The mathematics of Doom.
Or, the costs of compliance. It took quite a while to set up, model, define and isolate the true costs associated with 'compliance' – standing alone for the Australian aviation industry. We are now working that data against the same costs in peer nations – Canada, NZ, PNG and the USA. Of course, there is no way the results can be substantiated across the board. We used a 'model' charter company, mixed fleet, typical (if such exists) 'contract' and ad-hoc work mix of revenue; in short, a typical low capacity charter outfit. Acknowledged, it is a blunt instrument, but we were interested not in specific analysis of any one company, but rather in running the same model under different regimes. One of the more interesting results is the ability to recoup the costs of compliance from operating revenue available. Another is 'profitability' - the ability to repay loans and to attract investment.
No doubt the results could be decimated by bright young things producing a doctoral thesis, with time and support of a University; but, as stated, warts and all, our results so far clearly define one undeniable fact. Profitless prosperity is about the best result for the Australian model operator.
One of the major contributors to a lack of investment interest is the time and cost involved in establishing certification. Working with 'real data' from various operators, Australian certification establishment costs vary between 4:1 and 2.5:1 more than in comparable countries.
The percentage of that Australian cost dedicated to initial 'compliance' costs is truly alarming, the cost of 'on going' compliance and the costs associated in maintaining that compliance impose a serious financial burden for the Australian model. We conservatively estimate that ongoing compliance costs between 18 to 33% over and above that in comparable regimes.
Given that the reason for these fiscal and legal burdens is touted as being 'safety oriented', (safe conviction as many say) then any comparison of 'safety' statistics should show Australia well ahead of their peers nations. Alas, it just ain't so.
When you take to total cost of providing the 'regulations' then include the cost of the many 'inquiries' into the regulatory debacle, add the cost of the endless re-drafts, the MoS and the latest make work of converting a regulation into 'plain' English; one arrives at a truly staggering figure, one which could remove a large lump from the national debt. Well North of half a Billion, just to produce the regulations - add the rest to that - and be afraid.
No one would mind if all this improved Australia's safety benchmark to an exemplar for the aviation industry world wide. It does not, quite the reverse IMO.
The solution is both inexpensive and sensible; there will never be a better time to ring in the changes. Adopt a cost effective, operationally sensible set of regulations which do not require a degree in law to truly understand. Australian aviation is shrinking and sinking; even those who are doing well could be doing even better, despite the smaller market demographics. Bring in the NZ rules; see the Australian aviation industry return to full potential and flourish, unafraid of a criminal record for farting in church. Aye, mathematics of doom and harbinger of gloom. Enough already,
Toot – toot.
Or, the costs of compliance. It took quite a while to set up, model, define and isolate the true costs associated with 'compliance' – standing alone for the Australian aviation industry. We are now working that data against the same costs in peer nations – Canada, NZ, PNG and the USA. Of course, there is no way the results can be substantiated across the board. We used a 'model' charter company, mixed fleet, typical (if such exists) 'contract' and ad-hoc work mix of revenue; in short, a typical low capacity charter outfit. Acknowledged, it is a blunt instrument, but we were interested not in specific analysis of any one company, but rather in running the same model under different regimes. One of the more interesting results is the ability to recoup the costs of compliance from operating revenue available. Another is 'profitability' - the ability to repay loans and to attract investment.
No doubt the results could be decimated by bright young things producing a doctoral thesis, with time and support of a University; but, as stated, warts and all, our results so far clearly define one undeniable fact. Profitless prosperity is about the best result for the Australian model operator.
One of the major contributors to a lack of investment interest is the time and cost involved in establishing certification. Working with 'real data' from various operators, Australian certification establishment costs vary between 4:1 and 2.5:1 more than in comparable countries.
The percentage of that Australian cost dedicated to initial 'compliance' costs is truly alarming, the cost of 'on going' compliance and the costs associated in maintaining that compliance impose a serious financial burden for the Australian model. We conservatively estimate that ongoing compliance costs between 18 to 33% over and above that in comparable regimes.
Given that the reason for these fiscal and legal burdens is touted as being 'safety oriented', (safe conviction as many say) then any comparison of 'safety' statistics should show Australia well ahead of their peers nations. Alas, it just ain't so.
When you take to total cost of providing the 'regulations' then include the cost of the many 'inquiries' into the regulatory debacle, add the cost of the endless re-drafts, the MoS and the latest make work of converting a regulation into 'plain' English; one arrives at a truly staggering figure, one which could remove a large lump from the national debt. Well North of half a Billion, just to produce the regulations - add the rest to that - and be afraid.
No one would mind if all this improved Australia's safety benchmark to an exemplar for the aviation industry world wide. It does not, quite the reverse IMO.
The solution is both inexpensive and sensible; there will never be a better time to ring in the changes. Adopt a cost effective, operationally sensible set of regulations which do not require a degree in law to truly understand. Australian aviation is shrinking and sinking; even those who are doing well could be doing even better, despite the smaller market demographics. Bring in the NZ rules; see the Australian aviation industry return to full potential and flourish, unafraid of a criminal record for farting in church. Aye, mathematics of doom and harbinger of gloom. Enough already,
Toot – toot.