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Air Transport Sector Restructuring

Explore the concept of air transport sector restructuring for improved services, financial performance, and productivity. Discover the candidates, motives, and considerations involved, along with typical options and evaluation criteria.

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Air Transport Sector Restructuring

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  1. Air Transport Sector Restructuring Victor Craig Director Air Transport Halcrow AirPlan - Malaysia

  2. Air Transport Sector Restructuring What is Restructuring in Air Transportation ? “Any change in form of administration, function, operation and ownership… ...to achieve improved service delivery, staff productivity and financial performance”

  3. Air Transport Sector Restructuring Who are the Principal Candidates ? • National Air Carriers • Civil Aviation Administrations • Airport Administrations

  4. Air Transport Sector Restructuring Why Restructure Civil Aviation ? • Improve delivery of services to users • Improve financial performance • Remove counter productive constraints imposed by Government structures but - Radical change not always best solution - Issues & Implications must be studied - What has been done elsewhere may not suit another application

  5. Air Transport Sector Restructuring National Air Carrier Restructuring • Many National Carriers have been restructured • Moved away from Government control • Reinforced commercial focus • Involved ownership change - full or partial privatization • Involved major route, service and fleet rationalization • Involved improving staff productivity

  6. Air Transport Sector Restructuring Restructuring Civil Aviation Administration • Several Developed Nations have restructured Civil Aviation & Airports Administration • ICAO has taken initiative to implement restructuring in Developing Nations

  7. Restructuring Civil Aviation Administration Form of Restructuring Differs 1. By Corporate / Legislative Concept • Government Entity • Autonomous Entity • Private Entity 2. By Function • All Civil Aviation Functions Retained • All Except Specific Functions (e.g Accident Investigation) • Only Specific Functions (i.e. separate ATS or Airports)

  8. Restructuring Civil Aviation Administration Typical Options • Restructure within Government • Separate Parastatal Agency • Separate Not-For-Profit Corporation • Hybrid Structure - Government & Commercial Government Regulator & Single or Multiple Commercial Agencies for Specific Functions No single solution suits all cases Over time, one option may evolve to another

  9. Restructuring Civil Aviation Administration Typical Evaluation Criteria •Safety & Security •Ability to Raise Capital •Staffing •Commercial Self-Sufficiency •Functional Overlap•Max Commercial Potential • Reduced Govt Funding•Future Flexibility •Transition Costs •Balance Profit Motive & Public Interest

  10. Restructuring Civil Aviation Administration Restructuring Considerations for Airports 1. Can airport(s) be self-sustaining - now or in the future ? Positive cash flow for ROI ? 2. Is privatization appropriate, rather than commercially-focused public corporation ? 3. What are the motives for privatization ? 4. Privatization traps present ? (profit motive effect, competing markets and environmental management conflict)

  11. Restructuring Civil Aviation Administration Restructuring in Other Countries Developed Nations UK, Australia, New Zealand, Canada Developing Nations - 2 Examples Botswana (Africa) & Jordan (Middle East)

  12. Restructuring Civil Aviation Administration Developed Nations - United Kingdom • Dept. of Transport - International Affairs • Civil Aviation Authority - Regulation (Parastatal) • Air Traffic Services (NATS) - Parastatal - to be Privatized Later • National Airports - Originally British Airports Authority (Parastatal) - Privatized in 1986 - now BAA plc. • Other Major Airports - Now Privatized Corporations - Major Investors & Airport Developers

  13. Restructuring Civil Aviation Administration Developed Nations - Australia • DOT - International Affairs, Aviation Security • Civil Aviation Safety Authority - Regulation (Parastatal) • Air Services Australia - Parastatal Agency • Bureau of Air Safety Investigations - Parastatal • National Airports - Recently Privatized (except SYD) - Consortia of Investors incl. Foreign Airports BAA AMS • Other Airports - Municipal & Private

  14. Restructuring Civil Aviation Administration Developed Nations - New Zealand • Civil Aviation Authority - Regulation (Parastatal) • Airways Corporation - ATS (Corporation) • National Airports - Initially corporatized within government - Now privatized - major investors or public shares

  15. Restructuring Civil Aviation Administration Developed Nations - Canada • Transport Canada - Regulation (Government Dept) • Transportation Safety Board - Accident Investigation • NAVCANADA - ATS/ANS (Not-for-profit Corporation) • National Airports - Devolution to Local Levels - Primary now Airport Authorities (NFP Corporations) - Lower Level transferred to Local Authorities etc.

  16. Restructuring Civil Aviation Administration Developing Nations - Botswana • Department of Civil Aviation (Government) 950 staff - 6 Divisions + 4 Administrative Sections • Reliance on services “bought-in” from Government • Confused divisional roles & cost structure • All revenues to National Treasury Restructuring with ICAO assistance

  17. Source : Feasibilty Study for Establishment of a Civil Aviation Authorityt ICAO : TCB : BOT / 92 / 001 Sypher : Mueller International Inc & AirPlan Aviation Technical Services Inc

  18. Restructuring Civil Aviation Administration Developing Nations - Botswana Recommended restructure as parastatal CAA • ICAO managed project • 4 options examined • Parastatal Civil Aviation Authority preferred • Responsible for all functions • Revenues to be retained by CAA • Staffing reduced to 917 in 5 Directorates

  19. Source : Feasibilty Study for Establishment of a Civil Aviation Authorityt ICAO : TCB : BOT / 92 / 001 Sypher : Mueller International Inc & AirPlan Aviation Technical Services Inc

  20. Restructuring Civil Aviation Administration Developing Nations - Kingdom of Jordan • Civil Aviation Administration (Government) 1480 staff - 20 Departments • Theoretically profitable due to overflight revenues • All revenues to National Treasury • Inadequate budget to maintain infrastructure Restructuring under Canadian (CIDA) Funding

  21. Source : Feasibilty Study for Restructuring of a Civil Aviation Authorityt Architects Crang & Boake Inc, Sypher: Mueller International Inc. and AirPlan Aviation Technical Services Inc

  22. Restructuring Civil Aviation Administration Developing Nations - Kingdom of Jordan Recommended restructure as corporate CAA • Canadian funding for consultants • 5 options examined • Corporatized Civil Aviation Authority preferred • Responsible for all functions • Revenues to be retained • Staffing down to 870 in 5 Business Units

  23. Source : Feasibilty Study for Restructuring of a Civil Aviation Authorityt Architects Crang & Boake Inc, Sypher: Mueller International Inc. and AirPlan Aviation Technical Services Inc

  24. Implementing a Civil Aviation Authority Requires : • Proper study of options & functions - full definition of CAA concept • Review staffing & develop job descriptions • Establish salary scales & benefit schemes • 5-Year capital & operating budget, & implementation funding for transition process • Prepare necessary legislation • Appoint “Facilitation Team” to manage transition process

  25. Restructuring Civil Aviation Administration Final Thoughts 1. Restructuring can be approached in stages 2. Can create Independent Authority first - devolve or privatize elements later - if appropriate 3. Many airports will likely never qualify as commercially self-sufficient - need to be retained in CAA or in Airports Authority for subsidy

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