Long-awaited changes to wide-ranging aviation law have been passed through Parliament, but fall short of what some groups wanted.
While the Government says the Civil Aviation Bill ensures rules are fit for the 21st century, Consumer NZ says it misses a once-in-a-generation opportunity to better protect passengers. Airlines, meanwhile, say airports still have too much power over price setting.
In what could ease pinch points in the sector, however, the law does allow scope for the Civil Aviation Authority to delegate or contract out some of its functions. The CAA regulates aviation activities and also provides aviation security. The legislation also toughens requirements for airports to provide space for critical infrastructure provided by government agencies.
Ministerial oversight of aviation has bounced around since the legislation was unveiled in 2019 and new associate Transport Minister Kiri Allan said the bill repeals and replaces the Civil Aviation Act 1990 and the Airport Authorities Act 1966 with a single modern law that strengthens aviation security rules to keep New Zealanders safe.
“A lot has changed in the aviation sector over the last 33 years and the Government recognises that the laws that govern this important industry need to reflect and be able to respond to the current times,” she said.
The bill brings in greater controls and creates a zero-tolerance approach to the use of drugs and alcohol, including random drug testing for pilots.
The legislation, which is awaiting the Governor-General’s signature before becoming law, also covers technology developed in the past 30 years.
“New technology like cheap and easy-to-operate drones are creating new opportunities but they can also create problems when used around airports. This could lead to potential safety issues and this bill gives police new powers to take down drones if they are being flown in a dangerous manner,” Allan said.
Consumer NZ pushed hard for greater passenger protection, but made little headway as the legislation moved through Parliament.
The organisation says that in the United States and Europe, refunds are available as of right for flights cancelled for many reasons — including weather — and should have been kept in the changes to the Civil Aviation Act.
When the legislation was first unveiled before the pandemic, it was promoted as a way of providing more consumer protection.
However, this part of the law has been watered down as it moved through committee stages. Consumer NZ chief executive Jon Duffy said there were strong arguments from other submitters to support his organisation’s stand: if an airline cancels a flight, it should automatically offer a refund or a credit no matter what the fare type.
In its submission on the bill, Consumer NZ said it essentially allowed carriers to avoid liability for damages where delay was caused by something outside an airline’s control such as bad weather, a pandemic or government order.
“We’re a little disappointed, particularly over providing clarity when a flight is cancelled or delayed. It was a real opportunity to move protection for passengers into the 21st century but we’ve missed that, unfortunately.”
There is a provision for the associate minister to draft regulations that require airlines to disclose what consumers are entitled to if flights are cancelled or delayed. In New Zealand, this protection is less than in many other countries.
“We’re really supportive of that and we’d like to see the minister move on that as soon as the bill is passed.”
Duffy said he would have liked to have seen this included in the new law from the start.
“In the interim, airlines are still not providing accurate information to passengers. People can be misled, they may not know about compensation or refunds they are entitled to. When you compare us to the US or the EU, we’re second-class citizens both in terms of the rights afforded to passengers and the communication from carriers.”
The Board of Air Line Representatives says it welcomes the streamlining of legislation covering the sector. Changes were first mooted a decade ago.
But the board’s executive director Cath O’Brien said the new law still allowed airports to set prices.
“This means that there still exists in law an ability for airports to set prices without contracts with airlines for landing charges,” she said.
The Commerce Commission then oversees prices as set under part four of the Commerce Act – using an Information Disclosure Regulation.
But the way prices are set does not cope well with paying for large-scale catch-up investment.
“Where slow and steady airport investment is made – that makes more sense, as prices set will slowly accommodate capital expense. Where an airport has to make significant catch-up investment, this sort of regime allows for high capex costs to be forced through the aeronautical [price-setting] of airports, and risks price shocks for airlines.”
O’Brien would not comment on how the new law would - or would not - affect moves such as Auckland Airport’s announcement that it will spend up to $3.9 billion on a new domestic terminal and other infrastructure.
She said the new law also allowed for a “dual till” at airports. While aeronautical revenue such as landing charges is overseen by the Commerce Commission, airports’ other commercial income from property and retail rents is not reviewed by the regulator and does not have to be invested in aeronautical assets such as terminal or tarmac investment.
“This leads to perverse incentives for airports to develop commercial property while earnings from this are not reinvested in the aeronautical business,” said O’Brien.
But there will be more scope for consultation on allotting space for crucial airport infrastructure.
Under the new law, before approving a spatial plan, an airport operator must consult the substantial customers and the relevant government agencies.
That might mean making more space, or ensuring that floors are reinforced to allow for heavy screening equipment, or room for biosecurity processing.
“Of course, airports should do this as a matter of course, but where they have not, the Rasu [a Regulated Aeronautical Spatial Undertaking] now provides for the Secretary of Transport to direct that this happens. There are then timeframes the airport has to abide by, and significant penalties where an airport so directed doesn’t comply.”
Allan said the legislation would be introduced over the next two years and provided a framework to allow New Zealand to meet its international aviation emissions obligations.
“The recent weather events in Aotearoa demonstrated the crucial role of our aviation sector in helping our communities stay connected during a crisis when other transport modes are affected.
“These events are becoming more frequent and the Government knows we must act to reduce our transport emissions to help meet our climate goals as we adapt to the realities of climate change,” Allan said.
Virgin Australia lists on ASX after five years away from the sharemarket.