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
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