Part 6
In November 2017, APTA was due for its first big CASA audit, called a Level One. This meant a week-long review of APTA’s operations. Happily for Glen, it passed, along with the alliance’s bases, Melbourne Flight Training, TVSA at Bacchus Marsh, and, significantly, the two newest CASA approved bases, AVIA and Learn to Fly, both at Moorabbin. No concerns were raised about the business model or its operations. As far as APTA was concerned, CASA’s audit had further provided confirmation that the model had dotted all its i’s crossed all its t’s. Glen saw a future.
CASA had also suggested a number of other training organisations to Glen that might fit into his business model. Latrobe Valley Aero Club was one of those small, rural flight-training organisations struggling to fit into CASA’s new rules. It looked at Glen’s business model and saw a good option. After CASA raised a number of issues with Latrobe Valley operations that were subsequently rectified, the aero club began operating under APTA’s umbrella on 21 May 2018. This was made possible by CASA’s own ‘Temporary Base Procedure’; a procedure that allowed a flight-training organisation to be under the full operational control of another whilst an application was assessed. This was a procedure that had been recommended by CASA to Glen; a standard and well-utilised industry practice. Glen was confident that, in collaboration with CASA, Latrobe Valley could become another alliance member.
Those patches of grey cloud on the horizon, however, had begun to darken and coalesce.
May 2018 heralded the arrival of a new CASA Regional Manager for Glen’s business locale. At the time, CASA operated teams of personnel charged with overseeing a number of flight school training certificates. These teams were also to be reshuffled. Glen’s old team had been pivotal to the successful development of the APTA business model. The new Certificate Management Team, of eight inspectors and a manager, however, exhibited two concerning characteristics; the first being that a member of the new team had an established reputation within industry as being exceptionally difficult to work with. Glen formally raised his concerns with the Regional Manager at the time.
The second was that communication from the new team had began to dry up and had a very different ‘feel’. Glen found this more than a little worrisome. He began to wonder whether the new team either hadn’t received a substantive handover from the old team regarding APTA, or, because the model was ‘different’, they simply didn’t understand it. Or, perhaps that difficult team member was causing some friction?
Regardless, Glen, having no tangible evidence at that point to back up that niggling feeling of unease, proceeded with his business plan. He continued marketing the new business as a successful, working model and, moving amongst aviation circles, spread the word. By early 2018, aeroclubs and training facilities as far as Ballina, Brisbane, and even Darwin were either interested or already operating under APTA temporary base procedures. Although on the back foot financially and now with 60 approved competitors, things were still looking up for APTA in mid-2018 as the bulk of the industry played catch-up with the revised big-stick deadline looming.
In June 2018, APTA sent in the paperwork to CASA for Latrobe Valley and Ballarat Aero Clubs to be formalised as permanent operating bases of APTA (rather than temporary). CASA had already approved several schools to operate under APTA, so he was confident there would be no significant hurdles. Then, in August 2018, APTA also asked to add a new base for Learn to Fly at Moorabbin (where one already existed) and Whitestar Aviation in Ballina. The addition of permanent locations were considered by CASA to be significant changes to the Exposition – the document that CASA had helped Glen build.
The next big compliance hurdle, however, was for Latrobe Valley to undergo its Temporary Base audit, a stepping-stone to Permanent Base. APTA welcomed the CASA team to Latrobe Valley on 3rd September 2018 and the audit went well. An exit interview is required by the regulations and any concerns regarding the operation must be raised by the team at this onsite exit meeting; that is, on the day. None were raised, the team left, everyone was happy – or so it seemed. Latrobe Valley, with a clean bill of health, was left to continue to operate under the Temporary Base procedure, with an expectation of moving towards permanently joining the business, once CASA formally approved it.
But, that niggling unease? Those grey clouds on the horizon? On October 23rd 2018, they turned into a storm.
Without any sign, signal, or warning, the winds changed dramatically. CASA pivoted 180 degrees on its official position on APTA’s business model. APTA received a carefully considered and meticulously worded email from CASA, with the subject; “A Notice of Proposal Refusal to Approve Significant Changes to Exposition and Operations Manuals”. It was an extraordinary email by any account, with an eye-watering deadline.
The email declared that, unless Glen could prove otherwise within seven days, APTA was considered an unauthorised operation, and as a result five bases would be required to cease operations, one base would have its approval reversed, two new base applications would not be processed, and no new members would be allowed to join.
Glen was horrified. Not only did it seem was could lose his own flying school, but it seemed he may have inadvertently dragged many others down with him.
In support of the claims in the email, and despite historical support for the business model, CASA pointed to an Aviation Ruling (an advisory setting out CASA’s policy or position on a particular issue) from 2006, regarding the franchising of commercial operations,thatpurportedlydisallowed APTA.
Interestingly, months after CASA took action against APTA, they withdrew the Aviation Ruling that they used, and it was not replaced.
Just like that. In October 2018. Not during all those discussions? Not three years before, during the development phase, when CASA was made aware of the model? Not before approving the model in April 2017 and granting the new-rule Part 141/142 Certificate? Now, after all was said and done and spent.
But it was not that the Ruling had escaped the painstakingly thorough consultative process, but that CASA was using a Ruling that, in 2014, had been amended specifically to exclude flight training organisations. Glen was stunned. This was a ruling that did not apply to Glen’s business but was going to be used to blow the doors shut.
The email also stated that the organisations or temporary bases operating flight-training from locations other than APTA’s head office at Moorabbin, were likely in contravention of the Act, and further, that as APTA had facilitated the contravention it may face ‘enforcement action’. These were the exact procedures that CASA had previously designed with Glen, and used to approve new members.
CASA had also contended, that their legal department had not, until now, been aware of the franchised structure of the business. An extraordinary claim given that, as one of the very first flight-training schools to be issued with the new certificate, APTA would hardly have been able to slide under the radar. If anything, it would have been the subject of much closer legal and regulatory scrutiny.
To all this APTA had a mere seven days to respond or face being stripped of its certification. And, if it did try to state its case, it had to provide the relevant contracts with alliance organisations that proved APTA was the official on-site operator of the flight-training organisation at each of those locations. Only Glen had already provided the regulator with the relevant master documents of alliance member’s contractual arrangements, on a number of occasions.
Ignoring for a moment the legal integrity or otherwise of CASA’s email, what this shift in direction really signified and where it bore the greatest immediate implication, having effectively placed APTA on one week’s notice of impending closure, was that Glen suddenly had nothing to sell. Without a legally operating business structure in a highly regulated industry, Glen effectively had nothing. The email, although it wasn’t expressly worded as such, was a death warrant for the business. The actual execution, however, was still nearly 12 months away. Glen, at this point, had simply been hung out to dry. Slowly. In a very ill wind.
The implications of CASA’s decision to reject the business model as ‘disallowed’, slammed into Glen. Those pesky laws that businesses need abide by to legally operate? With just seven-day’s notice of the possible termination of APTA, how could Glen legally, let alone morally, continue to take on, or allow his temporary bases to take on, new students? If students had no certainty of finishing their training, why on earth would they train with APTA? How could he legally, let alone morally, take new alliance members on board? With APTA potentially unable to continue operating, why would new members even look at his model? And how could he legally, let alone morally, continue to operate at a cost of more than $20,000 a week when income, already an issue, with potentially no new students moving through the system, was suddenly looking dire? What would the lawmakers have to say about that?
And Glen certainly couldn’t simply pretend to his members that he hadn’t received it, keep half a dozen bases operating under the pretence that everything was going to be OK, send the paperwork in again, and hope for the best. Aside from Glen’s personal expectation of integrity, aviation is a small industry. To threaten the closure of that number of flight-training bases, everyone would know within minutes, confidence in his business would be lost immediately,and his hard-earned reputation would be in tatters.