Bills Digest no. 17 2008–09
Aviation Legislation Amendment (International Airline Licences
and Carriers' Liability Insurance) Bill 2008
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Date introduced:
24 June 2008
House:
House of Representatives
Portfolio:
Infrastructure, Transport, Regional Development and
Local Government
Commencement:
Sections 1 – 3 will commence on the day on which
the Act receives Royal Assent. Schedule 1 and Part 1 of Schedule 2 commence
on a day fixed by Proclamation, or 6 months after Royal Assent.
Items 51
- 53 of Schedule 2 commence after the commencement of Part 1 of Schedule
2 and after the commencement of Schedule 1 to the Civil Aviation Legislation
Amendment (1999 Montreal Convention and Other Measures) Act 2008.
Schedule 2,
item 54, will commence immediately before the commencement
of Schedule 1 to the Civil Aviation Legislation Amendment (1999) Montreal
Convention and Other Measures) Act 2008.
Should
the Civil Aviation Legislation amendment (1999 Montreal Convention
and Other Measures) Act 2008 not commence, the related provisions
will also not commence.
Links: The relevant
links to the Bill, Explanatory Memorandum and second reading speech
can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills
have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.
To update the regulatory programs for
the systems of International Airline Licences and mandatory carriers’
airline insurance. The system of International Airline Licences will be
changed to replace the current ‘self-operating’ system with one that enables
greater Government control over licence conditions.
The Air Navigation Act 1920 (the Air Navigation
Act) establishes a system of international airline licences (IALs). IALs
ensure that scheduled international air services are operated in accordance
with bilateral air service agreements and arrangements between Australian
and international aviation partners.[1] Airlines proposing to operate scheduled international
air services over, into or out of Australian territory, or those proposing
to market seats to and from Australia under code share arrangements with
another airline, require an IAL before services can commence.[2]
The Bill makes a number of amendments to update and modernise
the Air Navigation Act and the licensing system. The key amendment would
move the regulatory framework for IALs (currently placed within both the
Air Navigation Act and the corresponding Regulations) into the Air Navigation
Regulations. The purpose of this is to allow ease of making and amending
IALs and the IAL system, and eliminate the current problem of limited
ability to revoke or amend old licences, even where licence holders have
ceased operations in Australia.
The Regulation Impact Statement (RIS) for the Bill discusses
three possible options for addressing the issues with IALs. It notes the
problem in that ‘while there is a power to issue, cancel and suspend IALs,
under current regulatory arrangements there is no power to review and
audit compliance with the licence conditions’. In discussing the options,
the proposed option in this Bill is recognised as ‘retain(ing) the current
system of issuing IALs for an indefinite period, but gives the Secretary
a broad power to vary the conditions of an IAL in line with those usually
imposed on new IALs’.[3]
An alternative option considered was a licensing system requiring regular
renewal (for instance, on an annual basis with airlines providing updated
information for licence renewal), but this option was ultimately not chosen.[4] Certainly it would seem that a
system of regular licence renewal would provide some powers to review
and audit compliance with licence conditions, and would therefore immediately
address the issue. While the proposed system in the Bill does not address
the issue in the same way, it does offer similar powers including a ‘monitoring’
power, and was preferred as it ‘presents the smallest administrative burden
and regulatory costs’[5] while still providing an appropriate administrative structure
for issuing IALs.
Other amendments relating to IALs include:
delegation of IAL-related responsibilities to the Secretary
of the Department, including the granting, amending or revoking of licences,
as well as exempting some services from the requirement to hold an IAL.
The Secretary would instead have the power to exercise these responsibilities
through making regulations or determinations. While this might result
in a ‘downgrade’ of scrutiny for some aspects of the IAL framework, the
Explanatory Memorandum[6]
notes that the use of legislative instruments ensures that Parliament
will maintain oversight of any powers exercised.
- cancellation of all current IALs made under the current (or previous)
legislation. This will require all current IAL holders to apply for
new IALs, which will ensure that the entire industry is brought under
the new IAL regime and holds updated licences.
- Access to merit review of all decisions relating to IALs by the Administrative
Appeals Tribunal (AAT).
- clarification of existing relations between IALs and charter approvals.
The Bill also clarifies the application of IALs to some common commercial
aviation arrangements. These clarifications are to provide legal certainty,
and do not change current practice, and
- technical amendments, including transitional clauses to allow industry
to move over to the new IAL regime, updating of the language of the
Act, and making consequential amendments to other legislation.
Airline carriers carrying passengers to or from Australia,
or within Australia, are required to hold passenger liability insurance.
The insurance ensures that compensation will be paid in respect of death
or personal injury suffered by passengers on the carrier's aircraft.[7]
The Civil Aviation (Carriers’ Liability Act) 1959
(the Carriers’ Liability Act) establishes the requirement for insurance,
‘supplemented by provisions in the Civil Aviation Act, which allow (the
Civil Aviation Safety Authority (CASA)) to enforce the requirements as
part of their management of safety issues via the Air Operator’s Certificate
(AOC) process’.[8]
Currently, carriers are required to have appropriate
insurance and a current Certificate of Compliance from CASA to be able
to carry passengers on a commercial flight. CASA issues the Certificates
upon application by the carriers, once satisfied that appropriate insurance
is held by that carrier.
The Bill attempts to cut down on the administrative burden
of that system, by absolving CASA of the requirement to issue the Certificates
of Compliance. Instead, the Bill creates an obligation on operators to
provide CASA with a declaration indicating that they hold the appropriate
insurance cover required under the Carriers’ Liability Act. The Bill imposes
a small administrative penalty for failure to comply. Additionally, the
amendments provide that any lapse in insurance cover will result in an
automatic lapse of AOCs, which contains the operators’ authorisation to
carry passengers. Operating without insurance (and therefore without an
AOC) results in administrative action and possible criminal penalties
under the Civil Aviation Act.[9]
The Explanatory Memorandum notes that due to constitutional
limits, this amendment may not apply in relation to intra-State services
conducted by operators that are not constitutional corporations.[10] However, existing insurance
requirements and criminal penalties are provided in the Carriers’ Liability
Act, and State legislation.
Other amendments contained within the Bill are:
- increased capabilities for CASA to conduct regular audits of operators,
in an attempt to improve compliance with the insurance requirements,
and
- tightened restrictions on non-Australian carriers who make non-scheduled
international flights in Australia, by requiring them to prove they
hold carriers’ insurance before they are granted approval to operate
the service.
The Explanatory Memorandum states that consultation occurred
on the amendments with thirty-one different stakeholder groups.[11] In his second reading speech, the Minister
stated that:
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.[12]
The Explanatory Memorandum states that ‘the financial
impact of the Bill on the Commonwealth is expected to be minimal’,[13] with any additional costs to be met from existing
departmental resources.
Schedule 1 of the Bill makes proposed amendments
to the Air Navigation Act relating to IALs. Items 1 – 18 make technical
amendments to update the language of the Act.
Items 19 and 20 repeal current subsections 12(1B),
(2) and (3) and section 13 of the Air Navigation Act and replace them
with new (sub)sections dealing with IALs. Proposed new section 13
allows for Air Navigation Regulations to provide for the granting, imposition
of conditions, variation, suspension, cancellation and surrender of international
airline licences. These powers are exercisable by (or to) the Secretary
of the Department. The proposed amendments to section 12 allow the Secretary
to make determinations exempting some aircraft from the requirement to
have IALs, and to automatically exclude chartered services from the requirement
for an IAL.
Item 22 inserts an amendment to section 23 of
the Air Navigation Act to enable the AAT to review decisions relating
to IALs.
Items 23 – 25 of the Bill make consequential amendments
to the Adelaide Airport Curfew Act 2000, the Aircraft Noise
Levy Collection Act 1995 and the Civil Aviation Act 1988 to
reflect the changes to the Air Navigation Act in the Bill.
Item 26 contains a transitional provision, providing
that the old law governing IALs will continue to apply for at least six
months after commencement. The transitional period is to allow licence
holders to apply for replacement licences under the new licensing system.
Item 27 clarifies that, should a constitutional
dispute regarding acquisition of property occur by virtue of the provisions
in item 26 (relating to the surrender or cancellation of old IALs),
the matter should be heard in the Federal Court.
Schedule 2, items 1 - 28 make amendments to the
Civil Aviation Act 1988 (the CAA). Item 4 amends
section 9 of the CAA, which sets out the functions of CASA. The proposed
amendment provides CASA with the power to enforce requirements under the
CAA, and audit and enforce insurance and financial arrangement requirements
under Part IVA the Carriers’ Liability Act. The existing requirements
under the Carriers’ Liability Act include a 2 year prison term for non-compliance
with the insurance provisions (section 41E).
Item 5 repeals section 18 of the CAA, which restricts
the circumstances under which CASA can refuse to grant or vary permission
to operate short-term, non-scheduled flights. Repealing the section gives
CASA greater powers to refuse permission under the CAA. This is necessary
for the exercise of new powers provided in items 7, 10 and 14.
Items 7, 10, and 14 – 17 apply to carriers
with a non-commercial presence in Australia. The provisions require those
carriers to prove that they have appropriate insurance before operating
non-scheduled domestic flights (item 7), non-scheduled international
flights (item 10), or foreign registered aircraft on domestic flights
without an AOC (items 14 -17), within Australia. CASA may refuse
permission to operate such flights if proof of appropriate insurance is
not provided prior to that flight operating.
Items 19 – 26 amend the CAA to ensure that the
authority to carry passengers under an AOC will only be valid while operators
hold the appropriate insurance.
In particular, item 26 amends section 28BI to
include a statement that AOC holders must, at all times, comply with the
applicable insurance provision in relation to that type of operation.
Items 19 – 21 insert provisions which refer back
to the amended section 28BI (item 26), stating that section 28BI
applies to an AOC (item 20), and that a breach of that will mean
that the AOC does not authorise any flight or operation to which the condition
relates while the breach continues (item 21). These amendments
essentially provide for the automatic lapse of authorisation to carry
passengers, in the event of an insurance lapse.
The items also make technical and consequential amendments
to update references to ‘constitutional corporations’ (to which the amendments
will ultimately apply). Consequently, all operators that fall within the
scope of these provisions (with some State-based exceptions, as discussed
previously) will automatically be subject to a range of administrative
actions and criminal penalties under the CAA if they allow their insurance
to lapse.
Items 29 – 50 amend the Civil Aviation (Carriers’
Liability) Act 1959. Item 29 ensures that the requirement under
the Carriers’ Liability Act to have an acceptable contract of insurance
applies even where an operator has had its licence suspended by force
of law.
Items 31 – 35 and 37 –39 amend a number
of provisions in the Carriers’ Liability Act to remove the requirement
for a certificate of compliance from CASA. Instead, carriers (including
Government carriers – items 37 – 39 dealing with officers of the
Crown) will be permitted to operate so long as they hold an ‘acceptable
contract of insurance’. An acceptable contract of insurance is defined
as an adequate financial arrangement, that is, one that
covers the carrier for personal injury liability in respect of each passenger
carried, or to be carried, by the carrier (item 34).
To make up for the removal of CASA certificate of compliance
system, items 41 – 43 create an auditing power for CASA, enabling
CASA to require evidence from carriers to prove they hold acceptable contracts
of insurance.
[9]. Under the section 27 of the CAA, an operator must not
conduct commercial activities (as prescribed in regulation 206 of the
Civil Aviation Regulations) without an AOC. Additionally, the amendments
to the CAA will allow CASA to enforce section 41E of the Carriers’ Liability
Act makes carrying passengers without appropriate insurance an offence,
punishable by up to 2 years imprisonment.
PaoYi Tan
4 September 2008
Bills Digest Service
Parliamentary Library
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