Jun 26, 2008

Aviation Legislation Amendment (Intl Airline Licences & Carrier’s Insurance)

Aviation Legislation Amendment (Intl Airline Licences & Carrier’s Insurance) Bill 2008


The Aviation Legislation Amendment (International Airline Licences and Carriers’ Liability and Insurance) Bill 2008 will improve and modernise two regulatory programs related to the aviation industry.

Those two programs are:

  • The system of International Airline Licences; and
  •  The system of mandatory airline insurance.

The Bill will overhaul the system of International Airline Licences so that existing licences can be reissued with standardised and consistent conditions.

It will also enhance the Government’s ability to check that airlines are complying with Licence conditions, and rectify a range of administrative deficiencies.

The system of International Airline Licences is established under the Air Navigation Act 1920 and its accompanying Regulations.

It ensures scheduled international air services are operated in accordance with bilateral agreements and arrangements between Australia and our international aviation partners.

They also act as a final checking mechanism to ensure safety and security approvals are in place prior to the commencement of operations.

There are several problems associated with the current administrative framework for International Airline Licences.

For example, once a licence is issued it remains in force indefinitely unless an airline contravenes a provision in the Air Navigation Act, the Air Navigation Regulations or conditions in the licence itself.

As a result, many licences remain in force even though the airlines they were issued to have since ceased to exist or operate services to Australia.

The framework is also unnecessarily complicated by the regulatory structure of the Licence scheme.

Currently, some aspects of the regulatory structure are contained in the Air Navigation Act, and other aspects are contained in the Regulations.

This complicates the ongoing management and auditing of the Licence process.

This Bill will move the entire regulatory framework for International Airline Licences into the Air Navigation Regulations 1947.

The Bill allows for the granting, variation, suspension and cancellation of international airline licences by the Secretary of the Department of Infrastructure, Transport, Regional Development and Local Government under Regulations.

Regulations will be drafted to update and rectify the current administrative deficiencies in the International Airline Licence system.

The Bill also removes a range of redundant definitions in the Air Navigation Act.

The definitions relate to issues such as aviation security, which are now dealt with under the Aviation Transport Security Act 2004.

The second regulatory program overhauled by the Bill is Australia’s system of compulsory non-voidable insurance for passenger carrying air operators.

Under the Carriers’ Liability Act, carriers are required to maintain minimum levels of insurance to protect passengers in the event of an accident.

The scheme is supplemented by provisions in the Civil Aviation Act, which allow the Civil Aviation Safety Authority – or CASA – to enforce the requirements as part of their management of safety issues via the Air Operator’s Certificate.

The Bill will improve the ability of CASA to proactively enforce insurance requirements for air carriers.

It will also streamline administrative processes.

Under the new system, carriers will no longer need to obtain a certificate of compliance from CASA before flights are operated.

Instead, operators will be obliged to provide CASA with a declaration indicating they have obtained insurance. Failure to notify CASA would incur a small administrative penalty.

However, operators will continue to be authorised to operate services as long as they have an appropriate contract of insurance.

Amendments to the Civil Aviation Act will ensure that the authority to carry passengers under an Air Operator’s Certificate will only be valid while operators hold an appropriate contract of insurance.

If an operator allows its insurance to lapse, authorisation to carry passengers will automatically lapse, but can automatically be reactivated as soon as an operator secures appropriate insurance.

If at any time an operator carries passengers without appropriate insurance, it will be subject to administrative and criminal sanctions.

Additional amendments will be made to provisions in the Civil Aviation Act relating to the short term approvals for non-scheduled international flights that are granted by CASA.

In the case of these special approvals, the Bill proposes that carriers which do not have a commercial presence in Australia will be required to prove that they have an appropriate contract of insurance before they are granted approval to operate the service.

In such cases, the carrier will not be able to make a declaration after conducting the service. This is due to the increased difficulty of auditing a carrier that does not have a commercial presence in Australia.

The Bill will improve carrier compliance with the insurance requirements.

This is achieved by providing CASA with the necessary powers to regularly audit carriers, to ensure carriers have maintained appropriate insurance at all appropriate times.

If CASA identifies an operator that has carried passengers without appropriate insurance, the carrier will be subject to a range of administrative actions and criminal penalties under the Civil Aviation Act, in addition to criminal penalties that are currently imposed under the Carriers’ Liability Act.

These two regulatory proposals have been the subject of significant industry consultation.

When a discussion paper was released some three years ago in 2005, no objections to the proposal were raised.

A Regulation Impact Statement relating to the proposal to reform the system of IALs was prepared in 2006 and is included in the Explanatory Memorandum.

The expected financial costs to the Government to implement this Bill are anticipated to be minimal.

Although the Regulation Impact Statement anticipated a small administrative impost to Government, this estimate has since been revised, and it is now expected that any additional financial impact will be able to be absorbed by current resources.

The Bill provides long overdue and significant improvements to two important regulatory systems that promote a safe and efficient Australian aviation industry.