Civil Aviation Authority rejects advice to reform board

Exclusive: Deloitte said the regulator needed to appoint a senior independent director

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The Independent Online

Britain’s aviation regulator has rejected a proposal to overhaul its board structure in order to improve corporate governance, as recommended by the Big Four accountancy Deloitte.

In a review into the Civil Aviation Authority board’s effectiveness, Deloitte said the regulator needed to appoint a senior independent director. In the private sector this is an oversight role held by someone free from conflicts of interest, who can therefore hold the board to account.

But the board concluded that this role was “not appropriate” in a public organisation and would complicate the existing executive and non-executive director structure.

According to the latest CAA board minutes, the organisation also concluded that a senior independent director “would interfere in the relationship between the non-executive board members and the chair”.

The CAA, which oversees airlines and airports, is often criticised by the aviation industry for what it believes is overly burdensome regulation. For example, Heathrow complained about “draconian” price controls on landing charges last year, which the CAA argued would benefit passengers as they would not see a hike in their air fares.

The minutes also revealed that the regulator is £2m behind schedule on its revenue target for the first seven months of the financial year to November. Last year, the CAA’s revenue was £133.1m, up by £7.3m on 2013.

The shortfall was pinned on the CAA’s international division, which trains staff at overseas regulators and oversees exams for aircraft maintenance engineers and flight crews. However, this division’s fortunes improved in November, when it signed an advisory services contract with the Brunei Department of Civil Aviation.  

The CAA’s chairman, Dame Deirdre Hutton, has talked to the Transport minister Robert Goodwill about the limitations of the organisation’s regulatory powers in the wake of air traffic control’s IT failure in December. Staff at Nats, which controls Britain’s airspace, were unable to access important data at its control centre in Swanwick, Hampshire, resulting  in dozens of flights being delayed or cancelled.

Dame Deirdre repeated concerns that the chief executive, Andrew Haines, had made to the Commons Transport Select Committee shortly after the chaos. He pointed out that the CAA did not have the power to fine Nats, but was going to hand over a series of recommendations on how to beef up its enforcement powers early this year.

An independent inquiry into December’s debacle is underway and is expected to report its findings later this month. One of the major focuses of the report, according to the minutes, is “the lack of resilience built into Nats’ systems”.