The main function of the Air Safety Operations Department is to oversee the overall safety of all aviation operations in South Africa. In order to achieve this, the department comprises 5 divisions each focussing on a specific area namely, Flight Opera-tions, Airworthiness, Certification, Aviation Medicine and Aviation Personnel Standards.

Flight Operations

The role of the Flight Operations division is to regulate, control and promote aviation safety and to provide South Africa with safer skies. The areas of oversight include licensed aviation personnel, airports and aircraft. Clients include scheduled operators, non-scheduled operators, other operators such as crop sprayers, hot air balloons, etc, general aviation,

all organisations that represent any of the above-mentioned groups and international or regional organisations and bodies.

The functions of the Flight Operations division include:

· The verification and monitoring of information contained in the operations manuals of every operator to insure compliance with the Interna- tional Civil Aviation Organization (ICAO) and the Civil Aviation Regulations (CARS) of 1998 and to ensure the viability of safe operations before the Department of Transport issues an Air Service License to the applicant;

· Inspection of operations to ensure that they take place in accordance with specifications contained in the approved operations manual;

· The issuing of Operating Certificate to operators who comply with the specifications of the operations manual and can provide a safe and reliable service:

· The performance of follow up inspections at least once a year to ensure minimum compliance with the operations manuals.

The Flight Operations division also provides the following services:

· Assisting in the investigation of accidents and serious incidents when required and their prevention thereof;

· Conducting route surveillance checks as required by the Civil Aviation Regulations of 1997 and ICAO standards;

· Conducting flight simulator checks and certification at least once a year;

· Surveillance of cabin safety and flight engineers at least once a year;

· Conducting inspections on behalf of the Air Service Licensing Council;

· Advising the Accident Review Committee and Air Service Licensing Council and carrying out ad hoc inspections, interviews and prosecutions on their behalf;

· Providing advice with regard to the training, licensing and examination of pilots, cabin crew and flight engineers;

· Providing information and advice to all stakeholders to enable them to comply with the requirements of the relevant regulations and standards;

· Investigating alleged contraventions of the Aviation Legislation including the Civil Aviation Regulations;

· Following up on corrective action needed by any operator or aviation personnel license holders to ensure that they comply with the minimum safety requirements.

Clients include:

· Air Transport Operations: large aero planes

· Air Transport Operations: helicopters, helicopter external load operations:

· Air Transport Operations: small aero planes; · Agricultural Operations;

· Emergency Medical Services Operations;

· Cabin crew;

· Aviation Training Organizations; and

· Other CAA departments and divisions such as Dangerous Goods, Aviation Medicine, Airworthiness, Certification, AVSEC, etc.

The Division currently overseas a total of four hundred (400) Approved Maintenance Organisations, with a sizeable number of them located outside the boarders of South Africa.

Approvals of Manuals of Procedures

The division also approves Manuals of Procedures for all the maintenance organisations, where they specify how they carry out their maintenance work.

Minimum Equipment List Approvals (MEL)
The Division also approves Minimum Equipment
List for aircraft above 5 700kgs, wherein the
boundaries guidance of operating the aircraft with
certain defects are prescribed. The approval process
of MELs is undertaken jointly with the Flight
Operations Division.

Flight Manual Approvals
The division also approves Flight manuals in
conjunction with the Flight Operations Division.

Basic Area Navigation BRNAV
The division issues BRNAV, which is a certificate
that allows the aircraft to be operated on specific
routes, especially those that are highly congested,
where they have to fly at certain heights in order to
fly the most direct route to their destination.

Reduced Vertical Separation Minimums (RSVM)
In cases where South African registered aircraft are
operated in Europe or the United States of America
where there is a requirement for RSVM, the division
issues such approvals for the SA registered operators
to fly in those routes.

Avionics Modification Approvals
The Avionics Operational Unit is charged with
approving all avionics modifications on the aircraft (both aero planes and rotorcraft).

Issuing of Authority to Fly Permits
The division, through the NTCA operational unit,
issues Authority to Fly Permits for all aircraft operated
in the NTCA fraternity.

Transformation
The division made a lot of progress towards attaining
its transformation targets. This was achieved by the
employment of more airworthiness inspectors falling
in the designated gender and race categories.

Training Initiatives
The year under review saw the training budget
allocated to the division increase two fold in order to
cater for newly appointed staff as well as to upgrade
the skills levels of experienced inspectors. A total of
fifteen inspectors were trained in thirty 30 months.

• Best practices on medical validations will be
researched int er nationall y, with a view to
developing medical standards and requirements
for South Africa.

Aviation Personnel Standards

The division consists of 3 operational units, namely,
Licensing and Examinations, Curriculum Development
and Testing Standards. The division’s primary
objectives are to set civil aviation safety and security
standards and ensure that all certificated aviation
personnel are trained to an internationally accepted
standard and that they remain competent and compliant
with the necessary requirements.

The following is a highlight of achievements realised
by this Division during the year under review:
• A database system for foreign students was
created;
• An examination entry procedure for technical
employees was established;
• Two policies, nam ely, the ATP validation/
exemption policy for foreign pilots and cabin crew
rewrite examination policy were implemented;
• An audit was done on foreign and local CPL
licenses to verify compliance with examination
and license requirements;
• The AME exam ination structur e for online
examinations was created;
• A manual of procedure for Curriculum
Development was developed;
• 3728 licenses were issued;
• The Division also met its target for staff training;
• A panel of designated examiners was created.
A draft constitution for the appointment of
designated examiners was also drafted, and this
will be implemented as soon as it has been
approved by the relevant authorities;

• In an ongoing effort to improve the levels of
customer service, the turn around time for the
issuing of licenses was reduced from 1 hour to
30 minutes.

Current challenges

• There is a need to upgrade the current version
of the Exam i nat ion soft war e p ro gra mm e;
• The re is a ne ed t o de vel op t he Ai rcr aft
Maintenance examinations online. However this
can only be achieved when the examination
softwar e pr ogra mm e has been upgraded;
• The division is also in the process of being trained
on AME issues to streamline the issuing of AME
licenses;
• The Instructor’s examination also need to be
developed online;
• The current database of questions need to be
further developed and reviewed;
• Part 61 of the Civil Aviation Regulations, 1997,
also need to be finalised; and
• A review of the database must still be finalised.

Future plans and prospects

• A plan is in the pipeline to introduce a plastic card
license type from 2006;
• To improve on service delivery, the current position
of Head of Operations (HOO): Licensing and
Examinations will be split into two to have one
HOO focus on Licensing and the other HOO on
Examinations;
• The ATC licensing is going to be moved from Air
Traffic Services to the Licensing section since all
aviation personnel licenses form part of the
responsibilities of this section; and
• There is also a plan to have the Instructor and the
AME examinations online.

The Air Safety Infrastructure(ASI) Department is responsible for following in South Africa airspace over high seas assigned by the International Civil Aviation Organisation(ICAO) to South Africa for the purposes of air traffic services:

•aerodrome safety compliance;
•airspace planning, usage control;
•air traffic services safety compliance;
•air navigation infrastructure safety compliance;
•procedures for air navigation services-operations;
•aeronautical information service; and
•environmental protection(aircraft noise and engine emissions) compliance.

Aerodrome Safety Compliance

The Aerodrome Safety Compliance division is
responsible for four key areas, namely: aerodrome
licensing and compliance; frequency spectrum
management; visual and radio navigation aids and
obstacle control.

Aerodrome licensing and compliance

Licensed aerodromes are inspected annually to
verify compliance with safety regulations and for
renewal of licenses. The processing of applications
for initial issue of an aerodrome license entails
detailed inspections by engineering and aerodrome
operations inspectors and publication in the

Government Gazette for public comments, before the Commissioner may make a decision on the issue of the license. In between the annual inspections, the division undertakes adhoc surveillance inspections to ensure continued compliance.

Frequency spectrum management

The division manages the aeronautical High
Frequency (HF) and Very High Frequency (VHF)
spectrum on behalf of the Independent Communications Authority of South Africa (ICASA).

Frequencies are allocated to applicants for aeronautical ground stations after consideration is given to the merits of the application as well as potential interference.

Frequencies in the HF spectrum are allocated in
accordance with the international allocation plan.

Air navigation infrastructure compliance

The division is responsible for overseeing compliance with standards with respect to visual and radio navigation aids. Most of the Unit’s work in this area relates to instrument landing systems (ILSs), VHF omnidirectional radio range (VOR) and nondirectional beacons (NDBs).

Obstacle control

The Division is responsible for control of obstacles at and around aerodromes as well as enroute. Each aerodrome is protected by an “obstruction free zone” which is internationally agreed and given effect in Civil Aviation Regulations to reduce the risks of aircraft collision with obstacles. Tall structures within and in the immediate vicinity of aerodromes are evaluated against applicable standards and approved if they meet applicable criteria, controlled or operation of aircraft adjusted. Highly prevalent particular in the offairport or enroute phases are transmission/relay towers for cellular telephone. Other structures that draw attention even if they are not necessarily tall, are those on hills and high points of mountains.

Achievements

· All 136 licensed airports were inspected during the year;
· Safety Promotion Workshops were held at
Wonderboom and Oribi Airports, with focus on
aerodrome management;
·Consultation were continued with the Wonderboom and Mafikeng Airports, in order to maintain critical results areas in aerodrome safety;
·Eight emergency exercises were monitored in order to validate emergency procedure manuals;

·Emergency management systems were established at 5 airports;
·800 obstacles, most of them cellular telephone
radio masts, were evaluated for compliance with
relevant safety standards and approved;
·Two air shows were attended at Wonderboom and Grand Central airports; and
·Two additional staff members were appointed in the areas of Aerodrome Electrical and Apron
Operations oversight.

Challenges

The main challenge for the Division is that not all aerodromes are licensed. Currently regulations provide for licensing of aerodromes used for commercial operations by large aircraft (over 5700 kg mass). An estimated 700 aerodromes mainly serving small aircraft, sports and recreation are unlicensed. The Division has taken concerns brought about by this situation seriously,and through extensive consultations, is currently developing relevant regulations. The regulatory approach in this area will include a sector (mainly those serving
exclusively sports, recreation and private) being required to register and have documented and verifiable accountability for safety by the aerodrome owner/operator. Implementation of this area of coverage will present obvious challenges of ensuring compliance,particularly given the delicate nature of the lower end of the industry in terms of financial capacity.

Future plans

With aerodromes scattered all over the country, a decentralisation approach is being studied that will permit better surveillance, two way interaction with industry to improve safety, bearing in mind the high number of aerodromes that have to be under some form of regulation and the nature of the sector in question.

Other programmes will include rationalisation of activities related to aeronautical radio frequency control, which are the primary responsibility of ICASA but in which the CAA has a major role.

Airspace

The Airspace Division is responsible for key areas: airspace planning and usage control, and air traffic services safety oversight. Aeronautical Information Services is also under this Division.

Airspace planning and usage control

This area of the Division focuses on the planning of the airspace to ensure accommodation by all bodies and persons who wish to practice the arts business of aeronautics, bearing in mind that the airspace is a national

asset for the benefit of all South Africans, including those who wish to access it for nonaeronautical purposes.
In planning the airspace and usage, guidance is taken from ICAO world and regional plans, in whose development the Division takes part through various mediums including international meetings, task forces, etc.

Long term plans as well short term airspace structural adjustments and allocations are undertaken through a consultative processes. The National Airspace Committee(NASCOM) is a statutory body whose membership is made up of various subsectors of the aviation industry
as well as the South African Air Force (SAAF).

The primary responsibility of NASCOM is to serve as a consultative body advising the Commissioner on matters of the airspace. It meets at least four times a year to consider its business, and from time to time forms working
groups to address special matters requiring smaller groups with certain levels of expertise. The ATS section provides the secretariat for NASCOM, which requires considerable time.

In its four meetings during the year under review,NASCOM considered, amongst others, the Johannesburg Special Rules Area, an application to restore the prohibited area over Pelindaba, the withdrawal of navigational aids at Bisho and Lyndenburg airports, revision of the Airspace Master Plan which was completed and signed by the Commissioner in December 2004,
and Lanseria Terminal Control Area.

Air Traffic Services

The Air Traffic Services (ATS) Unit approves and monitors the provision of Air Traffic Services at 19 South African airports as well as the training of ATS personnel at two Aviation Training Organisations (ATOs). The Air Traffic
Navigation Services Company (ATNS) is currently the sole provider of ATS in South Africa. There are two organisations offering ATS training, namely ATNS and the South African Air Force (SAAF).

The ATS Unit is also responsible for the development of terminal instrument flight procedures (IAPs) in accordance with ICAO Procedures for Air Navigation
ServicesOperations (PANSOPS). Activities in this area include the design and verification checks of IAIPs, the amendment of aeronautical charts and the preparation of aeronautical data for publication, in support of AIS.

ATS personnel are also directly licensed by this unit. A total of 239 Air Traffic Controllers (ATCs) and 142 Air Traffic Service Assistants (ATSAs) were licensed by the CAA at the end of the year a considerable increase over the previous year. There were 13 licensed training organisation instructors.

Achievements

Each of the 19 South African Air Traffic Service Units(ATSUs) with current Approvals, and the two approved ATOs, were inspected twice during the year, as perschedule (see table on the next page).

One inspection for annual renewal and one
unannounced surveillance inspection were carried out on each ATSU and ATO. All Units and training facilities were found to be largely if not wholly compliant with the Civil Aviation Regulations (CARs). A number of previous audit findings were rectified by the responsible parties. One ATS Unit was inspected twice for monitoring purposes.

Activities in PansOps SubUnit included verification of data for 310 instrument flight procedures and related charts, the amendment of 5 World Aeronautical Charts (WAC) and the preparation of various graphics, 28 Supplements, various Aeronautical Information Package (AIP) amendments and Aeronautical Information Circulars (AICs) for publication, and the updating of the World Geodetic
System of 1984 (WGS84) survey data for 28 aerodromes. The Procedures Design Forum met three times and two Charting Meetings were held, with attendees from ATNS and SAAF.

A total of 122 aviation activity requests (balloon
releases, advertising blimps, firework displays) were

processed; 610 ATS licensing transactions were
made and 1354 incident reports were received,
cl ass ified and forwarded to the Occurrenc e
Investigation Department.

The ATS section also attended various meetings, including coordination meetings with the ATE Company in Midrand regarding the operation of their Unmanned Aerial Vehicle (UAV) in civil airspace, as well as meetings at the Department of Transport (DOT); attendance at the 35 th International Civil Aviation OrganiSation (ICAO) Assembly Session.

Other forums attended included seminars on the
implementation of the forthcoming Reduced VerticalSeparation Minima (RVSM) as required by ICAO,followed by RVSM Task Force meetings in April (Nairobi), July (Lagos) and November (Dakar). The matter regarding carriage of transponders in certain airspaces was also discussed in meetings between the Commissioner, ATS Section, ATNS and the aviation industry, held at ATNS Head Quarters.

The provision of aerodrome flight information service(AFIS) by ATNS at Grand Central airport continued to be monitored by means of surveillance inspections, although no approval by the CAA is currently required.
Safety levels have improved significantly.

The Civil Aviation Regulations (CARs) and Civil
Aviation Technical Standards (CATs) continue to be reviewed and revised when a requirement is identified, for example, during audits as well as during liaison with the industry and the service provider.

The old analogue telex system with a connection to the ATNS Motseta (Aeronautical telex and messaging system) was replaced with a digital line and a dedicated personal computer (PC) Motseta is an enhanced aeronautical telex interface which replaces the obsolete teletypewriters.

Total revenue for this period was R2,494,728
consisting of R910,776 direct revenue, R147,072 shared revenue, R1,070,160 indirect revenue and R366,720 for services rendered on behalf of the Department of Transport.

Challenges

Due to very few and low volume requirements for development of instrument flight procedures, there is hardly anything that can be equated to a pool of expertise in this area. Human resource succession for competencies in the PANSOPS area is therefore typically a challenge. Other challenges are in the areas of client education where there are new

regulatory requirements, such as in the provision of AFIS, and in the introduction of new airspace usage structures such as the reduced vertical separation minima (RVSM).

Aeronautical Information Services

The function of Aeronautical Information Services(AIS) is to provide aeronautical information necessary for the safety, regularity and efficiency of air navigation. In meeting this mandate, AIS disseminates aeronautical information concerning the entire territory of South Africa in accordance with the standards and recommended practices of the International Civil Aviation Organisation (ICAO).

Aeronautical publications

Information handled by AIS may vary widely in terms of the duration of its applicability. The urgency attached to information is handled differently depending on its urgency, operational significance,scope, volume and length of time it will remain valid and relevant to users.

Aeronautical information is published as an Integrated Aeronautical Information Package and composed of the following elements: Aeronautical Information Publication (AIP) including amendment service, Aeronautical Information Publication Supplements (AIP SUP), Aeronautical Information Circulars (AIC),and checklists and lists of valid Notice to Airmen
(NOTAM).

·Aeronautical Information Publication Amendments are published quarterly in January, April, July and October. These contain permanent changes or additions to the information contained in the Aeronautical Information Publication (AIP).

·Aeronautical Information Circulars are published on a monthly basis. These are intended to notify our industry in advance about major changes in procedures or facilities, information of an advisory nature or information concerning administrative or Legislative matters.

·AIP Supplements are published monthly as part of the Integrated Aeronautical Information
Package (IAIP). These contain information on
temporary changes to the AIP of long duration
which requires extensive explanation or graphics.

·Checklists and lists of valid NOTAM are also
published monthly as part of the IAIP. NOTAM
is information i ssued promptly whenever
information is of a temporary nature and of short duration or when operationally significant
permanent changes or temporary changes of
long duration are made at short notice.

Other Responsibilities of AIS include:

·Handling application requests for Location
Indicators through ICAO regional office;
·Handling applications for allocation of 3 letter
designators for aircraft call signs with ICAO;
·Handling applications for ICAO 5 letter
designators as required;
·Handling applications for Parachute jumping
exercises.

Achievements

·Integrated Aeronautical Information Packages
(IAIPs) were published monthly as scheduled
and in accordance with the Aeronautical
Information Regulation and Control (AIRAC)
System. AIRAC is a system aimed at advance
notification based on common effective dates of
circumstances that necessitate significant
changes in operating practices;
· The Aeronauti cal Information Publ ication
amendments were published during January,
April, July and October 2004 as scheduled;
· A total of 376 applications for parachute jumps
were processed.

Challenges

· Aeronautical information needs to be fully
automated for the purpose of improving its speed, accuracy, efficiency and costeffectiveness. This process will be implemented in stages. Currently, AICs are available on the CAA website, and the plan is to make the AIP Supplements and finally the AIP available on the web and in other
electronic means;
Current processes for the production and
distribution of aeronautical information need to
be streamlined in order to meet deadlines and
ensure timeous distribution of information; in part
this requires considerable education of the
information source bodies.
·Training and development of staff remains within international standards while advancing human resource transformation.

Future plans

In order to continue to reduce the costs of putting information in the hands of the users, the plan is to have all aeronautical information to eventually be published and distributed electronically in future. Apart from cutting down on costs, the electronic distribution will also ensure that this information reaches its recipients in short space of time. However, hard copies will still be made available to those clients or users who do not have access to electronic media or who prefer paper copies.
In the coming year the AIS section plans to participate in the regional AIS / MAP forums and global AIS / MAP activities, in order to advance capacity and deepen competencies.

Flight Inspection

Compliance and verification of air navigation infrastructure is further undertaken by the Flight Inspection Unit which checks the compliance of signals in space emitted by the radio navigation aids.

The Flight Inspection Unit operates a state of the flight inspection system (FIS), one of only two of such calibre in SubSaharan Africa, to check that the signal in space radiated by a navigation aid (navaid) is compliant with prescribed minimum standards. As a platform for the FIS, the Unit uses Citation 550 SII executive jet which offers marked flexibility of operational simplicity and quick access at relatively low cost. The Unit has spare capacity which is made available to SADC States.

Activities

· There were 171 planned inspections for the year but only 156 were performed. The predicted flying hours were 353.5 and 340.2 were actually flown. Targets could not be achieved due to equipment and aircraft problems experienced during October and November 2004 as well as in January 2005. This resulted in inspections being performed outside their expected intervals.

Over the past year, the following navigational aids were flight inspected:

Revenue

The predicted revenue for the year was R7 423 500 and the actual revenue generated was R6 912 292. The reason for this shortfall was due to equipment and aircraft problems already mentioned, resulting in inspections being performed outside their expected intervals.

Special projects and highlights

· The new VOR at Lanseria was commissioned
during April 2004;
· The new ILS on rwy 03R at JHB INT was
commissioned during June 2004;
· The new ILS on rwy 21L at JHB INT was
commissioned during August 2004;
· The new ILS on rwy 24 at Durban INT was
commissioned during December 2004;
· The new ILS on rwy 29 at East London was
commissioned during February 2005;
· Even though equipment and aircraft problems
hampered inspections, an effort was made to catch up as much as possible once the unit was
operational again.

Challenges

The main challenge facing the FIU is the minimisation of disruptions due to equipment or aircraft down times.

Environmental Protection Compliance

The objective of this Section is to ensure that the development and operation of aircraft is in compliance with the national policy on aircraft noise and engine emissions and regulations, to respond to complaints from the public regarding environmental issues, and to coordinate as necessary to ensure the minimisation of the negative impact of noise and engine emissions.
In the past year the Section participated in a number of forums on the development of national policy, on international standards development and attended the 35 th Session of the ICAO Assembly in September 2004, as well as two workshops on “Improving Environmental Capacity at Airports” held in Montreal Canada and Florida, USA.

As South Africa is a member of the ICAO Committee on Aviation Environmental Protection (CAEP), the Section continued to interact with the Committee secretariat and other committee members, on such matters that are feasibly to address through the use of electronic communication only.

The Aviation Security department (AVSEC) was
established by the CAA to give more focus on issues related to aviation security. The overall functions of AVSEC are:

· To assist in the development and implementation
of the National Aviation Safety/Security Plan
(NASP) in conjunction with the Chief: Civil Aviation Security;
· To ensure the sustainability of security standards by airports, airlines, cargo agents and navigational facilities to safeguard civil aviation operations against acts of unlawful interference;
· To conduct inspections and audits on airports,
airlines and cargo agents;
· To ensure safe transportation of dangerous goods by air;
· To investigate security related incidents and
accidents.

The work of AVSEC is carried by three main divisions, namely: Dangerous Goods & Cargo Security; Airlines and Airports Security; and Minimum Information Security Standards (MISS), as well as the Research and Development section which was established in
January 2005.

Dangerous Goods and Cargo Security

This division is responsible for ensuring the safe
transportation of dangerous goods by air and the prevention of any unlawful acts of interference againstcivil aviation; as well as to identify and pursue effective

and proportionate precautions to reduce the risk of terrorist atrocities in the supply chain of dangerous goods and cargo.

On 01 October 2004 the Dangerous Goods Section was transferred over from the Flight Operations Division (Air Safety Operations Departement) and merged with Cargo Security to form the Dangerous Goods and Cargo Security Division.

Presently until promulgation of Part 108 (Cargo
Security Regulations) of the Civil Aviation Regulations of 1997, as amended, the Division is responsible for acquiring and retaining all resources demanded by the Senior Manager to regulate, monitor, enforce and promote aviation safety and security and a culture of awareness in the aviation industry to enhance the safety and security in the transportation of dangerous
goods and cargo by air.

The Division works with the following clients:
• Scheduled airline operators;
• Nonscheduled
operators;
• Cargo Handling Organisations;
• Ramp Handling Organisations;
•Dangerous Goods Aviation Training Organisations;
• Airport Authorities; and
• Dangerous Goods Packing Organisations.

The Division undertakes scheduled, adhoc
and followup inspections of the above organisations to ensure that Safety and Security Standards and Recommended Practices of the International Civil Aviation Organisation

(ICAO) and Civil Aviation Regulations (CARS) of 1997, as amended, are complied to. In addition, the Division
is also responsible for:
• Processing of Exemption and Special Approval
applications;
• Processing of dangerous goods training Part 141applications;

• Dangerous goods incident / accident investigations;
• Enforcement;
• Technical advice to the aviation industry;
• Proposed amendment to regulations;
• Approval of the dangerous goods component of Flight Operations Manuals;
• Promotion of safety among our stakeholders; and
• Attendance of industry meetings.

Challenges

• Incorporation of dangerous goods security into the proposed cargo security regulations;
• Classification of high profile dangerous goods that could possibly be used to commit unlawful acts of interference against civil aviation;
• Effective penalty system for dangerous goods and cargo security violations;
• Finalisation of a cooperative agreement with the national nuclear regulator to ensure the orderly transport of radioactive material by air;

• Closer interface with the Department of Transport (DOT) regarding the transportation of dangerous goods by other modes of transport;
• Safety promotion among stakeholders within the industry to make them aware of the dangers of undeclared dangerous and incorrectly packed
dangerous goods being offered for transport by air;
• Setting of dangerous goods training unit standards with the Transport Education and Training Authority (TETA); and
• Ongoing oversight to ensure sustainability of
standards.

Airlines and Airports Security

The division is primarily responsible for:
Ensuring that the basics of aviation security in the areas of airports and airlines are in place;
· Growing the Division into a knowledge intensive
aviation security centre through research and
development;
· Ensuring that National Aviation Safety / Security
Program (NASP) is current and caters for the
aviation security needs of our country. This entails constantly reviewing it and rectifying weaknesses in the programme to ensure its continued effectiveness;
· Recommending to the Minister the introduction or amendment of civil aviation safety and security legislation;
· Recommending and advising the Minister on any international agreement with another state,
government or international organization;
· Working closely with other Divisions in areas related to aviation safety and security;
· Executing a Ministerial order issued in terms of

section 6 of the Civil Aviation Act;
· Defining and allocating the tasks of the civil aviation security programme;
· Establishing mechanisms for cooperation among different organisations responsible for executing the civil aviation security program;
· Ensuring that airports and airlines are able to
execute the civil aviation security program;
· Reviewing for approval all security programmes of airlines and international / domestic airports;
· Ensuring that airports provide the necessary facilities such as office space, communication facilities, suitable security facilities, training facilities, etc.;
· Ensuring that aviation security measures are
integrated into the design and construction of new facilities;
· Developing and implementing a National Aviation Security Training Programme and working closely with other institutions offering aviation security training programmes; and
· Administering all the civil aviation laws specified in the Civil Aviation Act.

Achievements

· The 5th Amendment to the Civil Aviation Safety Regulations of 1981 was approved by the Minister of Transport towards the end of the year;
· The appointment of the Chief of Civil Aviation
Security by the Minister of Transport was finalised, as required by the Civil Aviation Safety Regulations
of 1981;
· The National Aviation Safety / Security Plan (NASP) was approved by the Minister of Transport, thereby providing direction and legal stand;
· All oversight activities as planned for the year were successfully completed;
· Staff within the Division were successfully trained in order to equip them with technical skills; and mentoring for PDIs also took place in order to bring them up to speed with aviation security issues;
· The division also facilitated an ICAO training course in aviation security which was attended and successfully completed by AVSEC personnel, both within and outside the CAA, in September 2004;
· There was constant liaison with all stakeholders on aviation security issues such as the National Aviation Security Committee (NASC), Local Airport Security Committee (LASC), Safety Committees,etc.
· 10 airports were identified and recommended to the Minister of Transport as designated airports which had to fully comply with the National Aviation Security Plan;
· The CAA is now represented in the African Civil Aviation Commission (AFCAC) in the avsec panel of auditors; and

· Avsec educational and promotional campaigns
were carried out at identified airports that lacked behind on security issues.

Challenges

· The National Aviation Safety / Security Plan needs to be successfully implemented;
· Part 121 needs to be amended to include Security;
· There is a need to develop Minimum Aviation
Security Standards to cater for nondesignated
airports;
· The Sky Jacking Policy also needs to be finalised;
· Cockpit Security legislation needs to be finalised and implemented;
· There is a need for the CAA to be represented in Bilateral Agreements processes;
· Hold Baggage Security legislation must also be
finalised;
· The Crisis Management Plan for airports and
airlines needs to be finalized;
· There is also a need to increase and enhance our oversight activities in order to fully comply with the National Aviation Safety / Security Plan;
· Civil aviation legislation pertaining to aviation
security needs to be reviewed;
· In order to fulfill the AVSEC mandate, the Division will have to increase its capacity, in terms of people and resources;
· A fine structure for noncompliance
needs to be developed and implemented as a component of enforcement.

Future plans

· An area that needs to be finalised is reviewing the movement of passengers and cargo at airports to enhance the existing security measures;
· The CAA needs to decentralise and establish
regional offices in order to be closer to our clients;
· In future we need to put greater emphasis on
cooperation with our counterparts in the SADC
region;
· The legislation needs to be constantly reviewed to ensure its currency and relevance to the changing civil aviation landscape.

Minimum Information Security Standards (MISS)

The Minimum Information Security Standards Division(MISS) was established to provide a total security function for the CAA as well as to external stakeholders.
In the short time that the Division was in operation in AVSEC, significant progress has been made in terms of meeting the mandate of MISS.

Achievements

· 10% of CAA staff, including management, as well as external service providers went through the security vetting process;
· A number of policies and guidelines were
developed and implemented, namely: the security vetting guidelines; documents security guidelines; key control guidelines and the internal security
policy.

Challenges

· Approval and support by staff in general for the developed policies;
· To ensure that security policies are applied
consistently throughout CAA, as well as to educate staff about the importance of abiding by all the security policies and procedures. All these will be addressed by the Division during the next financial year.

The Occurrence Investigations (OI) Department is
responsible for carrying out accident prevention
activities in South Africa. This is achieved through:
∙ Investigating all aircraft accidents and serious
incidents;
∙ Generating safety recommendations from
accident reports to prevent reoccurrence
and
continually monitoring the implementation of
these recommendations;
∙ Disseminating aviation safety information to the
South African aviation industry and informing
them about accident rates and trends;
∙ Promoting aviation safety within the industry;
and
∙ Monitoring and benchmarking accident trends
with the international aviation community to make
sure that South Africa is on par.
The CAA is mandated to investigate the causes of
aircraft accidents and incidents in South Africa under
Annex 13 of the ICAO Chicago Convention and Part
12 of the Civil Aviation Regulations. South Africa,
as a signatory state to the Chicago Convention of
7 December 1944, is responsible for adhering to the
provisions of this Convention. The OI Department,,
which is semiindependent
from the CAA, carries
out these activities on behalf of the Department of
Transport.

The OI Department consists of three divisions:
∙ Accidents Investigation;
∙ Incidents Investigation; and
∙ Safety Promotion.

Achievements

Accidents Investigation
A total of 154 accidents were recorded this year,
compared to 150 last year. Although this represents
only a marginal increase, it means a lot in terms of
safety within the aviation industry. 197 safety
recommendations (SR) were generated from 13
Internal Accident Review Committee (IARC)
meetings, in which 217 accident reports were
approved for release.
Besides completing accident report backlog,
productivity increased. 217 accidents reports were
completed and released as compared to 171 the
previous year, as indicated in the table below:

The steady increase in incidents can be attributed to the growth of the South African Aircraft Register and an increase in air traffic movement over the past year, the latter shown in the table below:

Safety Promotion

Accident figures over the last twelve months showed a slight reduction as compared to the previous year. General Aviation (GA) experienced the most accidents whose probable causes ranged from fuel exhaustion to technical problems.

To address this, a total of 34 safety promotion workshops and presentations were conducted with general aviation, particularly with the aero clubs.

Our safety magazine, Safety Link, was also
produced three times last year to address issues of aviation safety. The topics and articles were mainly based on safety recommendations emanating from
accidents reports.

Confidential Aviation Hazard Reporting System(CAHRS)

The number of reports received suggests some measure of confidence in the system. A total of 104 reports were received through email, fax and telephone and 54 of these were investigated and closed, while the rest are still outstanding.

The kind of reports from the public, competitors, professional aviation bodies and aviation individuals were as follows:

· The public or passengers reported incidents such as airprox (air proximity), noise and low flying,fuel leakages and the Huey helicopter operations.

· Competitors reported incidents such as unsafe
operations, not adhering to safety standards and non compliance.

· Professional aviation personnel, on the other
hand, reported incidents such as non compliance, cutting of corners, forced to approve in order to avoid delays (irrespective of safety), release of unairworthy aircraft and violation of flight duty time.

In order to improve the system, CAHRS will be relaunched in September 2005.

International relationships

Our relationship with our Namibian counterparts
continued to bear fruit, which included exchange
programmes and visits to share best practices. We intend to bring more members of SADC on board, particularly those who have signed the harmonization of regional standards agreement.

We also hosted our colleagues from the Bureau of Accident Investigation (BEAFrance),
and fruitful exchange of experiences took place, such as how the Concorde accident was reviewed. We also plan to have an exchange programme with this Bureau should the budget allow us to do so.

Training

The OI Department continues to train and develop its staff in order to deepen their skills and thus make them better inspectors. A number of courses were attended, such as the Safety Management Course for Accident Investigators and the Fire Mishap and Accident Investigation course presented by the highly admired University of Southern California. These courses were both presented in South Africa, and other than the CAA, other organizations such as SAA and SAAF also sent their candidates. Other companies such as Rolls Royce from the USA were also in the country to train our people on their engines.

The benefit of bringing these courses to South Africa rather than attending them overseas is that it is very cost effective to do so and it also allows a larger number of people to attend.

Three of our investigators, including a female
candidate, completed their Private Pilot License (PPL) as part of ICAO requirements.

Social responsibility

Occurrence Investigations was involved in a number of social responsibility programmes during the year, aimed at previously disadvantaged schools. A number of schools from Gauteng, Limpopo and NorthWest were visited in order to expose them to a number of career options that exist in aviation. These
programmes were taken jointly with the Air Traffic and Navigation Services Company (ATNS), the Airports Company South Africa (ACSA), South African Airways (SAA), the South African Air Force (SAAF) and the Department of Transport (DOT). More of these activities will be undertaken in the coming financial year.

Challenges

Our main challenge is to substantially reduce the rate of civil aviation accidents in South Africa, in order to establish South Africa as one of the safest destinations in the world. This is absolutely necessary, especially for the country’s tourism industry as well as the forthcoming Soccer World Cup.

Our other challenges include:

· Establishing an independent accident
investigations board, separate from the CAA;
· Encouraging improved cooperation with SADC
and the rest of the African continent;
· Skills deepening and capacity building for our
staff; and
· Finding a permanent hangar base or space for
accident wreckage.

The Corporate Services Department renders all the support services the CAA requires in order to fulfil its mandate effectively. These services include Human Resources (HR), Finance, Information Technology (IT), Client Services and Corporate Service Support.

Human Resources (HR)

Over the last two years the CAA has experienced an increase in staff numbers, from approximately 160 to 273 employees. The number of black employees has increased by 8.89%, while that of females increased by 7.66% during this period. As a result, this growth has affected a number of issues within the organization, such as organizational culture and identity; mentoring, coaching and diversity; skills depth and breath; training and development; communication; industrial relationships, conflict resolution and unionization; careerpath management, succession planning and retention; as well as age, gender and riskbehaviour management.

It is anticipated that the organization will continue to grow over the next three years. In addition, decentralization, which is aimed at bringing the CAA closer to its clients, will increase management responsibility and introduce new challenges into the human environment.

Industrial and union relations

Industrial relations (IR) is a managed function of HR. It is aimed at creating a more human approach to people management. Fostering this is done through early IR specialist involvement in potential disciplinary matters, ensuring and advising on approved procedures, ensuring that all parties understand policies, employee counseling and advice.

A Bargaining Forum was established in terms of the recognition agreement with the Public Servants Association (PSA). During the period under review, the South African Trade and Allied Workers Union (SATAWU) became the majority union.

The division focuses on areas such as HR policies and procedures, early dispute resolution mechanisms, trust building, employment equity and diversity

Training and Development

In order to meet the strategic intent of capacity building within the organisation, the HR division will be developing an inhouse training unit during 2005/2006. The training and development strategy will focus on the objective of skills deepening. A strengthening of core competencies will take place in a planned and coordinated manner, to ensure that the skills profile of the organization will enable the CAA to successfully carry out its mandate and enhance
service delivery.

An amount of R953 000 was recovered from the Transport Education and Training Authority (TETA) as reimbursement for the training given to employees during the previous year. This money will continue to be used to further enhance the skills profile of employees through a focussed training and development programme.

In order to fast track employment equity (EE) within the CAA, a learnership programme was introduced in the form of trainee employees and bursary students. This managed programme will be enhanced through mentorship and coaching programmes. These are aimed at obtaining
maximum benefits from the existing ‘pockets of experience’ created by the sociopolitical imbalance of the past.

Specific intervention programmes were introduced, aimed at areas that needed urgent attention, such as Air Safety Operations and Infrastructure.

Learnerships

The learnership program implemented in 2004 entailed formalising the career paths required for any individual to obtain a qualification in aviation, while at the same time gaining practical experience. This would map out what the required competencies are for each level of progression. Partnerships with local historically disadvantaged tertiary institution (HDTI), the South African Qualifications Authority (SAQA) and the Transport Education and Training Authority (TETA) will play a critical role in this programme. The CAA will use its facilities and resources to enhance the skills profile of learners.

During the year under review six learners were placed, of which one was permanently employed in the Corporate Services department.

Cadets and Trainee Flight Operations Inspectors were employed late during the year, but certain weaknesses were identified in the selection process. However, an intervention by HR was initiated to ensure the success of this programme.

DTI award

During the year under review, the CAA was a proud recipient of an award from the Department of Trade and Industry for promoting and creating employment.

Conclusion

Notwithstanding the various HR challenges facing the CAA, the first phase of change was successfully achieved. This has set the base upon which competency deepening can take place, and further progress in Human Resource Development (HRD) can be done.

Finance

The Finance division is responsible for the recording, interpreting and reporting of the activities of the organization in financial terms and protecting its assets.

Achievements

The overarching strategic objective of the Finance division is to operate a financial model that supports a going concern. A new financial system, Great Plains, was implemented on 1 April 2004 incorporating the restructuring of financial procedures that ensured an overall improvement in the internal control environment.

Revenue Management was decentralized to the
operational departments during June 2004 to ensure that the billing and issuing of products are linked. The organization further managed to achieve the planned targeted retention based on the existing five year funding model. Amendments to the Aircraft Passenger Safety
Charge Regulations were made that resulted in a major improvement in the collection of this charge on scheduled departing passengers.

The Airworthiness and Finance divisions embarked on a project to recover outstanding currency fees. The outcome of this project was that the billing of currency fees has been automated between the financial and aircraft registration database. Two fixed term investments were also made during the year. The Finance division successfully managed the administration of all asset movements during the office move.

Current challenges

The existing funding model has become outdated due to the dynamics in the aviation industry and in the organization. The revision of this model will be done in cooperation with the Department of Transport and the industry, which will incorporate an overall study of costs
based on an Activity Based Costing Model. This project should ensure that all revenue streams are aligned with the longterm strategic objectives and business plans. The approval of the Minister of Transport should also be obtained for changes in the funding model as well as increased funding for the investigation of accidents and incidents. The Finance division will also embark on a project to integrate financial procedures and activities with operational procedures to ensure an effective control environment. These activities will be coupled with identified procedures that will be automated.

Future plans and prospects

The future plans of the Finance division are to ensure that the organization generates revenue based on an updated funding model as agreed by all relevant role players. It is also imperative to ensure that the overall control environment is effective and that revenue collection is done within a structured environment. Future plans will incorporate the continuous training and development of staff in order to produce credible real time financial information.

Information Technology (IT)

Office Relocation

The biggest challenge the IT division faced during this financial year was the CAA relocation from Brooklyn to Midrand. The entire move had to be done in less than two months. All infrastructures in terms of network cabling, PABX systems, telephone lines and switches were completed within the two months time frame and additional work outside this time frame was completed by November 2004. Most of the tasks were carried out during and after working hours, including weekends. All work carried out was achieved through dedicated and
committed staff members as well as contracted suppliers.

The server rooms and patch rooms were also equipped with gas control units in the event of fire as well as airconditioning units. These rooms are equipped with environmental monitoring equipment. This equipment sends out an email and sms to the IT staff informing
them if there are any irregularities in these rooms. This system is also monitored by an external company which also informs the IT division if there are any irregularities.

Installations

A new exchange server (for email)
was successfully implemented within one week of installation. This was a very seamless integration which was done during normal working hours and had very little or no interruption to user access.

A helpdesk system was also implemented to better monitor, control, evaluate and improve the services of the IT division.

Security

The IT division embarked on a major security project in order to improve and effectively manage the systems and controls in the IT environment, such as the Blue Coat Software, which is used to effectively control and manage internet access and usage; and the Vidius Port
Authority, which stops information leaks and prevents confidential data from unauthorized distribution, both inside and outside the organization. Other projects related to security are still currently under way.

Microsoft

The CAA has signed a service level agreement with Microsoft, which also includes software assurance. This agreement enables the CAA to purchase Microsoft software at a cheaper rate and also qualifies the CAA to receive upgrades and the latest software at no additional cost.

CAA Donations

The CAA also donated over 200 desktops, laptops, printers and scanners to SAGDA, which is a nonprofit organization.

Client Services

The mandate of the Client Services division is to develop and implement a comprehensive Customer Relationship Management (CRM) strategy, which entails the development of a client centric environment which is focused on the customers’ needs. This will be achieved by inter alia, the reviewing of the current business
processes and streamlining them for improved service delivery, but without negating the CAA’s regulatory responsibilities. This will include the implementation of technology in order to expedite processing of applications and queries.

Achievements

A Client Service Centre was established on 1 October 2004, and since then the number of clients visiting the CAA on a daily basis increased by 300%. Turn around time in terms of application processing was also reduced from 2 hours to 45 minutes, a vast improvement which has been greatly appreciated by clients.

Current Challenges

Current challenges that need attention include
engendering a client focused culture within the
organization; ensuring that the correct internal/ external balance in terms of the CRM plan is correctly evaluated; and training of Client Services staff to acquire the required levels of competency.

Future Plans and Prospects

Plans for the 2005/2006 financial year include the implementation of a Customer Relationship Management(CRM) Strategy; the implementation of a Call Centre; and the streamlining of all business processes that involve interface with our clients.

Corporate Service Support

The Corporate Service Support consists of two units, Procurement and Administration and Library and Registry.

Procurement and Administration

The mandate of the Procurement and Administration division is to provide a good support service to the whole organization through facilities management and support
thereof.

Achievements

Office Relocation
The CAA relocation of offices from Brooklyn to Midrand in September 2004 was successfully coordinated with all the role players. The entire move was completed within six weeks and all the departments were functioning from the 1 October 2004 with little or no problems.

Procurement
The procurement of goods and services is done according to our Black Economic Empowerment (BEE) policy, which gives preference to previously disadvantaged groups. The CAA’s total expenditure in terms of

percentage on BEE for the past financial year amounted to 68.9%. The CAA is also working towards developing and implementing an empowerment programme aimed
at Small, Micro and Medium Enterprises (SMMEs).

Challenges

• The current Procurement Policy needs to be formally reviewed in order to cater for the supply chain management processes;
• A plan has been put in place to decentralize the activities of the organization in order for the CAA to be much more visible and closer to its clients. This exercise will bring its own challenges in terms of resource planning and allocation;
• Procurement targets need to be improved to be in line with our policy. We have therefore set a target of 40% minimum BEE equity ownership for the coming financial year;
• A paperless environment needs to be developed and implemented for the Records Management Section. The plan is to put a system in place where all files will be accessed electronically. This means all files will be archived and only made available in hard copies when requested by law;
• Contracts with all service providers need to be put in place in order to have Service Level Agreements which work for the benefit of the organization;
• A userfriendly facilities management system needs to be developed and implemented.

Library and Registry

The key functions of the CAA Technical Library include the following:
• Development, Processing and Maintenance of the Library collection, in order to ensure availability and easy access to aviation information.
• Provision of Selective Dissemination of Information (SDI),
• Current Awareness Service (CAS),
• Reference service to staff and clients of the CAA;
• Marketing of Library material.

In addition, the Library also has the responsibility of keeping various manuals up to date, such as Aircraft Maintenance Organizations Manuals (AMOs); Aircraft Maintenance Manuals (AMMs); Aircraft Flight Manuals (AFMs); Airworthiness Directives (ADs); Approved Maintenance Schedules (AMSs); Manual of Procedures (MOPs); Pilot Operating Handbook (POH); Minimum Equipment Lists (MELs); Inspection Procedure Manual; ICAO documents; Service Bulletins / Letters and Aviation Legislation in South Africa.

The Registry section, on the other hand, is responsible for
• Records Management and control;
• File maintenance and repair;
• Mail management; and
• Protecting CAA files against theft, loss and damage.

Achievements

• A number of technical manuals were captured
into the Inmagic DB / Text, namely: the Manual
of Procedures (MOPs), Aircraft Maintenance
Organizations (AMOs); Approved Maintenance
Schedules (AMSs); Minimum Equipment Lists (MELs) and ICAO documents;
• Within the Records Management section, the TIMS software was installed and all registry forms were redesigned for effective control of files.

Challenges

• Backlog on updating of manuals due to shortage of staff;
• Electronic management of Library material e.g. CDRom and Electronic Journals (EJournals) ;
• Ensure that files never go missing and are always available when needed;
• A growing industry has also resulted in a growing number of files; and these also need to be managed very effectively.

Future Plans

• All Library material needs to be captured into the Inmagic DB/Text Electronic library system;
• Provide effective Electronic book (Ebook)
Management service to CAA staff;
• An Electronic Document Management System needs to be implemented;
• The CAA’s file plan needs to be revised and
implemented.

The Quality Assurance Division is responsible for ensuring that customer needs for high quality service are recognised and incorporated into CAA processes and activities.

It is responsible for establishing and maintaining a business management system within the CAA in order to ensure that all activities carried out by the CAA are done in a consistent and professional manner. The Business Management System of the CAA aligns
business and strategic objectives with CAA policies and processes in order to support the CAA in achieving its vision of “Excellence in Aviation Safety, Security and Industry Development”.

Achievements

The Division achieved the following during the period under review:
• The CAA embarked on a new 3year
internal audit cycle in 2004. The initial audits in 2004 were very comprehensive and covered all procedures and legislation that impacted on the divisions as well as business or operational risk. The second year of the cycle kicked off in 2005 and progress will be measured against the findings raised during 2004. The audit resulted in various operational challenges

being highlighted and improvements being made, which impacted directly or indirectly on the services rendered to customers;
• The CAA Executive Management team reconfirmed their support and commitment to the CAA Business Management System and to the adherence of the ISO 9001 2000 World Standard for Quality Management Systems (QMS) at a workshop held in February 2005;
• The CAA Customer Service Charter, which contains the CAA’s commitment to the provision of ‘excellent’ customer service, was finalised and placed on the CAA website. A central point for logging feedback on customer service was introduced and all feedback will be monitored and any complaints resolved speedily;
• External customer service standards were developed and implemented within each Division and achievement of these standards will be managed by the respective Divisional Managers and monitored by Client Services;
• CAA Strategies and Business Objectives were
reviewed and amended in January 2005, which
resulted in the amendment of the CAA Mission and related documentation. These changes were
incorporated into the CAA activities and will be
monitored on a quarterly basis;

Challenges

The following challenges will be faced during the coming year:

• Ensuring the continued support and commitment to the Quality Management System from all levels within the CAA;
• Ensuring that customer focus is built into all
processes, and that the achievement of service
standards is audited for its success;
• Finding appropriate software solutions to compliment the business management system; and
• Changing the perceptions within the organisation regarding Business Management System.

Future plans

The following projects will be pursued by the division during the coming year:

• Re-engineering of key business processes within the CAA in order to improve efficiency and customer focus within the organisation;
• Rendering assistance to the Africa Indian (AFI)
region, when this is requested from the CAA,
• Preparing the CAA for the ICAO audit which is
expected in 2007; and
• Investigating and implementing a fully paperless
system.

Introduction

The annual financial statements of the South African Civil Aviation Authority set out on pages 64 to 84 for the year ended 31 March 2005 has been audited in terms of the Public Finance and Management Act, 1999 (Act No. 1 of 1999 as amended) and the South African Civil Aviation Authority Act, 1998 (Act No. 40 of 1998). These financial statements are the responsibility of the
Authority‘s board of directors. Our responsibility is to express an opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with statements of South African Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes:
∙ examining, on a test basis, evidence supporting the amounts and disclosures included in the financial statements,
∙ assessing the accounting principles used and
significant estimates made by management, and
∙ evaluating the over all financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

Opinion
In our opinion the financial statements fairly present, in all material respects, the financial position of the

Authority at 31 March 2005 and the results of its
operations and cash flows for the year then ended in accordance with South African Statements of Generally Accepted Accounting Practice (GAAP), the Public Finance and Management Act (PFMA), 1999 (Act No. 1 of 1999 as amended) and the South African Civil
Aviation Authority Act, 1998 (Act No. 40 of 1998).

Emphasis of matter

Without qualifying our opinion above, we draw attention to note 9 to the financial statements. The Authority invested R60 000 000 with a guaranteed maturity value of R88 271 601 with Old Mutual and Momentum Group Limited. In order to secure this guaranteed maturity value of R88 271 601 at a minimum interest rate of
approximately 7.8%, the Authority had to pay a
commission of R2 500 000 to Old Mutual Life Assurance Company (South Africa) Limited and Momentum Group Limited. At the time of making these investments, there was no investment policy in operation. An economic analysis in support of these investments could not be made available to us. As indicated in the directors’ report the board has commissioned a forensic audit to investigate whether there has been any possible fruitless and wasteful expenditure incurred on the payment of commission.

31 August 2005

Introduction

The Directors present their seventh report in terms of the South African Civil Aviation Authority Act, 1998 (Act No. 40 of 1998) and the Public Finance Management Act, 1999 (Act No. 1 of 1999 amended), which forms part of the audited financial statements for the year ended 31 March 2005. The Authority is listed as a Schedule 3A Public Entity in terms of the PFMA.

The Directors are of the opinion that The South
African Civil Aviation Authority (CAA) complies with the provisions of the PFMA, except with regard to the emphasis of matter referred to in the audit report and the forensic audits referred to in the review of operations below.

Nature of business

The CAA is a statutory body with the primary function to control and regulate civil aviation in South Africa

and to oversee the safety and security of the aviation industry.

The CAA was established as a juristic body in terms of The South African Civil Aviation Authority Act, 1998, (Act 40 of 1998). This, together with the Civil Aviation Fuel Levy and Aircraft Passenger Safety Charge Act, enables the CAA to impose a passenger charge, fuel levy and direct charges upon the aviation industry, allowing it to generate revenue to fund its operations.

Board of Directors

The Board of Directors decide on all material matters affecting the entity and thus control all significant financial and strategic decisions. With the exception of the Chief Executive Officer, the Board of Directors exclusively comprise of independent nonexecutive directors who were chosen for their industry expertise, skill and acumen.

Financial results

In terms of its enabling legislation the CAA is mandated to generate its funding requirements from the imposition of user fees, a charge on departing scheduled passengers and fuel levy payable by the
general aviation industry. The CAA continues to conduct the full accident and incident responsibilities on behalf of the National Department of Transport and receives an annual payment for these services.

Revenue increased by 8% from R116 million to R125 million and is mainly due to the annual increase in direct charges, increased operational billable activities and an unexpected increase of 8% in passenger numbers in comparison with a 5% in the
previous year.

The industry is charged for direct services per regulated fees. The second increase in direct charges was implemented on 1 April 2004, which is in line with the fiveyear
funding model of the organisation.

The aircraft passenger safety charge of R7 is charged on all scheduled passengers departing from all airports in the country. This source of revenue represents 64% of the total funding. The fuel levy

is charged to general aviation at 1.5 cents per litre. The passenger safety charge and fuel levy were not increased during the financial year.

The CAA made two fixed investments during the year. The investments were made in September 2004 and December 2004 and yielded income of R2,3 million. Additional investment interest income of R5,7 million will be generated in the next financial period.

Bad debts to the value of R1,007 million were recovered during the year due to a strong legal approach that was taken to recover outstanding debts. The Regulations pertaining to the Aircraft Passenger Safety Charge were amended from 1 April 2004 to shorten the period of collection which also had a positive impact on the cash flow of the organisation.

The South African Revenue Services conducted a Value Added Tax (VAT) investigation during the 2003 financial year stating that the Output VAT was not correctly calculated and paid over. The assessment was contested and the CAA recovered R 1,93 million during the financial period.

Employment costs have increased by 21% mainly due to an increase in staff complement from 229 to 277. Operating costs increased by 21% and this is mainly attributable to office moving expenses from
Brooklyn,Pretoria to Midrand, Johannesburg. Travel and related expenses increased due to an increase in oversight activities.

Review of operations

The new Board of Directors was appointed by the Minister of Transport with effect from 1 st May 2005. In reviewing the Financial Year to March 2005 the Board has relied on statements provided by the Executive Management.

Following concerns expressed by both the internal and external auditors, the Board has commissioned forensic audits in respect of the following two matters to satisfy itself that there has been no fruitless and wasteful expenditure:

∙ The tranche investment of surplus funds.
∙ Office Relocation and Lease Agreements.

The Board has been advised that during the financial year under review, the CAA increased its efforts to promote and improve levels of safety throughout the civil aviation industry. The organisation remains
committed to maintaining its capacity to continue to adhere to International Civil Aviation Organisation (ICAO) standards and safety oversight requirements, especially in the technical area of flight operations.
In the next financial year the organisation will expand greater effort towards the recruitment and retention of more suitably qualified personnel in all technical areas. The following is a highlight of key operational

achievements during the year as advised by the Executive Management.

Eight additional Flight Operations inspectors were recruited in order to enhance the safety oversight function. Increased inspections were performed on operators, simulators, crews both in South Africa and at satellite stations which resulted in a
surveillance activities increase of 20% against the performance of the previous year.

Oversight in airworthiness requires the inspectorate to ascertain that all aircraft that fly in South African airspace are safe and mechanically sound for flight, as well as ensuri ng that approved Aircraft Maintenance Organisations perform their tasks in accordance with the requirements of the relevant Regulations. These oversight activities were increased by 35% and a total of four inspectors and four administrators joined the division. Liaison with industry continued and a workshop held with the industry during the year underpinned cooperation between the entities.

Manufacturing Regulations were amended to meet global standards, and are due for publication in the Government Gazette. A needs analysis/survey of manufacturing organisations was carried out in order to determine the level of conformance with the requirements. Subsequent evaluation of the responses formed the basis for the implementation of the “smart” surveillance
schedule.

The Personnel Standards Division created a
database system for foreign students and an
examination entry procedure for technical
employees was established. A revised cabin

crew rewrite examination policy was implemented in accordance with the Civil Aviation Technical Standards. Audits of foreign and local Commercial Pilot Licenses were conducted. A manual of procedure for Curriculum Development was developed. 3728 licences were issued during the year. A panel of designated examiners was created including a draft constitution for the appointment of designated examiners. In an ongoing effort to improve the levels of customer service, the turn around time for the issuing of licenses was reduced from 1 hour to 30 minutes.

An external Medical Appeal Panel was established to research appeal cases and to advise the Commissioner. This resulted in the finalisation of appeal cases that had, in some instances, been outstanding for over a year. The medical aspects of cabin crew training were reviewed and the industry
and relevant medical authorities participated in reviewing the curriculum. These inputs were forwarded to the Standard Generating Body (SGB) responsible for formulating the Flight Attendant Unit Standards for submission to the South African Qualifications Authority (SAQA). New examination questions and oversight of Air Ambulances highlighted a number of noncomplying operators that prompted communication with various Provincial Health Departments and Medical Aids to ensure that their aeromedical services tender specifications included compliance with the Civil Aviation Regulations, particularly Part 138.

The 52 nd ICASM (The International Conference for Aviation and Space Medicine) was hosted at Sun

City. The CAA sponsored the event and worked closely with SASAEM (The South African Society for Aerospace and Environmental Medicine) to ensure its success. Members of the Aviation Medicine Division cochaired scientific sessions at
the event. The CAA also sponsored the participation of ten black medical specialists who are part of the medical appeal panel. This forms part of a strategy to promote the participation of previously disadvantaged groups in aviation medicine.

All 138 licensed Airports were inspected during the year. Safety Promotion Workshops were held at Wonderboom and Oribi Airports with a focus on aerodrome management. The CAA continued with its consultation with the Wonderboom and Mafikeng Airports in order to maintain critical results areas in aerodrome safety. Eight emergency exercises were attended in order to validate emergency procedural manuals. Emergency management systems were established at five airports and 800 obstacles, most of them cellular telephone radio masts, were inspected for compliance with relevant safety standards and approved.

Each of the 19 Air Traffic Service Units and the two approved ATOs were inspected twice during the year, as scheduled. A substantial amount of time was spent on coordinating National Airspace Committee meetings and providing a secretariat service. These meetings took place four times during the year. A new ATS Licensing format and application system was introduced to the ATNS Standards Office and implemented.

Basis of preparation

The financial statements have been prepared on the accrual basis in accordance with Generally Accepted
Accounting Practice and under the historical cost basis, except for certain financial assets and liabilities
that are measured on a fair value basis or amortised cost in terms of AC133 – Financial Instruments:
Recognition and Measurement.

The principal accounting policies adopted in the preparation of these financial statements are set out below and are consistent with those of the previous year except where otherwise noted.

Equipment

Equipment, with the exception of the aircraft, is stated at historical cost to the organisation, less accumulated
depreciation. Depreciation is calculated on historical cost using the straightline method over the estimated useful lives of the assets. The method and rates used are determined by the relevant conditions in the industry. Aircraft is stated at valuation less accumulated depreciation. The valuation was done
effective 1 October 1998, being the date of inception of the CAA.

The recorded value of depreciated assets is periodically compared to the anticipated recoverable amount if the assets were to be sold. Where an asset’s recorded value has declined below the recoverable amount, and the decline is expected to be of a
permanent nature, the decline is recognised as an expense.

The annual depreciation rates and estimated useful lives are as follows:

Inventory

Inventory is stated at the lower of cost or net realisable value. Cost is determined on the weighted average basis. Redundant and slowmoving inventories are identified and written down with regard to their estimated economic or realisable values .

Foreign currency transactions

Transactions in foreign currencies are accounted for at the rate of exchange ruling on the date of the transaction. Gains and losses arising from the settlement of such transactions are recognised in the income statement.

Revenue recognition

The invoiced value of sales and services rendered, excluding value added tax, in respect of trading operations is recognised at the date services are provided.

Revenue recognition (continued)

Safety charge is based on the number of passengers departing from all airports in the country. This data is obtained from both Airports Company of South Africa and the various airline companies.

Fuel levies are based on fuel supplied by fuel companies to the General Aviation Operators. This is based on the litres audi ted by the fuel company auditors.

Accident and incident investigation fees are based on the number of accidents and incidents that are investigated and the revenue generated varies according to the nature and extent of the investigation.

User fees are generated from examinations, licence renewals, certifications, airworthiness and calibrations.
This revenue is recognised when the service is rendered.

Employee benefits

The organisation participates in a defined contribution fund, which is governed by the Pension Fund Act 1956, (Act No. 24 of 1956) and in which all employees participate. Current contributions to retirement benefit
fund are charged to the income statement in the period incurred.

Financial instruments

Financial assets and liabilities are recognised on the Authority’s balance sheet when the Authority has become a party to contractual provisions of the instrument.

Financial assets

The Authority’s pri nci pal financial assets are Investments, trade and other receivables, bank balances and cash.

Investments

Investments are recognised and derecognised on a trade date basis where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus directly attributable transaction costs.

At subsequent reporting dates, investments that the CAA has the expressed intention and ability to hold to maturity (holdtomaturity debt securities) are measured at amortised cost using the effective interest rate method, less any impairment loss recognised to reflect
irrecoverable amounts. An impairment loss is recognised in profit or loss when there is objective
evidence that the asset is impaired, and is measured as the difference between the investment’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be related objectively to an event occurring
after the impairment was recognised, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed
that the amortised cost would have been had the impairment not been recognised.

Trade and other receivables
Trade and other receivables are stated at their amortised cost reduced by appropriate allowances for estimated irrecoverable amounts. Due to the shortterm nature of the Authority’s trade and other receivables, amortised cost approximates its fair value.

Cash on hand is measured at its face value. Deposits held on call are classified as loans originated by the Authority and corrected at amortised cost. Due to its shortterm nature amortised cost approximates its fair value.

Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into. Financial liabilities include finance lease obligations, bank overdrafts and trade and other payables.

Finance charges are accounted for on the accrual basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Trade and other payables

Trade and other payables are stated at amortised cost. Due to the shortterm nature of the Authority’s trade and other payables, the cost approximates its fair value

Provisions
Provisions are recognised when the organisation has a present legal or constructive obligation, as a result of past events for which it is probable that an outflow of

economic benefits will be required to settle the obligation
and a reliable estimate can be made of the obligation.

Leases
Leases of equipment where the CAA assumes
substantially all the benefits and risks of ownership are classified as finance leases.

Assets leased in terms of finance lease agreements are capitalised at amounts equal at the inception of the lease to the fair value of the leased asset, or, if lower, at the present value of the minimum lease payments and is depreciated in accordance with the policies applicable to equivalent items of equipment.
The corresponding rental obligation, net of finance charges, is included in longterm payables. Lease finance charges are allocated to income statement over the duration of the lease by using a constant periodic rate of interest on the remaining balance of the liability for each period.

Leases, under which the risks and benefits of ownership are effectively retained by the lessor, are classified as operating leases. Rental incurred under operating leases are charged to the income statement in equal instalments over the period of the lease, except when an alternative method is more representative of the time pattern from which benefits are derived.

Asset replacement reserve

The asset replacement reserve, which is part of
distributable reserves, represents a portion of surpluses generated during the financial year based on asset replacement needs and funds availability. This reserve is created to enable the CAA to maintain an asset base that is in line with the aviation safety mandate.