want to put that information in on a confidential basis, I amsure the committee would consider that if it makes things easier.

Mr Bramich—Unfortunately, that would be fairly difficult for us to provide. It is informationthat we gleaned from the newsgroups on the web site and from talking to pilots, et cetera. It isvery subjective, I would suggest.

Mr O’Dea—I probably have a little more experience in general aviation. That would not beterribly hard to put together in places like Camden and Bankstown, which would be fairlyindicative of the market. I also see that some representatives from the Bankstown Airport UsersGroup are presenting after lunch, and I am sure they would be adequately able to respond.

CHAIR—Does it include things like the problems that pilot training schools had—which, weare informed, have now been solved? Have you a comment on that?



Mr O’Dea—Yes, I will comment on that. I know that particularly in Camden there has been apush with location specific pricing to reduce hours, and it sets up a conflict. The operator has todecide whether or not to compete against someone who operates outside tower hours andtherefore has lower costs. People that are coming to learn to fly do not have full knowledge ofthe risks associated with flying. You put flying operators in an invidious position where theyhave to try to balance a commercial interest against a safety interest, and their customers are notfully aware of what those risks are. As for Camden, a couple of quarters in a row the Air SafetyDigest described a large number of incident reports that were occurring around a place likeCamden tower outside the tower hours. When location specific pricing came in, because thetower hours were reduced, operations were pushed out into daylight hours outside tower hours.So we had a decrease in tower hours, a drop in the movement numbers inside that period andoperations were pushed outside it, which increased the danger compared with what it wouldotherwise have been.

The comments that I hear from operators at Camden and Bankstown in particular are that theadministration system is basically unworkable. They have large costs associated with justadministering a bill. It is fine if you are sending out a bill to 30 customers at Sydney who are allflying 747s and the bills are in terms of tens of millions of dollars per month. That is fine if youradmin cost for that bill is somewhere between $5 and $12. If your admin costs for Airservices issomewhere between $5 and $12 and you are sending out a bill for $6.75, it does not seem tomake a great deal of sense. I think the problem that a lot of the operators had was that theyrecognise that the original system that was in place—the avgas levy—was a particularlyefficient mechanism for collecting revenue and funding the airways system.

The problem with any form of taxation is that you have to have a balance between efficiencyand equity. With the best will in the world, a number of people were pushing the view thatlocation specific pricing would be a far more equitable system, and in theory it would havebeen, but I do not think the government had full and adequate advice on what the effect of thatwas and I think that some of the organisations that are responsible to it were deficient in theiradvice.

Location specific pricing has become unworkable. So I think the solution lies somewhereeither in a community service obligation, where the government funds safety at a GA andregional level as a community service obligation, or a balance between equity and efficiencywhere you reintroduce the avgas levy at a rate slightly higher than what it was—and it was16.53 cents a litre when it was taken off—that is, at around 20 cents a litre, and offer a rebateoutside control towered airports of 10 cents a litre. That takes into account that the peopleoutside towered airports are not getting the same level of service, but you take off all these otherinsidious charges of $ 1.50 here, $2 there, the proposal to charge for SAR times and things likethat. That will in some way balance the equity and efficiency issue. That is my own personalcomment. I think community service obligation is another way to go, but there are plenty ofways that this can be sorted out.

Mr Bramich—In regard to location specific pricing, we understand that Airservices havebeen having some difficulty collecting charges from some operators. In fact, as a union we wereapproached with the proposals that controllers in a tower would—

CHAIR—I have that same information.



Mr Bramich—Yes. They would have to basically say to an aircraft, ‘We cannot give you aclearance. Ring this 1800 number and sort out your account’, or something to that effect.

Senator O’BRIEN—Is this taking off or landing?

Mr Bramich—It would be taking off, I think. We have not heard much more about thatproposal.

CHAIR—Thank you for that.

Senator O’BRIEN—Mr O’Dea, you mentioned that the Camden tower has reduced its hoursof operation as a result of the introduction of location specific pricing. Are there any plansbeyond that airport to close towers, or reduce hours of operation to your knowledge?

Mr O’Dea—Certainly there is. Obviously, there is the case of Archerfield. I am halfwaythrough doing the same analysis on Coffs Harbour. I have been advised that there is anotherreview that has been under way in Airservices on Camden tower as well, and that it may benecessary to cast an eye over that in the future as well. One of the possible recommendations inthe paper—which I believe in strongly—is that Airservices are the wrong people to be doingcost and safety assessments. It was clear that they lack either the ability or the resources to dothem properly. I am not suggesting for a moment that there is anything improper or that therewas any improper motive in what they did. But, even assuming that it was all above board, itstill raises the problem that there is a general perception that there is a conflict of interest withall things. Not only does the thing need to be done properly—and I am sure Airservices wereattempting to do it—but there are also needs to be the perception for public confidence in thesystem.

It would seem appropriate for that to be taken out of Airservices’ hands and put into DOT andCASA’s—and if, because of the technical nature of a lot of the analysis, the Bureau of TransportEconomics had a hand in it as well. I think you would find that that would increase the level ofpublic and industry confidence in the outcomes of these studies.

Senator O’BRIEN—On page 21 of the September submission, you specifically referred topressure to reduce hours at Bankstown airport as income from location-specific pricing wasonly sufficient to keep the control tower open for eight hours a day, but those plans had, as atSeptember, been shelved. Is there anything further you can tell us about that particular towersituation?

Mr Bramich—No. As a union as a whole, we have not heard anything further. Basically, wedid have paperwork indicating the revised hours and some form of very basic safety study, etcetera. We clearly objected and, at some stage—I do not whether it was due to governmentintervention or whatever—we stopped hearing about it and it sort of disappeared.

Mr O’Dea—The problem with Bankstown and Camden in particular and, to a lesser regard,Hoxton Park, is that we have the Olympics coming up and so they are ramping up the staffnumbers for the Olympics. So I would be surprised if there were not a push in that regard.Certainly, what I hear from Bankstown is that that is likely to come up again after the Olympicsperiod is over.



Senator O’BRIEN—At the same time, you said in your submission in the same paragraphthat Airservices advised that the cost of any extension of operating hours would have to be metin full by operators. Is that still your understanding of the Airservices position?

Mr Bramich—That is, as we understand it, basically the proposition put to the industry.

Senator O’BRIEN—What would that mean to an operator?

Mr O’Dea—There are people in industry who think that it is a scare tactic, and the basis oftheir argument is that Airservices come and say, to use the numbers for Camden, ‘The cost ofoperating this service is $1.4 million a year. If you want to have a service at Camden tower, thatis the figure that you will pay.’ And you have to pay that. It is impossible for them to do it.There were figures like a $38 per movement, which is ridiculous. Unless you have accurate dataupon which you are going to base that, and unless it is based on the incremental cost or themarginal cost, then it is understandable that people would see what Airservices is doing as ascare tactic. I would be a little kinder and say that maybe Airservices do not understand theircosting mechanism or the costings structure as well as others might. But, again, that type ofthing should not be determined by Airservices. And, because there is a large community benefitto the safety issue, it should not be determined by Airservices, or by the airport users inconsultation with both. But the government has to have a look and play a role in representingthe community in that issue as well. If it does that, it may also have to take a role, if there is abenefit to the community outside the private costs and benefits, in finding that.

Senator O’BRIEN—You have given the committee information on Archerfield. I wonder ifyou can help us with an updated view on the Moorabbin and Jandakot situations. For example,you say in paragraph 2.3.8 on page 21 that in relation to Moorabbin there were complaints that adangerous situation existed outside tower hours and that Airservices and CASA both refused totake responsibility for determining what hours the tower should operate. Can you update thecommittee?

Mr Bramich—Basically, nothing has changed, as we understand it, with regard to the towersat Moorabbin. They were reduced. We still see complaints in the media from time to time fromwhat I think is the local Victorian government member there, about the safety situation.Following a question from Senator Woodley on the notice paper, Airservices did actuallyemploy on contract one or two ex-air traffic controllers to sit in the tower between 6 and 8 p.m.,I think—I cannot remember the exact hours—and count how many people were in the circuit. Ido not believe that we got the figures from those surveys but, as I said, I think that there are stillcomplaints occurring at Moorabbin. Certainly with Jandakot, once again, there are continualcomplaints in the media and, as we understand it from our local representative, complaintsabout the level of safety outside Jandakot tower hours. There will be a CAGRO trial in place orabout to take place outside tower hours at Jandakot.

Senator O’BRIEN—Okay. Going back go Moorabbin and the situation between Airservicesand CASA, has that situation changed or has it remain unchanged?

Mr Bramich—Basically we feel that it has remained unchanged in that no-one seems to bewilling to say, ‘It is our responsibility to say, right, a tower is required at Moorabbin, and it isrequired between 6.00 a.m. and 8.00 p.m., or it is required between 7.00 p.m. and 9.00 p.m.’



There seems to be a reluctance on behalf of either organisation to actually say, ‘We are thepeople who say it will occur, and this is what will occur.’ That is the perception we have.

Mr O’Dea—It is technically not a difficult matter to do, and I highlighted it in theArcherfield paper. The methodology is quite simple. The Americans use it as well, and it can beadapted to have a look at the incremental costs and benefits. If you are doing a cost and safetyanalysis on a tower, that can also be done at the margin on an hourly basis as well, and you canjudge what is the incremental cost of keeping the tower open one hour longer compared with thebenefit that comes from that. Likewise you may choose to reduce hours. You may find that withsome tower hours the incremental cost does not justify the benefit. However, I think it isprobably fair to assume that, at the moment, at most of the gap airports you would find thatthere was a safety benefit in extending the tower hours rather than reducing them, but you cando that in an academic fashion and in quite a calculated fashion.

Senator O’BRIEN—You also provided, and today you have dealt with this in some detail,the cost of providing air traffic control services, particularly in relation to Archerfield. You sayin paragraph 3.1.1 on page 22 of your original submission that the cost structure at someairports has been loaded up with unrealistic costs for technical and maintenance services. Canyou expand on that point, please?

Mr O’Dea—Yes. Airservices mentioned it in their first presentation about the airwaysservice cost discussion paper. The original paper that I wrote, ASANGA, which was completedin January 1997, addressed the airways service cost discussion paper and the fact that they hadused an average costing methodology to calculate their prices. Their methodology at the time, asI recall, was based on maintenance hours. I understand they had 10 days to prepare the report,and they said, ‘These are our maintenance costs. How are we going to allocate these costsacross towers?’ My understanding is they said, ‘We will have so many hours of maintenance atthat tower and so many at that tower, we will divvy it up on that basis.’ What that meant wasthat airports like Camden, Bankstown, Moorabbin and Parafield were being loaded up withcosts associated with satellites, bearer links and radar when in fact none of those services wereprovided at those airports. The costs that you want to put onto those places are the costs that areextinguished if you close them—simply the incremental costs. I think that is the fundamentalproblem with it. I think it would help if help from outside Airservices came into Airservices andgave them a hand at calculating those costs accurately.

Senator O’BRIEN—It is a fairly fundamental point, isn’t it? If you have so-called locationspecific pricing but it is inaccurately calculated and, according to your submission,inappropriately loaded with costs which are generated irrelevant to the operation of thatparticular tower, then it is hardly location specific, is it?

Mr O’Dea—I think you will find—and I might try to pre-empt what Airservices will say thisafternoon—that Airservices now use service level agreements at Archerfield. These servicelevel agreements are supposedly location specific, but it is between two parts of Airservices—the Commercial Operations Group and the Commercial Support Group. The trouble is they arenothing more than an accounting fiction. When you look at Archerfield, Archerfield is a similartower to Camden. The costs that I calculated for Camden three years ago I doubled and inflatedfor inflation—I used the CPI index to inflate them. They were about a third to a quarter of thecosts that Airservices are claiming they incur at Archerfield and Coffs Harbour. So even when



they claim that these service level agreements are location specific, they are still inflated, in myview, to a factor of 300 or 400 per cent.

Senator O’BRIEN—That is a fairly damning comment to make if these charges arepurported to be location specific. You are saying that they are not location specific eitherthrough a lack of competence in the mechanism or a deliberate loading of the costs for reasonswhich others may care to answer?

Mr O’Dea—I am not suggesting any impropriety. I am saying they were probably done withall the best will in the world. I have some understanding of economics and finance and I amsuggesting that some of the people have tried to set up a system whereby they would price thoseservices as if they were running the services as an individual business, and that is simply not thecase. Those services can be run much cheaper as part of a large Airservices Australia. I guesswhere the union is heading with this and what seems fairly clean from the evidence is that it ismuch better in Australia’s circumstances to maintain a single air service provider. There arehuge economies of scale that mean the cost of providing services at Archerfield, Camden,Bankstown, Parafield, Tamworth and Albury are significantly reduced when they are calculatedaccurately inside a large organisation with economies of scale rather than separating them andduplicating all the associated fixed costs.

Senator O’BRIEN—I hear what you are saying. I guess we will be visiting this matter in alot more detail.

Mr Bramich—I would like to make one comment on what Gerry has been saying. If youtake Cairns, where I work, as an example, we have something like 20 technical staff. We havearound 20 air traffic controllers in the tower and about 24 who do approach in the approachcontrol unit downstairs. So we have got an almost 50 per cent ratio of technical staff and there isa lot of technical staff maintenance costs included in the costings for Cairns, but those staff donot just look after the equipment at Cairns. They look after the radar up on the tableland whichis used for en route control, they would probably go up to the Cooktown non-directional beaconand they would maintain communications links between the radar and Brisbane, and all that sortof stuff. So they are not just doing stuff related to Cairns, but I suspect that it is very difficult toseparate out the actual costs for providing the air traffic control service just for Cairns airport, asopposed to all the other things that they do as well.

CHAIR—You would almost need a minute-by-minute log, wouldn’t you?

Mr Bramich—That is right.

CHAIR—We are getting lots of questions to ask. Thank you very much for your evidence, itis indeed valuable and we will read with interest the further documents that have been tabled.Thank you for appearing.



[12.19 p.m.]

HENNESSY, Ms Aminta, Co-Convenor Bankstown Airport Users Group

TIPPETT, Mr Alan Raymond, Co-Convenor, Bankstown Airport Users Group

WARD, Mr Darrin Richard, Co-Convenor, Bankstown Airport Users Group

CHAIR—Welcome. I understand you have handed up a number of documents that look asthough they will be very useful to us and that you want them tabled. Is there any objection tothese documents being tabled and published?

Senator O’BRIEN—Subject to a quick check. I suspect there is no reason why they shouldnot be, but we have not actually looked at them.

CHAIR—It might be useful just to reserve that for a moment. Thank you for that. Would thewitnesses like to make an opening statement?

Mr Tippett—The documents that we have tabled are for your edification perhaps later on.We will only address a couple of those during this session.

Senator O’BRIEN—Perhaps I could make myself clear. I do not suspect there will be aproblem but, for example, occasionally documents that you do not see make a claim aboutsomeone that someone might consider defamatory. We have not have a chance to see if there issuch a claim in the documents, and that is the only reason I am being a little bit reserved.

CHAIR—It does happen. All of us have experience of it.

Mr Tippett—We have a brief statement. The flying training industry, which we arerepresenting, have three main concerns with location specific pricing. The first is that locationspecific pricing and its administration are unsustainable if the flying training industry is goingto remain viable, and I will come back to that point shortly. The second point we would like tomake is that Airservices has shown a serious lack of business acumen and commercial acumenin the way it has introduced location specific pricing. The third point is that prior to theintroduction of location specific pricing Airservices failed—intentionally or otherwise—toconsult with the flying training industry, knowing full well that this was the sector of theindustry that would be hardest hit by the introduction of location specific pricing.

In terms of the sustainability of location specific pricing by the industry, earlier this morningyou heard Airservices give an example that it would cost, if full location specific pricing was inplace, $23 per landing per tonne at Parafield. On the basis of a basic trainer, a one-hour flyingtraining session, that would represent an 18 per cent increase in one hit on the cost of thatsession. In our submission we state that we are very price sensitive, and over the past 10 yearsour prices have increased by an average of 0.7 per cent per annum. Any increase in the price offlying training severely impacts on the level of training activity. We have enclosed with the



documents a sample price list from one of the flying schools at Bankstown. It is 1992 costs andit is year 2000 costs, and they represent a 7.8 per cent increase over eight years. Airservices areproposing—just as an example—18 per cent in one hit. It is simply unsustainable.

In regard to the level of commercial acumen shown by Airservices, when location specificpricing was first introduced we, as a group, asked them to suspend billing until such time asthey had sorted their administrative systems out. Their response was given to us in a letter dated7 October 1998. Bear in mind that location specific pricing was introduced on 1 July 1998. Iwould just like to read, if I may, an extract from the letter that we received from WilliamPollard, the chief executive of Airservices. It reads:

Clearly, the implementation of such significant pricing reforms has been difficult for both Airservices and some of itsgeneral aviation customers. Quite apart from the philosophical debate surrounding the movement from a tax basedsystem to one predicated on user pays principles, the data capture and administrative processes which support the newarrangements are yet to be fully bedded down. I appreciate the concerns you have raised in this regard, but expect thatwith the heightened focus on this area the level of accuracy will continue to improve over the coming months. I am sureyou will appreciate that I cannot agree to any temporary suspension of billing.

We responded to that letter, and you have a copy of it in the documents we have asked to be tabled.

CHAIR—Thank you.

Mr Tippett—I would suggest to you that any private enterprise that introduced a system thatoperated like this one does, that had not been bedded down prior to its introduction, would nolonger be in business. Yet the flying training industry, and general aviation in general, isexpected to just wear this, and it is not acceptable.

When the fuel contamination crisis broke in December last year, all but two flying schools atBankstown were grounded. We wrote to Airservices requesting them to close Bankstown towerduring this period to save costs and turn it into a mandatory broadcast zone, which is a separateprocedure without a tower. That request was based on the very limited amount of traffic thatwas operating into and out of Bankstown. That request was refused—you have copies of thatcorrespondence—on the basis of safety.

In terms of item 3, the lack of consultation prior to the introduction of air services, we havetabled a letter from Airservices Australia to Camden Aviation outlining the so-calledconsultation that took place. There is not one flying school from Bankstown represented. BritishAerospace at Tamworth were consulted, but in our view they are not representative of the flyingtraining industry. The so-called contract that Airservices issued two to three weeks prior was thefirst the industry had heard of the new charges. I personally rang the representative atAirservices just six weeks prior to the introduction of LSP. This person was handling theintroduction of LSP from the financial side and he could not tell me what the charges would be.Again, we would say that that is lack of consultation and lack of commercial acumen. Thismorning we heard Airservices say, and I believe this is correct, that in October last year theminister wrote to them to say that they must recognise the government’s desire to support smallbusiness, specifically mentioning the flying training industry. Our observations to date give noindication that this is occurring. It is interesting to note that the industry gave Airservices theopportunity to test the validity of their so-called contract in court and they chose after the initialhearing to change their case to one of arguing restitutionary claim. Yet this morning Airservicesstated that they propose to continue with the contractual arrangement. We learnt just prior tocoming into the hearing before that the court case which was due to start tomorrow and was



scheduled over four days has now been called off because the industry simply cannot afford the$100,000 that it is going to cost to run that.

CHAIR—The industry meaning—

Mr Tippett—The flying training industry. The flying training schools all contributed to thecost of the court case which was being mounted by the Royal Queensland Aero Club. We weretold this morning that just one week prior to Easter Airservices supplied our solicitors with3,000 pages of documentation and a further 1,000 pages last week in relation to this court case.That is what pushed the cost up: solicitors do not do anything for nothing, as you know. Itpresents a very serious situation for us. We are unable to afford to contest this so-calledcontract. The reaction from the flying training industry generally has been simply to refuse topay the bills. We have written to Airservices stating that we do not acknowledge that we havehad a contract or have a contract with them. There was never any offer and acceptance, andconsequently no payment has been made by the majority of flying training schools. If you haveany questions, we would be very pleased to take them.

Senator FORSHAW—Most questions I have have just been answered in the submission.You have been very clear in what you have put to us. Can you give us the magnitude of thenumber of people involved in flying training that you are representing?

Mr Tippett—There are 19 schools at Bankstown that we represent. I cannot give you anexact figure for the number of people involved. I can take that on notice and supply that if youwish.

Senator FORSHAW—What about the number of flying instructors and employees?

Mr Tippett—I would be guessing. As I say, I can take it on notice and supply it.

Senator FORSHAW—I have had similar representations in respect of some other parts ofNew South Wales. I notice we have got Coffs Harbour coming up later. You have obviouslybeen in touch with other groups throughout the state—

Mr Tippett—And throughout Australia.

Senator FORSHAW—Are there any areas where you expect that it is not a problem or areyou saying that this is going to impact right across the board?

Mr Tippett—It will impact across the board wherever a tower exists. Civil Air put forwardthe suggestion that the reintroduction of the Avgas levy with the rebate system for regionalareas would be a more equitable way to go. We would support that. In its current form it issimply unadministrable. As an example, we have given you copies of some of the accounts wehave received. The error rate is extraordinary but there are ridiculous things. For example, wehave one training aircraft, which cruises at 100 knots, and that managed to get from Bankstownto Moorabbin in one hour 52 minutes. It is just not possible. That is just one example. There areso many ridiculous errors in those accounts that just could not be right.

Senator FORSHAW—The figures you are talking about are inclusive of GST?



Mr Tippett—No, that is excluding GST. That is yet another one to—

Senator FORSHAW—I thought that might be your answer but I thought I would put thealternative that you would have already been advised of the impact of the GST.

Ms Hennessy—The introduction of the GST is going to have a huge impact on flyingtraining. It is going to up the cost 10 per cent straightaway on top of all these present increases.

Senator O’BRIEN—Do you mean you are not saving money on fuel costs or the otherrelated costs?

Ms Hennessy—No, because they have successfully divided the Civil Aviation Authority upinto three separate organisations who are all being kept.

Senator O’BRIEN—In your executive summary, point 5 on page 2 of your submission, youhave said that it is your contention that Airservices knew of the impact of location specificpricing on the flying training industry and therefore deliberately chose not to consult with thissector. Do you have evidence that that is the case? Is that conjecture or is it extrapolated fromsomething? How do you make that claim?

Mr Tippett—It is really extrapolated from the document we have tabled, a letter to CamdenAviation which lists the so-called consultation. You will see what we mean by the lack ofrepresentation of the flying training industry.

Senator O’BRIEN—You say because there was one possible body involved in flyingtraining that there must have been a deliberate decision taken to exclude the sector other thanputting a token representative in the consultative group?

Mr Tippett—Given that Bankstown is the busiest airport in Australia and, as we understandit, the fifth busiest airport in the world, it would seem that it would be logical to consult withoperators at that airport.

Senator O’BRIEN—What about the size of particular training operations? Would that berelevant?

Mr Ward—It is the flying training hub for Australia basically. Bankstown is quite wellknown.

Senator O’BRIEN—But a particular operator—

Mr Tippett—A particular operator such as British Aerospace is not representative of theflying training industry because of the scale of their operation.

Mr Ward—There are other letters that we have tabled that indicate quite clearly thatAirservices was aware of the impact on the flying training industry well before the introductionof LSP. They have said that they were aware that flying training was going to be the mostadversely affected by it and yet the only consultation that we were able to find was British



Aerospace being along at that meeting; if I remember rightly they also invited ANA Airlines outof Japan. I do not exactly know what the impact was going to be on them. We can only butwonder—

Senator O’BRIEN—I think we do know what the impact was on ANA—

Mr Ward—It would be cheaper for them. There seemed to be an awful lot of people whowere going to benefit from the introduction of LSP and very few—one organisation as such—who may be affected by LSP, were at that meeting.

Senator O’BRIEN—You say that your organisation—I am not sure which one it is and youmight clarify that—was in contact with CASA before the consultation. They knew of yourinterests but chose not to include your organisation?

Mr Tippett—No, I did not say that.

Senator O’BRIEN—No, I thought Mr Ward was implying that.

Mr Tippett—Sorry, no. About six weeks prior to the introduction of the charges, we weretrying to gain information, and the point was that six weeks before the imposition of thesecharges we still could not get an answer out of Airservices.

Senator O’BRIEN—Sorry, I did not mean to misrepresent what you were saying; I hadmisunderstood you. On page 3 of your submission, you refer to an investigation of locationspecific pricing in the United States leading to a rejection of location specific pricing. Is thereany more detail you can give us on that particular point in your submission? It may be that youwill want to take that on notice.

Mr Tippett—We might take that on notice. We do have an article which we did not table. Itappeared in an interview with the head of the FAA over there on this very issue.

Senator O’BRIEN—Okay, it would be useful if you could supply that. Thank you. Is itpossible for the committee to be updated on the level of flying training activities since locationspecific pricing was introduced? If it is possible, how is that translated in terms of employmentand turnover for the industry?

Mr Ward—I am an operator at Bankstown airport. I guess the issue is fairly subjectivebecause it varies from operator to operator. Then we had the fuel crisis not that long ago and soon, and it complicated it. I think it is certainly fair to say that the general consensus atBankstown and at a lot of other places I have spoken to—I am regularly in contact withoperators at Moorabbin and Archerfield and at times Jandakot—is that their flying training isdown. There could be other factors, but that is the general feeling. At Bankstown particularly,which is relevant, we have Hoxton Park airport nearby, which does not have a control tower andtherefore does not have the costs, and Camden tower, which is now closing much earlier in theday. There is opportunity there for people to fly at reduced cost at those places. There is nodoubt that we have lost customers to Hoxton Park and Camden operators. They have said,‘We’re simply not going to pay the charges at Bankstown. We’re scraping and saving for our



flying all the time now and we simply can’t afford these extra charges again.’ They are certainlymoving to other airports. There is that sort of evidence there as well, but it is fairly anecdotal.

Senator O’BRIEN—Are you saying that your business has experienced customer resistanceto the price increases and that those customers have stated that they are moving to non-LSPsites?

Mr Ward—Most definitely, yes. Not all of them but a certain number have done it, yes.Almost every operator you speak to says similar sorts of things.

Senator O’BRIEN—How does that impact on employment in the sector, in your view?

Mr Ward—I can tell you now that we have three fewer instructors now than we did prior toLSP. We certainly do not have the increase in business that I was hoping for. I cannot put all ofthat down to LSP, but there is a factor in there. I guess it is very hard to know what the thoughtsare of a customer whom you never got. That is where it is very difficult for us, but the generaltrend is that the growth that should be there is certainly not there at the moment. The feedbackwe get from people—sometimes on the Internet you see the comments made—is that, ‘I wasgoing to fly at Bankstown, but I’m not going to pay those landing fees when I can go out toHoxton Park, for example, and not pay anything there.’

Senator O’BRIEN—How does the sector get its customers? I presume there is some sort ofadvertising. Is there any price advertising, or do people just learn of the pricing factors by theirinquiry?

Mr Ward—Do you mean the prices when we actually advertise?

Senator O’BRIEN—If someone wants to learn to fly, they will look you up in the YellowPages or find out from a friend or something. I am just wondering: is the price difference afactor used in marketing by the non-LSP fields?

Mr Ward—It certainly is now, yes. You can see airports now advertising ‘No landing chargeat this airport’, for example, when it never used to be there before LSP. I do not know howmuch of an effect that has directly on it, but certainly when people look at what the prices arethey say, ‘Gee, it is a lot cheaper to go out to this other airport anyway.’ So some airports arecertainly saying there will be no landing charges. I have seen that at Hoxton Park.

CHAIR—Earlier submissions mentioned a couple of times that a subsidy is given to theindustry. I do not know how it is applied—we did not ask that question—but there is a subsidyof $11 million in the first year and probably $7 million in the second year. Has that not flowedon to your industry?

Mr Tippett—It certainly has. That is how they have arrived at the $6.75 per tonne figure.The $23 figure that Airservices quoted for Parafield was after the subsidies come away.

CHAIR—So, in two years, after the subsidy has gone, you would expect the LSP toincrease?



Mr Tippett—Significantly.

CHAIR—In your letter you invite us to meet at Bankstown. We will give consideration tothat. I think everybody on this committee has interviewed airport flying training industrypeople. I have, at other airports, such as Coffs Harbour and Maroochydore. We have had contactwith Port Hedland. I do not know what they do over there, but there has been some contact. Itmight be useful for the committee to meet there. I am not making any promises, though. But weappreciate the invitation. Like Senator Forshaw, I did have a lot of questions, but your answersare very clear about the sorts of things I wanted to know. I am still trying to get at one thing thatAirservices Australia indicated about location specific pricing. One of the complaints I heardgoes back 18 months. The location specific pricing was originally based on landing and take-off. For a training school just doing circuits, that was going to push the prices through the roof.Airservices Australia have told us that they reduced those circuits so that there is just the singlecharge.

Mr Tippett—That is correct.

CHAIR—That is how it happened. But that was only possible because of the subsidy—thatis what I am coming to. Even though that seems to be a sensible concession, it is only atemporary concession.

Mr Tippett—We believe so. We have had indications that that circuit charge will never beintroduced, but that has been by word of mouth. That came about as a result of a meeting thatMr Ward and I had with Airservices the Friday before the introduction of location specificpricing. Airservices came to the realisation that the additional cost would be unsustainable.

CHAIR—It would mean that you would close down?

Mr Tippett—Yes. We would be out of business.

CHAIR—That is probably as many questions as I can ask at the moment, but it raisesquestions that we will have to ask later of Airservices.

Ms Hennessy—If I might add one little piece of information—as you may be aware,Clamback and Hennessy have been an operator in Bankstown Airport for some 20 years. Ourbusiness is not just flying training but charter and international ferry, which is the movement ofaircraft around the world. I have kept track on computer of the monthly hours in the last five orsix years, and the flying training number of hours has just gone steadily downwards. If we wereoperating on our own LSP within the company, we would have to close down the flying trainingschool. In actual fact, the international ferry side of our business keeps Clamback and Hennessyafloat. We are one of the few flying training organisations that do not rely on flying trainingonly. If we did, we would be going out the door.

Senator O’BRIEN—You say that it has kept going down; is the trend discernible at the pointat which location specific pricing came in or are there other factors?

Ms Hennessy—I would have to go and dig out the figures again but, prior to location specificcharging, we had four or five instructors and now we have two, and that is just in the last two



years. That is on a full-time basis. We have access to part-timers but, in keeping full-timers on,we have gone from five to two.

CHAIR—Thank you very much for your evidence. It is very valuable indeed.

Proceedings suspended from 12.45 p.m. to 1.45 p.m.



EDWARDS, Mr Bevan George, Airport Manager, Coffs Harbour City Council, CoffsHarbour

CHAIR—Welcome, Mr Edwards. We invite you to make an opening statement and then wewill ask you some questions. We have your submission, which I have read. I have also visitedCoffs Harbour and talked to somebody up there about this issue. I did not have time to pursue itas fully as I would have liked, but at least I have some idea of the problem.

Mr Edwards—Thank you for doing that. Council has also asked me to thank you for theopportunity of being here today and representing the regions. That is very important to peopleout there in regional Australia.

Council is in the aviation business, being an airport owner and operator, but we do not professto be experts, particularly in the area of airspace management. Today I represent the city councilbut also I am acting as a voice for our general aviation clients, and I guess, too, the travellingpublic that use our airports and other regional airports. Our submission that we lodged with youin September covered the issue of E airspace and Airspace 2000 and the impact of locationspecific pricing. However, council is interested in the findings on the other issues that theinquiry is looking at as well. Until just recently we had BAe 146s visiting our airport, and eventhe issue of fumes in the cabin was something that we were interested in.

In principle, council supports Airspace 2000. It is a rationalisation or a review of what wehave done in the past and what we can do in the future, and that is healthy. But councilrecommends caution in doing so and using the Dick Smith approach of affordable safetycombined with economic rationalism. We feel that that is fraught with a little bit of danger. Inparticular, we had grave concerns about the operational requirements of class E airspace in theform it was originally introduced, particularly when it allowed a mix of private VFR operationswith commercial IFR operations where there was no means of identification or communication,particularly with the private aviators.

Comments we also received were that pilot procedures on approach to regional airports werea problem with workload and with radio congestion. While we are aware that changes havebeen made for the better, it is now a question of whether they have gone far enough. We believethat a radio is required for aircraft venturing into class E airspace and that a transponder must beused if fitted.

On the issue of location specific pricing, in essence council feels it was a classic case ofputting the cart before the horse. The industry and Airservices Australia were not really ready.There was no mechanism in place to allow us to look at other forms of air traffic services. It wassimply a case of ‘Cop this and wear it sweet; we are not going to change’—and that is mostunfortunate. The Australian aviation industry is a very conservative industry and has a goodreputation, and change, if it does takes place, takes place slowly, and it would have been muchbetter had all the issues been put on the table and the industry been consulted before we startedbeing charged for those services, and they have had an impact on general aviation operations.Certainly, it is a concern for regional centres such as ours and Maroochydore where it also putsour air traffic control services at risk. So we follow this inquiry and the whole matter with greatinterest.



Since we made our submission we have received a draft report from Airservices Australia ona cost-safety-benefit analysis for our tower, and we have responded to that. It has certainly madeus more aware of the issues. It was a very worthwhile exercise. But, in essence, we think that Eclass airspace needs to be looked at—there have been improvements, and they may beadequate—and industry needs to be satisfied with the requirements of E airspace as they arenow.

Location specific pricing was introduced too early and has had an impact on general aviation.Air traffic control is important to growing regional ports such as Coffs Harbour andMaroochydore, and Coffs Harbour in particular because we are in a unique situation at themoment trying to build an aviation industry, trying to broaden our economic base as a regionalcentre, and we are a little bit concerned that Airservices’ approach to assessing the value of airtraffic control services is limited to simply a cost-safety-benefit analysis when there are moreissues at stake than just that. There needs to be a broader investigation, whether that be done byAirservices or others, because the tower to us is more than just a simple safety tool.

The other point comes as a layperson’s opinion of the TAAATS system. I have had theopportunity to visit the Brisbane centre and look at the TAAATS system in operation. I find itvery impressive. It seems a step forward where you have the latest technology being utilised togather information from various sources including aircraft, whether it be through flight plans,position reports over the radio, or through radar information or direct position data fromelectronic equipment in aircraft. It all comes together onto a screen for a controller to get a fullpicture of how this all fits together. I believe that that is an excellent situation where we areworld leaders there and it is something that we need to get right. We have been world leaders inthe past in aviation and this is a tremendous opportunity. That is a layperson’s viewpoint.Certainly we are not experts in the area. Thank you.

CHAIR—Thank you very much. You say that location specific pricing has had an impact ongeneral aviation. Would you like to just spell that out a bit. Have you the situation that we haveheard about this morning in relation to flight training institutions? Do you have flight training atCoffs Harbour?

Mr Edwards—We do. We have four flight training organisations. The aero club was thestrongest for some time. Unfortunately, because a lot of these organisations play their cardspretty close to their chests, particularly when it relates to their financial position, I do not haveany firm information. I know the aero club is in trouble because they have already approachedme about reduced lease fees and the like. Their training throughput has dropped, but by howmuch I do not know. I will certainly have that information because I need that to makerecommendations to council. If we are to waive fees or anything like that we need to have somesort of financial report to justify our doing that. And one other flight training place has closeddown, but that was due to more than just location specific pricing.

So I do not have any evidence that I can give you that relates to dollars and cents on airtraining specifically. However, what I can tell you is that since location specific pricing wasintroduced we have had a 30 per cent decline in GA traffic movement landings in Coffs Harbouron a tonnage basis. We charge a landing fee per tonne and there has been a 30 per cent drop.Whether that relates to location specific pricing or whether some of it might be attributed to a



general downturn in general aviation I do not know, but certainly the decline came about assoon as location specific pricing was introduced.

CHAIR—You said that air traffic control efficiency itself is at risk. I presume that alsothreatens safety. Would you like to spell that out a bit more? You are maintaining the tower, Ipresume.

Mr Edwards—We are maintaining our tower for the present. It is hanging by a string, Iwould suggest. Certainly Airservices Australia feel that it is not warranted. They have indicatedto us that they would like to see it removed. In fact, their draft report recommends that way andrecommends that it be replaced by an air-ground radio operator. We do not agree that that isnecessarily a viable alternative and we do not believe that anything that Airservices put intotheir report on our tower supporting the air-ground service really justified it. There was no realeconomic analysis, nor was there any real justification for it. There was only a cursory mentionof its benefits. We think that that needs more investigation as well.

There are a number of regional ports, particularly on the east coast of Australia, that benefitfrom having a tower. I can only speak in detail for Coffs Harbour. We have a fairly broadvariety of aviation activities at our airport. We have visitations by Boeing 737s as charters. Nextyear we will have the Kendell jet, which is a fairly fast aircraft, right through to pilot training,parachuting and glider operations. That is all part of the package that we provide as a tourismdestination. It accounts for a very complex airspace and we feel that that tower just makes lifethat much easier and safer for our aviation community.We are also working with the CoffsHarbour Education Campus to develop an international aviation college. Australia probablydoes not need another commercial pilot training school, but this college is more than that: it is aone-stop shop in aviation. There is nothing else like it in the Southern Hemisphere. It ismodelled on the Embry-Riddle Aeronautical University in Florida in the USA. If the collegereaches the vision that the campus has for it, it will be a wonderful asset for the region, for NewSouth Wales and for Australia. We have the opportunity to do that because the campus itself isunusual in that it is a university, a TAFE college and a senior high school combined.

CHAIR—Is it related to Southern Cross?

Mr Edwards—That is right. It is the Southern Cross University, but we call it the CoffsHarbour Education Campus because it is actually a partnership between Southern Cross andTAFE and so on. It is just over the hill from the airport so there is a very good tie-up there. Itwill be a one-stop shop for aviation.

CHAIR—It is a new campus, isn’t it? I was there the other day.

Mr Edwards—That is right. It has been open for only a few years; it is quite modern. It willprovide languages, management and technical training for aviation mechanics. This campus willbe able to provide anything to do with aviation as it builds up. Just recently we had someKorean students come through who were taught something as simple as baggage handling andcheck-in and using the computerised reservation systems. We were able to do that through theuniversity and at our airport as well. The potential is tremendous.



We hear talk of a decline in aviation pilot training. We have had a new player come to ourairport as a business partner to the campus to provide the pilot training part of the college, andthey would see the tower as a vital part of training. Maybe one day we will even be able toprovide air traffic management training.

Our general aviation community is divided about the benefits of the tower. With locationspecific pricing, our GA people generally say no, that they cannot afford the tower and that theydo not want it. Half of the GA community say that it chases people away, that even if it werefree it would chase people away. The other half of the GA community say that it is a benefit,that it is good for pilot training and a great environment in which to learn to fly in controlledairspace and so on.

There is a feeling with some pilots that they bypass Coffs Harbour simply because there iscontrolled airspace and that gets all too difficult for them. We argue that if all these otheractivities were going on and these particular pilots could not cope with controlled airspace, theywould not be able to cope with uncontrolled airspace either and it would probably be better forthem to fly on and visit another port. That is our position with respect to the tower.

Senator O’BRIEN—I was going to ask about the impact on the airport of the introduction oflocation specific pricing. You have dealt with that in part, but I just want to be clear about onething. You said that until recently the BAe146s had been using the airport. Has their departureformed a substantial part of this 30 per cent decline in GA traffic movement?

Mr Edwards—No, the two things are unrelated. If anything, the departure of the jet servicefrom Coffs Harbour has had a negative impact on the cost-safety-benefit analysis for the tower.The general aviation aircraft tend to be non-jets anyway. That is not strictly true: we have hadVIP jets and a few private jet aircraft come in. But generally, no, there is no connection betweenthe two in my opinion.

Senator O’BRIEN—Sorry. Yes, you did say GA traffic movement, so that would beirrelevant. In terms of the other class E space issue, I think you said you had a betterunderstanding of the issue since you put your submission in.

Mr Edwards—That was referring more to location specific pricing and the impacts of thetower. As far as the class E airspace is concerned, it seems to have gone fairly quiet at themoment and I am not too sure what the situation is, but I know that there has definitely been animprovement compared to when it was first introduced. The only area I am not certain about arethe radio procedures now for commercial aircraft.

Senator O’BRIEN—Thank you very much, Mr Edwards.

CHAIR—Were you here before lunch when the Bankstown Airport Users Group gave theirevidence?

Mr Edwards—Yes, I was.

CHAIR—Were you a little alarmed, when I asked them to spell out a bit the whole locationspecific pricing and the basis for that, to hear that at the moment the reason why the single



charge is able to be applied to training schools, even though they are doing multiple circuits, is afederal government subsidy of $11 million, reducing in the second year to $7 million and thendisappearing altogether? Do you have a concern that that location specific pricing may in factjump considerably once that subsidy has gone?

Mr Edwards—Yes, I do have a concern in that regard. I was aware of the subsidy and I wasaware that it had been reduced to $7 million this year. I was not aware that the subsidy waspaying for the reduction in charges for circuits. That is alarming.

CHAIR—I was not aware, and we will probably ask Airservices to confirm that or spell itout for us, but it certainly raised questions for me.

Mr Edwards—Yes. The other concern I have is that it is very difficult to get a handle on thecosts for air traffic control services. We have looked at figures for Coffs Harbour; we do havefigures we have extracted from the most recent safety-cost-benefit study. We have looked at thecost that we thought it could be provided for if it was done privately, and again there is noexample in Australia to go by so we are just going by our best estimates based on overseasexperience. Based on our traffic movements for commercial aircraft and our passengerthroughput at the terminal, we feel that the tower could probably be provided at our airport forabout another $1.50 per passenger movement, and a substantial reduction to the general aviationcommunity as well. Having talked to the aviation industry, to the regional airlines and to generalaviation, that appears to be a fairly satisfactory compromise. But whether Airservices Australiacan provide that service at that price we do not know. We are very happy with the service we getfrom Airservices Australia. I know it was mentioned this morning that Airservices staff havebeen quoted as saying that they do not want to provide service at that end of the market, and thatis certainly the message we are getting too. But the service they do provide is an excellent one.A regional airport is a community within the community; it is almost like a Peyton Place.Anybody who works there has no choice—they have got to be part of that community. TheAirservices air traffic controllers do an excellent job of being disciplined in what they do butalso in dealing very well with the people on the ground, in the air or whatever. So certainly wedo not have any complaints about the service that we get.

CHAIR—I do not know whether you want to answer this but I will ask it and you can tellme. Coffs Harbour Council operate the airport. Is it a profitable operation?

Mr Edwards—It is. The airport is run as a business unit of council. We turn over $2 milliona year. We have a financial plan that projects out to 15 years. We are making sure that anymoney earned by the airport goes back into the airport for asset replacement and for businessdevelopment. We have recently upgraded our main runway and we are upgrading the terminalbuilding at the moment.

We are one of the few airports that have a marketing budget. You do not market airports—people do not visit airports unless they are in the general aviation industry or whatever—but wemarket our destination and try and encourage people to fly to Coffs Harbour for a holiday or forconferences instead of flying over the top of us and going elsewhere. We are very active in thatregard. We run it on business principles. The council does see it as an economic generator, notjust for the city of Coffs Harbour but for the region, and is really working very hard with thecampus to get this college up and running.



CHAIR—That is a very good concept. I presume there are flow-on effects from having theairport there and promoting it, such as tourism and all of the benefits that brings.

Mr Edwards—Most definitely. We have had a healthy increase in passenger numbers overthe last 10 years. From circumstances beyond our control we have had a bit of a lull in ourmarketing over the last 12 months. We are recovering from that now, and that is reflected in thenumbers, the throughput of the airport, so marketing is a very important component of that.

CHAIR—My last question is a dorothy dixer, but nevertheless an important one. You say atthe end of your submission that regional aviation is vital to the continued growth of regionalAustralia and that these areas should not be marginalised; they should be helped, et cetera. Thiscommittee would agree with you very strongly—we are the rural and regional affairs andtransport committee—but if you want to say a little more about that in terms of Coffs Harbouras a regional centre we would be happy to have that on the record.

Mr Edwards—Excellent, thank you. I appreciate the opportunity. As I said before, CoffsHarbour council sees the airport as an economic generator and certainly the businesscommunity and, I think, the silent majority of the city and the region share that view. An airportis important for different reasons at one centre compared to another; in particular, at CoffsHarbour it is tourism and business development. We believe that we are very quickly becomingthe commercial centre on the mid-north coast, although Port Macquarie might disagree with uson that. We see the airport as a vital link to Sydney and now we are working with SunstateAirlines to open up south-east Queensland as a marketplace for us. So we are out there activelypromoting our destination and its qualities.

Coffs Harbour was a bit of a well-kept secret as a holiday destination. We are starting to workto change that and, yes, that is where the airport becomes vitally important. There are peopleflying to other parts of Australia or even overseas who could fly to Coffs Harbour. There is alsothe trend now for businesses to hold conferences out of the capital cities: come to CoffsHarbour, have a round of golf, do your business, go and do some fishing, and fly as well. So,yes, it is important for us. And if we can build on the aviation college and the other aviationbusiness that that will bring, if we can make Coffs Harbour airport a centre of excellence inaviation, that has got to be great for Australia as well as for Coffs Harbour.

CHAIR—Are there any further questions?

Senator O’BRIEN—No. It is good to see business has got more time than us to go on thosesorts of trips.

CHAIR—Yes. We might need to go to Coffs Harbour—who knows.

Mr Edwards—We will make you very welcome.

CHAIR—Senator Forshaw probably visits fairly regularly. He has not come back to thehearing yet. Thank you very much for your evidence. It is very valuable to us. It was originallysome time ago but your problem in location specific pricing was one of the motivations forfinally getting this inquiry going.



Mr Edwards—That is appreciated. We find it is valuable that we can come from a centre likeCoffs Harbour, as a local council, and be represented in the national capital on a matter ofnational significance. That is tremendous.

CHAIR—Good. Thank you very much.



[2.16 p.m.]

DUMSA, Mr Adrian Gerard, Head Air Traffic Controller, Airservices Australia

FLEMING, Mr Andrew Selby, Chief Financial Officer, Airservices Australia

ROBERTS, Mr Craig, Assistant Chief Officer, Aviation Rescue and Fire Fighting,Airservices Australia

SMITH, Mr Bernard Ross, Chief Operating Officer, Airservices Australia

CHAIR—I welcome Airservices back again. We invite you, if you wish, to make an openingstatement in terms of the evidence that has been given today. You may want to do that—it is upto you—but we certainly have lots of questions.

Mr Smith—Thank you, Senator. It might be worth while just clearing up a couple of issuesthat did come out during the day. A number of the presentations referred to AirservicesAustralia withdrawing from ‘that end of the market’. That really is valid only in respect of theCAGRO operation. I think there is a bit of confusion between CAGRO and the smallertowers—

CHAIR—For the sake of the committee and the record, you might like to give us a bit of anoverview of the way your organisation is split up, because that was all new for us today—it wasnew to me, anyway. So you might like to do that as part of your answer as well.

Mr Smith—All right. Perhaps I should do that first to set the context. In terms of thestructure of the Commercial Operations Group which obviously carries out the operations of theorganisation, we have the three major business centres and then the terminal operations group.The terminal operations group contains within it the gap towers—Bankstown, Parafield,Jandakot, et cetera—plus the smaller control towers. There was a suggestion at one stage thatwe get involved in the CAGRO style of operation. CASA did approach us. Our boardconsidered that matter and took a decision not to operate in that end of the market. That doesnot mean, however, that that same rationale applies to small control towers. We will continue tooperate those small control towers until a proper, appropriate and thorough review has beendone of the operation, and any withdrawal will be with due regard to safety which, as I havesaid earlier, is the primary consideration. Having said that, many of the smaller control towersare very unprofitable, and many of them—

CHAIR—They are profitable?

Mr Smith—Unprofitable, yes. And even if they were marginally costed—which wassuggested at one time—and we took away all the costs of the overheads of the organisation,many of them would still be very loss making. They are not just losing a bit of money; they arelosing a great deal of money. There was a statement made by one of the presenters that we werereducing HF outlets. I would just like to clarify that. The HF outlets are being reduced from 17in number to 16 in number initially, and where we go ultimately will be subject to future review.No decisions have been taken along those lines at the moment. If I could return to the CAGRO



issue for a moment, a further statement was made about it being a DTI service. It is not a DTIservice; it is advice to pilots of surface conditions and some reference to traffic in the area.

There was also a statement made that CASA has simply picked up current operations andreproduced those in NPRMs. I do not think that is quite the case. We have actually put in a 48-page submission suggesting a great many changes. So I do not think that is a valid statement.We are also aware of the administrative issues regarding local specific pricing. We are bringingin this year a three-tiered arrangement as an option for our clients so that they can, if they like,choose to pay a one-off charge for an entire year. They can then fly anywhere they like, and wewill base that charge on the previous year’s operation. The safety net is that, if they do not wantto, they can simply continue doing what they are doing at the moment—paying the LSP charge.There was also mention of a proposal to charge for SAR time. That was considered at one stagebut rejected on safety grounds. We have no intention of charging for the lodgment of SAR time.

CHAIR—What is SAR time?

Mr Smith—Search and rescue time. The Bankstown Airport Users Group also referred to arequest to turn the Bankstown aerodrome into an MBZ during the period of the fieldcontamination issue. We did consider that very carefully. The numbers simply did not stack upon safety grounds. The reduction in aircraft movements at Bankstown at that time wasnotionally thought to be significant, but when we reviewed the hard numbers it was not assignificant as first thought. We did not believe that we could put up a sensible safety case, so wedeclined. I think they are the main points for the moment.

Senator O’BRIEN—Firstly, I will go back to a matter I raised with you this morning. Nowthat I have the written draft that you were reading from this morning, Mr Smith, I will quoteback to you. On page 7 you said, and I am assuming this is what you said this morning:

As a postscript, Senators would be interested to know that in 1999 in a landmark judgment the High Court ruled thatAirservices is entitled to use network pricing, that our charges are not in the nature of taxation and that statutory liens areconstitutionally valid. Notwithstanding this High Court decision on network pricing, Airservices, its major customers andthe government support the concept of location specific prices as a means of encouraging efficiency and the best use oflimited resources.

The question I asked you this morning was: in light of that decision, was it the government’s policy to retainlocation specific pricing? I think you said that it was not a matter for government; it was purely and simply anAirservices decision. Are you saying that the government has made no decision on this matter subsequent tothis decision?


Senator O’BRIEN—Presumably the government is well aware of the decision?

Mr Smith—Yes, the government is aware of the decision by the High Court.

Mr Fleming—Maybe I can add to that. The Compass case and the Federal Court actionpending were contributory reasons why Airservices was considering location specific pricingbut they were not the only reasons. The other reasons were to do with creating more equity inour charging principles, eliminating the inequity of the avgas being charged to general aviationusers who were not using Airservices services at all and creating a much better nexus betweenthe costs and activity at an airport with the price that was being charged at that airport. The



Federal Court action was an issue for us at that time but it was not the single overriding reasonwhy Airservices was considering putting in location specific pricing. It dated back to reportsfrom Hilmer, before that and government policy back in 1996

Senator O’BRIEN—It is a fairly significant impetus, isn’t it, a court decision to say youcannot use a scheme?

Mr Fleming—It certainly made us more keen to implement location specific pricing at thetime, but really that case came up after the decision to implement location specific pricing wasbeing talking about. The original—

Senator O’BRIEN—Not after the decision was being talked about; after the possibility of itsintroduction was being talked about?

Mr Fleming—That is right. Back in 1996, we released a discussion paper saying what thepotential costs of location specific pricing would be at the different ports and we consultedwidely with customers after that right through until June-July 1998, when location specific forterminal navigation was introduced.

Senator O’BRIEN—The law change on network pricing would have to be seen as asubstantial factor, wouldn’t it?

Mr Fleming—It was certainly a factor. As the case was proceeding, it was really, I suppose,supporting the views of a lot of stakeholders that network pricing was not appropriate, in that itdid not take into account the inequities and cross-subsidies within that program. But, as theHigh Court finally ruled, it was not sufficient to enable our charges to be classed as taxation andtherefore we were still able to. But it was running in parallel, if you like, with the impetustowards putting in place a fairer pricing structure.

Senator O’BRIEN—Sure. But if you take away the court decision-and we had a suggestionabout this this morning-there are a variety of other measures or modifications to the systemwhich existed prior to location specific pricing which might indeed be more equitable and lessdamaging to certain aviation operations and environments which, in the context of the decision,would not have been considered. Isn’t that a fair comment?

Mr Fleming—It is hard to go—

Senator O’BRIEN—You could not consider anything based upon some sort of universalscheme if the courts were going to strike down, could you?

Mr Fleming—It is hard to go back and say, ‘What would have Airservices have done if thatcourt case had not been running.’ It is certainly my understanding that there was—

Senator O’BRIEN—But isn’t it a fair and fairly straightforward proposition to say that ifyou believe the courts are going to strike down any universal scheme then you will rule anysuch alternative out in your considerations? Isn’t that a fair comment?



Mr Fleming—It is a fair comment, but you have to look at the timing of that court case.What I am saying is that the impetus towards putting in place a fairer pricing structure startedprior to those decisions being brought down.

Senator O’BRIEN—I do not think we are talking about different things, Mr Fleming. What Iam saying is a fairer pricing structure might have included some modification of the existingscheme if it was felt that that existing scheme was legal.

Mr Fleming—It might have done. I cannot speculate.

Senator O’BRIEN—Okay. In terms of the earlier submission that you made to thecommittee, on page 4 you advised that you are continuing to work with the industry to progressthe low level airspace reform program. I think you have given us somewhat of an update thismorning on how that is proceeding. In the light of evidence that was given after yourpresentation this morning, is there anything further you wish to add on that

Mr Smith—No, I think that the process is going on as we speak. A working party has metrecently and I think that is the third meeting that that party has had. There is general alignmentin the industry on the model and we are getting on with working through the issues and themitigations for those issues in a fairly disciplined manner.

Senator O’BRIEN—What precisely is low level airspace, for the purpose of yoursubmission?

Mr Dumsa—Low level airspace, by definition, is any of the airspace that is currentlyclassified as class G airspace and any of the airspace that is currently classified as class Eairspace.

Senator O’BRIEN—The consultative process has gone on and the implementation of yournew arrangements is still to come. Is there anything further you want to put to the committeeabout that?

Mr Smith—That consultation process includes a very comprehensive representation from theindustry, from the light aircraft end of the market up to the airlines and including the highperformance operators in between, such as the Flying Doctor Service or charter operators. Weare making sure that we get all the input we can and make the right decisions to implementwhatever changes come about out of this process in a disciplined fashion.

Senator O’BRIEN—All the input that you can?

Mr Smith—Yes.

Senator O’BRIEN—Thank you. You said in your earlier submission that your board hasapproved an approach that will see all class G traffic related functions absorbed into TAAATS.It seems that there are some interim arrangements taking place which you have dealt with. Wehave described it as DTI. You are saying it is not that.



Mr Smith—Sorry, Senator, could I clarify that? I was saying only in relation to the CAGRO.

Senator O’BRIEN—Can you outline for the committee precisely what all of those functionsare, or at least those where absorption has already occurred, and describe how TAAATS willdeliver enhanced services based on increased rate A usage.

Mr Dumsa—We have been pursuing a low level airspace reform program over the lastcouple of years. On the way to getting to that reform program we took the decision, because ofTAAATS commissioning, to absorb the provision of low level traffic information services intoTAAATS to use the technology that is available in that machine. We embarked upon a three-stage program for that transitional arrangement. The first stage was to take the low levelairspace just to the west of Cairns into the TAAATS environment in December of last year. Thathas occurred. The second stage was to take the low level airspace along the east coast ofAustralia, basically south of Ballina, as far south as Bass Strait into TAAATS progressivelyfrom 23 March through to about two or three days from now. The third stage is to take theremaining low level airspace in Australia into TAAATS progressively from 15 June through toaround October of this year. The safety enhancements that accrue as a result of that transition,the so-called on again, off again radar services on the east coast of Australia, are being providednot on a workload permitting basis but on a full-time demand basis along the east coast. We arenow providing services in low level airspace based on the provision of radar services. We willcontinue to do that. I can be more technical if you want.

Senator O’BRIEN—I would appreciate that. Perhaps not now, but if there is somedocumentation you can supply to the committee, that would save time and fill the void ofinformation that we may have at the moment.

Mr Dumsa—Sure.

Senator O’BRIEN—Separately, you have also said that these arrangements would allow forthe cost of service provision under class G to be reduced. I wonder if you can expand on exactlyhow savings will come about and what sort of quantum you are looking at?

Mr Dumsa—The cost of service provision in low level airspace prior to this interimarrangement was around the $38 million mark. The cost of service provision after the interimarrangement will be of the order of $20 million. So there is a net $18 million worth of savings.That accrues from the reduction in the number of flight service officers providing directivetraffic information. I do not have the exact numbers but as a guideline we will be moving fromservice being provided by 160 flight service officers and about 40 support staff to the servicesbeing provided by an additional 40 controllers using the capabilities of TAAATS

Senator O’BRIEN—Thank you for that. On location specific pricing, firstly, can thecommittee have the a copy of the structural review of air services undertaken by the Departmentof Transport and Regional Development and completed in March 1998? As all changes we arelooking at here flow from that process, it would be very helpful to the committee if we couldsee what the starting point was and what the original basis for change was as well.

Mr Fleming—I think we would need to refer that to the department.



Mr Smith—That would not be our document.

CHAIR—But we would like it.

Senator O’BRIEN—I think we would. If there is some problem with it being on the publicrecord I am sure the committee would deal with that in the appropriate way.

Mr Fleming—Yes.

Senator O’BRIEN—Can you tell me whether CASA has developed all the operating andlicensing standards for air traffic control operations required if these services are privatised?

Mr Smith—That process is ongoing at the moment. NPRMs have been released over the pastmonth or so for some aspects of the new regime, and they are currently out to industry forcomment at the moment.

Senator O’BRIEN—So the answer is that they have not been developed to a final standard;there are some drafts, at least of some parts of the standards.

Mr Smith—Correct.

Mr Fleming—Yes. There is a consultation period that I think finishes in mid-May. But theprogram is still to have that resolved by the end of June. However, I think there will be somefurther discussion around the implementation of those standards and regulations taking placeperhaps over the following 12 months.

Senator O’BRIEN—Are those draft documents available to the committee or able to bemade available?

Mr Fleming—I think they are publicly available.

Mr Smith—They are publicly available on the Net.

Mr Fleming—Yes, on the web site.

Mr Smith—I think we would just need to clarify the licensing.

Mr Dumsa—If I could give you some clarification, CASA has put forward five notices ofproposed rule making, comments for which were required by 26 April. One related toaerodrome rescue and firefighting services, the second to ATC licensing, the third to ATStraining organisations. The fourth was for aeronautical telecommunications service providers,and the fifth was for air traffic service providers. The one missing link is the airspace designcriteria, part 71 to the Civil Aviation Regulations. We do not know when that will be available.But CASA’s program is to have that finalised by the end of June, beginning of July.

Senator O’BRIEN—On page 5 of your submission you say in relation to location specificpricing:



Whilst this is an indicator of priorities for improvement it also tells us that care must be exercised in implementingcompetitive forces lest the adverse impact on regional and isolated communities overwhelm the efficiency gains.

Can you explain to the committee how you go about a cost-benefit analysis such that you can measure theefficiency gains on the one hand and the negative impact on the regions on the other?

Mr Smith—The cost-benefit analysis does not in itself take into account the economicimpact on the local community. And we are talking about airports here, I presume. I have notbeen able to find the quote. This is small towers, I guess. Okay, yes, so that still applies. Theprocess is such that once the cost-benefit analysis is completed that gives us an indication ofwhether we ought to proceed with withdrawal or otherwise. Then we go out into a furtherconsultation process, because the cost-benefit analysis in itself needs some input from localstakeholders. But then we go out and we look at what impacts there might be and we use themas a factor in determining the final outcome.

Senator O’BRIEN—Does that mean that while the budget papers have the subsidies tocertain airports finishing next year, it may well be that in the future we will have locationspecific pricing but with ongoing subsidies to a number of locations—such as Launceston, forexample?

Mr Smith—We do not know what will happen in the future, but our budget is our best guessat the time we put the figures together. What we do know is that the government has said thatthe $11 million reduces to $7 million during the coming financial year.

Mr Fleming—I suppose we should remember as well that when location specific pricingcame in, in July 1998, there was a subsidy for that year of $11 million and only $2 million forthe following year. That $2 million was subsequently increased to $11 million because theprogram of putting in regulations for the introduction of competition was delayed. The subsidywas really being put in place to allow that framework to come into being and allow propercompetition.

Senator O’BRIEN—So it has been delayed basically only because of the delays inimplementing the new regulatory arrangements.

Mr Fleming—That is correct.

Senator O’BRIEN—Otherwise the current government decision is that it will be phased outvery quickly.

Mr Fleming—That was the original intention of the subsidy—to get through that transition.

Senator O’BRIEN—And the government is not considering any other options?

Mr Fleming—We do not know.

Senator O’BRIEN—Airservices had a plan to sell or close down navaids, and that wassubsequently withdrawn, possibly because of a lack of support. Was that also based on adetailed analysis of the costs and benefits of that plan, or was it just a response to negativesubmissions from the regions?



Mr Smith—I think we ought to clarify first what actually happened there. Airservices had acouple of issues in relation to navaids. The first was that, as a general thing, many of theorganisations using the navigation aids were not paying for them. They were being paid for bypeople who were not using the navigation aids, so it was inequitable. The second was that wehad a feeling that a number of these aids probably were not being utilised a great deal. So weput together a concept for shutting down navigation aids, and we put that concept out forcomment. The comment was quite significant and very, very negative, and it became apparentto us that there was not a great deal of sense in proceeding in that manner with the closure ofnavigation aids. But I do highlight that the process was a valid one. The process was that we putout the concept, we told people what we thought ought to be done, and we invited theircomment as to whether we ought to go ahead or not. They said no—very clearly—so we shutdown the program.

Senator O’BRIEN—I seem to recall dealing with that matter at estimates not too long ago.

Mr Smith—Indeed.

Senator O’BRIEN—Is there a document which sets out the basis for the withdrawal of theplan, or was it a simple decision not to proceed?

Mr Smith—It was a simple decision not to proceed. We did advise our customers andstakeholders through a number of means, but it was a pretty simple decision.

Senator O’BRIEN—Will the same approach be taken to the location specific chargingregime for air traffic control and fire services?

Mr Smith—Are we talking historically here?

Senator O’BRIEN—We are talking about the cost benefit and impact on regions approach.

Mr Smith—When location specific pricing was originally introduced?

Senator O’BRIEN—As it is to be applied, for example, to air traffic control and fireservices. In other words, after you go to consultation, if there are a lot of negative responses,will you withdraw it?

Mr Smith—Location specific pricing as a concept has been around for a long period oftime—a couple of years. We are now talking about looking at some airports that we believe donot warrant a service because the levels of traffic are insufficient to require that sort of a service.So it is not an issue of considering LSP as a whole. We have looked at that in the light of thedecision by the courts, and we have decided that, on balance, the contract process is a good one.It gives us a lot of exposure to our customers. It gives them an opportunity to tell us what theythink. So it is Airservices’ intention to continue with location specific pricing on a contractbasis. It is not a matter of considering whether to shut down LSP as a whole. Rather, we arelooking at individual airports—you know that Coffs Harbour and Archerfield are under reviewat the moment. We have done cost benefit analyses on those airports and have then gone backout to stakeholders, customers, people who pay the bills, people who use the airports, et ceteraand said ‘What do you think about this?’ That is the process we are going through.



Senator O’BRIEN—On page 9 of your original submission you state:

Airservices acknowledges that there are segments of the regional and GA operators who in general terms have beennegatively impacted on by LSP charges.

Can you tell me how the assessment was done that led you to make this statement, and can the committeehave a copy of any formal documentation on that, please?

Mr Smith—Senator, much of that is anecdotal—customers saying to us the sorts of thingsthat we heard this morning in presentations in this room.

Senator O’BRIEN—So no formal work has been done on that—it is just from the responsesthat you received?

Mr Smith—On the economic impacts?

Senator O’BRIEN—On the economic impact of the LSP charges.

Mr Smith—No, that is quite correct.

Senator O’BRIEN—Can you give us any more detail about the segments of the. regionaland GA operators that have been affected—rough numbers on how many were involved andwhat regions they operate in?

Mr Fleming—I think this is going back more to when location specific pricing was firstintroduced.

Senator O’BRIEN—No, that is not what you were saying. I am just trying to find it in yoursubmission.

Mr Fleming—Do you mean: what are we doing now?

Senator O’BRIEN—I have found it. The sections are headed ‘Impact of Location SpecificPricing’ and ‘What is Airservices doing for industry sectors negatively impacted by LSP?’. So itis post the introduction.

Mr Fleming—All I was going to do was to take us back and say that that was principallywhy we put in place the cap of $6.75 at the time. The government recognised the issue as itrelated to regional and GA operators and therefore funded the subsidy to mitigate that impact.Subsequently, we have been discussing with the users of those airports ways in which we canrefine the service or work with them to perhaps reduce our costs even further in those areasbelow the cap price. In fact, from next year in Alice Springs we will be able to reduce the priceto below the cap price of $6.75. Work has been going on since the introduction of LSP to try torefine the services to get the cost to a level that the customers are prepared to pay.

Senator O’BRIEN—So work has been done to identify the segments of the industry that arenegatively affected—is that what you are saying?

Mr Fleming—Negatively affected at various different ports.



Senator O’BRIEN—So there is some work that can identify where the negative effect is?

Mr Fleming—The Bankstown users group that we heard from this morning was specificallyformed as a result of putting in LSP.

Senator O’BRIEN—I am asking if Airservices has done that work, Mr Fleming.

Mr Fleming—We had done work up to the introduction of location specific pricing, and thatthen prompted the introduction of the subsidy at that stage to mitigate the effect.

Senator O’BRIEN—Which you have just told us was basically to be short-term and wasonly extended because of the difficulty in implementing the new regulatory regime.

Mr Fleming—The government at that time were not prepared to make an open-endedsubsidy; they put a time limit on it.

Senator O’BRIEN—So there are no long-term strategies in place to deal with the problem ifit persists?

Mr Fleming—The long-term strategy is to continue to work towards getting the regulationsin place so that everyone is clear what the regulations and standards for a tower should be. Thegovernment policy is to introduce competition and let the marketplace decide what the priceshould be. That may or may not include an ongoing subsidy. We do not know that.

Senator O’BRIEN—It is work in progress. Is that what you are saying?

Mr Fleming—Yes.

Senator O’BRIEN—There is work being done on it, but you have not done any work toidentify the areas you need to address?

Mr Fleming—We think we have worked with our users over the last couple of years. Wehave reduced the costs where we believe we can. We believe we have most of our costs to alevel that does not enable us to cut the costs further. As you know, we wrote down the value ofassets at some of the lower ports. In fact, at ports such as Archerfield, the costs are now down toaround $1.6 million, which is represented by over a million dollars of staff costs and half amillion dollars of other allocated costs, but the user fees being generated at Archerfield arearound a quarter of a million dollars, the balance being made up by the subsidy. We believe wehave worked to get the costs down to a level where, unless there is a major change in service,we cannot reduce them further.

Senator O’BRIEN—Yet Mr O’Dea this morning was extremely critical of your costings andI would assume you were aware of his views before.

Mr Fleming—I was not aware of his view before, but I listened with interest to what he said.Our cost allocation models and principles were developed with Arthur Andersen three or fouryears ago. Since then, they have been refined by users within our organisation—technical



people, not accountants. All of our costings have been exposed and vetted by the ACCC eachyear when we do our pricing. So I am a little bemused by some of his comments, especiallywhen, as I say, the vast majority of the costs at these ports are directly located at the port andgenerated by staff costs.

Senator O’BRIEN—There was evidence that the Cairns costs would be inflated by costs notrelated to the Cairns airport.

Mr Fleming—I cannot comment specifically on the Cairns airport.

Senator O’BRIEN—You can rule out that that is the fact, can you?

Mr Fleming—Absolutely, yes. They are not inflated by any other costs. Clearly, where thereare costs that are allocated, one could derive different ways of allocating those costs.

Senator O’BRIEN—But whether or not you have allocated them, the point being made isthat, if there are staff based at Cairns who actually perform a part of their work elsewhere in anoperation which is not directly attributable to Cairns airport, can you rule out that those costshave been attributed to Cairns airport?

Mr Fleming—The allocation of those costs is done by the people at Cairns airport inconjunction with management in Brisbane.

Senator O’BRIEN—Yes.

Mr Fleming—I do not understand why they would have inflated the costs. I cannot rule outanything, but I would be very surprised if that had happened.

CHAIR—I forget who it was now, but we were being told that in fact staff working at Cairnsairport are doing work such as director of traffic information for the tablelands and west of thetablelands. Therefore, location specific pricing for Cairns included an element which was notrelated to the Cairns area. That was a query about your figures, if they are Cairns locationspecific pricing, saying that they include some elements which do not relate to Cairns.

Mr Fleming—I can look into the figures again, but I do not believe that is the case.

CHAIR—It is not fair probably to ask you off the top of your head, but if you could look atit.

Mr Fleming—We do have a very thorough and sophisticated process of allocating costs tothe services that are provided. In that case, the costs of those employees should be allocated tothe en route service that we are providing, not the terminal navigation service at Cairns. I willcertainly look at that again. I never say we are perfect, but I would be very surprised if that werethe case because this goes through a very thorough vetting, quality control process and, as Isaid, has been scrutinised by the ACCC each year we put up our prices.



Senator O’BRIEN—So if it was found in the case of Cairns that these costs have beenincluded, does that call into question the whole process? You have just described how rigorousthe process is and how thoroughly it is checked, but if it is the case that costs which ought notbe contributed to location specific charges for Cairns have been, doesn’t that call into questionthe whole process?

Mr Fleming—It would, but it is entirely hypothetical.

Senator O’BRIEN—It is; I understand and accept that.

Mr Smith—The principle is that if we are putting the cost against Cairns we would also beputting the revenue against Cairns, so it would be a business decision. I have to say that themodel we have—whilst I have heard a lot of criticism about the support group and thecommercial operations group—overall creates a very healthy tension in the organisation, suchthat this group in Cairns are now fighting for their piece of the turf, if you like. They do notwant to be allocated any more costs than they have to be because that does not make them lookgood. Similarly, the other side of the organisation who are supplying the service want tooff-load as much as they can. So we have a good tension that allows us to really expose all thosecosts and make sure that they are allocated in the right area. As Mr Fleming says, we do notclaim absolute perfection, but I do believe we have a very sound model.

Senator O’BRIEN—For example, if there were navaids—I am again being hypothetical—serviced by Cairns and they wanted to get rid of them but the decision had been made that theykept them because they had to stay and that was the only base to service them, they would becosts which potentially could be loaded in by decision of the government or Airservices and nota decision of Cairns, and rightly so.

Mr Smith—That would certainly not be a government decision; it would be an Airservicesdecision. We would look at the particular circumstance. We do get down to some very technicalarguments about who in fact is using a navigation aid—for instance, you would never have anyidea who was using an NDB or a VOR beacon. But we look at those things and say, ‘What isthe likelihood? Let’s find a sensible method of splitting the costs.’

Senator O’BRIEN—I have some more questions, Mr Chair, but someone else may like toask some.

CHAIR—If you would like a break, maybe I could ask a couple that relate to a slightlydifferent matter and then give you a chance to come back. I wanted to go to the issue of safety.Remember we raised that in a general sense this morning in terms of the tension between safetyand competition policy, et cetera. As an example of that, the firefighters union tabled this letterfrom Airservices Australia—specifically, from Craig Roberts—to Mr Griggs of the firefightersunion. It was to do with the dispensation for BAe 146 aircraft which allowed a reduction fromcategory 6 firefighting services to category 5 firefighting services—category 5 is a lower levelof firefighting service—at particular airports.

I find it interesting that the reduction in the firefighting service for the same aircraft really hadnothing to do with air safety but had everything to do with whether or not there wereinternational operations at that airport, et cetera. So the BAe flying into Hobart would attract a



category 6—I think it is now a category 7—firefighting service. The same aircraft flying intoRockhampton or Mackay or Launceston would be allowed to attract a category 5 level offirefighting service. It seems to me that that is an example of downgrading safety related tocompetition and other factors and had nothing to do with the objective of applying safety to thataircraft wherever it lands. What I am getting at is: in light of that debate about competition andsafety, would you like to comment on that letter and that example?

Mr Smith—Chair, I would like to introduce our assistant chief fire officer, Craig Roberts andallow Craig to answer the questions.

CHAIR—Yes, certainly.

Mr Roberts—The classification of the 200 series aircraft had nothing to do with whether anairport is an international airport or a domestic or regional airport. It had to do with a review ofthe firefighting resources that were required to deal with the 200 series aircraft. The fact thatHobart has a different category of service compared with Launceston has nothing to do withthat aircraft at all. The size of aircraft going into Hobart is larger than the size of aircraft goinginto Launceston. Hobart has regular public transport at the 767 size. For that we need to have acategory 7 fire service provided at Hobart. We also get 146 aircraft and a whole heap of otheraircraft but because we are already a category 7 that is the service that is provided at thatairport. We do not structure it down less than that. Launceston, on the other hand, does not havethe 767 regular public transport aircraft flying into its operations. Therefore, the category forthat airport is less. It is currently a category 6. That is no different from a 146 aircraft flying intoSydney. Sydney happens to be category 9 because of the 747 aircraft. It had nothing to do withthe type of airport it was. It is purely to do with the size of the largest aircraft utilising thatairport.

CHAIR—Thank you. I understand that.

Senator FORSHAW—I understand that, but what about the regularity of flights into and outof airports? How is that factored into assessing the level of fire service that should be available?Some airports—and we have heard about Bankstown—have a lot of activity but they are not737s or BAe 146s. Other airports might have a reasonably sized commercial jet, Dash 8s orequivalents but may have only a couple of flights a day at peak times.

Mr Roberts—The provision of services for aviation risk in firefighting is based on ICAOand it is based around regular public transport. So it does not deal with freighters or necessarilycommercial or single owner or training school type aircraft operations. It is based aroundregular public transport. The criteria for airport fire services within Australia is based on afigure of 90 per cent. We endeavour to provide services at airports to cover 90 per cent of thepassengers on board. That criteria is currently under review by CASA and it is a CASA issue asto how that gets changed. We actually provide greater than that. We are providing at themoment about 92.6 per cent coverage of the travelling public within Australia through theprovision of 16 airports. It is those busier airports which have the fire services.

CHAIR—Would you like to comment on Bankstown?



Mr Roberts—Bankstown, in the main, is not regular public transport operations. You arelooking at a lot of training school flights and a lot of small operators working into Bankstown aswell. Their figures in terms of regular public transport do not come up into the level of criteriathat currently exists.

Senator FORSHAW—Are charter services included in regular public transport, or is itcommercial airlines?

Mr Roberts—Yes, if they are scheduled flights, but a one-off, an ad hoc, is not.

CHAIR—Charter flights are not scheduled, by their nature.

Mr Roberts—By their nature they are not.

Senator FORSHAW—I should declare a personal interest!

Mr Roberts—They are not, it is purely for scheduled public transport.

Senator FORSHAW—Yes, that is what I thought.

Senator O’BRIEN—Civil Air, on page 3 of their supplementary submission, this morningidentified a number of concerns. They said that a significant contributor to workload is thecumbersome HMI actions required to get an aircraft symbol on the screen. They talked aboutthe increased workload due to third party HF relay and coordination and the delays in theprovision of information. I think there was some talk about 20 mouse strokes required to getcertain information on the screen. Do you have any response to that aspect of their submission?

Mr Dumsa—We have been working very closely with all of the operators, particularly CivilAir, on this issue of HMI in TAAATS. It is not quite fair to say that TAAATS is not capable ofproviding services in low level airspace. We have been providing services in low level airspaceright from the first commissioning in August 1998. In fact, probably 50 per cent of the low levelservices have been provided from TAAATS for the last six to 12 months.

There is an issue with manipulation of data in low level airspace outside of radar coverage inrelation to being able to call a flight plan up. One of the issues is that whilst there is somerigour—I have to be very careful what I say here, with no disrespect to certain operators—to theoperation on the east coast with general charter type operations, once you get into the centre ofAustralia a lot of flight plans are submitted with an estimated time of departure of midday andthe flight might not actually take off until 5 o’clock in the afternoon. That creates someproblems with data storage and database management in TAAATS. So it is the ability to be ableto access that data and to bring that data up in front of the controller in very quick succession. Ifthe data is not there after a certain period of time, the data drops off the database and goes into astorage bin, if you like, and it takes a number of strokes to get the information back.

As recently as last Thursday we held talks with Civil Air about the HMI issue, and aboutwhat we might do to address the issue. There was agreement at that meeting that our safetymanagement system was robust and would identify workload issues and safety issueseffectively and efficiently and if we could not work sufficient mitigations around the HMI issue



then we would be left with a category A risk, which would mean that we could not proceed withthe implementation on 15 June. Everybody accepts that—Airservices, Civil Air and theworkers.

We are working very hard to get a particular HMI fix in place. If we do not get that HMI fixin place then we have contingency plans to put in place an additional sector for the one to twomonths that will be required to get that HMI fix in place, and that mitigates the workload to thepoint where the controllers believe that they will be able to accept the workload.

Senator O’BRIEN—On page 9, paragraph 2.4.3 of their original submission, Civil Airraised the issue of ‘the diversion of the controller’s attention from high altitude commercial jetsto low level aircraft’. They further mentioned at least one safety incident in North Queenslandwhen a controller’s attention was diverted. Can you give us more information about that matter?

Mr Dumsa—Not without the specifics of it. I suspect I know which incident it is, but I wouldlike to see the specific information.

Senator O’BRIEN—So you know of an incident?

Mr Dumsa—There was an incident in the Proserpine area over two years ago, certainlybefore TAAATS. We have been providing services from ground level to 60,000 feet inQueensland sectors north of Brisbane since 1995. There was an incident where a controller’sattention was diverted in low level airspace. It was not related to the system; it was rather thatthe controller misappropriated his time. I do not know what the result—

Senator O’BRIEN—Perhaps we need some more information. I will put that effectively as aquestion on notice. I am not asking you now. I will check, and if there is something, I am sureyou will allow me to put it on notice so that we can get it outside of the hearing. On page 4 ofCivil Air’s supplementary submission a mention was made of risks in the safety case. Was anypressure put on ATC group or team leaders in relation to directed traffic information andprevious G class airspace arrangements to reduce the risk to a lower level to enable it to beaccepted?

Mr Dumsa—No. Categorically not.

Senator O’BRIEN—Regarding safety cases parts 1 and 2 as presented by Airservices toCASA and mentioned in Civil Air’s supplementary submission, did CASA accept and sign offon the safety case prior to the commencement of stage 1 of the DTI transition?

Mr Dumsa—CASA were not required to in relation to stages 1 or 2. The safety case was putin relation to a proposed change for stage 3 of the implementation which was to have takenplace from 15 June. In fact, we did not proceed with that particular change. That change relatedto the removal of directed traffic information services from areas where we currently providethe service on HF. At the behest of industry, following consultation we decided to abandon thatparticular approach at this point in time. So the safety case that was put to CASA is no longerrelevant.



Senator O’BRIEN—Given that the unions have expressed concerns about the speed atwhich Airservices is introducing the DTI procedures—or however they are better described; Ipreviously asked questions about Airservices’ performance management contracts—how manymanagers in Airservices involved in the assessment of safety cases would be on performancebased contracts? You can take that on notice if you think you need to.

Mr Smith—I think we need to take it on notice.

Mr Dumsa—I would like to make a statement. The safety cases are prepared by theoperational controllers at the work face. They are not on performance contracts.

Senator O’BRIEN—I did say the ‘assessment of’, not necessarily the ‘preparation of’. I amnot sure whether that changes your answer at all.

Mr Dumsa—I will take it on notice.

Senator O’BRIEN—The CPSU raised issues of a six-hour TAAATS outage in the SandonDTI sector. Can you give us some more information on that—the cause of the failure, thelikelihood of recurrence or any safety implications for aircraft in the airspace at the time?

Mr Dumsa—I checked during the break—I rang the centre manager. The incident that wasreferred to occurred on the night of 16 April. A staff member failed to turn up for work on theSandon sector, so the sector was closed between 11.00 p.m. and 5 a.m. In fact, it would havebeen closed until 6.00 a.m., but they decided to bring a person on from the morning shift anhour early. One aircraft was affected: an aircraft that was flying from Sydney to Tamworth. Theservice was provided to that aircraft. It was a staffing issue, not a facilities issue.

Senator O’BRIEN—Civil Air put up suggestions for alternatives to location specific pricing.There may be others. I think you have already answered this, but I may as well ask it forcompleteness. Has Airservices conducted studies or analyses of alternatives to location specificpricing? If you wish to take it on notice, I will be quite happy to accept that

Mr Fleming—The only thing I can say is that there is only either network or location specificpricing, so there are only two alternatives there. But if you then look at location specific pricingthere may be different ways of funding that. Certainly a lot of different ways of doing that werelooked at prior to the introduction. There has been no specific further work to look atalternatives since then.

Mr Smith—Perhaps we should clarify one issue. As I am sure you are aware, Airservices isfunded by its clients, not by the government budget.

Senator O’BRIEN—Subject to that additional funding.

Mr Smith—I am sorry, yes, that is correct. The principles, therefore, are for us to beequitable, that the costs should fall where they occur and that those who use the service pay forthe service. They are the principles under which we are operating.



Mr Fleming—To add to that, location specific pricing has been recognised by IATA as beingthe preferred type of pricing. It is also recognised by ICAO as well. In fact, it was recognised inthe Eagle award that Airservices received last year as being the equitable way of pricing ourservices.

Senator O’BRIEN—That begs the question as to whether it is the best system available toAirservices in all of Australia’s circumstances. I can understand why international operatorswould prefer it—they are beneficiaries of location specific pricing, aren’t they?

Mr Fleming—Yes, they are.

Senator O’BRIEN—And I suppose it would be fair to say that a company like Virgin, if itever comes here, flying the main routes, would equally be a beneficiary.

Mr Fleming—They will be flying domestic routes as well.

Senator O’BRIEN—Yes, but if they are predominantly flying Sydney-Melbourne, forexample, that is where the biggest benefit is compared to the previous arrangement, isn’t it?

Mr Fleming—That is correct.

CHAIR—I have a couple more questions and they are quite different from where we havebeen going. We may have discussed them earlier, I am not sure, but I will run them past youagain. In terms of the directed traffic information service which is now going to be providedthrough TAAATS rather than through the original arrangements, why was the decision made todo it that way?

Mr Smith—It comes down to a couple of issues. One is cost. As I think Mr Dumsa pointedout earlier, it was costing us about $38 million to provide those services generally. We havebeen able to reduce that significantly as a result of this activity, or will by the time all changesare put into place. The other is from an operations viewpoint. There are benefits in terms ofsituational awareness of a controller having control of a given amount of airspace not having tocoordinate with another network to understand what is happening between the two areas. Again,it is anecdotal, but I can say from talking to a couple of controllers who are actually workingthose sectors now that they are quite pleased with the way things are going.

CHAIR—That is disputed by other evidence that we have had. The question is that directedtraffic information is to be on a workload permitting basis, and that criticism has been levelled. Iwonder if you would like to comment on that because that seems to be a serious criticism.

Mr Dumsa—Certainly. Any services being transitioned during this interim stage, betweenDecember of last year and the end of this year, will be replicated identically. There is no‘workload permitting basis’ about it. Where ATC takes on directed traffic information services,they will provide it with exactly the same priority as in the provision of air traffic controlservices. The point at issue perhaps is in those areas where we are providing the service by thirdparty relay. Where we go through a flight information service operator on HF to provide thetraffic to the aircraft and back, there will be slight delay in the transition of traffic information,but there is certainly not a workload permitting basis involved here.



CHAIR—And you are not worried about overload on the system?

Mr Dumsa—Workload is always an issue, but we have worked very hard with each sectorgroup, each sector and each group of controllers. The subject matter experts in each group havebeen working very closely not just within their own groups but also with adjacent groups andwith the flight service sectors and the subject matter experts from the flight service sectors todetermine the exact workload on each sector. We have re-sectorised the size of groups. We donot simply take a volume within which air traffic control is provided and then bolt on a flightservice volume. We cannot do that. That would just throw the workload over the top. Wereassess the sector sizes and reduce them or structure them so that the workload is equitableacross the board.

CHAIR—And that is still in a transition phase?

Mr Dumsa—That is correct.

CHAIR—Have you had any hiccups with that phase?

Mr Dumsa—It has been generally smooth. There have been a couple of hiccups. As CivilAir rightly pointed out this morning, there were a couple of sectors where we underestimatedthe traffic load. But we put on additional staffing and, as things have settled in, as people havebecome more experience in the sectors, that issue has gone away. We have certainly taken thatinto account in our assessment of the third stage, which is far more critical.

CHAIR—There was some media discussion some time ago about whether or not that waspart of the problem in a couple of instances, but I do not have sufficient recall to give you thedetails. It happened at Brisbane, I think, on one occasion. We will leave that, because it is notfair to speculate on something I do not have enough detail on. I understand that HF radio isbeing withdrawn?

Mr Dumsa—No. There was originally a plan in the third stage implementation for us toattempt to withdraw the provision of directed traffic information services in areas where it iscurrently provided on HF.

CHAIR—Right.

Mr Dumsa—There were two points of misinterpretation there. One, people interpreted thatas being the complete withdrawal of HF—that was never to be the case; we would always retainHF for the provision of flight information services; and, two, as I just alluded to, we backedaway from the concept of withdrawing DTI from HF areas in the interim stage.

CHAIR—That is very reassuring. I have had an ongoing interest for most of my life in theRoyal Flying Doctor Service and similar services, so that reassures me. I think that is as muchas we can do this afternoon. Thank you very much for your evidence, frankness and answers. Ifyou could have a look at the couple of things you took on notice, we would be very grateful.

Mr Smith—It would be a pleasure. Thank you.



Committee adjourned at 3.24 a.m.

commonwealth of australia official committee hansard · reference: air safety—airspace 2000 and...

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