CAA to be Divided into Regulatory and Airport Services Divisions

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Re: CAA to be Divided into Regulatory and Airport Services Divisions

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Aviation Minister Ghulam Sarwar Khan at a press conference in Islamabad today said that process of bifurcating Pakistan CAA into Airport Services and Regulatory Body will be completed by June 30.

Separate Additional Director Generals will be appointed Airport Services and Regulatory Bodies.

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Re: CAA to be Divided into Regulatory and Airport Services Divisions

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Pakistan CAA employees joint action committee is going to widen its protest against the bifurcation of aviation body into regulatory and airport services divisions.

CAA employees joint action committee will stage protest at Lahore Airport on June 29.

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Re: CAA to be Divided into Regulatory and Airport Services Divisions

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Today, Pakistan CAA employees Joint Action Committee staged protest at Lahore Airport against segregation and privatization of the aviation regulatory body.

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Re: CAA to be Divided into Regulatory and Airport Services Divisions

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Pakistan CAA employees at Peshawar Airport staged protest against privatization of the aviation regulatory body.

The protesters also said that their salaries have not been increased since past three years.

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Re: CAA to be Divided into Regulatory and Airport Services Divisions

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A special cabinet committee is meeting on July 29 Headed by the Adviser to the Prime Minister on Commerce and Investment Razak Dawood, the cabinet committee will discuss threadbare formalisation of the organisational structure of the CAA by creating the Pakistan Civil Aviation Regulatory Authority and the Pakistan Airports Authority.

A highly-placed source told Dawn that the government’s segregation plan included outsourcing of different airports of the country in two phases — corporatisation of the airports in the first phase for attracting private investors and completion of this transaction in the second phase by involving the Privatisation Commission and appointing financial advisers and investment banking firms.

The decision to segregate the CAA was taken by the government in view of the sensitivity of the operations and involvement of strategic assets — the airspace. Therefore, one entity will be entrusted with the job of regulatory functions while the other will develop and manage functions of the airports.

The July 29 cabinet committee huddle will be the fifth such meeting on the issue and after that the CAA board is also likely to meet. During one of the earlier meetings, apprehensions were expressed by the Ministry of Defence as well as the Pakistan Air Force over the separate infrastructure for joint airspace management as they were of the opinion that it was not advisable in the national security interest.

But after going through the proposed law prepared by the CAA in this regard, the defence ministry suggested that only commercial operations of the airports should be outsourced while security and flight operations should remain intact under the monitoring of the state.

They had also suggested incorporation of a provision in the proposed law enabling the defence forces to take over the airports in case of war, besides a security clearance from the premier intelligence agency (ISI) by making it prerequisite for those companies to which the operations at the airports would be outsourced.

The source explained that airport and air navigation services presently being undertaken by the CAA involved management of 44 airports that included oversight services for all aircraft operating within the country’s airspace.

The decision to set up two authorities was reached during one of the meetings of the cabinet committee in view of the fact that only six of the 44 airports are profitable.

Already two draft legislative bills are ready — one aims to replace the existing CAA Ordinance 1960 while strengthening the scope of the regulatory body in accordance with the international commitment and the other proposes amendments to the CAA Ordinance 1982 for ensuring establishment of an airport company under Companies Act 2017 and enabling the companies to own the title and assets of airports ordered by the federal government.

The law, however, allows the government to transfer shares of the company to the private sector. The law will also allow transfer of employees from the CAA to the company on same terms and conditions for a favourable condition.

In March last year, the government had developed the National Aviation Policy 2019 to make the role of the CAA as a regulator completely independent of service providers with financial and administrative autonomy within a period of two years.

The decision also aims to achieve the objective of the organisational change of the regulator with minimal adverse collateral disadvantage.

Subsequently, the federal cabinet approved in principle the proposal for separation of CAA’s regulatory and service provider functions. Later, the cabinet had at a meeting on May 19 constituted the six-member cabinet committee under Razak Dawood, which also had the aviation minister as its member. Dr Ishrat Hussain, the convener of the Institutional Reforms Committee, had also participated in the proceedings of the committee.

During one of the meetings, the Privatisation Commission had suggested that instead of making a single company for different airports, companies should be incorporated for each airport separately.

Source: DAWN
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Re: CAA to be Divided into Regulatory and Airport Services Divisions

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CAA to address members` concerns before bifurcation

Nasir Iqbal

Updated 04 Aug 2020

ISLAMABAD:
The Civil Aviation Authority’s board has decided to review the functional separation of the authority after incorporating all the concerns the members had expressed during a meeting held before Eidul Azha.

An informed source told Dawn that the idea for functional separation of the authority was presented before the CAA board after the cabinet committee overseeing the federal government’s plans for organisational separation of the CAA met the same day, July 29, before the board meeting.

The plans envisage creation of a “Pakistan civil aviation regulatory authority” (PCARA) and a “Pakistan airports authority” (PAA).

Under Section 7 of the Civil Aviation Authority Ordinance of 1982, the CAA board has the powers to run the authority’s affairs, but it has no power to take any decision regarding splitting the organisation.

The board meeting was presided over by Aviation Secretary and CAA chairman Hassan Nasir Jamy. Among others who attended the meeting were Air Marshal Ahmed Shehzad and Planning and Development Division Secretary Mathar Niaz Rana.

The meeting of the cabinet committee was presided over by Adviser to the Prime Minister on Commerce and Investment Razak Dawood. Federal Aviation Minister Chaudhry Sarwar Khan also attended the meeting.

In March last year, the government had developed the National Aviation Policy to make the role of CAA as a regulator completely independent of service providers, along with financial and administrative autonomy within two years.

The decision also requires achieving organisational change of the regulator with minimal adverse collateral disadvantage.

Subsequently, the federal cabinet approved in principle a proposal for segregation of the CAA’s regulatory and service provider functions and in its meeting on May 19 this year, the federal cabinet constituted a six-member cabinet committee under Razak Dawood. The aviation minister was one of its members.

Dr Ishrat Hussain, the convener of the Institutional Reforms Committee, had also participated in the proceedings.

The source said the cabinet committee was expected to submit its recommendations to the federal cabinet.

There is every likelihood that the cabinet committee may not meet again and instead, finalise its recommendations for the cabinet.

Two bills ready

Two draft legislative bills are ready — one aimed at replacing the existing CAA Ordinance of 1960 while strengthening the scope of the regulatory body in accordance with the international commitment.

The second bill proposes amendments to the CAA Ordinance of 1982 for ensuring establishment of an airport company under Companies Act of 2017 and enabling the companies to own the title and assets of airports ordered by the federal government.

The law, however, allows the government to transfer shares of the company to the private sector, besides allowing the transfer of employees from the CAA to the company on the same terms and conditions.

Originally, the source said, the plan to outsource airports was envisaged during the previous government of PML-N, but the scheme was shelved during its last days. When the Pakistan Tehreek-i-Insaf came to power, it decided to go ahead with the plan.

Now the CAA board has asked the Change Management Committee to go through the functional separation within the CAA and bring back the plan for consideration of the board by incorporating all the concerns expressed during the meeting, including security issues.

The segregation plan of the government includes outsourcing different airports in two phases — corporatisation of airports in the first phase for attracting private investors, while the second phase suggests completion of this transaction after co-opting the Privatization Commission by appointing financial advisers and investment banking firms.

Source: DAWN
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Re: CAA to be Divided into Regulatory and Airport Services Divisions

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Regulatory, airport service functions

Body sets aside MoD’s security concerns

August 11, 2020

ISLAMABAD:
Setting aside the security concerns of Ministry of Defence (MoD), a cabinet committee headed by Prime Minister’s Advisor on Commerce and Investment, Abdul Razak Dawood has decided to incorporate two authorities i.e. for regulatory and airport services functions, with enabling provisions to have subsidiaries under the Companies Act, 2017, well-informed sources in Civil Aviation Authority told Business Recorder.

Sharing details, the sources said that on May 19, the federal cabinet considered the summary initiated by Aviation Division on “outsourcing of major airports of Pakistan” and directed that the segregation of regulatory and operational functions of the CAA should be completed, along with the two draft legislations, by June 30, 2020. The Cabinet also constituted a six-member committee under the convenership of Abdul Razak Dawood to evaluate various available options, while keeping in view segregation of regulatory and operational functions of the Authority, for outsourcing of the major airports and recommend the way forward.

Prime Minister Advisor on Institutional Reforms and Austerity, Dr. Ishrat Hussain was the convener whereas, Prime Minister Special Assistant on Parliamentary Affairs, Babar Awan, Chairman, Board of Investment and Secretary Civil Aviation Division were the members of the committee.

The Cabinet Committee has held six meetings to discuss and deliberate on separation of the regulatory functions from service provider and corporatization of airports to invite the foreign investors to invest in airports. Cabinet Committee was apprised that a Change Management Committee (CMC) was constituted in July 2019 for segregation of the Authority on the basis of regulatory and commercial /operational functions. The CMC had proposed segregation of PCAA in two phases: initially the functional separation to be carried out within the Organization, and in second phase the organizational separation of the Authority into two entities to take place by establishing Regulatory body and a Services body and ensuring uninterrupted operations at the Airports and resolution of potential impediments that may arise post segregation of PCAA.

Representative from Privatization Commission suggested that instead of making a single company for different airports, it may be suitable if a company is incorporated for each airport separately. Further, if the Committee suggests appointment of a Financial Adviser for privatization of airports, the same needs to be processed through the Privatization Commission. Addressing the same, Secretary Aviation clarified that the main objective of the Committee is structural reforms of the PCAA and to prepare a way forward and attract the investors to development of services at airports and to strengthen the regulatory functions of the state by segregating it from the Service Providers. The committee initiated its proceedings with consideration of various models for outsourcing of airports. The different models of airports outsourcing across the world were shared with the committee for investment and concession fee respectively, for which draft rules have already been prepared by the PCAA. One of the models involved the inclusion of provision to transfer of assets to corporate entities incorporated for operating airports for which legislative and policy change is required; whereas another required incorporation of company by PCAA that would operate airports under airport operator licence. The committee was further informed that drafts for two legislative bills have been prepared by PCAA within the timeline - one bill shall replace the existing CAA Ordinance 1960 while strengthening the scope of Regulatory body in accordance with the international commitments as a contracting state of ICAO and the second bill shall propose amendments to the CAA Ordinance 1982 to establish a standalone regulator by excluding airport services and air navigation services.

It was also deliberated that a single legal instrument may be prepared amalgamating the provisions and laws defined in both the ordinances i.e. 1960 and 1982. However, considering that the law constituting an authority or the national point of contact with reference to the international treaties is to be covered by a standalone law and state obligations are to be defined in another law to outline the scope of services with provision to incorporating a corporate entity under Companies Act 2017, the committee agreed to the two separate legal instruments.

While it was agreed in the initial meetings of the committee that regulatory functions shall be entrusted to an authority; the structure for service provider entity remained under discussion. It was decided by the committee that an audit firm shall be engaged to devise proposals on the corporate structure of services entity. It was agreed that RFP/EoI shall be prepared in collaboration with Chairman Board of Investment.

The Cabinet Committee was also informed about the Lahore High Court decision of November 6, 2018 on the aspects of outsourcing of airports; the court had limited the scope of outsourcing of airports to provision of airport services from car park to terminal building only. The decision of Supreme Court of Pakistan of February 19, 2020 also came under discussion whereby it was directed that “no land around Jinnah International Airport, Karachi will be used for any commercial exploitation...”

The Cabinet Committee after having detailed deliberations and considering the concerns raised by the Ministry of Defense / PAF, the employees’ grievances on security of terms and conditions and keeping in view the fact that only four airports are profitable, decided with consensus that two authorities shall be incorporated i.e. for Regulatory and Airport Services functions, with enabling provisions to have subsidiaries under the Companies Act, 2017. It was also agreed that the Air Navigation Services and Flight Operations shall always remain a fully owned subsidiary under the State / Authority.

The Committee while considering the categories / status of airports agreed that there may be a need to incorporate three subsidiaries. One subsidiary may have three commercially viable airports i.e. JlAP, AIIAP and MAP which may be considered initially for outsourcing / inviting international investments; the second subsidiary shall have medium level airports requiring private sector exposure for development; and the third one shall have airports established for socio-economic purposes for which government may offer a subsidy for operations.—MUSHTAQ GHUMMAN

Source: brecorder.com
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Re: CAA to be Divided into Regulatory and Airport Services Divisions

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Today, federal cabinet meeting advised authorities to complete legal work in ninety days for legislation on division of Pakistan CAA into Regulatory and Airport Services bodies.

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