Local commercial and general aviation sector under policy pressures
he commercial and general aviation (GA) sector in South Africa is currently facing significant challenges that really need to be addressed if it is to remain healthy over the coming years. So cautions the Commercial Aviation Association of Southern Africa (Caasa).
The association is concerned with the “broad centre” of the aviation industry. That is, it excludes, at one end, sports aviation and, at the other, scheduled airlines. Companies that operate jet airliners, but not on a scheduled basis, do fall within the ambit of the organisation. Caasa currently has some 220 companies as members, and these members operate a total of around 6 200 aircraft, both fixed-wing and helicopters (not all in South Africa). “We are the largest commercial/GA association on this continent,” points out Caasa CEO Leon Dillman.
The aim of the association, it states on its website, is “to serve, promote, watch over, advance and mutually protect the interests of the general and commercial aviation industry, and to act as a link between the industry and government, government agencies and other public bodies within the Southern African region.” It sums up its activities as representation, campaigning (for changes that will benefit the industry), monitoring (any changes in the law and in the markets), collectivism (bringing together the players in the sector), gathering information (directed to its members), acquiring benefits (which membership brings to the members) and monitoring a code of ethics (covering both aviation and business activities) to which all members must subscribe.
Caasa was originally established as the Commercial Aviation Association in June 1944, while the Second World War still raged (but Allied victory was clearly only a matter of time). The formal purpose of the association was stated, at that time, to serve as “a permanent association for the furtherance of civil aviation in Southern Africa”, so the regional focus was explicit from the start. The original membership was 25 people, many of them representing companies.
Regulation, Yes; Overregulation, No
“We must fulfil the requirements of the International Civil Aviation Organisation, or ICAO,” he stresses. “But we are experiencing overregulation, which actually makes compliance difficult. This overregulation is ostensibly in the name of safety, but all too often it seems to be regulation for the sake of regulation.”
Regarding manned aircraft, a particular area of concern is Part 93 of the regulations of the South African Civil Aviation Administration (SACAA). “Part 93 covers corporate operations,” he explains. “The SACAA seems not to understand that the ability of industry to comply with Part 93 is limited by problems within the drafting of the current regulations, as well as omissions.
The current risk is that there is a sincere possibility of insurance repudiation by the underwriters should industry, and most especially private operators unable to comply, become involved in a claim. The route presented as the way forward by the SACAA does not deal with the clear and present danger to the industry.”
Part 24 and Part 44, which cover small and minor modifications to aircraft, are also causing a headache for the industry. These modifications include such things as replacing old radios with new ones and fitting a new satellite navigation system, or geographical positioning system, to light aircraft. “These need full SACAA approval, as if they were significant changes.
Getting such approval cannot be done quickly. Without such approval, the aircraft cannot be legally flown, causing great inconvenience to the owners of the light aircraft. We have had this problem for a few years now.
“But the really big problem is drones,” he highlights. More properly called Remotely Piloted Aircraft or Air Systems (RPASes) or Unmanned Air Vehicles (UAVs) or Systems (UASes), the use of drones in civilian applications is growing very rapidly worldwide. The SACAA’s regulations regarding RPASes, known as Part 101, came into effect in July 2015.
“It is good to have regulations for UASes, but it currently takes 18 months to register a small drone! And registering a drone and getting a drone pilot’s licence [are] very expensive,” reports Dillman. “This is totally unacceptable. Drones have the potential to create many new jobs and assist businesses in various sectors through a variety of applications. The slow processes at the SACAA are preventing these developments from happening in South Africa. What the SACAA is doing now is completely impractical and is crippling a sector that is booming elsewhere. We need something practical.”
Not that relations with the SACAA are in any way adversarial. “In general, the SACAA supports the local industry and tries to help it,” he emphasises. “Also, in general, we have a good working relationship with the SACAA. We don’t agree with everything they do, but they are always willing to talk things over.” The problem is that aviation is, and always has been, a fast-moving sector. And in some sectors of the industry – most obviously the RPAS – that movement seems to be accelerating. Delays caused by overregulation or slow approvals processes cause real financial loss to owners and operators.
Another issue – one outside the ambit of the SACAA – that is causing problems is broad-based black economic empowerment (BBBEE). “We are receiving a lot of complaints about BBBEE.” Here, the issue is not shareholding/ownership but staffing. The aviation industry needs skilled personnel to maintain and fly its aircraft. “Because of this requirement for skilled staff, it is very difficult for the sector to meet some of the BBBEE requirements,” he states.
Together, these different factors have an impact. “Because of over-regulation and BBBEE problems, a number of local companies are moving their operations to neighbouring countries, such as Namibia, or even as far away as Malta,” he reports. “International companies are moving their centres of gravity for their African operations to other African countries, such as Nigeria.”
Yet another problem is the foreign exchange rate. “Rand weakness is another issue,” he observes. “This [makes] the importing of aircraft more expensive. This is reducing imports and reducing the sales of both new and used aircraft. This is a serious issue for us. However, exporting aircraft, which are sold in US dollars, makes sense. So a lot of aircraft are being sold into Africa. These sales are near an all-time high now. We refurbish aircraft here and then re-export them.”
“Our association is growing at a tremendous rate,” highlights Dillman. He admits this might be the result of the stresses the industry is encountering at the moment. Interestingly, membership includes some State-owned companies. Caasa has eight “subassociations”, each covering a specialist area or related areas within the commercial/GA aviation sector. They are Amosa, Cuaasa, AAA-SA, Asaat, Atosa, Hasa, Aado, and Anso.
Amosa stands for Aviation Maintenance Organisations of Southern Africa. This group encompasses aircraft maintenance, and repair and overhaul (MRO) organisations. Members include the MROs of scheduled Southern African airlines and South African Airways Technical (which is a subsidiary company of the South African Airways Group, not a unit of the airline itself).
Perhaps oddly, its membership also includes local aircraft and aircraft components manufacturing companies (there is also a separate association of aircraft manufacturers in South Africa, which is not part of Caasa).
Cuaasa is the Commercial Unmanned Aircraft Association of Southern Africa. Its aim is to serve, advance and defend the interests of the region’s commercial UAV industry, and acting as a bridge between the industry and government, government agencies and other entities.
AAA-SA is the abbreviation for the Airports and Aerodromes Association of Southern Africa. Its membership includes Airports Company South Africa (Acsa) and it looks after the interests of both Acsa and non-Acsa airports.
Asaat stands for the Association of Southern African Aerospace Traders and Allied Industries. It represents companies that buy and sell aircraft, aircraft spares and components. Sellers of other aviation products and publishers of aviation magazines are also members of this grouping.
Atosa is the Aviation Training Organisations of Southern Africa. Its membership comprises the flying schools and ground (MRO) schools.
Hasa is the Helicopter Association of Southern Africa. In addition to operators and maintainers of helicopters, its members include local operations belonging to major helicopter manufacturers, such as Airbus Helicopters Southern Africa.
Aado is the abbreviation for the Associa- tion of Aviation Design Organisations. It is the grouping for aircraft designers.
Anso is the Aviation Non-Scheduled Operators of Southern Africa. Its members are charter operators, medical evacuation organisations and all other nonscheduled air transport operators.
Caasa recently launched its Aviation Activity Index (CAAI). “What is important about this index is that it is the first of its kind in Africa,” points out Dillman. The CAAI is a composite index of aviation activity developed to improve knowledge about conditions in the sector. “We decided we’d really like to know what is going on in this segment of the aviation industry,” explained Caasa board of directors member Dr Roelof Botha at the launch of the index.
More formally, in its press release, Caasa stated that the decision to develop the CAAI was based on, “firstly, the recognition of the indispensable role that commercial aviation plays in facilitating the rapid transport of decision-makers in all spheres of society; secondly, Caasa has identified a need to contribute to the knowledge base of conditions in the aviation industry by forging a number of key indicators into a composite index, weighted in terms of their perceived contribution to the general trend in commercial aviation”.
The first quarter of 2014 serves as the base for the index, equal to 100. It is composed of 25 indicators organised into seven groups. These groups, with their weight in the complete index, comprise air traffic movements at Acsa airports (30%), spares imports by value (20%), aircraft exports by value (15%), aircraft imports by value (13.4%), air traffic movements at other airports (10%), helicopter imports by value (6.6%) and aircraft imports by quantity (5%). “Combined in an appropriately weighted index, these indicators provide an objective and balanced measure of economic activity in various spheres of the commercial aviation industry,” stated Botha.
“I hate to tell you, but the first quarter [of 2017] was a disaster,” he reported. “Most of our indicators took a tremendous dip in the first quarter.” Imports of larger helicopters fell by 43%, imports of small aeroplanes collapsed by 80%, imports of aeroplanes with a weight of between 2 t and 15 t dropped 71%, imports of under- carriages declined 68%, exports of smaller aeroplanes fell by 70% and exports of medium-sized aeroplanes dropped 62%. For example, the average quarterly value of aircraft imports last year was just over R700-million, but during the first quarter of 2017 was only fractionally above R300-million. Also, air traffic movements at East London airport declined by 27%.
“I’m not 100% sure what went wrong,” he admitted. “It is a pretty volatile industry.” There are, however, a number of very likely reasons for the decline. These are the weak growth of the South African economy, the falling levels of business confidence and high domestic interest rates, which “have eroded the competitiveness of the domestic aviation industry via the high cost of capital”.
However, some indicators showed “solid” performance. These were imports of smaller helicopters, imports of aircraft spares, exports of helicopters, and air traffic movements at the Cape Town and Durban airports. Thus, while the average quarterly value of spares imports during 2016 was close to R1-billion, during the first quarter of this year, it approached R900-million – down, but not dramatically.
“The good news is that the real annual average growth [in the sector] has been 6.3% since 2014,” affirmed Botha. In comparison, the national economy has performed much worse, with an average annual growth rate of a little less than 1%.
“We now know the industry has a problem,” concludes Dillman. “Because we know there is a problem, we can look to fix it.”
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