UK CAA propose 128% fee hike for commercial operators

UK based commercial drone operators Cloud 9 are not happy with proposed fee hikes.

On their website, they have this to say.

UAV operators who want to make money from ‘aerial work’ (flying in return for money) are legally required to be trained appropriately and certified/licenced via a document called a Permit for Commercial Operation (a PFCO), previously known as the Permit for Aerial work, or PFAW. If you do not hold this, and appropriate insurance, you cannot fly, you are bound by the terms of the permit which are, by & large, to maintain certain separation distances, fly safely and stay within certain limits. This subject has been done to death elsewhere, so we won’t go into that further here.

To obtain a PFCO for 7kg aircraft or less, the most common type, the fees are currently £112 to issue the first permit, and £56 to renew it every year. (See Page 6 of this document for the CAAs current charging scheme)

There are other costs which are not attributable to the CAA which bump up the cost of compliance such as insurance at around £600 per year. Now, at the level of £56 for a renewal, the overhead every year without taking into account standard business costs is £656. Not small, but not huge either.

So what does your money get you from the CAA?

A bit of paper and the permission to operate commercially. You pay your money, wait 28 days or more (working days, as they like to remind you – who uses 28 working days in the 21st century?), and eventually if you have filled in all of the paperwork correctly you will get your permit. In fact, you don’t even get the bit of paper, you get badly scanned copy, nothing nice to put in a frame & show to clients for more gravitas. So essentially you get a scanned PDF for your money. Hmm.

There is NO way to track your application and you pretty much feel like a naughty schoolchild when you call up for a progress update, only to be told that it has not been 28 days so nobody knows what is going on. Customer service is not a concept the CAA seem to ‘get’, so you had better be grateful that they’re even answering the phone to you IF you can find a working phone number.

When you do eventually get quite annoyed that your drone, a £5000 investment, is sat idle and your £1000+ training cannot be put into practice, and ask the CEO of the CAA to improve things, the person in charge of the UAV department sees this as some kind of personal crusade, and starts calling or sending out emails to your training organisation to complain…instead of, radical suggestion time, improving the time it takes. No, it’s more important to waste time complaining that someone dares ask for the ability to put £6000 to work to make the money back. Oh dear.

Ditto the next year, you have to make sure you send your renewal in time otherwise you’re essentially out of the air until the CAA get around to you.

You may think then that with a licensing regime making sure commercial operators are properly qualified is working to keep unlicensed, unsafe, operators from making money and that the penalty of the law is being used to stop ‘average Joe’ flying the drone he got for Christmas for a few quid in his back pocket…..Sorry, no, that’s not happening. At least not from our Point of View.

Cloud9 Aviation has made no less than 5 reports in 12 months to the CAA of unlawful commercial operation, provided details of the people, the operation, the aircraft and where they have been operating, and who has been paying them – on every occasion our report has been met with indifference by the CAA Compliance Team, we have even been referred to the Police as the CAA did not wish to deal with the matter – the Police when we spoke to them were disinterested and closed our crime without resolution despite us providing all the information they needed to arrest, charge and prosecute those concerned.

So, currently, we have a reasonable pricing structure, but a somewhat unreasonable delay in getting your permit, caused we believe by the department concerned being a ‘department of one’ or nearly one, with no way of tracking your application, and little, if any, enforcement of the rules making a farce of the system.

The proposed changes

The CAA have very quietly published this consultation document, buried deep within which is a nasty surprise for UAV operators.

The document states that:-

“The growth in the ownership and use of UAS in the UK, and globally, is well documented. Alongside this growth is an increase in the reported close interactions between drones and commercial aircraft. We need to understand the safety risk of these interactions better and take proportionate steps to mitigate it.
The objective of our UAS programme is to ensure the safe integration of UAS into the total aviation system. The programme has two distinct elements:
 To ensure the safety of other airspace users.
 To support the Government’s objective of growing the UK drone economy, for example, Pathfinder technology demonstrators, cross-Government UAS strategy and early development of Unmanned Traffic Management (UTM).

To date, the DfT has largely funded both elements of the programme and they will continue to fund the second element. But as our work on safety is a core regulatory
function, we believe that it should be funded by commercial aircraft operators, rather than the UK taxpayer.

This element of our work costs £500,000 per annum which we propose to recover through the AOC variable charge.”

So, it seems the CAA have taken the initiative here and decided to use money from the AOC variable charge (a charge paid by commercial airline/aircraft operators to the CAA for their operations licence, essentially).

Then you read on to page 19 where you see that they plan to increase as follows:

The application fee to £170 from £112 (a £58 increase)

The annual renewal fee from the reasonable £56 to a whopping and unreasonable £128 – a massive £72 increase, so that’s well over 100% increase.

..and woe betide if you want to vary your permission, to add say Night Flying to your legal ability – you’ll now pay somewhere between £170 and £340 for that.

There is no indication what, if any, increase in service level you will receive for the extra money they want you to pay them.

This begs the question if they’re receiving income from the AOC Variable Charge to provide subsidies to UAV regulation to the tune of £500,000 a year, and they are not offering any proposal to increase the service level, or extend anything additional permission wise, or increase enforcement to a realistic level – how can they justify the extra charges?

They cite as follows:-

Over the past seven years the increase in our charges was only 3.7% while in the same period UK inflation was 19.1%. This is because we have worked hard to reduce our operating costs. As part of the CAA’s five year strategic plan, we set ourselves stretching financial targets which included substantially containing the growth in employment costs, including ongoing pension costs which grew by in excess of £20 million. We set a financial target to save at least £16 million in employment costs over the 5 year plan period. By 31 March 2016, we had exceeded that target and we had reduced those costs by 2.2% in real terms; FTEs in the Regulatory Sector reduced by 19%.

However, we now face significant financial pressures with increases in our cost base as well as the need to make crucial investment in modernising our systems. Our two main workstreams, Performance Based Regulation (PBR) and the Transformation programme, will deliver long-term efficiencies and better customer service, and we are committed to controlling the costs of making these improvements.

Given these current cost pressures, we propose that there should be an increase of 1.5% across all Charges Schemes in 2017/18, which is lower than the forecast CPI rate of inflation of 1.8%.

Hmm…interesting. Let’s analyse that.

Surely the CAAs pension issues are just that, theirs, and they would have known about this long ago. UAV regulation accounts for 3, perhaps 4 jobs, only one of which is involved in front line day to day business as far as we can see, so the £16 million in employment savings are unrelated, and as for the 1.5% increase across all charges schemes – we’ve found at least one 100% increase, so thats a load of rubbish too. They’re cutting costs so they will be making savings, so they do not NEED to increase fees as they are making all these savings…and finally, they admit they have set themselves what amounts to unrealistic target in terms of savings, but they have surpassed this, so as they have now made all of these wonderful savings..and then some, why the fee increases?

Conclusion

As of the date of writing, the CAA have approved 2284 operators (as of 10\12\2016) which means if 80% of those renew, the CAA are on track to make £237,536 from renewals in the next 12 months following the increases – up from £102,323 under the current charging scheme – a £135,213 increase – not bad money for taking some money, sitting around for 28 days or more, then pressing ‘print’, signing & stamping a bit of paper and sending an email. These figures are before you take into account NEW permits issued which are also being hiked in price, and for non-standard permissions, the charges increase very significantly.

We put the case that the increased fees CANNOT be justified at all and are likely to lead smaller operators to decide to withdraw from the industry. There may be those that say “but its only £72, you can charge £1000 a day or more” – yes, we can, but it isn’t about the money.  It is the principal of a regulator which wishes to more than double fees for renewals, but does nothing to enforce against those operating unlawfully, and has very little customer service to speak of when it comes to your application progress.

Do you agree? Or not. We’d love to hear. Why not email us on [email protected].

We encourage all clients and potential clients to also email the CAA in response to the consultation document proposing the fee increase, stating why you think this is a bad idea. The email [email protected]