CAA Financing Mechanisms
Sarantis Poulimenakos
Regional Officer, ANS Implementation ICAO EUR/NAT Office
EUR/NAT Workshop on Sustainable Funding of
States CAAs
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Since the functions of safety, security and economic oversight are a State
responsibility, Government funding is the assumed method by which to
finance these functions.
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However, this is not always possible or practical, particularly for States with
limited financial resources.
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Consequently, ICAO has developed policies and guidance on the issue of
funding oversight functions.
Challenges for States
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Current and projected traffic volume vs required aviation investments
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Rapid evolution of technology vs complex regulatory framework
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Insufficient financial and human resources
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Retention and Training/re-training of personnel
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Already Existing/identified deficiencies
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Capacity building activities
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Political, governance, institutional and legal issues
ICAO available data on the funding of civil aviation oversight:
Government (treasury) funding - the most important source (49 %)
Other funding derived from products and services (16 %)
Airport charges (16 %)
Air navigation charges (12 %)
Other sources of funding (7 %)
ICAO's Policies on Charges for Airports and Air Navigation Services (Doc 9082)
Costs directly related to the safety, security and economic oversight function for airport
services or for air navigation services may be included in the airport or ANSP cost basis for user charges at the States’ discretion and provided that such costs are imposed on the providers of services
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What are the implications for the not
sufficiently funded safety, security and
economic oversight entities?
Annex 17:
“3.1.10 Each Contracting State shall ensure that the appropriate authority arranges for the supporting resources and facilities required by the aviation security services to be available at each airport serving civil aviation.”
Verified by USAP-CMA
Civil aviation should not be charged for any costs incurred for general security functions performed by States such as general policing, intelligence gathering and national
security
More comprehensive guidance material on security charges is contained in the Airport Economics Manual (Doc 9562) and in the Manual on the Economics of Air Navigation Services (Doc 9161).
The reality how AVSEC funding is broken down varies greatly from State to State and the structure of AVSEC funding is a State’s decision
AVSEC is in many States associated with national security and considered an important part of States national security agenda
Funding AVSEC activities and oversight may therefore have alternative and manifold sources and a (solid) basis
Economic oversight
Doc 9082 (Section I, paras 12-15) - States’ exercise of economic oversight responsibilities should be clearly separated from the operation and provision of airports and air navigation services, with roles and powers clearly defined for each function
Cost of operation and administration of economic oversight may increase as the approach taken by a State moves from a light-handed to a more robust form.
Potential costs (and benefits) related to a particular form of economic oversight such as fall-back regulation, price cap regulation, or rate of return regulation need to be assesse
ICAO Guidance document on Financing Aviation
Emissions Reductions
Basics of Financing Financial Instruments
Organizations and Programmes Steps to Identify and Access Financing
ICAO Guidance on Financing
Chapter 1 -introduction to financing climate change mitigation in the aviation sector. This overview includes an introduction to the basics of project finance, a description of the barriers to private investment, a summary of the relationship between public and private financial instruments, and a detailed description of the architecture of public climate financing.
Chapter 2 - how aviation interests can identify and access financing for climate change mitigation projects. This includes how to prepare a compelling project for financing, the need to build in-country support for the project, the process for building a funding database and identifying appropriate programs to pursue, followed by soliciting project funding from those sources.
Chapter 3 -the types of financing instruments and specific programs. It includes loans from international organizations and public and private banks, grants for risky pre-development costs and local capacity building, various types of bonds to meet long-term financing requirements, etc.
Chapter 4 - financial policies and tools. The policies are those that encourage market investment in low carbon investment such as deregulation, public procurement programs, and tax policy.
Chapter 5 - examples of low carbon financing in specific industry areas: renewable energy, electrification, and drop-in biofuels which are most applicable to the aviation sector.
Guidance document developed in the frame of the ICAO Assistance project with UNDP and GEF financing
ICAO Guidance on Financing
This guidance has also the objective to facilitate access to GEF national allocation.
State Action Plans developed using ICAO Doc 9988 can be a good starting point for financing projects to reduce international aviation emissions.
Using internationally approved plans and methodologies as the basis to assess potential CO2 benefits from projects can highly facilitate the approval of green financing for selected aviation projects.
Article 15 — Airport and similar charges, the application of user charges should not be discriminatory (foreign aircraft should be treated in the same manner as national aircraft of the same class engaged in similar operations)
Based on the recommendations made by various conferences on the economics of airports and air navigation services (Report of the Conference on the Economics of Airports and Air Navigation Services (CEANS) (Doc 9908 refers)
States are encouraged to incorporate the four key charging principles of
non-discrimination, cost relatedness, transparency and consultation with users into their
national legislation, regulation or policies, as well as into their future air services agreements, in order to ensure compliance by airport operators and air navigation services providers (ANSPs). (Doc 9082)
