Industry’s most profitable booking service?

The UK CAA has released a consultation on its proposed Scheme of Charges for its 2024/2025 fiscal year, which if enacted as per current proposals will see the UK Instrument Rating (IR) flight test fee rise to its highest level ever, breaking the £1000 mark for the first time.

The proposals, which are open to public consultation until 15 January 2024, start with a blanket price increase of 5.3% on all charges (except spaceflight regulation) aligned at one percent below the Consumer Price Index with Housing Costs (CPIH) inflation level. This of itself has been branded controversial by some industry commentators, given that it was based on the September peak inflation rate of 6.3%, which has since dropped by nearly two percentage points and now effectively puts the CAA’s rate above the current rate of inflation, rather than one percent below it as was the apparent aim. It is accurate to state, however, that September is the month that the CAA historically chooses to align its rates to.

Perhaps more controversial is the CAA’s proposal to add a further three percent levy to cover its estimated costs in “enabling innovation” in the aviation sector, including the Future Flight Programme which aims to facilitate the integration of new airspace users, namely the RPAS, eVTOL and air taxi industries through airspace modernisation and technological, training, and regulatory development.

Noting that its costs pressures are rising next year due to UK Government ending its funding assistance programme enacted during COVID-19, the CAA says: “Going forward, these are new cost pressures that the CAA will need to absorb in addition to the efficiencies it is delivering as part of the recently published ALB review recommendations. Despite this, with an ever-increasing remit, and with rapid changes in technology within the aviation sector, particularly around RPAS and air taxis, we are seeking a modest financial contribution from industry in excess of the rate of inflation as a means to support our strategic focus on aviation innovation, equating to an average price increase of 7.5% in total, with a maximum price increase of 8.3% on our safety charging schemes.

This increased focus on innovation is critical to our role as an enabler of the aviation industry, with a programme of work which will provide benefits to all users, along with ensuring we are prepared for the near-term regulatory challenges change in technology is bringing.”

The CAA defines four categories for its regulatory focus: safety, consumer protection, aviation security and spaceflight. Of the four categories, safety is the largest category, encompassing AOC licensing, personnel licensing, aerodrome and ATC licensing, aerial application certificates, en route ATC regulation, aircraft registration and instrument flight procedures.

It is also the category that will need to absorb the largest blanket price increase, set at 8.3%. Consumer protection (covering air transport licensing, airport regulation and the ATOL scheme), and aviation security, are meanwhile looking at a blanket 5.3% increase in fees, while the spaceflight category is exempt from any price increases due to separate financial support provided direct from Government. The training industry’s fees fall into the safety category and it is therefore set for a blanket 8.3% increase across all regulatory charges, including personnel licensing. Set currently at £924, this will put commercial flight test fees at over £1,000 for the first time, including the IR flight test.

With the CAA apparently having a mandate to achieve cost recovery for the services it provides (plus a modest return), and to limit cross subsidy to other services, members of the flight training industry are continuing to question how the regulator can justify such a high fee for what is effectively just a basic booking service.

For the last 12 years the CAA has been using industry examiners to conduct flight tests for commercial pilot cadets, following the closure of the last of its Regional Flight Test Centres in 2011 after the retirement of a number of its internal examiners who the authority had decided not to replace. Instead, commercial pilot flight tests are now conducted by a group of industry examiners appointed by the CAA, given the title of Authorised Flight Examiners (AFEs).

Prior to the switchover from internal examiners to AFEs the CAA had charged £785 for the initial Instrument Rating flight test – the single most expensive flight test a commercial pilot cadet has to complete during their training. The fee was understood to have been set at a level to cover the costs of employing 15 examiners and running Regional Flight Test Centres but was never subsequently reduced after the CAA had devolved the work to industry.

Instead, under new proposed rules published in a Scheme of Charges consultation in 2011, the CAA would charge £534 for processing the booking and appointing an examiner, and the AFE would then charge a fee on top. As the effective ceiling was then £800, given that was the published fee the CAA would levy if appointing one of its few remaining internal examiners to do the test, AFEs could only charge £266 (£800-£534) to deliver them, leaving the authority with two thirds of the overall fee.

Questions were raised at the time as to why the CAA was charging such a high fee to provide what was in effect nothing more than a booking service, which no longer included internal examiner or Regional Test Centre associated costs.

When FTN last got an answer from the CAA about their high booking fees we were told somewhat ambiguously: “These charges are historic and are subject to revision following finalisation of the EASA Regulations and their impact on the processes adopted by the CAA to implement same. Any resultant revised charges will be subject to full industry consultation.”

The CAA has continued to consult with industry each year on its Scheme of Charges proposals but has yet to address the question of flight test fees directly and continues to take the lion’s share. The latest proposals for FY2024/25 include IR flight test fees of £1000, with £390 paid to industry examiners and £610 retained by the CAA for what quite likely amounts to being the industry’s most profitable booking service.

Author: FTN Editor

Share This News On