Independence, governance and accountability
Airservices Australia's relationship with the aviation industry
In general, the committee received submissions from the aviation
industry which suggested that major capital city airport operators and aviation
organisations have an open and constructive working relationship with
The committee notes that Airservices Australia participates in a range of
forums and industry groups to foster a productive, positive and cooperative
relationship with the aviation industry.
Airservices Australia commissions an annual stakeholder satisfaction
survey to understand the effectiveness of its 'relationship management
framework' with airlines, airports, the Department of Defence and other government
departments (such as the Civil Aviation Safety Authority and the Department of
Infrastructure, Transport, Regional Development and Local Government). To
facilitate the sharing of information regarding its aviation agenda,
Airservices Australia also publishes a quarterly report to the aviation
However, the committee heard evidence and received submissions which suggested
that Airservices Australia has a partnership approach with the aviation
industry. The committee was told that this partnership approach has lead to
the prioritisation of aviation industry requirements above those of local
communities and also to a loss of community confidence in the organisation's
ability to perform its functions with impartiality:
... the organisation has proved itself too beholden to the
industry at the expense of the public interest in minimizing aircraft noise. A
separation of powers is essential. ASA's regulatory failure on Noise Management
has been so complete leading to an absolute loss of faith in the organization
by its public “customers”.
It was also suggested that this partnership approach has contributed to
the prioritisation of aviation industry requirements above those of
non-aviation business communities. In one circumstance relating to the Australian
Noise Exposure Forecasts and development around airports, it was suggested that
Airservices Australia had acted as an advocate for an airport operator.
Evidence to the committee suggested that this perceived conflict of
interest arises from two key organisational features:
- Airservices Australia's current organisational funding
- Airservices Australia's dual responsibility for the safe
management of air traffic and the protection of the environment.
Airservices Australia receives the majority of its revenue from industry
fees, charges and consultancy work, with revenue principally derived from
aircraft operators. During the Senate Rural and Regional Affairs and Transport
Legislative Committee's supplementary estimates hearing, Mr Greg Russell, Chief
Executive Officer of Airservices Australia, indicated that:
Our annual revenue at the moment is running at about
$770 million. I would have to get to you the precise number, but I could
tell you that from the airlines – and other airspace users, private pilots and
that sort of thing, but overwhelmingly – the number would be well over
95 per cent.
The committee heard that the funding arrangement might predispose
Airservices Australia to a conflict of interest. The Sydney Airport
Community Forum Inc questioned Airservices Australia's ability to effectively
balance the needs of the aviation industry and local communities:
... industry has a particularly intimate, ongoing relationship
with Airservices Australia which the “community” does not possess. In normal
circumstances this would be natural, given the regulatory nature of Airservices
responsibilities, but when the communities interests may differ from those of
industry, it can put the community at a disadvantage, if the needs of a
"noise sharing" implementation conflict with the
requirements of the airlines.
The committee observed that this perceived lack of organisational
independence had led to a loss of confidence in Airservices Australia's ability
to effectively engage with local communities. Curfew4Canberra, a community
based organisation, suggested that the partnership approach has affected
Airservices Australia's ability to perform its duties in an open and
... a commercial service provider to the aviation industry, it
has a profound conflict of interest in that its revenue driven relationship
with the industry results in a partnership which precludes scrutiny and thus
transparency, to the detriment of its broader responsibilities to the community.
Dr Murray May suggested that the funding arrangement had adversely
affected Airservices Australia's ability to respond to community concerns:
A problem lies in a conflict of interest within the core
roles of Airservices Australia. As the name Airservices Australia suggests, an
alliance exists between the agency and the aviation industry, including a close
relationship with respect to funding, with ASA’s funding going up or down
depending on how the aviation industry is performing. It is common for
regulators to identify closely with the groups they regulate and to come to see
the issues and solutions similarly. Because of conflicting roles, Airservices
Australia is unable to address negative feedback from the community constructively,
as it is committed to and constrained by the growth paradigm subscribed to by
various spheres of government and the airline industry.
As outlined in Chapter 2, Airservices Australia has dual responsibility
for the provision of safe air traffic management services and, as far as
practicable, for ensuring the environment is protected from the effects
associated with the operation and use of aircraft (including noise impacts).
The committee received evidence that these two organisational priorities are
conflicting and competing, and have led to a conflict of interest:
There is an inherent conflict of interest between the need of
Airservices to achieve improved flight paths and that of residents who are
impacted by those changes.
The City of Canning suggested that the task of protecting the
environment from the effects of aircraft operations is given less priority
within the organisation, leading to sub-optimal outcomes for the
Whilst there is no argument that the safety of aircraft
operations is paramount in managing the aviation industry it is believed that
the current structure does not present suitable opportunity for options to be
explored which may provide improved environmental outcomes (including attention
to aircraft noise) whilst maintaining appropriate attention to safety.
One submitter described Airservices Australia as having 'embarked on a
systematic policy of partnership with industry'
and suggested that Airservices Australia had demonstrated failures of its
obligation to the public at the following three primary elements of regulatory
Regulatory capture is the term used to refer to situations in
which a government regulatory agency, created to act in the public interest,
instead acts in favour of the commercial or special interests that dominate the
industry it is charged with regulating.
At a first level of capture, the regulator allows the
regulated to breach the law, ethic, good practice rule, moral principle or
public interest duty that the regulator is responsible for upholding. At a
second level, the regulator assists the regulated to avoid the regulatory
consequences after the fact.
At the deepest level of development, the 'capture' is so complete that the
regulator may assist the regulated to defeat the regulatory regime before the
The committee also received evidence recommending urgent reform to
separate Airservices Australia's responsibility for setting routes and handling
complaints from their commercial interests.
Other submitters further suggested that a new, independent statutory authority is
required, which would have the powers to enforce its findings and deliberations
in relation to aircraft noise affects.
However, Canberra Airport noted that as the two functions are
intrinsically linked it would be very difficult to separate the safe and
efficient management of airspace from the management of aircraft noise.
Canberra Airport suggested that:
For instance, when assessing the desirability of flight paths
or procedures it is in the interests of all parties that the relevant body take
into account safety, efficiency for the airlines and airports, and amenity for
the community. The process would become incredibly inefficient if two separate
bodies were tasked with making different assessments (one about safety and
regularity and the other about amenity) about proposed flight paths or
procedures. Apart from the inevitable delays that would occur through the
introduction of another organisation, there would also be questions as to what
the position would be if the different bodies came to different conclusions –
would this become the basis for challenging a flight path or procedure? How
would this dispute be resolved? Would this just create more uncertainty for
airlines and the community?
Airservices Australia's response
In a supplementary submission to the inquiry, Airservices Australia
responded to the suggestions of 'regulatory capture' by noting that the
organisation does not regulate the aviation industry:
A large number of submissions contain the view that
Airservices is a regulator. In some submissions there is a belief that if
Airservices is the aviation industry regulatory a conflict of interest
situation arises. This belief is simply not correct. While Airservices provide
air traffic management and related services, it is not Australia's aviation or
Airservices does not control the scheduling and frequency of
aircraft movements and our services are provided on a fee for service basis
with oversight by the Australia Competition and Consumer Commission regardless
of the volume of services.
Airservices Australia also strongly denied suggestions that its funding
arrangement influences the organisation's activities, processes or engagement
with local communities:
Like any government any government agency, we deliver our
services without prejudice, according to regulation and with the safety of the
travelling public at the forefront. In designing flight paths, Airservices
makes all decisions based on the complexities of ensuring that aviation safety
is paramount; that the national airways system is efficient; and, the potential
environmental impact on communities is minimised. Any potential impact on
future income streams is not a consideration.
Mr Greg Russell, the Chief Executive Officer of Airservices Australia, suggested
that a strong governance model ensured the organisation's independence. Mr
Russell described a system of checks and balances overseen by a board
overwhelmingly comprised of external appointees.
The committee considers that the community perception that Airservices Australia
lacks independence and has a partnership approach with the aviation industry
underscores the need for enhanced organisational transparency, openness and
accountability. Airservices Australia must focus its efforts on
re-building community confidence in their ability to effectively balance the
management of aircraft noise with the safe and efficient management of
airspace. Airservices Australia must also focus on strengthening its relationship
with local communities so that the management of aircraft noise is perceived to
be fair and equitable, but is proved to be so. The committee is of the view that
oversight by the Aircraft Noise Ombudsman (described below) will assist
Airservices Australia to build this community confidence, as will a renewed
focus on effective engagement with communities and organisational transparency as
described in Chapter 3.
Governance and Accountability
Airservices Australia is governed by a board of 18 directors appointed
by the Minister of Infrastructure, Transport, Regional Development and Local
Government. The board is responsible for ensuring that Airservices Australia
performs its role in a proper, efficient and effective manner.
The board meets eight times annually and reports to the minister on a quarterly
basis. The board is supported by three sub-committees which meet between
four and six times annually to oversee three areas in detail: audit, safety and
Airservices Australia also reports annually to parliament regarding
their compliance with their legislative requirement to manage aircraft noise
and consult the community.
Aircraft Noise Ombudsman
The newly established Aircraft Noise Ombudsman position, announced as
part of the Commonwealth Government's 2009 National Aviation Policy Statement,
will seek to improve Airservices Australia's consultation arrangements and
distribution of noise-related information to the general public. The Aircraft
Noise Ombudsman will oversee the handling of aircraft noise complaints,
independently review noise complaint handling procedures and make
recommendations for improvements where necessary.
The committee heard that the Aircraft Noise Ombudsman will be
established within Airservices Australia and will report directly to the
Airservices Australia board. Mr Greg Russell, the Chief Executive Officer
of Airservices Australia, suggested that Airservices Australia has appropriate
governance arrangements to ensure the independence of an Ombudsman operating
within the organisation.
The intention is that the Aircraft Noise Ombudsman will operate in a similar
manner to the Independent Safety Adviser. Mr Russell suggested that the
Independent Safety Adviser's open access to the organisation and direct
engagement with, and reporting to the board, have proved effective.
To ensure transparency, Mr Russell further indicated that the Aircraft
Noise Ombudsman would be able to initiate inquiries at their own discretion and
without referral to the board.
The Aircraft Noise Ombudsman would then be free to make recommendations to the
board about noise management, including where there are problems and where
there are opportunities for improvement. The Aircraft Noise Ombudsman's
recommendations and reports would be made public.
Mr Mike Mrdak, Secretary of the Department of Infrastructure, Transport,
Regional Development and Local Government, described the rationale for
positioning the Aircraft Noise Ombudsman within Airservices Australia rather
than establishing it as an independent body:
In the end the government has gone down this path because I
think it is important that this role be very closely tied to the provider of
air traffic control services and the government agency that has responsibility
for managing the off-airport environmental issues associated with aircraft
operations, to make sure that we have that linkage. At the end of the day this
is about how we improve the performance of the industry, and we felt that that
was best done by having a person, an office, closely aligned with the agencies
rather than sitting outside it.
The establishment of the Aircraft Noise Ombudsman was broadly welcomed
by submitters to the inquiry.
It was considered that the Aircraft Noise Ombudsman would provide a mechanism
for individuals and organisations who feel they are not getting resolution through
the extant consultation processes to have their concerns considered and
assessed. However, a number of concerns were raised regarding the independence
of an Aircraft Noise Ombudsman established within Airservices Australia.
The committee heard that establishing the position within
Airservices Australia could give rise to the perception that the Aircraft
Noise Ombudsman is lacking in independence, accountability and transparency. Submissions
to the inquiry suggested that if established within Airservices Australia as
currently proposed, the Aircraft Noise Ombudsman's ability to act with impartiality
would be constrained,
and there may be a tendency to feel pressure to favour the aviation industry's
and Airservices Australia's position over the general public.
The committee noted submissions to the inquiry which emphasised the
importance for independence – both in reality and as perceived by local
The holder of such an office must not only be able to operate
truly independently but must be seen to be doing so.
In order to effectively assess noise complaints, it was suggested that
there was a need for clear performance measures, including measures to assess
the performance of Airservices Australia and airline operators' use of
specified flight tracks. 
It was also suggested that the Aircraft Noise Ombudsman should have extended powers
and a stronger regulatory framework to enable it to recommend penalties and
sanctions where warranted:
It is Australian Mayoral Aviation Council's view that the
Ombudsman must be independently positioned and resourced with the capacity to,
not only review incident reports and the way they are managed but also allocate
responsibility and, where warranted, recommend penalties. The Ombudsman must
also be able to monitor the veracity of information supplied and the genuine
and transparent nature of the consultation process.
To ensure the independence and transparency of the Aircraft Noise Ombudsman,
the committee heard that the position should be established independently from
and not under the structure currently proposed by Airservices Australia.
The committee views the establishment of the Aircraft Noise Ombudsman as
a positive step. The position will provide a right of review and appeal mechanism
which has been lacking in the existing community consultation and complaint
resolution approach to date. It will provide the community with an opportunity
to have claims and complaints regarding aircraft noise considered by a third
party. It may also provide an avenue for the consideration of matters raised
by non-aviation businesses and organisations.
However, the committee has concerns regarding the potential
effectiveness of the Aircraft Noise Ombudsman if the position is established as
currently proposed. The committee notes the significant challenge the Aircraft
Noise Ombudsman will face if the position is established within the
organisation it is tasked to review, particularly in circumstances where the
Ombudsman is especially critical of the performance of
The committee shares the view that the Aircraft Noise Ombudsman must not
only be able to act independently, but must also be perceived to do so by the
Australian community. The significant public concern regarding the possible
establishment of the Aircraft Noise Ombudsman within Airservices Australia
clearly indicates that the position must be independent from Airservices
The committee is of the view that the Aircraft Noise Ombudsman should be
established independently from Airservices Australia and should report
publicly and directly to the Minister for Infrastructure, Transport, Regional
Development, and Local Government, and the Australian Parliament. The Aircraft
Noise Ombudsman should provide an annual report of their operations and this should
include a description of the actions Airservices Australia has undertaken
to implement recommendations and, where appropriate, a description of those
instances where appropriate action has not been taken.
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