A Commonwealth Ombusdman investigation into the conduct of the Civil Aviation Safety Authority (CASA) has found no legislation that prevents a flying school from franchising out their Air Operator's Certificate (AOC) to other operators.
The revelation comes in a report supplied to former Australian Pilot Training Alliance (APTA) owner Glen Buckley, who is taking legal action against CASA over several enforcement issues that he says destroyed his business and forced him out of the aviation industry.
One of the contentious points in the enforcement action applied to APTA in October 2018 was that the organisation was illegally allowing other flying training schools to use APTA's Part 142 approval (franchising), which was the very business model APTA was built on.
It was only one of several issues that Buckley reported to the Commonwealth Ombudsman. In Phase One of the investigation, Assistant Director of Investigations Michael Buss said he could find no legislation that made franchising illegal.
"As of October 2016, no Australian legislation prohibited 'franchising' of an AOC, subject only to the exclusivity of the AOC holder’s operational control, and that remained the case as of 25 March 2020," Buss says in his report.
"There would be no legal or regulatory impediment to Mr Buckley or APTA selling or licencing intellectual property in the form of its AOC exposition to other FTO [Flight Training Organisation].
"And there would be no legal or regulatory impediment to CASA issuing part 142 Permissions on submission of those expositions by other FTO."
Buss also pointed out that CASA had agreed with the finding.
CASA's reasoning for declaring the APTA model–which it had previously approved–illegal was that franchising for FTOs was not permitted by the Franchise AOC Arrangements ruling made in 2006. That ruling refers to commercial operations under CAR 206, but in September 2014, flight training was removed from CAR 206.
"The Ruling was not amended to reflect that legislative change from 1 September 2014 meaning that the CAR and the Ruling were no longer aligned in material ways," Buss concluded.
"Conceptually, I accept CASA's view that the Ruling may reflect broader policy considerations.
"Nevertheless in my concluded view there was an administrative deficiency due to an absence of a direct relationship between the activity being regulated and the policy said to regulate it.
"This gave rise to ambiguity and uncertainty with the potential to cause detriment to those relying on the accuracy of the regime or, conversely, prevent detriment from occurring."
The Office of the Commonwealth Ombudsman is now proceeding with Phase Two of the investigation, which will investigate the CASA action of serving a seven-day cease notice on APTA in October 2018 and CASA informing Buckley's new employer in August 2019 that his new role was "untenable" due to comments Buckley was making publicly.
Buckley is currently suing CASA and the then CASA Regional Manager for defamation over the comments, saying that he had suffered reputational damage that "has extended to my reputation with peers in the industry, my past employees, work colleagues, my suppliers, neighbours, school community, and indeed my own family."
Update 3 September
A CASA spokesperson today issued the following statement.
"CASA’s position on ‘franchise-like’ arrangements is that they may be acceptable, so long as those arrangements ensure that the authorisation holder maintains ‘full operational control’ over the approved activities and is able to satisfy CASA that this is so.
"CASA will continue to cooperate fully with the Ombudsman’s investigation, which is not yet completed."