Hon Gerry Brownlee
Minister of Transport

28 August 2012 Media Statement

New Funding Framework for CAA

A new funding framework for the Civil Aviation Authority (CAA) will enable the organisation to improve air safety and ensure users meet the true cost of the services they receive, Transport Minister Gerry Brownlee says.

“The new framework will ensure the CAA is sufficiently resourced to continue delivering air safety benefits in a rapidly changing environment and to provide opportunities for continued economic growth.

“Confidence in the safety and security of the civil aviation system underpins the substantial economic contribution of the aviation sector in New Zealand.”

The decision follows the Office of the Auditor-General’s 2010 review that highlighted concerns regarding the CAA’s performance and capability.

The CAA’s subsequent funding review, extensive consultation with the aviation sector, and a value for money review, resulted in a significant CAA change programme which begun in June 2011. The Crown provided $7.5 million to fund much of this programme and to maintain normal operations during 2011/12.

“Good progress has been made over 2011/12 and now that the foundation for improving capability has been prepared, government approval for the new funding framework has been given to support future improved operations,” Mr Brownlee says.

The new funding framework affects all civil aviation fees, charges and levies and will come into effect on 1 November.

It will recover an extra $14.1 million over the next three years from commercial aircraft operators, passengers and pilots. This will ensure the CAA has sufficient revenue to fund its ongoing operations and continue to improve its services.

Mr Brownlee says the CAA’s funding framework had not been reviewed for over 15 years.

“As a result, the rates for fees and charges are considerably lower than needed to meet the related costs, and levy-payers are cross-subsidising others.

“The government considers that people who choose to fly, or operate airlines and aircraft, should meet the full cost of these operations, and is taking a phased approach towards this.”

The overall impact on aircraft operators is expected to be relatively small – for large operators, less than 0.5 percent of their annual fuel bill, and for small operators, less than 0.6 per cent of their annual fuel bill. The impact on passengers will be very small.

Mr Brownlee says the CAA needs greater funding to do its job properly, including moving to risk-based regulation, ensuring New Zealand keeps up with aviation technology, and providing opportunities for innovation and economic growth.

“The CAA has already delivered savings to ensure costs are minimised and further savings are expected over the next three years.”

The CAA is the regulatory agency that safeguards civil aviation in New Zealand. The CAA controls which operators enter the civil aviation system and monitors operators' on-going adherence to safety standards.

“Safety levies for all international passengers will increase by 41 cents per ticket, while the safety levies for domestic passengers travelling on New Zealand-certificated airlines will decrease by seven cents a ticket.

Questions and answers on the new funding framework, can be found on the CAA’s website: www.caa.govt.nz

ENDS

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