EASA’s certification pricing will produce no profit margin

 - October 2, 2007, 11:03 AM

The newly formed European Aviation Safety Agency (EASA) is crafting a pricing policy for the certifications it can now grant. On April 15 in Paris, EASA executive director Patrick Goudou presented outlines of this policy, as well as details on the agency’s growth. In the European Union, EASA is slowly taking over from the JAA. EASA, which currently has only 40 employees, is temporarily based in Brussels, though it will eventually move to permanent headquarters in Cologne, Germany.

“We are now the only entity in Europe that is able to deliver a type certificate,” Goudou noted. As such, EASA is the only agency in the EU that can approve aviation products, modifications and repairs and grant operating certificates to design offices and maintenance companies. Certification of the latter company types within the EU was delegated to national aviation authorities, though. For product certification, a delegation contract was signed with the JAA late last year.

Starting next year, EASA will charge the manufacturers for certifications. “Today, they pay to national authorities,” Goudou said. A notable exception is France: the DGAC does not demand payment for certification work.

Prices for certification services are currently in discussion at EASA. The plan is to create aircraft categories, such as very light aircraft, helicopters and widebody airliners, to name a few. For each certification, the exact price would be worked out by adjusting the base price with an estimated number of man-hours. “We will charge only our actual costs– we do not aim to make a profit,” Goudou said. He expects EASA’s prices to be lower than they are currently, at least in the countries that charge such fees. Until it reaches a sufficient size, EASA will delegate much certification work to the JAA or national authorities. It will repay them accordingly.

Earnings from certification work should account for some 80 percent of EASA’s total budget– E60 million ($72 million)–next year. The remaining 20 percent will come from subsidies, Goudou said. This year EASA’s budget is E17 million ($20 million).

Plans call for increasing EASA’s workforce from 40 to 100 people by year-end, and boosting it to 200 by the end of next year. “Recruiting takes a lot of energy,” Goudou said. He explained that the entire management team takes part in the process. Many JAA employees are applying for jobs at EASA. “Clearly, we are emptying the JAA,” Goudou said. However, current recruitment rules imply that the opening of new positions must be made public. Therefore, a JAA employee has to take the same recruitment steps as any other candidate to land the job at EASA. Goudou stressed that he also wants to have a significant number of people coming from the industry. According to Goudou, the agency could reach its full size of “at least 350 to 400 people” in 2006 or 2007.

The executive director said he already met with FAA Administrator Marion Blakey. “We have started relations [between EASA and the FAA],” he said, emphasizing that it does not mean that the two authorities agree on every subject. For example, at issue are the FAA’s plans for new rules on ETOPS and fuel-tank safety. “We are well aware that future decisions in these fields can have significant consequences for the business of the major manufacturers, but we are working on safety,” Goudou emphasized. The two bodies will organize annual harmonization conferences to continue the work being done between the JAA and FAA. The next such meeting will take place in Philadelphia next month.

Second EASA Certification Was the Boeing 777-300ER
The joint-certification effort that the FAA and JAA set up has not changed since EASA took over certification work. For example, on March 19 the FAA and EASA simultaneously certified the Boeing 777-300ER. Last December 22 EASA certified the GE90-115B engine for that aircraft. “U.S. manufacturers were probably reassured about the EASA’s attitude when they saw our second type certificate was for a U.S. product,” Goudou said.

EASA is so far responsible for certifications and maintenance issues only. In the future it will also oversee air operations and flight-crew licensing. Operational issues should come under the agency’s umbrella “very soon.”

Future regulations for corporate aviation operations, including fractional ownership, are still open questions. Last month EASA planned to submit a proposal dealing with these issues under a three-month consultation process. After that, a draft will be sent to the European Commission. “The legislative process at the European Parliament will then begin,” rulemaking director Claude Probst explained. Probst, a former advisor of the EC’s air-transport director, was accompanying Goudou at the debate. He hinted that JAR OPS 2, the rules drafted by the JAA for corporate aviation, will be the basis for EASA’s project.

The latest step for JAR OPS 2 was the end of the comment period last August after the JAA issued an advanced notice of proposed amendment (A-NPA). At that time, the JAA was warming to the idea of a code of best practices (AIN, November 2003, page 92). Probst appeared favorable to this suggestion. The final binding rule will be released by the EASA. For the industry, however, it is difficult to follow two simultaneous projects being conducted by two different bodies (EASA and the JAA) on the same subject, but on overlapping timeframes.

Will European national aviation authorities one day be taken over by EASA, with, for example, the French DGAC becoming “EASA France?” Goudou answered that this will certainly not happen in the next 10 years. He said the agency has even been solicited to have offices close to the manufacturers’ locations. “During the next three to five years, we need to build our agency and to work together to make a common culture emerge. So we really do not want to scatter,” he said.

Later on, the agency’s executives plan to have several regional (not necessarily national) offices in Europe. However, should the national authorities ultimately disappear, it would be a political decision. “Before that, a law must change the breakdown of responsibilities between EASA and the national authorities as, under the current plan, they have significant tasks under their umbrella,” he said. Among these tasks are certifications of production and maintenance organizations. At the beginning of this month the European Union grew from 15 to 25 member states.
Most of the new members come from the former Soviet block. Goudou and Probst acknowledged that some old Russian or Ukrainian aircraft will not meet EASA safety standards. “As a consequence, the agency will not take them under its responsibility but leave them to the states,” they said. Under ICAO rules, EASA cannot just ground the aircraft, Probst said. Industry observers warn that the flying public might not see such a situation as satisfactory.

Before becoming the first boss of EASA, Goudou, 54, was the head of the French military aeronautic maintenance services. In an earlier position at DCN, the state company for military naval construction, he had to build a new commercial department from scratch. “So it is not the first time I am building something and making it work simultaneously,” he told AIN.