EXPLANATORY STATEMENT

 

Select Legislative Instrument 2009 No. 23

 

Issued by the Authority of the Minister for Infrastructure, Transport, Regional Development and Local Government.

 

Air Navigation Act 1920

 

Air Navigation Amendment Regulations 2009 (No. 1)

 

Section 26 of the Air Navigation Act 1920 (the Act) provides, in part, that the 

Governor-General may make regulations, not inconsistent with the Act, prescribing all matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

 

The Aviation Legislation Amendment (International Airline Licences and Carriers’ Liability Insurance) Act 2008 (the Amendment Act) will amend the Act to improve the Australian Government’s oversight of scheduled international air services through the system of International Airline Licences (IALs). The Amendment Act will also amend section 13 of the Act to provide that the regulations may provide for or in relation to the licensing of scheduled international air services operated, over, into or out of Australian territory.

 

The IAL system ensures that scheduled international air services are operated in accordance with bilateral air services agreements and arrangements negotiated between Australia and our international aviation partners. It also acts as a final checking mechanism to ensure that various safety and security approvals are in place prior to the commencement of air operations. Subsection 12(1) of the Act provides that international airlines shall not operate scheduled international air services over, into or out of Australian territory except in accordance with an IAL granted by the Secretary of the Department of Infrastructure, Transport, Regional Development and Local Government (the Secretary).

 

The purpose of the Regulations is to improve the Australian Government’s oversight of the IAL system.

 

The Air Navigation Regulations 1947 (the Principal Regulations) currently set out the existing framework for granting or varying IALs. There are a number of areas within the existing system which could be improved. For example, there is no formal mechanism to ensure airlines are complying with licence conditions on an ongoing basis. There is also no mechanism to update IALs from time to time to reflect changes in policy or administrative practice. This has resulted in inconsistencies between older and newer IALs.

 

The Regulations will amend the Principal Regulations to introduce a simple audit scheme and allow the Secretary to standardise and modernise IALs by imposing additional conditions on IALs in writing from time to time. Airlines have the right to appeal any decision to the Administrative Appeals Tribunal under section 23A of the Act, as amended. The Regulations will also simplify the regulatory structure of the IAL system.

 

Stakeholders were consulted on the proposed reforms in 2005 (a full list of consulted stakeholders is included in Appendix A of the Explanatory Memorandum to the amending Act). No objections were raised. Two out of eight responses received by the Department specifically noted their support for the proposal.

 

A Regulation Impact Statement was prepared in 2006 and is included in the Explanatory Memorandum to the amending Act.

 

Details of the Regulations are set out in the Attachment.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Subsections 4(1) and 4(2A) of the Acts Interpretation Act 1901, read together, provide that regulations may be made between the passing and commencement of an Act, as long as such regulations do not commence before the Act upon which they rely for their authority.

 

The Regulations will commence on the commencement of Schedule 1 to the Amendment Act. It is expected that Schedule 1 will commence on 20 March 2009.

 

 

 

 

 

 

 

ATTACHMENT

 

Details of the Air Navigation Amendment Regulations 2009 (No. 1)

 

 

Regulation 1 – Name of Regulations

 

This regulation provides that the title of the Regulations is the Air Navigation Amendment Regulations 2009 (No. 1).

 

Regulation 2 – Commencement

 

This regulation provides for the Regulations to commence on the commencement of Schedule 1 to the Aviation Legislation Amendment (International Airline Licences and Carriers’ Liability Insurance) Act 2008 (the Amendment Act).

 

Regulation 3 – Amendment of the Air Navigation Regulations 1947

 

This regulation provides that the Air Navigation Regulations 1947 (the Principal Regulations) are amended as set out in the Schedule.

 

Schedule – Amendments

 

Item [1] – subregulation 3(1), definition of agreement

 

This item makes a consequential amendment to the definition of agreement at subregulation 3(1) of the Principal Regulations. The reference to the ‘Air Transit Agreement or another agreement or arrangement’ in the definition has been moved from subsection 12(2) of the Act to new subsection 13(3) by the Amendment Act.

 

Items [2], [3] and [4] – subregulation 3(1), new definitions

 

These items insert a number of new definitions for code sharing, International Air Services Commission and relevant authority into subregulation 3(1) of the Principal Regulations.

 

Item [5] – subregulation 3(1), definition of scheduled international air service

 

This item repeals the definition of scheduled international air service to ensure consistency with the Act. The term is not defined in the Act and will instead revert to its commonly understood meaning.

 

Item [6] – Part 6, Division 1

 

This item replaces the existing regulations dealing with the Secretary’s powers to grant or vary international airline licences (IALs). The new regulations 15 to 18G are designed to improve the Australian Government’s oversight of international air services, to allow licences to be updated from time to time to reflect changes in policy or administrative practice and to simplify the regulatory structure of the IAL scheme.

Regulation 15

 

This regulation specifies that Division 1 is made for the purposes of section 13 of the Amendment Act.

 

Regulation 16

 

Subregulations 16(1) and (2) set out the information airlines are required to provide when applying to the Secretary for an IAL.

 

Before granting an IAL, the Secretary, or their delegate (collectively referred to hereafter as ‘the Secretary’), assesses whether the applicant’s ownership structure and the proposed services comply with the bilateral air services agreements and arrangements negotiated between Australia and our international aviation partners. The Secretary also ensures that an applicant has received the necessary safety, security and insurance approvals issued by various agencies.

 

The information required by subregulation 16(2) is consistent with the existing application process set out in guidance material published by the Department of Infrastructure, Transport, Regional Development and Local Government (the Department), however it is more definitive of what evidence is required to be supplied by applicants when applying for an IAL. For example, under paragraph 16(2)(i), applicants will have to supply details about the type of aircraft to be used for each scheduled international air service in addition to information about the services to be covered by the licence. These details will allow the Department to cross-check the types of aircraft proposed to be used by applicants with those authorised by relevant bilateral arrangements.

 

Subregulation 16(2) also includes a new requirement. IAL applicants will now have to prove that they can be contacted on an Australian phone number before the Secretary grants an IAL. This will ensure that Australian consumers have access to customer assistance without having to make an international phone call.

 

The Secretary will also have the power to request additional information and to refuse to grant an IAL until the requested information has been provided.

 

Subregulations 16(3) and (4) provide for a streamlined application process for airlines which only conduct code sharing services. Code sharing is a common commercial arrangement where an airline sells tickets on a flight operated by another airline and each airline markets the flight as its own. An airline that only intends to code share on aircraft operated by another airline would still require an IAL as it is exercising rights granted under Australia’s air services agreements and arrangements. However, it may not require safety or security approvals as these only apply to aircraft operators.

 

Under the new system, a code sharing airline will not be required to provide evidence of safety or security approvals to apply for an IAL. However, the Secretary will grant a limited licence which only authorises code sharing on specific services operated by airlines which hold the necessary safety and security approvals. If the code sharing airline wishes to commence operations with its own aircraft in the future, it will need to reapply for a full IAL. These measures streamline the application process for code sharing airlines and improve the Australian Government’s oversight of the system by introducing a formal process for overseeing the transition from code share only services to own aircraft services.

 

Regulation 16A

 

Under the transitional provisions at schedule 1, item 26 of the Amendment Act, all IALs issued under the old law will be automatically cancelled by force of law on 20 September 2009, six months after the expected commencement of the Amendment Act. All airlines operating scheduled international air services to or from Australia must apply for and be granted a new IAL before this date, in order to continue services.

 

Regulation 16A introduces a streamlined application process for airlines which have held their IAL for two years or less. These airlines will not have to submit a full application, but can instead submit a declaration of compliance to apply for a new IAL. The Secretary will make a declaration form available.

 

Regulations 17, 17A, 18 and 18A

 

These regulations set out matters relating to the Secretary’s decision to grant an IAL, to refuse to grant an IAL, and the duration of an IAL. Consistent with current practice, once an IAL is granted, it remains in force indefinitely unless the licence holder breaches a condition of their licence or the regulations. The applicant is also granted a new power to request the licence be cancelled. This option was not available to them under the old system.

 

Regulation 18 imposes a new obligation on the Secretary to notify an applicant within 14 days if the Secretary refuses to grant an IAL. Any decision to refuse to grant an IAL is subject to appeal before the Administrative Appeals Tribunal.

 

Regulation 18B

 

Subregulation 18B(1) sets out standardised IAL conditions. The majority of these conditions mirror existing conditions contained in IALs themselves. However, including these conditions in the regulations will ensure greater consistency and clarity for industry.

 

The new condition to maintain a contact telephone number in Australia, imposed by paragraph 18B(1)(a), is explained at regulation 16 above.

 

Paragraph 18B(1)(b) is a new requirement for airlines to comply with a simple self-assessment audit scheme. The scheme is described at regulations 18F and 18G below.

 

Subparagraphs 18B(1)(d)(viii) and (ix) add Australia’s compulsory insurance standards to the existing list of aviation safety and security legislation that IAL holders are required to comply with. This will further strengthen the Australian Government’s ability to ensure consumers have access to compensation in the event of an aviation accident.

 

Subparagraph 18B(1)(d)(x) makes Qantas’ IAL conditional on compliance with the ownership requirements outlined in the Qantas Sales Act 1992. This further ensures that all airlines comply with the ownership requirements stipulated in relevant legislation, being the Act (for airlines other than Qantas) or the Qantas Sales Act 1992 (for Qantas).

 

Subregulations 18B(2) and (3) grant the Secretary a new power to impose additional conditions on IALs. Under the current system, there is no effective mechanism to update IALs from time to time to reflect changes in policy or administrative practice. As a result, there are inconsistencies between older IALs and more recently issued IALs.

 

Under the new system, the Secretary will be able to update and modernise licence conditions to reflect any future changes in Australia’s regulation of international aviation, provided licence holders are given notice in writing, the conditions are not applied retrospectively and the Secretary provides a statement setting out the reasons for the conditions. The licence holder must be given 35 days’ notice of any updated conditions in accordance with regulation 18D (detailed below). Any decision to update conditions would be subject to appeal before the Administrative Appeals Tribunal.

 

Regulation 18C

 

This regulation simplifies the regulatory structure of the IAL scheme. Currently, the power to suspend or cancel an IAL is exercised by the Minister under section 13 of the Act while similar powers to vary a licence are exercised by the Secretary under the principal Regulations. Regulation 18C consolidates all these matters under the regulations, providing for these powers to be exercised by the Secretary.

 

Regulation 18D

 

This regulation imposes a new obligation on the Secretary to provide 35 days notice, and a written statement of reasons, before varying, suspending or cancelling an IAL. The Secretary must consider any response received from the licence holder before taking action.

 

The Secretary will be able to take urgent action, without providing prior notice, if there is a risk to public safety or security. Any action would be subject to appeal before the Administrative Appeals Tribunal.

 

Regulation 18E

 

This regulation provides that if the Secretary varies or suspends an IAL and later becomes satisfied that the licence holder is not complying with the terms of the suspension or variation, the Secretary can cancel the licence. Consistent with regulation 18D, the Secretary must provide notice and a statement of reasons and an airline has the right to appeal a decision to the Administrative Appeals Tribunal.

 

An IAL cannot be suspended for more than six months in total.

 

Regulations 18F and G

 

These regulations introduce a simple audit process to improve the Australian Government’s oversight of the IAL system.

 

All IAL holders will be required to fill out and return a declaration every six months stating that they comply with the necessary safety, security, insurance and ownership requirements to allow them to continue operating services. This will provide a simple self-assessment process for airlines to review their compliance at regular intervals. Failure to provide a declaration may result in the cancellation of an airline’s IAL.

 

To simplify the system for airlines, this requirement has been aligned with the existing requirement to lodge timetable approvals. Airlines already submit timetables every six months, for the Secretary’s approval, setting out proposed services for the coming Northern Summer or Northern Winter scheduling season. This is a standard, internationally recognised requirement that is familiar to international airlines.

In addition to the self-assessment audit process, the Secretary will also write to IAL holders from time to time under subregulation 18G(3) or paragraph 18B(1)(c) requiring the licence holder to provide evidence that they are complying with licence conditions.

 

Regulation 18F obliges the Secretary to make a compliance declaration form available for the IAL holder.

 

Item [7] – Division 3A

 

This item inserts a new heading to reflect that all current offences relating to timetables and advertising are incorporated in the one division.

 

Item [8] – Restriction on advertising a service

 

This item relocates the current restriction on advertising a scheduled international air service (previously regulation 18) to new regulation 24AA to incorporate all offences relating to timetables and advertising in Division 3A. It also amends the provision to clarify that an airline can advertise services before receiving an IAL if they clearly state the service is subject to regulatory approval. This ensures consistency with the other restriction on advertising provisions applying to timetable approvals and non-scheduled services. It also provides greater certainty to industry.

 

Consistent with the existing restriction on advertising applying to timetable approvals and non-scheduled services, an offence of 50 penalty units applies to a person who contravenes the restriction on advertising scheduled international air services.

 

Item [9] – Division 3A, heading

 

This item makes a consequential amendment to remove the old Division 3A heading which is replaced by item [7].