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Introduction of One Continuing Airworthiness Management Organisation (CAMO) Policy for Airline Groups

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Summary

The current European aviation legislation assumes for commercial air transport an organizational structure comprising only a single legal entity. This assumption does not fully correspond with today’s reality where international Airline Groups with multiple legal entities are commonplace. These Airline Groups follow a multiple air operating certificate (AOC) strategy due to regulatory, national and political boundaries.

Consequently, the current EU requirement of a 1:1 link between AOC and CAMO for commercial air operators creates complexity, generates redundant activities and increases costs by around €150 million annually.

Equivalent and better levels of safety, performance and cost efficiency can be achieved with one integrated group CAMO serving multiple AOC’s. Consequently, the current European regulatory framework should be expanded with an option for a single CAMO solution within an Airline. The essential structural changes are recommended with this industry position paper.

Introduction

The current European aviation legislation assumes for commercial air transport an organizational structure comprising only a single legal entity. Such a setup no longer corresponds to today’s industry trend, which rather consists of international Airline Groups with multiple legal entities (Airline Groups). These Airline Groups follow a multiple air operating certificate (AOC) strategy due to regulatory, national and political boundaries.

Consequently, the current EU requirement of a 1:1 link between AOC and CAMO for commercial air operators creates highly complex structures with redundant activities, thereby reducing effective steering and oversight within an Airline Group. At the same time, main competitors from other aviation markets (e.g. Americas, Middle East, Asia) do not face such challenges and therefore gain efficiency.

Equivalent and better levels of safety, performance and cost efficiency can be achieved with one integrated group CAMO serving multiple AOC’s. The setup of One CAMO as an integral part within an Airline Group and its governance structures will safeguard essential accountabilities and safety mechanisms whilst reducing complexity.
Industry benefits are estimated to be at least €150 million annually, mainly from enhanced fleet agility, integrated processes supporting performance improvements and unit cost benefits.

The current European regulatory framework should be expanded with an option for a single CAMO solution within an Airline Group. Essential structural changes are recommended with this industry position paper. A4E urges EASA, national authorities and industry partners to change the current legal setup to allow a One CAMO option for Airline Groups in light of fierce global competition, additional industry challenges and the ongoing consolidation trend. Furthermore, the current COVID-19 pandemic forces airlines to reduce costs wherever possible.

The separation of the AOC:CAMO requirement will also align the organization interface analogue to other interfaces within the aviation industry (e.g. DOA:POA, CAMO:145). In all other cases a combination of approvals is not required while not having a negative safety or oversight impact.

Regulation Causes Undue Complexity for Business Groups

The current European aviation legislation for licensed air carriers is based on a “historic” single entity organizational structure of an airline. A key element is the mandatory 1:1 link between the Air Operator Certificate (AOC) and its integral, dedicated continuing airworthiness management organization (CAMO) headed by the nominated post holder for continuing airworthiness (NPCA). A limited scope of continuing airworthiness tasks may be subcontracted by the CAMO to an independent non-approved organization. All elements are under surveillance by the competent national aviation authority (NAA).

Figure 1: Organization Concept assumed in current regulation — “classic” single entity airline

 

Driven by global and local competition, the trend towards a consolidation within the aviation market is active. Hence, today’s airline industry in Europe is predominantly characterized by Airline Groups aiming at commercial, performance and customer service benefits from scale and process integration whilst protecting safety and quality standards as a Group. In other areas of the aviation industry, such developments are already further advanced due to legal flexibility (MRO industry, EU type certificates, EU OEMs). 65 % of EU registered aircraft operate in pan European Airline Groups. Groups typically have to pursue multi-AOC strategies in their efforts to develop business given the strong influence of wide-ranging, non-aviation related national, regulatory and political boundaries within the EU, such as but not limited to: labour law, taxation and neighbourhood topics. Consequently, this fragmentation of the European aviation market due to national boundaries causes significant disadvantages when facing global competitors coming from much larger national markets.

In addition to these given restrictions, the 1:1 AOC-CAMO requirement currently forces European Airline Groups to maintain multiple, parallel CAMO’s resulting in complex and multi-layer structures. Duplicate CAMO infrastructures, processes and manuals with equivalent activities (maintenance programme development, reliability monitoring, AD assessment, etc.) are mandatory despite standardized aircraft fleets. Reporting lines and steering are complicated in multi-AOC/CAMO structures despite one executive board. Harmonization of processes, tools, standards and subcontracting (SCAMT) may alleviate such headwinds but cannot overcome the cost driving redundancies, the added complexity and the introduced risk of failure due to additional oversight and interface management.

Figure 2: Example for Airline Group per current aviation law — parallel functions per airline due multiple authorities

 

Additionally, individual NAA interpretations on the common EU regulation interfere with group harmonization and create additional headwinds. What is more, combined with other national benefits for AOC’s, the diverse NAA landscape allows for an indirect competition over flexible interpretation. The market knows Airline Group setups with stretched subcontracting, extensive double-hatting for local CAMO’s within groups creating effectively pro-forma organizations for the sake of regulation. At the same time, the continuing airworthiness performance of these Airline Groups is well established. Hence there is an urgent need to revisit the current regulation in order to align it with industry trends.

On a global competitive scale between leading regulatory setups, such restrictions are not established. Airline consolidation in other aviation markets typically results in full mergers, more efficient operations with 700+ aircraft and fully integrated technical operations producing well respected safety standards and highly profitable airlines as seen with major US and CA mergers. The multi-national setup linked with the 1:1 AOC-CAMO requirement is a direct business disadvantage for European carriers which can be resolved with a n:1 AOC-CAMO setup for Airline Groups — while maintaining a high, or even improved safety standard due to less complexity and equivalent new safety management standards of Part-CAMO.

In Europe, a previous attempt to develop CAMO outsourcing towards independent parties (e.g. OEMs, MROs) was terminated due to concerns over reduced control and oversight for the operator (NPA2010/09).

In 2019, EASA recognized and introduced the terminology “single business grouping” in context with new authority oversight options for groups with certificates in multiples member states of the EU (i.a.w.  Basic Regulation (EU) 2018/1139, Art. 65). This provides a new starting point for defining “single business grouping” and leveraging related safety and cost benefits for such groupings, especially for the CAMO. Essential structures and criteria for the discussion are drafted in this document.

Objective to Introduce One CAMO Setup for Business Groups

One CAMO shall

  • Be an integrated Center of Excellence for continuing airworthiness tasks serving multiple AOC’s of a single business grouping (Airline Group AOC’s) and as such prevent double work. Furthermore, it will strengthen safety performance due to less complexity caused by a reduction of process interfaces across the Airline Group.
  • Enable one Controlled Environment for the aircraft assets within the Airline Group and allow re-allocation between Group AOC’s with minimal lead-time (e.g. 1 day) and no CAMO “phase-out, phase-in” effort. Such enhanced steering options will increase agility of the organizations, which is urgently required for run-up scenarios during the current Covid-19 crisis.
  • Ensure a more effective, less complex continuing airworthiness function for Airline Groups by permitting the AOC to contract the CAMO function to one designated entity within the Airline Group and allowing a much leaner administration.
  • Be restricted to providing services within the same Airline Group in order to ensure that already established group governance structures can be leveraged in favour of lean interfaces whilst securing the essential roles of AOC and CAMO within the group.
  • Allow the European industry to compete with other aviation markets on a global scale where larger and fully integrated airline group operations benefit from increased flexibility due to significantly larger national markets (US, China) and different legal frameworks.
  • Enhance steering options and increase agility for organizations during the current COVID 19 crisis which causes a prolonged recovery and increased volatility of the aviation market.

One CAMO shall not administrate operational aspects such as aircraft registration.

Figure 3: One CAMO for Airline Group providing one Controlled Environment for fleet and lean organization

 

Key benefits of the approach are equivalent or better safety levels, estimated industry savings of €150 million per year and a level playing field in global competition and between EU member states.

  • Safety: human factors related errors due to complexity within CAMO and its interfaces will be reduced. Today, HF related errors induced by variations are high scorers, CAMO plays a decisive role by providing and processing all maintenance data.
  • Organization efficiency: global shortage for qualified technical staff requires airlines to achieve productivity gains. Bundling of duplicate roles, combing expertise and being able to invest in advanced digital tools as integrated CAMO setups will improve staff efficiency by up to 30% at major groups.
  • Fleet agility benefits and more effective steering options are main contributors to savings given the continued volatility of markets and resulting need to re-allocation aircraft on short terms.
  • Level playing field: One CAMO option provides opportunity for EASA to align diverse interpretations on current law and to restore global competitiveness of EASA framework.
  • Protection of European Aviation through new efficiency and growth opportunities while facing intercontinental competitors with significantly larger national boundaries and government support.
  • Flexibility for airlines to setup different organizational structures according to their business need.
  • Harmonization of legal framework through more flexibility at the AOC: CAMO interface analogue to DOA:POA and CAMO:145 while maintaining clear accountability.

Request for Action to EASA

In order to achieve benefits outlined above, EASA is requested to:

  • Add the One CAMO option to the rulemaking program in 2020;
  • Coordinate and lead a rule making activity to develop the needed regulatory framework for a One CAMO solution (n:1 AOC-CAMO link) for Airline Groups. A start of the rule making activity is requested for 2020 to face the impacts of the Corona crisis during the next years;
  • Establish harmonised authority oversight and regulation interpretation via One CAMO approval for and EASA guidance for national AOC interfaces.

Legal Recommendation

Airline AOCs within a single industry grouping shall be allowed to allocate the complete CAMO function to a single One CAMO which is an integral part of the same single business grouping. In order to ensure both business needs and essential organization requirements for AOC and CAMO and ultimately to ensure safety, a conceptual organization draft is presented.

The organization design for One CAMO follows the concept of an ideally seamless continuing airworthiness management during the entire aircraft life cycle within the group. It is also in line with Airline Group commercial organization management principles whereby common services, functions of high expertise generally are harmonized and bundled to render an efficient and effective service.

To-date, Airline Groups specify, purchase, allocate, phase-in/out and manage commercial aircraft assets on a group level. An obvious next step is to ensure seamless continuing airworthiness during the operational phase of the aircraft and its various allocations to group airline operations. Benefits were discussed earlier.

Figure 4: Aviation organization concept for commercial transport today and target for One CAMO

 

The related aviation organization within the airline group and changes required are suggested as follows.

The current implementing rules do not recognize Airline Groups as part of an aviation organization. The individual airline operators within the group are currently considered as parallel, separate aviation organizations under national oversight. Each operator must appoint an Accountable Manager (ACM) and maintain an integrated CAMO and NPCA. Limited subcontracting is allowed requiring active control through direct involvement with related resources and competencies required. Key requirements are listed below.

ACM

The operator shall appoint an accountable manager, who has the authority for ensuring that all activities can be financed and carried out in accordance with the applicable requirements. The accountable manager shall be responsible for establishing and maintaining an effective management system.
ORO.GEN.210(a)

NP

The operator shall nominate persons responsible for the management and supervision for (…) continuing airworthiness or for the continuing airworthiness management contract (…).
ORO.AOC.135(a)

ACM CA

The organization shall appoint an accountable manager that has corporate authority for ensuring all continuing airworthiness management activities can be financed and carried out in accordance with this Part-M.
M.A.706(a)

NP CA

(…) the accountable manager shall designate a nominated post holder. This person shall be responsible for the management and supervision of continuing airworthiness activities (…)
M.A.706(d)

1:1 link

(…) licensed air carriers … shall (2) be approved, as part of its operator certificate, as a continuing airworthiness management organization  …
M.A. 201(e)

The proposed aviation organization for One CAMO ensures essential roles and safety mechanisms within the Airline Group context. A key prerequisite is to elevate an already existing solution for non-commercial operators to the Airline Group context (n:1 AOC:CAMO link).

n:1 link

(…) commercial transport other than those by licensed air carriers … the operator shall (2) ensure that, tasks associated with CA are performed by an approved CAMO. When the operator is not CAMO approved itself, establish a written contract i.a.w. Appendix I
M.A. 201(f)

The AOC structure remains unchanged including accountability as an operator. However, instead of an integral CAMO, an Airline Group CAMO shall be contracted by all group operators. The AOC’s shall nominate NPCA’s whose main role is to manage and supervise the continuing airworthiness contract as provided for in ORO.AOC. The contract shall be established in accordance with Appendix I of Part-M where scope and duties for the operator and contracted CAMO are defined. No continuing airworthiness tasks are performed by the AOC-organization nor is active control required since the service is rendered by the approved One CAMO within the Airline Group. The focus of the NPCA is to ensure interfaces, processes/policies and information flow.

The group One CAMO is responsible for maintaining continued airworthiness of the operators’ aircraft, organize approval of modification/repairs, carry out airworthiness reviews and carry out mandatory occurrence reporting related to continuing airworthiness issues. The ACM of the CAMO ensures that all continuing airworthiness management activities can be financed and carried out. Furthermore, the ACM designates a person or group of persons responsible for the management and supervision of continuing airworthiness activities. The approved CAMO must also establish a Quality and Safety Management system as required by Part-CAMO.
An Airline Group Functional Board for technical operations may be leveraged as formal aviation organization element to ensure priority for safety and regulatory compliance and avoid potential conflict of interest between AOC’s and CAMO.  Such Group Functional Boards (e.g. Technical Executive Board) are formal decision-making committees for the Group structure, where both Airline AOC Executives (typically CEO, COO, ACMs) and Group Operations Executives decide on resource allocation, major technical decisions, standards, policies, etc.

The continuing airworthiness task execution centres are typically located both central and decentral, e.g. close to AOC hub location, depending on the nature of the task. Harmonisation across the group is typically in line with process functions and technology. A separate legal entity will be required for One CAMO within the Group context including branches per member state. The entity shall be at least majority owned by the Airline Group to ensure control and governance. One CAMO will enable a controlled environment with seamless aircraft transitions, stringent processes, standards, tools, data and clear organizational structures.

Regulatory Changes Required

Regulatory development and/or interpretation is needed for implementing the One CAMO option in EU regulation. Therefore, the followings aspects must be considered:

Main topic:

CAMO approval for commercial operator: The operator “shall be approved, as part of its air operator certificate, as continuing airworthiness management organization” (CAMO). (M.A.201 (e))

Recommendation: Equivalent to M.A.201 (f)(2) valid for “commercial specialized operation”, the commercial operator when part of an Airline Group shall also be able to ensure, that the task as associated with continuing airworthiness are performed by an approved CAMO within the same Airline Group. When the operator is not CAMO approved itself then the operator shall establish a written contract with such an organization which is part of the Airline Group which must be approved i.a.w. Part-CAMO.

Related topics:

AOC/CAMO link: “For licensed air carriers (commercial operator) (…), the (CAMO) approval shall be part of the air operator certificate”. (M.A.703(b)).

Recommendation: Following above recommendation “CAMO approval for commercial operator”, the CAMO approval shall only be part of the air operator certificate, when the operator is CAMO approved itself. In case the CAMO requirement is fulfilled by another organization / entity within the Airline Group, this allocation shall be specified within the AOC.

AOC Responsibility:  In order to have “clearly defined lines of responsibility and accountability” in place, “the operator shall nominate (…) a person responsible for management and supervision of (…) continuing airworthiness or for the continuing airworthiness management contract in accordance with Regulation (EU) No 1321/2014” for the aircraft it operates.  (ORO.GEN.200 & ORO.AOC.135)

Recommendation: An additional option for contracting of CAMO services shall be introduced for commercial operators without reference to current regulation 1321/2014 while this regulation does not allow contracting; in such case the operators duty shall be limited to the supervision of the contracted Airline Group One CAMO.

CAMO QM link to operator’s QM: Quality Department of CAMO must be integrated part of Operators quality system.  (M.A.712(e))

Recommendation: The One CAMO requires an independent Part CAMO approval, safety and quality management system including a quality function. Such function may establish shared services within the Airline Group.

CAMO staff employment: the CAMO “shall have sufficient appropriately qualified staff for the expected work”, which must be “employed”. (M.A.706(f) & AMC M.A.706)

Recommendation: The current wording “employed” currently creates complexity in the Airline Group context since labour law and national authority interpretation of the term is different per member state. “Employed” can be interpreted as must have a direct employment contract with the respective legal entity, consequently no staff assignments within an Airline Group. The wording shall be improved to “qualified staff under direct control of the Airline Group CAMO”. The direct control of the Accountable towards all CAMO staff shall be regulated in group governance architecture (e.g. majority ownership), AOC-CAMO contracts and assignment statements etc.

Authority oversight: The CAMO approval must be issued by the competent authority and is part of the air operator certificate.  (M.A.703 (a)+(b))

Recommendation: When the operator is CAMO approved itself, the CAMO approval must be issued by the competent authority of the AOC. When the operator contracts the CAMO functions to the Airline Group One CAMO the approval shall be issued by the competent authority of the member state where the Airline Group One CAMO has its principle place of business.

In case of pan-European multi-site organizations, the oversight may be done by EASA upon request i.a.w. Art. 65 of the basic regulation EU 2018/1139.

About A4E

Launched in 2016, Airlines for Europe (A4E) is Europe’s largest airline association, based in Brussels. The organisation advocates on behalf of its members to help shape EU aviation policy to the benefit of consumers, ensuring a continued safe and competitive air transport market. With more than 720 million passengers carried each year, A4E members account for more than 70 per cent of the continent’s journeys, operating more than 3,000 aircraft and generating more than EUR 130 billion in annual turnover. Members with air cargo and mail activities transport more than 5 million tons of goods each year to more than 360 destinations either by freighters or passenger aircraft. Current members include Aegean, airBaltic, Air France-KLM Group, Cargolux, easyJet, Finnair, Icelandair, International Airlines Group (IAG), Jet2.com, Lufthansa Group, Norwegian, Ryanair Holdings, Smartwings, TAP Air Portugal, TUI and Volotea. In 2019, A4E was named “Airline & Aviation Business Development Organisation of the Year” by International Transport News. Follow us on Twitter @A4Europe.