Dr. Poti Chao Department of Industrial Engineering Chiang Mai - - PowerPoint PPT Presentation

• Dr. Poti Chao

AGENDA

• Introduction to Aviation Policy
• What is Policy
• Aviation Policy Objectives
• Safety Management System (SMS)
• Aviation Policy Framework
• Thai Aviation Policy
• Deregulation in Air Transport
• Airport Commercialization and Privatization
• Airport Cargo and Customs
• Discussion and Conclusion

Introduction to Aviation Policy

Introduction to Aviation Policy

• Aviation policy is to aimed to support government to achieve long-term

sustainable economic growth.

• Aviation sector is a major contributor to the economy
• Supporting its growth within a framework will enable a balance between benefits
• f aviation and its costs
• Support sustainable development and maximizing wellbeing of the

environment.

• Protecting passengers’ rights
• Enabling competition through regulation policy
• Enforcement of safety and security issues

Introduction to Aviation Policy

• Aviation policy will help to assist Thailand aviation economic benefits
• There are three distinct types of economic benefits:
• Aviation’s economic footprint
• Consumer benefits for passengers and shippers
• Enabling long-term economic growth

Introduction to Aviation Policy

 Aviation’s economic footprint  Contribution to Thai GDP - The aviation sector contributes THB 139

billion (1.5%) to Thai GDP

• This total comprises:
• THB 64 billion directly contributed through the output of the aviation sector

(airlines, airports and ground services)

• THB 44 billion indirectly contributed through the aviation sector’s supply

chain

• THB 31 billion contributed through the spending by the employees of the

aviation sector and its supply chain

• In addition there are THB 678 billion in ‘catalytic’ benefits through tourism

which raise the overall contribution to THB 818 billion or 9% of GDP

Introduction to Aviation Policy

 Aviation’s economic footprint  Major employer- The aviation sector supports 393,000 jobs in Thailand

• This total comprises:
• 79,000 jobs directly supported by the aviation sector
• 185,000 jobs indirectly supported through the aviation sector’s supply chain
• 130,000 jobs supported through the spending by the employees of the aviation

sector and its supply chain

• In addition there are a further 1,802,000 people employed through the catalytic

(tourism) effects of aviation

Introduction to Aviation Policy

• The average air transport services employee generates THB 1,321,883 in GVA annually, which is over 5.5

times more productive than the average in Thailand

• The aviation sector pays over THB 4.8 billion in tax including income tax receipts from employees, social

security contributions and corporation tax levied on profits

• It is estimated that an additional THB 7.3 billion of government revenue is raised via the aviation sector’s

supply chain and another THB 5.1 billion through taxation of the activities supported by the spending of employees of both the aviation sector and its supply chain.

Introduction to Aviation Policy

 Consumer benefits for passengers and shippers

• From visiting family and friends to shipping high value products, 40 million

passengers and 1.1 million tonnes of freight travelled to, from and within Thailand

• More than 26,000 scheduled international flights depart Thailand annually,

destined for 107 airports in 60 countries

• Domestically, more than 108,400 flights make over 17 million seats

available to passengers annually, destined to 26 airports

Introduction to Aviation Policy

 Consumer benefits for passengers and shippers

• Air passengers resident in Thailand comprise approximately 20 million of the

passenger total

• For the 40 million passenger flights in total, passengers pay THB 850 billion

(inclusive of tax), with Thai residents paying around THB 425 billion

• This expenditure is likely to significantly understate the value passengers

actually attach to the flights they use

• Calculations by Oxford Economics suggest the value of the benefit to

travelers from flying, in excess of their expenditure, is worth THB 568 billion a year (THB 284 billion for Thai residents)

Introduction to Aviation Policy

• Air transport is crucial for the distribution of high value to weight products
• Air freight may only account for 0.5% of the tonnage of global trade with the rest of

the world, but in value terms it makes up around 34.6% of the total

• Shippers pay airlines THB 119 billion annually to carry 1.1 million tonnes of freight to,

from and within Thailand

• The benefit to shippers, in excess of this expenditure, is estimated as THB 50 billion
• Based on the share of exports in total merchandise trade, Thai shippers receive over

half of this benefit (THB 27 billion)

Introduction to Aviation Policy

 Enabling long-term economic growth

• In 2010 there were 113 routes connecting Thailand to urban agglomerations

around the world

• On average there were 2.8 outbound flights per day along these routes
• A total of 26 of these routes were connecting Thailand to cities of more than

10 million inhabitants, with 3 outbound flights per day available to passengers

Introduction to Aviation Policy

 Enabling long-term economic growth

• Frequencies are higher to the most economically important destinations
• I.e. passengers benefited from 4 outbound flights per day from Bangkok to

London Heathrow Airport, and from 17 flights per day from Bangkok to Hong Kong International Airport, providing high speed access for business and leisure purposes throughout the day. Many of these city-pair connections are only possible because of the traffic density provided by hub airports.

Introduction to Aviation Policy

 Enabling long-term economic growth

• Thailand’s integration into the global air transport network transforms the

possibilities for the Thai economy by:

• Opening up foreign markets to Thai exports
• Lowering transport costs, particularly over long distances, helping to increase

competition because suppliers can service a wider area and potentially reduce average costs, through increased economies of scale

• Increasing the flexibility of labor supply, which should enhance allocative efficiency and

bring down the natural rate of unemployment

Introduction to Aviation Policy

 Enabling long-term economic growth

• Thailand’s integration into the global air transport network transforms the

possibilities for the Thai economy by:

• Encouraging Thai businesses to invest and specialize in areas that play to

the economy’s strengths

• Speeding the adoption of new business practices, such as just-in-time-

inventory management that relies on quick and reliable delivery of essential supplies

• Raising productivity and hence the economy’s long-run supply capacity. It

is estimated that a 10% improvement in connectivity relative to GDP would see a THB 5.8 billion per annum increase in long- run GDP for the Thai economy

What is Policy

What is Policy in General

 Public policy is a course of action adopted and pursued by a

government.

 Response to a perceived problem.  Formulated by a specific political process.  Adopted implemented and enforced by a public agency.

Defining Public Policy

 Public meant People  A representative group (Government) which holds the political power

directly responsible to the citizens.

 Public policy address public issues by instituting laws, regulations,

decisions or action pertinent to the problem at hand.

 Issues including crime, education, foreign policy, health, and social

welfare.

Response to a Perceived Problem Formulate by a Specific Political Process Adopt, Implement and Enforce

Stages of Public Policy

• Identify Stakeholders
• Define Problem
• Action Plan
• Identify Authorisation
• Language used
• Simple/Complex
• Administration
• Compare
• Identify Gaps
• Re-design

Response to a perceived problem

 Government is responsive to its legitimate stakeholders

 Stakeholders: business owner, individuals, government officials, bank, etc.

 Defining problems

 Careful define problems between individuals  Evaluating trade-offs and effects

 Establishing an action plan

 Time required for the plan to take effect

Formulated by a specific political process

 Identify which organization has authority and might feasibly respond.  Language used  Simple or complex

 Simple – proceeding independent bills with no causal effects to others

(bills)

 Complex – proceeding with multiple bills (actions) with incremental effects

to others (bills)

Adopted implemented and enforced

 Actions be administered and implemented  Something must happen  Connecting with original issues.  Closing the gap

 Gap between pre-implement and post-implement.

 Analyzing the final effects and re-design (if necessary).

Aviation Policy Objectives

Aviation Policy Objectives

 Protection of Passengers’ right

• The government is committed to improve passenger experience.
• Require investment in surface access to airport and improvement of

border experiences.

• If disruption occur, passenger rights are protected
• Communication between airport/airline and passengers are highly

encouraged to avoid service faults.

Aviation Policy Objectives

 Competition and Regulation Policy

• The role of government should be largely confined to facilitate a

competitive aviation market.

• Especially within a proportionate international an domestic market in order

to ensure high standards of safety and security.

• Removing barrier to economic growth and increasing individual freedom.
• Government should be committed to seek alternatives to create new

regulations to ease the burden of aviation business.

Aviation Policy Objectives

Safety

• Air transport is one of the safest form of travel.
• The need to ensure regulation is proportionate and cost effective.
• Working closely with international aviation bodies will ensure a high and

uniform of level of civil aviation safety.

• The need to develop safety programme in line with new ICAO

standards.

Aviation Policy Objectives

Security

• To keep pace with the rapidly changing nature of threat, the government is

require to seek to an outcome-focused, risk-based regime for aviation security regulations.

• The government is to work closely with the industry to develop

implementation of security management systems.

• Modelled on the safety management systems (SMS) approach used by several

aviation industry and its safety regulators.

• Government and private sector should collaboratively provide the industry

with greater scope for innovation and efficiency in delivering security processes, potentially enabling security outcomes to be delivered in more passenger-friendly means.

Safety Management System (SMS)

Safety Management System (SMS)

• SMS identifies
• Policy component
• Safety risk management component
• Safety assurance component
• Safety promotion component
• It is not…
• A substitute for compliance
• A substitute for oversight
• A replacement for system safety
• A requirement for a new department
• It is…
• Compliance is integral to safety management
• An effective interface for safety management
• SMS completes the system approach
• A set of decision making processes for senior and line management

ICAO Annex 6 and 14

• According to ICAO Annex 6 and 14…
• States shall establish state safety program to achive acceptable level of safety in

civil aviation

• Framework for implementation and maintenance contained in Safety Management

Manual (SMM) (Doc 9859)

• Acceptable level of safety establish by state.

Informed Decision Making

• Management and employees understanding hazards and risks
• Reporting: all personal freely share critical safety information
• Just: employees must know what is acceptable and unacceptable behavior
• Learning: The company learns from mistakes. Staff are updated on safety issues

by management

• Flexible: Organizational willingness to change.

Safety Culture

• Senior management commitment
• Senior management visibility
• Safety accountability framework
• Safety policy goals, objectives, standards, and performance
• Resource commitment
• Effective employee safety reporting system
• Safely information system

Safety Management Strategies

Reactive (Past) Responds to events that have already happened, such as incidents and accidents Proactive (Present) Actively identifies hazards through the analysis of the

• rganization's processes

Predictive (Future) Analyzes system processes and environment to identify potential future problems

Safety Management Strategies (SMS) Components

1. Policy and Objectives 2. Risk Management 3. Safety Assurance 4. Promotion

Policy Risk Management Safety Assurance Safety Promotion

SMS Design Attributes

Processes must have attributes built in

• Responsibility: accountable activities + qualities
• Authority: power to accomplish activities
• Procedures: clear instructions for employees
• Controls: ensure activities produce correct outputs
• Process measures: measure processes and results
• Interfaces: Manage process and relationships between employees,
• rganization and with contractors, vendors, customers, other
• rganizations.

Aviation Policy Framework

Aviation Policy Framework

 The Aviation Policy Framework sets out policy on:

• Supporting growth and benefits of aviation
• Climate change impacts
• Noise and other local environment impacts
• Working together
• Planning

Aviation Policy Framework

 Supporting growth and the benefits of aviation

• Strong evidence that aviation brings direct and indirect economic benefits
• Objective – to ensure that national air links continue to connect other

countries in the world.

• Encourage new routes and service to key destinations
• Improving performance, resilience and passenger experience
• Integrating airports in the wider transport network

Aviation Policy Framework

 Climate change impacts

• Objective – to ensure that the aviation sector makes a significant and cost-

effective contribution towards reducing global emissions

• Action at a global (ICAO) level is the preferred and most effective means to

reduce emissions

• Not the time to re-examine the case for including aviation in national

targets

Aviation Policy Framework

 Noise and other local environmental impacts  The Key Messages

• noise is the primary concern of local communities near airports
• The expect industry to lead the way best practice for tackling noise,

acceptability of any growth in aviation depends on it

• Individual airports working with the appropriate air traffic service providers

should give particular weight to the management and mitigation of noise

• Future growth should ensure benefits are shared

Aviation Policy Framework

 Noise and other local environmental impacts  High level policy on aviation noise

• As before, the objective is to – limit and, where possible, reduce the

number of people significantly affected by aircraft noise

 Role of government

• Government to continue to set noise controls at designated airports

(especially near civil/pedestrian areas)

Aviation Policy Framework

 Working Together

• Objective is to strengthen and streamline the way in which the aviation

industry and local stakeholders work together

• Motivating connectivity not only between airline and airport but also some
• f the private sectors which will stimulate competitive services.

Thai Aviation Policy

Thai Aviation Policy

• Civil Aviation Authority of Thailand (CAAT) established by the Emergency

Act on Civil Aviation of Thailand B.E. 2558 (2015)

• CAAT promotes the goal of improved aviation safety by encouraging

voluntary compliance with and through the enforcement of Thai aviation legislation and regulation.

• When necessary, CAAT repeat offenders and whose who willfully

disregard aviation safety, are sanctioned.

Thai Aviation Policy

• As a contracting State of the International Civil Aviation

Organization.

• The government of the Thailand has an obligation to oversee the safe and

efficient operation of aviation activity.

• As a signatory to the ICAO, the Government has agreed to the application of

Article 12 of the convention, “Provision of the Air”, which states in part.

Thai Aviation Policy

• Each contracting State undertakes to adopt measures to insure that every

aircraft flying over or maneuvering within its territory and that every aircraft carrying its nationality mark

• Wherever such aircraft may be, shall comply with regulations relating to

the flight and maneuver of aircraft there in force…

• Each contracting state undertakes to ensure the prosecution of all persons

violating the regulations applicable.

Thai Aviation Policy

• Accordingly, CAAT supervises and administers the enforcement mandate

inherent in the international agreement.

• Enforcement and sanctioning powers, providing by a legal framework.
• Have been delated to CAAT inspectors who have the responsibility and

authority to conduct investigations.

• As a result…
• International agreement and domestic legislation, enforcement is not an option, it is both a legal

and social obligation.

• Vigorous enforcement action will be taken with respect to all breaches of

the published aviation safety standards or requirements.

Thai Aviation Policy

• Without limiting the sorts of tasks which technical and operational

personal may be asked to perform relationship to variation, suspension or revocation action.

• The delate is most of the time, the decision maker which take

responsibility for the decisions.

• It is the delegate’s personal judgement and belief that is relevant to

question of whether or not the grounds for the proposed action are sound.

Thai Aviation Policy

 It is the responsibility of technical and operational officers to…

• Gather or receive the information and evidence, which supports a

recommendation for an action

• As necessary, seek advice and input from Director of Flight Standards,

Director of Aerodrome Standards, Director of Ait Navigation Service Standards and Director of Legal Department in relation to the conduct of the operator/person in question.

Thai Aviation Policy

 It is the responsibility of technical and operational officers to…

• Complete a non-compliance report and forward it to the appropriate

Director recommending a proposed course of action

• Draft (in consolation with legal department) the relevant notice to the
• perator/person affected by the decision
• Prepare for and attend any show cause conference taken up by the
• perator or person affected by the decision.

Thai Aviation Policy

 It is the responsibility of technical and operational officers to…

• As necessary, assist Director of Flight Standards, director of Aerodromes

Standards, Director of Air Navigation Service Standards, and Director of Legal Department by providing information and advice.

• Serve or arrange for the service that may be necessary (including the

provision of technical and operational assistance to the Director of Legal Department in any administrative law litigation).

Thai Aviation Policy

 Responsibilities of the Director of Legal Department

• Provide legal advice to officers and the delegate in relation to actual or

proposed variation, suspension or revocation action, or any part of the process

• Assist officers in the preparation of show cause’ and decision notices, in

accordance with regulations

• Conduct, or arrange for the conduct of, administrative law litigation arising
• ut of variation, suspension and revocation decisions

Thai Aviation Policy

 Responsibilities of the Director of Legal Department

• Keep Director of Flight Standards, Director of Aerodromes Standards,

Director of Air Navigation Services Standards advised of the progress and results of any civil court or administrative proceedings

• Represent CAAT in any proceedings before the Court, where the CAATs

decisions have been challenged.

Thai Aviation Policy

 Responsibilities of the Director of Flight Standards, Aerodromes

Standards and Air Navigation Services Standards

• Ensure that their directorate is organized, staffed and equipped to perform

its functions as required by the Act and regulations; and the Director

• Amend the administration of the Inspectors in order to ensure their smooth

and efficient functioning.

• Program the operation of inspections per the guidelines laid down in

inspectors manual

• Supervise the activities of the Inspectors

Thai Aviation Policy

 Responsibilities of the Director of Flight Standards, Aerodromes

Standards and Air Navigation Services Standards

• Liaise with the operators to ensure smooth and efficient execution of the

inspection programs.

• Ensure that the activities of the inspections conform to rules and regulations

laid down for the conduct of inspections.

• Submit periodic and other analytic reports to the Director of the results of

the inspections

• Ensure that the Inspectors maintain the currency of their licenses and carry
• ut refresher training regularly.

Thai Aviation Policy

 Responsibilities of the Director of Flight Standards, Aerodromes

Standards and Air Navigation Services Standards

• Liaise with the other Directorates of the CAAT and provide them with

specialized advice on all operational manners.

• Advise the Director on all matters relevant to air safety and help in

investigation of accidents/incidents involving aircraft

• Keep the Director informed of all important activities of their Directorate.
• Ensure that the objectives of the Inspections are met and that the system
• f inspection is optimized and institutionalized. Updating of the system to

meet the changing situations is an imperative that must be pursued.

Thai Aviation Policy Inspection and Surveillance

 Routine Inspections

• Routine Inspections should normally be conducted before issuing or

renewing a Thai Civil Aviation Document (CAD) in order to confirm compliance with applicable standards.

• These inspections involve the examination of aircraft, aeronautical products

(appliances, parts, components, etc.) cargo, premises and facilities relating to aeronautics.

Thai Aviation Policy Inspection and Surveillance

 Inspection Authority

• The Act and Emergency Act authorize the Director or his designate to

conduct inspections for the purpose of enforcing the Act and regulations.

• It therefore authorizes designated Inspectors to inspect aircraft, operator

facilities and aerodromes.

• The inspector are authorized to:
• Entry for inspection
• Inspection
• Production of document/records
• Obstruction
• Seizure of evidence

Thai Aviation Policy Inspection and Surveillance

 Inspectors’ Role

• Entry for Inspection
• For the purpose of inspections, Inspectors shall normally enter aircraft or

premises with the owner, employee or other representative being present or giving consent.

• An Inspector’s authority to enter aircraft, aerodromes, facilities or premises to

conduct inspections shall be provided to each inspector, in accordance to his need to exercise his/her delegated authority and shall be listed upon the Inspector’s personal Identification and Credential Card.

Thai Aviation Policy Inspection and Surveillance

 Inspectors’ Role

• Inspection
• The Inspector shall provide reasonable notice to the operator to make

available, the aircraft, or facility for the purpose of inspection.

• Production of Documents/Records
• An Inspector’s authority to demand the production of documents and records is

derived from the provisions of Act and Emergency Act.

• Obstruction
• Any Person willfully obstructing or impeding an Inspector during an inspection

shall contravene the provisions of the Act and Criminal Code B.E. 2499 (1956).

Thai Aviation Policy Inspection and Surveillance

 Inspectors’ Role

• Seizure of Evidence
• Director or Inspectors have a power to seize the evidence for the purpose of

investigation in accordance with the provisions of the Act.

• Return of Evidence
• Any item seized during an inspection or investigation shall be returned to its

rightful owner within 30 days of the seizure

• Unless the item is required during a comprehensive investigation
• Upon conclusion of the Case Report, the item shall be returned to its rightful
• wner.

Thai Aviation Policy Inspection and Surveillance

 Urgent Action  An Inspector must take action without delay when encountering a situation

where there is a threat to Aviation Safety. Most Inspectors are delegated the authority to detain an Aircraft.

• Detention of Aircraft
• The authority for detention is found in Section 67 of the Act.
• Inspectors may detain any aircraft when there is violation of the provisions of

the Act with respect to Aircraft (There is a reasonable grounds to believe that the aircraft is unsafe or is likely to be operated in an unsafe manner)

• They may take reasonable steps to ensure its continued detention.
• Once the grounds for detention (e.g. unsafe condition) have been removed, the

aircraft must be released

Thai Aviation Policy Inspection and Surveillance

 Urgent Action

• Suspension of Civil Aviation Document (CAD)
• The authority for the suspension is found in the Act and regulations.
• It authorizes the Director to suspend a CAD, provided that an appeal may be

made within 15 days of suspension, to the Director in accordance with the Act

• n Administrative Procedure B.E. 2539 (1996).
• Once the Director has made a decision to suspend a CAD, he must notify CAD

holder of his decision in writing.

• Suspension of a CAD shall come into effect immediately and remains in effect

until such time as the aviation threat is removed.

• Reinstatement of a CAD is considered by the appropriate functional authority

and is not considered to be an enforcement matter.

Thai Aviation Policy Inspection and Surveillance

 Surveillance

• Presence
• The most effective method of enhancing safety within the aviation community is to

provide a regulatory presence aimed at promoting voluntary compliance with the Act and the regulations.

• These objectives can best be achieved by CAAT personnel participating in structured

surveillance activities.

• Surveillance may either be routine or special-purpose.

Thai Aviation Policy Inspection and Surveillance

 Surveillance

• Routine Surveillance
• Routine surveillance includes audits, base inspections, CAD renewal inspections

and ramp checks

• Conducted in the normal course of the CAAT inspector’s duties of monitoring

day-to-day aviation activity.

• When contraventions of the Act or regulations are detected, Inspectors are

responsible for completing a Detection Notice for submission to their respective Director of Department.

• These forms may reveal problems, trends or threats to aviation safety.

Accordingly, this information can often provide the impetus for planned surveillance.

Thai Aviation Policy Inspection and Surveillance

 Surveillance

• Special Purpose Surveillance
• Special purpose surveillance is directed at specific areas, events and

activities by the CAAT Inspectors.

• Most surveillance done by Inspectors is of an overt nature
• That is, undisguised and designed to deter regulatory infractions and to

encourage voluntary compliance through a visible presence.

• It is also designed to detect violations.

Thai Aviation Policy Inspection and Surveillance

 Surveillance

• The Enforcement Surveillance Plan
• The Surveillance Plan is a plan designed to establish a balanced and

systematic approach to surveillance

• Makes the best use of available resources of the CAAT.

Thai Aviation Policy Detection

• Detection is the discovery of a possible violation of the Act or regulations.
• Sources of detection are diverse and may result from activities such as

inspections, audits and surveillance.

• Sources of detection also include police reports and public complaints.

Thai Aviation Policy Detection

 Initial Enforcement Process

• CAAT Inspectors must take action on observing or being apprised of a

contravention.

• All Inspectors are responsible for completing a Detection Notice Form and

forwarding it without delay to their respective Director of Department.

• The inspector or Director of Department may address immediate
• perational considerations through the exercise of their delegated powers.

Thai Aviation Policy Detection

 Initial Enforcement Process

• If the contravention is considered minor, the Inspector may simply orally

counsel the CAD holder and fill out the detection notice form.

• If the contravention is of a more serious nature, the Inspector must as soon

as practicable refer the incident and all the collected evidence to his/her Director of Department.

• The Director of Department shall review the information in the Detection

Notice for his/her own information and pass it on to Legal Department for further action.

Thai Aviation Policy Detection

 Initial Enforcement Process

• The decision to conclude the matter with an oral counselling is the

Inspector’s.

• In the event that the counselled person has received counselling concerning

this matter before o

• Or perhaps other members of an operator have also been counselled regarding

the same matter, a comprehensive investigation may be mandated.

Thai Aviation Policy Detection

 Oral Counselling

• Oral counselling provides the CAD holder with immediate guidance on the

need for future compliance

• It is an option for Inspectors when the imposition of a sanction is not

considered necessary and when all the following conditions are satisfied:

1.

The contravention is minor and inadvertent; and

2.

There is no direct flight safety hazard even though the violation is safety- related; and

3.

The CAD holder has no record of a similar type of violation and has a compliant attitude; and

4.

The CAD holder is not disputing the allegation.

Thai Aviation Policy Detection

 Oral Counselling

• This type of deterrent action does not become a part of the CAD holder’s

record.

• However, a completed copy of the Detection Notice is required to ensure that

the event is recorded in the Enforcement Data Base.

Thai Aviation Policy Detection

 Contraventions concerning the Transportation of Dangerous Goods

by Air

• Within CAAT, all inspectors are responsible for promoting compliance with

and detecting contraventions of the regulations on Transportation of Dangerous Goods by Air.

• Because of the possible hazards involved in the transport of dangerous

goods, all inspectors, upon detection or receipt of a reported violation, shall apprise their respective Director of Department of the situation.

• Inspectors should have a basic familiarization of how to identify dangerous

goods and must not place themselves in positions that might jeopardize their safety.

Thai Aviation Policy Detection

 Inspectors Flying as Passengers

• Inspectors flying as passengers have, due to their knowledge of Aviation

and the Law concerning Aviation

• Duty of Care to speak up, when they become aware of an immediate

threat to aviation safety or a situation that if not stopped, would in their

• pinion, become an immediate threat to aviation safety.
• In this event, they should identify themselves to a member of the cabin

crew as a Civil Aviation Inspector and apprise the crew member of the immediate threat to aviation safety.

Thai Aviation Policy Detection

 Inspector’s Off-Duty Actions

• Inspectors are not expected to conduct surveillance during times when they

are not working

• However, if an inspector becomes aware of a contravention or an

immediate threat to aviation safety, he/she is obliged to act.

• Once the situation is stable and no longer represents an immediate threat

to aviation safety, a Detection Notice shall be filled out and an initial investigation conducted.

• The normal procedure for follow-up may then be used.

Thai Aviation Policy Detection

 Analysis of Legislative Provisions

• Analysis of legislation provides a procedure for examining offence-

creating provisions to obtain a precise interpretation of a regulation

• If the facts and evidence support an allegation of a contravention.
• The decision to continue or terminate a case is often based upon the

results of the analysis of legislation.

• Enforcement Inspectors shall complete an analysis of each provision that

has been contravened for each case where a comprehensive investigation is conducted.

Thai Aviation Policy Investigation

• An investigation is a systematic search for documentation of the facts

relevant to an event

• All CAAT Inspectors are responsible for detecting and reporting alleged

violations by implementing the initial enforcement process.

• All investigations must be thoroughly and meticulously completed, since

the resulting action may both affect individual rights and public safety.

Thai Aviation Policy Investigation

 Priorities for Investigation

• Priority shall be given to violations received from any Government

request.

• For all other violations the Director shall assign an investigation priority

level based on safety impact.

 The rights of the alleged offender

• When the inspectors detected any alleged violations, he/she shall report

the alleged violations to their respective Director of Department.

Thai Aviation Policy Investigation

 The rights of the alleged offender

• The Director of Department shall designate the inspector to conduct

comprehensive investigation

• The inspector is responsible for investigate the fact and places as well as

collect the relevant evidence to determine if there is any violation of the provision of Act.

• A designated inspector shall inform an alleged offender the detail of the
• ffences and advise them the rights to defense the allegation with

supporting evidences before concluding a case report to their respective Director of Department.

Thai Aviation Policy Investigation

 Co-ordination between CAAT Divisions and Outside Agencies

• Co-ordination between the various CAAT Divisions, the Royal Thai Police

and other external organizations

• Concerned with Aviation Safety is encouraged, in order to maintain

technical accuracy and perspective

• To expedite the collection of relevant facts.

Thai Aviation Policy Investigation

 Case Reports

• A case report is a summary of the facts drawn up by a designated

inspector for use by the Legal Department

• It is mandatory that a case report be prepared for each file, whether a

sanction is recommended or not

• The content and preparation of case report are described in Regulation
• f Department of Civil Aviation on Criminal Procedures

Thai Aviation Policy Investigation

 Disclosure of Information

• The CAAT Civil Aviation Policy is one of full disclosure to the CAD holder
• r his/her representative.
• The Legal Department shall disclose all evidence that may assist the

CAD holder, even if the evidence will not be used in any proceedings.

• However, file notes containing personal opinions as well as internal

correspondence outlining how to proceed with sanctions shall not be disclosed.

Thai Aviation Policy Investigation

 Disclosure of Information  The purpose of the full disclosure is as follows:

• To ensure the CAD holder knows the case to be met and is able to

make full answer and defense

• To encourage the resolution of facts at issue
• To encourage the resolution of the case prior to the hearing.

Thai Aviation Policy Investigation

 Full Disclosure  Full disclosure means that the CAD holder will be given at least the

following information, as relevant to the case:

• Particulars of the circumstances of the case
• Copies of relevant written statements (these may include witness

statements, investigative notes and summaries)

• An opportunity to examine electronic statements and/or other medium

such as air traffic control tapes

Thai Aviation Policy Investigation

 Full Disclosure

• Particulars of the CAD holder’s enforcement record, if applicable
• Copies of relevant documents and photographs that the Investigator

intends to introduce into evidence during a hearing

• A copy of the notice of suspension of the CAD
• Particulars of relevant information intended to be relied upon at the

hearing and any information known to the Investigator that the CAD holder may use to impeach the credibility of a CAAT witness in respect

• f the facts at issue in the case

Thai Aviation Policy Investigation

 Full Disclosure

• If applicable, a copy of the flow chart relating to an airworthiness matter
• The names of witnesses, their employment and their address, unless

there is evidence to indicate that the witness will be harassed or intimidated prior to the hearing

• The witness should be informed of the action, and inquiries should be

made whether there is any problem anticipated

Thai Aviation Policy Investigation

 Exceptions to Full Disclosure  Certain information that is related to items of the public interest may be

exempt from the disclosure policy.

 This information includes but is not limited to the following:

• Information concerning a confidential informant, an ongoing investigation,
• r investigative techniques
• Information that may be considered confidential by the Government of

the Thailand

• Information that cannot lawfully be disclosed or that would be injurious

to international relations, national defense or security if disclosed

Thai Aviation Policy Investigation

 Medical and Optometric Information

• Medical information provided by a CAD holder is confidential and shall
• nly be disclosed with the permission of the CAD holder
• Except that the information may be released to the court, by direction of

a judge; and it may also be used as evidence in an investigation by the CAAT

Thai Aviation Policy Investigation

 Electronic Recordings of Interviews and Conversations

• Covert recording of Interviews and conversations is not authorized.
• A witness, alleged offender or CAD holder must consent to a recording

being made.

• A recorded telephone conversation with a witness or CAD holder may

be used as evidence in circumstances where a personal interview cannot be arranged.

Thai Aviation Policy Investigation

 Special Investigations

• Contraventions by Military Aircraft
• The Act and regulations do not apply to Thai military aircraft operating in

military service and foreign National military aircraft.

• General Contraventions
• During a routine visit, inspection or audit or any other occasion
• When a CAAT Inspector becomes aware of a contravention by an air carrier

crew member or employee

• The Inspector is obliged to make note of it and to report the essential facts.
• The Detection Note is the vehicle for reporting.
• Pertinent evidence must also be seized and forwarded with the Detection

Notice.

Thai Aviation Policy Investigation

 Special Investigations

• Contraventions Detected during an Audit or Inspection
• When during an Audit or Inspection a contravention is discovered
• The Audit or Inspection shall be stopped and the manager of the organization

briefed concerning the finding

• The focus of the audit or Inspection shall be changed to an Investigation

Thai Aviation Policy Investigation

 Contravention of Foreign Legislation by Thai CAD holders

• When a Thai CAD holder is alleged to have violated foreign aeronautics

legislation that has a direct Thai equivalent

• The investigation shall proceed under the applicable Thai provision as if the

contravention had occurred in Thailand

• Where the allegations relate to a regulation without a direct Thai

equivalent and where the contravention is confirmed

• The Director may proceed administratively or judicially under the provisions
• f the Act

Thai Aviation Policy Investigation

 Contraventions involving Foreign Civil Aircraft Operators

• Whilst in Thailand, airmen and operators from foreign countries must

comply with the applicable sections of the Act and regulations

• Aeronautical operations by foreigners in Thailand are predominantly

commercial operations and all of those operations require the operator to hold an AOC from their countries of registry

• Where contraventions of the Act or regulations are involved. CAAT shall

conduct a comprehensive investigation and report its conclusion to the foreign operator’s National Civil Aviation Authority.

Thai Aviation Policy Investigation

 Foreign Private Aircraft

• Foreign private aircraft include corporate aircraft and those operated by

recreational flyers

• These aircraft do not require an air operator certificate but are required to

meet all of the requirements of their National Civil Aviation Authority and at a minimum, the ICAO SARPs.

Thai Aviation Policy Investigation

 Contraventions in Thai controlled Oceanic Airspace

• Alleged contraventions of Thai and foreign aircraft will be investigated in

the normal manner.

• Reports of contraventions by military aircraft are investigated to the degree

possible and the information forwarded to the appropriate and competent military authority of Thailand.

 Requests from foreign Civil Aviation Authorities

• Full cooperation shall be provided to foreign civil aviation authorities that

request assistance from the CAAT.

Thai Aviation Policy Deterrent Action

• When a violation of the Act or the regulations is confirmed at the

conclusion of a comprehensive investigation

• The proper deterrent action to impose is determined
• This is a critical decision in the enforcement process since it may

significantly affect an individual’s attitude towards aviation safety and towards compliance with the Provisions in the future

 Objectives of Deterrent Action

• The major objectives of deterrent action are:
• To protect the individual and the public from possible harm
• To encourage future compliance
• To deter others from contravening aeronautics legislation

Thai Aviation Policy Deterrent Action

• Achieving these objectives will contribute to the advancement of aviation

safety

• The primary aim of aviation legislation and regulation
• Administrative action comprises all other measures taken by the Director

pursuant to the provisions of the Act and regulations such as oral counselling and the suspension of documents.

Thai Aviation Policy Deterrent Action

 Types of Deterrent Action

• There are two types of deterrent actions:
• Judicial Action refers to the prosecution of an alleged offender in the criminal

courts and is available only for offences specified under the Act

• The actions that may be taken by the courts include fines and prison terms
• For some offences under the Act, the Director, inquiry official or offense

settlement committee shall settle the penalty with the offender, in accordance with section 120 of the Act.

• Administrative Action comprises all measures taken by the Director or

inspectors pursuant the provisions of the Act and regulations, other than judicial action, includes the suspension and/or revocation of Civil Aviation Documents, prohibitions, oral counselling and orders for additional training.

Thai Aviation Policy Deterrent Action

 Joint, Direct and Vicarious Liability

• Joint deterrent action may be taken against the person directly liable for a

contravention and the person vicariously liable for the contravention

• This may be done when both parties are responsible for causing the

contravention to occur.

Thai Aviation Policy Deterrent Action

 Disclosure of Deterrent Action

• Employers of CAD holders should be advised of the deterrent action taken
• If the contravention took place whilst the alleged offender was on company

business at the time of the contravention

• Although aero-medical information should normally be suppressed
• If the contravention involved flying whilst under the influence of alcohol or

prohibited drugs

• In the interest of public safety, such finding shall be disclosed to the

employer

Thai Aviation Policy Deterrent Action

 Disclosure of Deterrent Action

• Employers of foreign document holders may be advised of deterrent action

taken

• If the contravention took place whilst the alleged offender was on company

business

• The foreign country’s cultural/political situation should be taken into

consideration

• The Director will decide on a case-by- case basis

Thai Aviation Policy Deterrent Action

• The Director of Flight Standards, Director of Aerodromes Standards and Director of Air Navigation Services

Standards shall ensure that the detection source is advised of the outcome of the case and record this action.

• Legal Department should provide advice on case specifics, such as particular charges, to the Director, prior

to approaching the Office of The Attorney General.

• It is clear that once the case has been turned over to the Office of The Attorney General, it becomes the

responsibility of the Office of The Attorney General and that the CAAT will act as a resource and provide expert advice only.

• Communication with the CAAT is strictly at the discretion of the Office of The Attorney General.

Thai Aviation Policy Deterrent Action

 Sanctions

• The following will be considered in the interpretation and use of

administrative sanctions:

• The sanction may be moderated in light of mitigating circumstances (events

that were inadvertently caused by misunderstanding, misconception or an honest mistake)

• In some circumstances, the pilot–in-command, registered owner, operator
• r operator of an aerodrome or other facility, may be proceeded against for

the actions of another person

• A second offence is considered to have taken place when the record of a

previous similar offence is still on the offender’s file

• Sanctions for a second and all subsequent offences should be higher than

Thai Aviation Policy Deterrent Action

 Sanctions  Factors Affecting Sanctions

• What was the role of the Offender, perpetrator or accomplice?
• Was there any pressure or undue influence exerted by an employer or

an employee?

• Were there any mitigating circumstances such as poor weather,

improper air traffic control instructions etc.?

• Was there threat to safety?
• Was there any actual harm done?
• Was there careless or reckless conduct?

Thai Aviation Policy Deterrent Action

 Sanctions  Factors Affecting Sanctions

• Are there any prior sanctions on record?
• Are there any related offences?
• Is there a question of competence or qualification involved?
• Would the recommended sanction achieve public safety?
• Will the sanction act as a deterrent?
• Will the sanction promote future compliance on part of the offender?

Thai Aviation Policy Deterrent Action

 Sanctions  Burden of Proof

• The Burden of Proof is on the CAAT, except in the case of

failure to renew on medical grounds

• The standard of proof for administrative action, that must be

established, is Substantial Proof

• However, as some cases may be tried later in a Court of Law,

Legal Department policy is, that all investigations shall be conducted to the evidential requirements of Criminal Law.

Thai Aviation Policy Deterrent Action

 Sanctions  Case Presenting Officer (CPO)

• The CPO represents the Director
• He/she presents evidence and makes representations on behalf of the

Director and may act as expert witness in judicial proceedings

• The CPO would normally be one of the legal staff of the Legal Department

but may also be the Inspector who is responsible for conduct an investigation of the case.

Thai Aviation Policy Deterrent Action

 Sanctions  Role of the CAAT Inspector

• Any CAAT Inspector may be called to give testimony as either an

eyewitness or expert witness

• Eyewitnesses attempt to reconstruct a series of events that occurred at a

particular point in time

• Expert witnesses, on the other hand, give opinion evidence based upon

their education and experience and attempt to assist the Director or a court to understand the evidence or to make a finding of fact, based upon the Expert’s opinion.

Thai Aviation Policy

 Communication with the Media

• In instances where communications with the public and news media

arise, inspectors shall refer to the current CAAT policy

 Access to Information

• Alleged offenders have the right to obtain any information concerning

their own person or the allegations against them.

• Any other request must be made in writing to the Director.

Thai Aviation Policy

 Access to Information

• Personal Information
• Personal information is protected under the Constitutional of the Kingdom of Thailand

and may only be released with the written consent of the individual to whom the information relates

• However, that information may be disclosed to an investigative body specified under

the Act, for the purpose of enforcing any law of Thailand whilst carrying out a lawful investigation

• Prior to releasing any such information Legal Department shall be consulted
• Corporate Information
• The names of corporate offenders may be published if the Director believes it to be

in the public interest.

Thai Aviation Policy

 Access to Information

• Police / the Office of Attorney General/ Foreign Agency Reports
• Information contained in Police, the Office of Attorney General or a foreign agency

investigation reports received by the CAAT, shall not be released without the approval of the referring authority

• Public Release – Enforcement Action
• Court trials are a matter of public records
• However summary convictions and sanctions imposed by the CAAT on individuals are

protected information under the Constitutional of the Kingdom of Thailand and are not to be disclosed except by permission of the individual concerned. De-identified cases may be published in the interest of aviation safety

Thai Aviation Policy

• Matters before the Courts
• Matters before the courts shall not be discussed with the public until conclusion of the case and

then only concerning matters that are considered of public interest

• Third Party Interests
• Request from purchasers of aircraft, parties repossessing aircraft, trustees in bankruptcy etc., to
• btain aircraft logbooks or other CADs should be referred to CAAT
• Criticism of the CAAT
• When the CAAT comes under criticism during the course of an Inspector’s duties, the Inspector

should calmly acknowledge the comments and pass them along to his or her respective Director of Department.

Thai Aviation Policy

 Thai Aviation Policy Conclusion

• The transport ministry have setup a committee to oversee the first-ever

air transport master plan

• Strategies will be more synchronized with other relevant transport

departments and agencies in capacity building

• i.e. airport expansion, air traffic control and human resource development.
• The Thai Aviation Policy framework is aimed to assist Thailand aviation’s

economic benefits

Deregulation in Air Transport

Deregulation in Air Transport

• Deregulation – also known as liberalisation, is the removal of

imposed condition which restricts the operation of the free market.

• Rising importance with the context of international aviation

regulation.

• Airlines are commonly privately owned.
• Anti-trust laws have been assumed to maintain global competition
• US Airline has the largest domestic market in the world
• The initial attempt to bring together domestic and international

airlines was through Chicago Convention in 1944

Chicago Convention

• In 1944, new conventions were formed to create basis for

international air law for both domestic and international

• Comprised of five sub-agreements or known as ‘Freedom of Air’

1.

The right to fly across another territory without landing

2.

The right to land for non-traffic purposes (i.e. re-fuel)

3.

The right to put down passengers and cargo taken on in the territory

• f the aircraft’s nationality

4.

The right to take passengers and cargo destined for territory of the aircraft’s nationality

5.

The right to take passenger and cargo, and to drop-off passengers and cargo destined for, or coming from the territory of any state signatory to the Chicago convention.

Chicago Convention

• The Freedoms of the air are set to grant a country’s airlines the

privilege to enter and land in another country’s airspace.

• Freedoms 3, 4, and 5 are essentially commercial privileges that

encourage economic enterprise in air.

• Freedoms 1 and 2 attack the political hazards that help keep the skies

from opening wide.

• Freedom 6-9 have been added. Although not officially recognised by a

number of countries.

• More controversial.

Freedoms of Air

Freedom Description 1st The right to fly over a foreign country without landing 2nd The right to refuel or carry out maintenance in a foreign country without embarking or disembarking passengers

• r cargo

3rd The right to fly from one’s own country to another 4th The right to fly from another country to one’s own 5th The right to fly between two foreign countries on a flight originating or ending in one’s own country

Freedoms of Air

Freedom Description 6th The right to fly from a foreign country to another while stopping in one’s own country for non-technical reasons 7th The right to fly between two foreign countries while not

• ffering flights to one’s own country

8th The right to fly inside a foreign country, continuing to

• ne’s own country

9th The right to fly inside a foreign country without continuing to one’s own country

Airline Deregulation Act 1978

• In between 1978 and 1985, constant opening and closing of

routes due to financial viability.

• Removes barrier to entry.
• Tariff deregulation in 1982 – allows airline to compete on price
• Civil Aeronautics Board (CAB) was set in 1978 to regulate air

transport during to avoid wasteful competition and price wars.

• However it was removed in 1985 with transfer of remaining

responsibilities to other government departments.

• In reality, timescales were shorted, due to market pressure.

Impact of Deregulation

• New routes were set up
• New market entry
• Uneconomic destinations were withdrawn
• Route Structures
• Rapid development of hub and spoke operations via major airlines
• Rise of low-cost airlines, focusing on point-to-point destination operations
• Concentration of airlines
• New entrants of airlines (but most are unsuccessful)
• Vertical integration with feeder service for major airlines.
• Air fares and profit
• Lower profit due to lower fare
• Introduction of yield management, poor at the beginning.

Impact of Deregulation

• Passenger traffic
• Grew rapidly, in line with global passenger numbers
• Airline service and congestion
• Growth of new airlines and new routes has cause airport congestions.
• Airline punctuality has generally fallen
• Introduction of Frequent Flyer programmes to retain customers (i.e. Star

Alliances, One World, etc)

European – Open Skies Policy

• According to European Liberation (SN/BT/182)
• Open Skies Policy Agreement is a concept that calls for liberalisation of rules

and regulations of international aviation industry.

• With particular focus on commercial aviation in order to create a free-market

environment for the airline industry.

• Before the European Commission’s effort to develop a Common Air Transport

Policy, several initiatives were introduced to harmonise the development of civil aviation in the whole industry since 1980s.

• In 1987, The European Council took the first important step towards the

creation of a common air transport policy for the European Economic Community (EEC) with adaptation of measures on aviation.

• Currently there are three packages of aviation liberalisation

European – Open Skies Policy

• The First Package [December 1987]
• More liberal fare regime
• Removal of ‘Single Designation’ provisions so that any number of airlines were

able to operate on major international routes in the community

• Abandoned practice of equal sharing of capacity
• Overrode the insistence of a number of Member States that their national airline

be given a fifty per cent share of the market

• Remove most capacity restrictions
• Gave the airlines automatic but limited right to operate ’fifth freedom’ services - linking

points in the territories of two or more other Member States

• Removed the ability of member states to block proposals for economic low fares
• Opened up market access

European – Open Skies Policy

• The First Package – The Aftermath
• Smaller airlines were enable to enter some of the more important

intra-community routes

• Smaller airlines were able to charge the fares that they wished (i.e.

British Midland, Hamburg Airlines and Ryanair)

• However, the First Package was time-limited and required to be

revised by 1990.

• The Second Package was introduced.

European – Open Skies Policy

• The Second Package [July 1990]
• Built on the First Package by introducing an element of ‘double

disapproval’

• Fares under which a fare set by an airline for a route between Member

States would be permitted unless both States disapproved it.

• Loosened constraints on pricing, capacity restrictions and market access
• Opened up almost all European Community Airports
• Multiple designation on routes of certain traffic density
• Third and Fourth Freedom rights on most European Union Routes

European – Open Skies Policy

• The Second Package – The Aftermath
• In January 1991, UK government complained that a number of fares

charged by airlines during 1990 were excessively high.

• However, those fares remained in place and airlines were not required to

refund money to passengers.

European – Open Skies Policy

• The Third Package – [January 1993]
• Open market access throughout the EU
• Full traffic right on any route
• No capacity constraints even on routes outside their own country
• No price control
• No subsidisation of air service, except those that are socially necessary
• Harmonisation of operators’ licences
• Cross border majority ownership allowed
• Airlines subject to merger legislation
• Introduction to the age of Low Cost Airlines

European – Open Skies Policy

• The Third Package – The Aftermath
• In December 2005, the European Common Aviation Area has been formed.
• Morocco signed up in December 2006
• Russia and the Ukraine followed in 2008.
• There are currently 34 State Parties to the Open Skies Treaty.

European – Open Skies Policy

Re-negotiation of Bilateral Agreement

• Driven by the US during the period of 1978 to 1991
• Aimed at opening up the aviation market, particularly for US airlines

accessing other countries

• Allowed for more airlines to access the market and compete on international

routes

• Reducing the monopoly status of flag carriers
• Approach spread to renegotiation of other bilateral
• I.e. UK – Canada, Intra-European agreements, Southeast Asia and the

Pacific

Post 1978 ‘Open Market’ Bilateral

Moving to ‘Open Skies’

• In 1999, the US and Dutch signed a new agreement – effectively ‘Open

Skies’

• Fly between any two points in each country
• Unlimited fifth freedom rights
• No tariff Controls
• Commercial freedom for airlines
• By 2001, over 50 ‘Open Skies’ agreements between the US and other

countries.

Post 1992 ‘Open Market’ Bilateral

Trans-Atlantic Common Aviation Area

• Traditionally, each EU member has had its own bilateral with the US
• 15 already have ‘Open Skies’ Agreements
• However, the EU has long sought to harmonise key market issues between Europe and the US
• In 2002, the European Court judged that the EU has the power to negotiate on behalf of all

member states

• Negotiations started in May 2003
• In November 2005, an ‘Open Skies’ agreement was reached
• Similar content to standard ‘Open Skies’ bilateral, with the EU treated as a whole

Trans-Atlantic Common Aviation Area

• However, some issues remained unresolved…
• Access to Heathrow airport
• Ability to operate domestic flights with the US
• Ownership rules for US airlines
• In December 2006, the US announced that it was withdrawing the

revised ownership rules for US airlines

• Negotiations restarted in early 2007 to try and reach an agreement
• An agreement was reached in March 2007 and approved by all parties
• Became effective on 30th March 2008

EU-US Open Skies Agreement

Second Stage Negotiations

• Article 21 – of the Chicago Convention stipulates that “Each

contracting State undertakes to supply to any other contracting State

• r to the International Civil Aviation Organisation, on demand,

information concerning the registration and ownership of any particular aircraft registered in that State…”

• In the Convention, this provision is part of the chapter on nationality
• f aircraft, itself placed in the part on “Air Navigation” addressing

the principles designed to facilitate navigation, including the change

• f an aircraft’s registration from one State to another.

Second Stage Negotiations

• Article 21 sets out areas for further negotiation
• Further liberalisation
• Foreign investment opportunities
• Effect on environmental and infrastructure constraints on traffic rights
• Further access to government financed air transport
• Provision of aircraft with crew
• Article 21 also sets out timescales
• Negotiations to begin within 60 days of the start of Open Skies treaty
• Progress review after 18 months
• Further 12 months to reach an agreement
• If this deadline is not met, then either party can revoke the treaty
• Deal would end about 12 months later

Response to Open Skies

• Airlines have responded in a number of ways
• Increased Trans-Atlantic services (Aer Lingus)
• Airlines moving to Heathrow
• Delta, Continental, Northwest, US Airways
• Slot trading with alliance partners
• Still retain Gatwick operations
• New services by airlines outside their own countries
• Air France – Heathrow to Los Angeles
• British Airways – New York to Brussels/Paris ad ‘Open Skies’

The Result of Deregulation

• Deregulation has opened up the aviation industry over the past 40 years
• Much of the initiative has come from the US
• Major effects on market access, pricing and other aspects of airline

activities

• More recently, deregulation within Europe has opened the market even

more

• Domestic and international deregulation has also been a necessary

stepping stone for Low-Cost Carrier’s business model

• However, several public sectors is still bound up by bilateral service

agreements based on the Chicago Convention

• Further negotiations are needed to fully open the market and allow inter-

continental mergers

Airport Commercialization and Privatization

Airport Commercialization and Privatization

• In the 1970s, most airports around the world were typically

government owned

• National Level [I.e. Heathrow, Johannesburg, Dublin, Paris CDG, Sydney]
• Local Level [I.e. Regional UK airports, US airports]
• Mixed [I.e. Frankfurt, Amsterdam]
• Managed in three different ways
• Directly by the government
• Particularly in Asia, Middle East, Africa and South America
• Semi-autonomous
• Examples include Heathrow and Amsterdam
• Concession with some private sector involvement
• I.e. Venice and Zurich

Airport Commercialization and Privatization

• In between 1970s and 1980s, several airports saw a growth in

commercialisation

• Reflected airline privatisation
• Recognised that airports were commercial enterprises
• Increased focus on commercial over operational issues
• Establishment of independent airport authorities
• Generated a tension in between private and public sector.

Airport Ownership

• FOR airport privatisation
• Reduce the need for public sector investment
• Free access to commercial markets
• Reduce government control
• Freedom to diversify
• Improved efficiency
• Greater competition
• AGAINST airport privatisation
• Airports are national/regional assets
• Political beliefs
• Monopoly position
• Priority to shareholders over local people

Types of Airport Privatisation

• Share flotation
• Trade sale
• Concession
• Project finance privatisation
• Management contract

Historical Pattern of Ownership

• During WWII, all airports taken over for military use
• In 1947, the Ministry of Civil Aviation took over management of 44

airports

• Aimed to ensure finance available for the development of airports
• A white paper in 1961 transferred loss making airports to local

authority ownership

• airports making substantial losses so transferred to local authority –

buck passing and also to provide more local management focus

Historical Pattern of Ownership

• In 1966, the British Airports Authority was established to manage and

develop the main international airports

• BAA established for major airports but not privatised. Heathrow, Stansted,

Gatwick and Prestwick

• Although the majority were publicly owned, there was a lack of an

effective policy framework

• Airports in the Scottish Highlands were owned by central Government

through the Civil Aviation Authority

• Lack of effective framework – each authority carried out developments at

their own airport with no consideration for others

Airports Act 1986

 Objectives

 To encourage enterprise and efficiency in the operation of major airports by

providing for the introduction of private capital (Privatisation)

 Air transport facilities should not in general be subsidised by the taxpayer or

the ratepayer. Airports, whoever their owners, should normally operate as commercial undertakings (Commercialisation)

Aims of Airport Privatisation

 Improve efficiency  Reduce subsidies  Reduce burden on Government  Provide access to private capital  Gain political advantage  Introduce commercially focused management

Airports Act 1986

 BAA quoted on the stock exchange

 Regulated by the Civil Aviation Authority (CAA) which determines the prices it

can charge airlines

 Airports with an annual turnover in excess of £1m formed into a

Companies Act company

 100% of shares owned by local authorities

Public Sector Airports

 100% owned by local government  Airports provide wider economic benefits  Restricts capital available for growth  1998 White Paper proposed to release local authority airports with

sound financing from the public sector borrowing requirements

Public Sector Airports

Manchester Newquay Inverness Luton

Partially Privatised Airports

48.25% Airport Group Investments 49% Copenhagen Airport 80.1% Omniport 95% MAR Properties Newcastle 75% Peel Holdings Durham Tees Valley Blackpool Birmingham Humberside Norwich 82.7% Manchester Airport

Privatised Airports Non Municipal Airports Ex Municipal BAA Sold in

• ne go

Sold in stages Ex Public Sector Private Developments

Aberdeen Edinburgh Gatwick Glasgow Heathrow Southampton Stansted Bournemouth Cardiff East Midlands Southend Coventry Plymouth Exeter Bristol Liverpool Prestwick London City Robin Hood

UK Airport System

The Sale of BAA

 During 2006, BAA was sold to Ferrovial and de-listed from the Stock

Exchange

 Valued the assets of BAA at £10bn  Sale raised a number of issues

 How would it affect charges at the main London airports?  Is it right for national assets to be owned by a foreign firm?

Share Flotation

• Airport company’s share capital is issued and traded on the stock

market

• Government owner will give up total or partial ownership, while

transferring economic risks and effective control to the new shareholder

• Total or partial privatisation of this type will totally eliminate or certainly

reduce the need for state involvement in the financing of airport investment

Trade Sale

• Some or all of the airport will be sold to a trade partner or consortium of

investors

• Management and technological expertise of the partner as well as

financial capabilities will be taken into account when agreeing on sales

• The strategic partner is an established airport operator or the purchasing

consortium will contain a member with airport management experience

Concession

• Airport management company or consortium will purchase a

concession or lease to operate the “privatised” airport for a defined period of time, commonly between 20-30 years.

• Financial terms and the types of lease will vary but typically this
• ption will involve an initial payment and a guaranteed level of

investment and/or payment of an annual fee.

• The concessionaire will take full economic risk and will be

responsible for all operation and future investment

Project Finance Privatisation

• A company will usually build or redevelop and then operate an

airport or specific facility, such as a terminal, for a certain length of time

• Generally such an agreement will require no upfront payment but

the operating company will bear all the costs of building or re- developing the facility

• At the end of this period, ownership will revert back to the

government

Management Contract

• Ownership remains with the government and the contractor takes

responsibility for the day-to-day operation of the airport

• The contractor will pay a management fee, usually related to the

performance of the airport

Why Privatization

• Cost efficiency and outsourcing opportunities
• Develop airport policy to guide potential private investors
• Strategic and business approach to long-term needs
• Increase in non-aviation revenues
• Better commercial revenue decision making
• I.e. advertising, land leases, space rentals and marketing airport

facilities etc.

• Attract private financing
• Improve service quality

Impact on profitability

Airports Act 1986 on profitability?

Average Profit per Passenger

£/pax 1988/89 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/2000 Private 2.08 2.08 2.49 2.34 3.10 3.49 3.83 3.71 Part-privatised 5.10

• 5.55
• 4.73

0.78 1.31 2.99 2.04 Public 1.11 1.10 0.64 0.63 0.60

• 0.05

0.89 0.00

Share of Passenger Trips by Ownership

Owner Million passengers per year Percent of market BAA 144.3 63% Manchester Airport Group 27.6 12% Abertis 15.7 7% Peel Airports 5.9 3% Other 24.6 15 %

Other issues

 Investment in infrastructure

 The Government has proposed significant levels of investment in the South

East over the next 30 years

 Is it in the best interests of consumers and airlines that this is provided by

• ne operator?

 Experience with competition in regional airports

 These have grown significantly in recent years  Often there is competition between airports  Attracts a range of different airlines

Air Privatisation Conclusion

 Traditionally, airports have been viewed as strategically important assets  However, have evolved into commercial organisations  Privatisation is the next step in this and is gaining momentum worldwide  The first country to introduce privatisation was the UK

Air Privatisation Conclusion

Air Service Regulation

• The Role of Government in Air Transport
• State-owned Airlines
• Forms of Regulation
• Bilateral Air Service Agreements

Role of Government…then

 The Paris Convention of 1919

 States have full sovereignty over the air space above their territory  Allowed all aircraft from contracting states access to airspace  Required certificates of airworthiness for aircraft and licences for pilots  Established international ‘rules of the air’

 Signed by 32 countries

Role of Government…then

 Early airlines were privately run  However, the small size of the market saw many go out of business  The 1920s and 1930s saw Governments establish national airlines

 Significance of air transport in development and trade  Require a stable national airline  Bilateral air service agreements allowed governments to designate an airline

to operate services

 Trend continued after World War 2 as countries rebuilt their airlines

Role of Government…now

bilateral agreements

Airline Ownership

Government Private

Problems with State-owned Airlines

Private airlines may have

services

Doganis (2001) Backx et al. (2002)

Problems with State-owned Airlines

 No clear development strategy

 Over-extended or historical network

 For example, Air Zimbabwe operates from Harare to Beijing and (soon)

Guangzhou

 Load factors are as little as 10%

 Too many aircraft types

 Average number of aircraft types

Types of Regulation

 Non-economic regulations

 Airworthiness of the aircraft  Maintenance  Number of flight crew  Operating procedures  Aviation infrastructure

 Economic regulation

 Exchange of air traffic rights (‘freedoms’)  Control of fares and freight tariffs  Control of flight frequency and capacity

Fares Regulation

 From 1945, all air fares were set by the International Air Transport

Association

 In the 1970s, new airlines outside IATA emerged that offered better

service or lower prices

 Thai, Singapore Airlines

 In 1979, flexibility was introduced to the pricing structure  IATA tariffs still provide the basic fares structure in bilateral agreements  Also allows interlining

Bilateral Air Service Agreements

 These regulate air transport between two states  They represent the core of the regulatory regime  Contents include

Case Study: US/UK

 Bermuda 1 was signed in 1946

 Allowed two airlines from each country access  Double approval of all fares  Single entry point of Heathrow

 By 1976, pressure was mounting to allow more airlines access  In 1977, Bermuda 2 was signed and is still in force today

Bermuda 2

 Two airlines from each country can use Heathrow

 UK – British Airways and Virgin Atlantic  US – United and American Airlines

 Only 14 named cities can be served from Heathrow  Further restrictions on those from Gatwick  Fifth freedom rights

 US airlines to Berlin, Frankfurt, Hamburg and Munich  Air India, El Al, Iran Air and Kuwait Airways to New York  Air New Zealand to Los Angeles

Bermuda 2

 Double designation on two routes of each country’s choosing  Double designation by either UK or US is also possible if

 Total passengers on a route exceeds 600,000 for two consecutive years  Number of passengers carried by the airline of that country exceeds 450,000

for two consecutive years

 Capacities and fares have to be agreed by the UK and US regulatory

authorities

Air Service Regulation Conclusions

 Governments continue to play a significant role within the air transport

industry

 This is in recognition of the key role air transport plays in the economic

development of a country

 They retain a financial interest in many airlines  Traditionally air services have been restricted by bilateral agreements,

which has impacted upon the industry

 During the 1980s, liberalisation of air services has become more

widespread

Airport Cargo and Customs

Airport Cargo and Customs

• Air cargo service are provided by a segmented group of air carriers that

provide various services based upon wide range customer demands.

• The four basic types of carriers provide these services:
• Integrated express operators
• All-cargo carriers
• Commercial service passenger airlines
• Ad-hoc cargo charter carriers
• Provides three primary types of air cargo service options:
• Integrated express service
• Freight forwarding
• Airport-to-Airport

Airport Cargo and Customs

• Integrated express carriers move the customer’s material door-to-door,

providing shipment pickup, transport via air or truck, and delivery

• Integrated express operators include FedEx, UPS, DHL, Airborne Express,

and to a certain extent U.S. Postal Service (USPS)

• Express companies provide next day, document, and small package services

to the customers they serve

• Integrated express carrier operate using a hub-and-spoke system similar to

the passenger airline system

• The hub is the backbone to the integrated express carrier since it provides

connections to each market

Airport Cargo and Customs

 Freight Forwarding

• Freight forwarding companies act as brokers between the shipper and

the carrier (all-cargo, commercial passenger or ad-hoc charter)

• The forwarder handles wide-ranging types and sizes of freight, from

small packages to be consolidated into container loads, to oversized,

• ne-time freight movements.
• These loads are then tendered to an air cargo carrier or commercial

carrier to deliver to the forward’s agent or subsidiary at another airport

Airport Cargo and Customs

 Airport-to-Airport

• Airport-to-airport service is provided by all-cargo, ad-hoc charter and

commercial passenger carrier

• Freight must be dropped off at the airport by the shipper, or the

shipper’s freight forwarder

• Must be picked up at the destination airport by the customer, or the

customer’s freight forwarder

• All-cargo carriers operate airport-to-airport air cargo services for their

customers, but do not offer passenger service

Airport Cargo and Customs

 Airport Cargo and Customs Point of Concerns

• Airport cargo is highly concern with supply chain security
• Cargo operation efficiency are to be measured inside and outside of

the airport

• Dangerous goods handling and storage in cargo terminals
• Cargo under penalty of forfeiture (abandoned cargo, customs

issues, etc)

• Specific Storage requirement goods (pharmaceutical, food, etc)
• Cargo theft

Airport Cargo and Customs

• Regulated Agent are to have the following properties
• Certificate of approval – valid 12 months
• Maintains records – including records of accredited known consignors and cargo security

declarations

• Safeguarding of cargo
• Secure premises protected by trained security officers
• Applies security controls to unknown cargo
• Known cargo to remain sealed with tamper evident seals
• Random inspection of known consignor premises and cargo
• 10% of known consignor cargo consignments to be screened
• Background check, including criminal check of personal
• Job specific training
• Air cargo security familiarization training

Airport Cargo and Customs

 Point of Concerns in Air Cargo Customs and Security

• Known Cargo
• Cargo from a known consignor which ahs been processed, in

accordance with the regulation, by a regulated agent

• Unknown cargo which has undergone appropriate security controls
• Exempted items tendered by a regulated agent
• The originator of goods for carriage who has been accredited and

registered with the CAA

• Known consignor accreditation certificate – valid 12 months
• Establish business with a regulated agent

Airport Cargo and Customs

• Known Consignor
• The originator of goods for carriage who has been accredited and registered

with the CAA

• Known consignor accreditation certificate – valid 12 months
• Establish business with a regulated agent
• Complies with the known consignor requirements which includes:
• Known cargo to be packed and stored in secure premises
• Background check, including criminal check, of personnel
• Cargo to be made tamper evident
• Cargo security declaration to be lodged with a regulated agent – valid 12

months

Airport Cargo and Customs

• Must be dived into 8 sections
• Compliance undertaking
• Organizational structure split into general structure and security structure
• Operational procedures and resource utilization
• Record keeping
• Training
• Recruitment of personnel
• Amendments to manual
• Contingency plans

Airport Cargo and Customs

 Point of Concerns in Air Cargo Customs and Security

• Security Controls
• Screening by physical check (hand search)
• Screening by x-rays
• Subject to simulation chamber testing
• Applying other means both technical and bio sensory, such as vapor

trace detectors and dogs

• Maturing by delaying transportation of cargo
• Air way bill or other valid dispatch document to accompany every

consignment

Airport Cargo and Customs

 Point of Concerns in Air Cargo Customs and Security

• Security Screening Equipment
• Must comply with the minimum technical requirements approved by

the commissioner for Civil Aviation

• Intended to prevent the introduction of dangerous or prohibited articles

Airport Cargo and Customs

• Transshipment cargo (only if cargo meets minimum security requirement

at origin and transit points)

• Human remains
• Live animals
• Live saving materials, essential medical supplies, human organs, blood

plasma or similar materials

• Nuclear materials
• Must be tendered to the air carrier (or verified by the Air Carrier in

respect of transshipment cargo) by a regulated agent who must apply certain minimum security measures

Discussion and Conclusion

Discussion and Conclusion

• Aviation policy help negotiate bilateral and multilateral air service

agreement with other countries

• Such agreement provide basis for airlines of the countries involved to

provide international air service for passengers, cargo and mail

• Through air service agreements, Thailand has developed a

procompetitive operating environment for Thai airlines to foreign countries

• With the rapid economic development, competition between airlines has

helped ensure the benefits of consumers when using air –related services

• Aviation policy plays a major role in connecting government, aviation

sectors and consumers

Q&A