Conspiracy claims in grounding of CityJet

Five months ago, 25-year-old pilot and entrepreneur Paul Webb turned his five-year-old air freight carrier into a budget commuter airline and found himself being described as another Richard Branson, or Ewan Wilson.

But this week CityJet followed the route blazed by Wilson, rather than Branson, plummeting into receivership with debts of $2 million and 107 out of work.

Now it is crying conspiracy within the Civil Aviation Authority.

Among the creditors are approximately eight young pilots who paid $22,000 to train with CityJet - a controversial practice but one attractive to young pilots with money and desperate to clock-up enough flying time to land a job with a major carrier.

Trouble started for CityJet on October 14 when the CAA grounded it for under-recording flight times.

Within weeks, the CAA ordered it to stop carrying passengers because of serious concerns about the pilots' familiarity with the aircraft.

Luckily for Mr Webb, he withdrew from CityJet two weeks ago for personal reasons, leaving it in the hands of partner Steve Mosen, although Mosen says he paid "zero in cash" for Webb's share.

Less fortunate is that while Mr Webb was this week holidaying in Rarotonga, an unrelated court document was plastered to the door of his Epsom villa. This one was issued under the Matrimonial Property Act.

Although no longer with CityJet, Mr Webb has been helping out with media relations. He has selectively released partial transcripts of taped conversations with CAA investigator Richard Cox, pointing to political pressure, not safety issues, as the reason for CAA's intervention.

Extracts from the transcripts go like this: Cox: "Now, I mean you're fully aware that there has been a lot of political pressure."

Webb: "Oh, there's a lot of people that don't want us to be operating."

Cox: "That's right, and they'd find an easy way of doing it, i.e. bank accounts and so on and so on, right."

Webb: "Right."

Cox: "And it's happened in the past, I can assure you. Um, and knowing me, I don't take that as a threat, or anything else, it's just a fact of life, you know, you're amongst the big fish ..."

In another conversation Mr Cox again refers to "pressures that have been in this particular case" and that Mr Webb had clearly made some enemies on the way up.

He also said he would strongly recommend that CityJet not be grounded "because I won't have any part of it and I've already told my bosses that."

Although Mr Cox remains with the CAA, all comment is referred to spokesman Martyn Gosling, who is "not interested in talking about the tapes."

All he will say is that Mr Cox "is a fact-gatherer, he doesn't have any say in decisions that get made."

Mr Gosling says CAA decisions have to withstand court scrutiny, that there is an appeal process, and CityJet should use it.

Yesterday, receiver Anthony McCullagh shelved CityJet's plans to take the CAA to court over the grounding, saying legal action would be a waste of resources.

Transport Minister Maurice Williamson declines to comment on the tapes on the grounds that legislation forbids his getting involved in individual cases. And he will not acquiesce to Mr Webb's demand for a pre-election ministerial inquiry.

Press secretary Peter Burdon says: "The Minister is comfortable with the work CAA does."

Sitting at his desk in CityJet's Penrose office, with security guards manning the reception and out-of-work staff gathering their belongings, Steve Mosen, once an Air New Zealand pilot, observes wistfully that trouble was expected once CityJet started competing for passengers.

Going up against the giants of New Zealand aviation is not for the faint-hearted. You can at least expect a price war. But a conspiracy involving the CAA?

Other small operators grounded in the past doubt it. Air Chathams owner Craig Emeny is suing CAA over a 12-week grounding which he says has taken three years to recover from, financially.

He thinks CityJet has been treated much better because "CAA has learned from how they dealt with us."

SoundsAir chief pilot Willy Sage says everyone screams unfairness when they are grounded - and the CAA has grounded five small airlines in the past six years.

Since it happened to SoundsAir, Mr Sage says the company has made considerable management changes and now enjoys a good relationship with the CAA.

The opinion in the industry, he says, is that CityJet should have been grounded much sooner.

But that leaves a question.

The CAA spokesman, Mr Gosling, says there is no difference in the safety standards required for flying freight or passengers. So why was it that after five years of flying freight and being subject to CAA's safety audit regime, it swoops only after CityJet begins carrying passengers?

Mr Gosling says the airline went through "significant changes" when it started flying passengers.

"It took on more people and was doing more things. Suddenly a whole lot of new pressures may well have started to impact on them."

Before long the CAA "started to get comments about the way flights were conducted."

Then, the owner of a Cessna Twin Caravan CityJet was leasing, complained the flight times were being under-recorded. The CAA grounded it and decided to take a closer look.

"We went through their systems and at that stage things looked good," says Mr Gosling.

"Then the investigators went on to the flight deck and things stopped looking good. They discovered 19 issues that bought into question the pilots' knowledge of the aircraft."

CityJet was ordered to stop flying passengers - the minimum action to protect passengers without destroying the business, says Mr Gosling - and to have its pilots retested.

The day the receiver arrived, CityJet pilots were sitting exams to prove one way or another they knew their way around the Bandeirante cockpit. The papers should be marked within 10 days.

But does this mean that if the CAA's attention had not been alerted by a disgruntled aircraft owner, an unsafe airline would have continued flying passengers untroubled by the CAA?

Mr Gosling insists not, that sooner or later its audit and spot-check process would have found the weaknesses.

In the meantime CityJet is back flying freight so that receiver Mr McCullagh can sell it as a going concern. CAA's investigation continues.

Mr McCullagh agrees the earlier grounding had a significant financial impact. But he says that overall CityJet was undercapitalised in relation to the extra demands of carrying passengers.

It has rehired 21 staff, including 16 pilots but not those who paid their $22,000.

Mr Mosen says: "We intend to accommodate them at some point," but does not reveal how.

Jan Corbett investigates suggestions that political pressure helped to put a budget airline's passenger service out of business