The principles are based on the need for the CAA Charges Schemes to be cost related, fair and reasonable, and to reflect the CAA’s intent to remove cross-subsidies wherever possible. These principles are set out below.
The CAA is required by the Civil Aviation Act to fully recover its costs associated with discharging its regulatory functions. The CAA is also required to achieve a rate of return as defined by the Treasury.
The CAA shall continuously seek to minimise the cost of regulation by improving its efficiency and effectiveness and by limiting its regulation to that which is necessary, proportionate to risk and within the scope of the legislative framework.
The CAA shall recover its costs from those it regulates. Charges for a particular scheme shall recover the costs properly attributed to that scheme. For activities within a scheme, charges shall be cost related, fair and reasonable.
Where costs cannot be related to a particular organisation or individual, charges shall be fairly and equitably distributed between those who benefit from safety regulation.
At the charges proposals stage, any under-recovery expected to occur on a specific charges scheme should, in general, be recovered from the scheme or schemes most closely related to the scheme in question.
The CAA shall recover fully the costs of non-statutory activities from those on whose behalf the activities are carried out. These shall include all directly attributable costs (direct costs, support costs, allocated and apportioned overheads, and cost of capital rate of return). For any non-statutory activity, an appropriate rate of return should be achieved. For example, training courses provided by the CAA.
Industry and the CAA shall use their best endeavours to remove material cross subsidies between and within schemes.
The direct costs and direct support costs of a scheme/activity shall be allocated to that scheme/activity. Where indirect and overhead costs can be attributed specifically to a scheme/activity, they shall be allocated accordingly. In all other cases they shall be allocated on an appropriate basis (e.g. in proportion to the direct costs of each scheme/activity). The basis of allocation/apportionment should be discussed with the users and applied consistently.
The CAA shall provide adequate transparency in order to provide clear cost information in relation to the allocation and apportionment of costs between, and within schemes. Any material cross subsidies remaining must be clearly identified.
The CAA shall seek to keep annual increases in charges for any scheme within inflation, having regard to Principles 2 and 7. Where step changes are required, they shall be phased over a maximum of five years.
Some changes cannot be phased and the CAA may need to mitigate the effects of such changes on individual charge payers. Such mitigation shall be eliminated within three years.
Costs associated with advising and providing assistance required by the Secretary of State in connection with his civil aviation functions shall be recovered from the Secretary of State.
Subject to Principle 11, for work performed under contract to EASA, the CAA shall seek to fully recover its costs under that contract.
The cost of transition to new European institutional arrangements will need to be supported. Such support will be proportionate and subject to discussions between industry, the DfT and the CAA.