CASA imposed restrictions on businesses ability to trade
Request for clarification of potentially misleading information provided by Mr Shane Carmody CASA CEO, to Senate Estimates by CASA on 20/11/20
Attachments: CASAs initial and subsequent interim approvals to operate.
Ombudsman’s Report Phase One
20th December 2020.
Dear Mr Shane Carmody, and the RRAT Senate Estimates Committee.
I am fully satisfied that comments made by the CEO of CASA, Mr Shane Carmody in the Senate Estimates Committee on 20/11/20, have the potential to mislead the Committee.
The comments made by Mr Carmody contained gross errors and were not an accurate representation of the truth.
I would like the opportunity to correct any misconceptions that may have been created by the following statement that Mr Carmody made just prior to the 7-minute mark of his presentation, and accessed via this link
“the notice we provided in October of 2018 was for allowing him to expand his services, which happens all time. We did not approve that. We did not stop him operating. We allowed him to continue to operate under his current arrangement”
That comment would lead the Committee to believe CASA actions only prevented me from expanding.
That is far removed from the truth. Had Mr Carmody’s statement been the truth, it is likely that the several businesses forced into closure would still be operating, and the impact would not be so significant.
Despite Mr Carmody asserting that, “he
continued to operate under his current arrangement”, as the owner of the business, I can assure you that was not the case. I have outlined 9 consequences that resulted from that notification, and the significant commercial impact on my business, and other affected entities.
One
Without any warning, on 23rd October (refer attached) CASA provided a notice to my Organisation, that it had only 7 days surety of operations.
That correspondence also led me to believe that I was operating unlawfully, and it was unlikely that this matter could be resolved.
I have attached that correspondence as evidence of my assertion.
For CASA to take such heavy handed and disproportionate action against a business, one would expect that CASA had identified a grave and imminent risk to aviation safety or sustained regulatory breaches. This action was based on a “change of opinion” within CASA only.
· 23rd October 2018 without any warning, you advised that the business had 7 days surety of operations.
· 30th October 2018 to 12th February 2019, the business operated on a minute my minute CASA approval that could be immediately withdrawn.
· 12th February to 13th May 2019 a short term interim approval to operate was issued.
· 13th May 2019 to 1st July 2019, a further short term interim approval to operate was issued.
· 31st June 2019, the business was unable to meet salary commitments to its staff and was sold for 5% of its agreed value. The nominal price was in exchange for debt obligations accrued over the 8 months with trading restrictions in place.
As with any business, to have only 7 days surety of operations and be advised that your business will “not be permitted to continue operating” has a devastating impact on any business operating in any sector, be it a bank, a retailer, a mining company or indeed a flying school. Importantly, this totally unacceptable situation, continued on for 8 months.
· In the case of my business, by placing only 7 days of operations, it makes it impossible to enroll students into courses that typically run over more than 12 months.
· It brings enormous instability to the existing students and their families already enrolled in courses, as it creates uncertainty as to the continuing operations of the business.
· It makes it impossible to attract and recruit, or to retain employees when the business faces such an uncertain future.
· It brings enormous instability to the many staff that depend on the business to derive their livelihood.
· It prevents me from marketing and recruiting to students at the most important time of year i.e., the end of the school year, when graduates from secondary school are considering their career options.
· It raises concern with suppliers that have long term arrangements in place with the Organisation.
Two
Almost immediately after I received the initial notification on 23rd October 2018, CASA will confirm that they wrote to all of my customers advising that APTA was operating in breach of regulations. This correspondence was sent before I had the opportunity to respond or attempt to resolve CASAs issues. It had a destabilising effect on my customers, and eroded confidence in the business model. This was the business model that 10 CASA personnel spent two years designing with me and approving in April 2017.
Three
The Executive Manager of Regulatory Services and Surveillance advised me that after a meeting with his Executive, (i.e. Mr Aleck and Mr Crawford) they had determined that APTA would “
not be permitted to continue operating” and that statement was made in the presence of a witness.
Four
I point out that immediately on receiving that initial notification and on numerous subsequent occasions, I advised CASA in writing that the restrictions on trade i.e. inability to enrol students etc would cost me in excess of $10,000 per week as I paid staff salaries but was denied access to my existing revenue streams. The business was immediately moved into a situation of incurring substantial losses on 23rd October 2018, and this would continue until the issue could be resolved, which after 8 months it was not. This lead to the sale of the business under financial duress in June 2019, when mine and my parents could no longer pay the staff salaries.
Five
The notice of 23rd October 2018, also advised me that my own flying school, Melbourne Flight Training (MFT) that had been operating for 13 years delivering safe and compliant operations was operating in contravention of the regulations. This was a ludicrous assertion. How could my own business operating under my own AOC possibly be operating in contravention of the regulations. It simply operated in exactly the same manner as any flying school in Australia under a fully approved CASA AOC that belonged to me. CASA have failed to explain this to me.
Six
The notice did also go on to state that existing members that had previously been approved by CASA i.e. AVIA and LTF were now also operating in contravention of the legislation, and would likely have their approval reversed, which substantially impacted on their capability and would potentially lead to their closure.
Seven
It also advised that new members that had made substantial investment in establishing their business would not have their applications processed. These organisations were required to have the investment and facilities in place before CASA would make the assessment.
A very significant investment was made by both Simjet in Brisbane and Whitestar Aviation in Ballina. The notification received on 23 rd. October 2018 advised that despite the significant investment made in acquiring a facility, obtaining a simulator, employing suitably qualified staff etc that the approval process would not proceed. The owners of both organisations lost many hundreds of thousands of dollars of investment in Australian aviation because of this reversal in this notification that arrived on 23rd October 2018.
Eight
The Ballarat Aero Club which had ceased operations after almost 100 years of operating had intended to resume operations under APTA. CASA intended to reject that application. Similarly Latrobe Valley Aero Club which was facing closure had joined APTA to ensure its continuity of operations. CASA notified me in that correspondence of 23rd October 2018, that it intended to reject the applications for these two new Members, leaving their future uncertain.
Nine
CASA applied an “administrative freeze” on all APTA applications. These applications were for the addition of new courses that APTA and its customers required. Similarly, a significant investment in a new flight simulator for Ballarat Aero Club was not processed, leaving the investment laying idle for many months. Additionally, a simulator was not renewed by CASA and also lay idle for a protracted period. Upgrades of Key Personnel to strengthen the organisation and enhance safety were not processed.
The truth is that several businesses were forced into closure, many employees lost their job, and millions of dollars of investment was lost, as was a unique opportunity for the Australian flight training industry, and most particularly in the regional sector which APTA was designed to support.
Whilst I appreciate that it is not the Committees role to adjudicate in disputes, and that it has no avenues to provide remedies, this matter is pertinent to the Committees Terms of reference and in particular;
· Whether the current legislation is fit for purpose
· The economic impacts of aviation safety frameworks
· The immediate and long term, social and economic impacts of CASA decisions on small business
· The maintenance of an efficient and sustainable Australian aviation industry including the training sector.
· Efficacy of CASAs engagement with the aviation sector
· The ability to broaden accessibility to regional aviation across Australia, which is in fact the exact purpose of APTA.
My hope is that Mr Carmody will respond to both the RRAT and myself to add some clarity to the statement that he made to the Committee and ensure transparency.
Respectfully, Glen Buckley