Aviation Industry Association reposted this
On Tuesday, Fenix UAS lodged a detailed submission on the CAA Pricing Review 2024. Our submission was authored by our Managing Director, Dr Andrew Shelley, who has extensive experience advising on the calculation of regulated revenue requirements in other industries, and the calculation of efficient prices to recover those revenue requirements. Key points from the submission are: There is a significant lack of information in the consultation document that would enable an independent calculation of the regulated revenue requirement. Many claims made in the document are unsubstantiated. There is no way to establish whether or not the claimed revenue requirement for the CAA is actually reasonable. There is little or no justification for proposed activity levels or for proposed allocations of the calculated revenue requirement to different “services”. There is a complete lack of consideration of concepts of 'incremental cost' and 'stand alone cost' that would normally be included in a regulated revenue and price-setting processes. The Authority’s evaluation of options is lacking detail and in some instances the logic is likely to be incorrect. In some instances principles are misunderstood or misapplied in the evaluation of the proposed option. For example, the 'balancing cost recovery' criterion is presented as recovering costs across as many participants as possible. The principle should instead be focussed on identifying the beneficiaries of the costs and recovering costs from those beneficiaries. Of the options proposed by the Authority, Option 2 has significantly greater negative effects than the consultation document suggests, and is likely to have substantial negative effects on competition as well as safety. The proposed standard hourly charge rate under this option is excessive and almost certainly violates the stand alone cost test. The Authority's preferred option - Option 1 - also has some negative effects on both competition and safety. The proposed standard hourly charge is high and likely exceeds the cost of contestable or competitive service provision. Option 3, which sees no change to the standard hourly rate, is likely to be the best option if the proposed revenue requirement is reasonable. There must be a change to open more of the services provided by the Authority to contestable provision. To that end, Fenix UAS Ltd has previously provided proposals to conduct low risk UAS certification. If the CAA is unable to conduct certification activities with its current level of staff or at an hourly rate that reflects a reasonable benchmark, then activities should be shifted to private sector providers who can provide services more efficiently.