annual report 2002-2003 - south african civil aviation

ANNUAL REPORT 2002-2003

CIVIL AVIATION AUTHORITY

SOUTH AFRICAN

RP: 15/2004ISBN: 0-621-35034-6

South African Civil Aviation Authority Annual Report for 2003

CONTENTS

Chapter 1: General Information1.1 Introduction1.2 Board Chairperson's Statement1.3 Acting Chief Executive Officer's Statement1.4 Board of Directors1.5 Information on the Ministry1.6 Vision And Mission Statement1.7 Legislative Mandate1.8 Staffing

Chapter 2: Human Resource Management2.1 Introduction2.2 Summary of Personnel Costs And Changes2.3 Employment Equity Profile2.4 Skills Development

Chapter 3: Performance Review3.1 Key Objectives3.2 Aviation Safety Promotion

3.2.1 Accident and Incident Investigation 3.2.2 Safety Information 3.2.3 Aviation Safety Promotion 3.2.4 Safety Awareness Month - June 2002 3.2.5 Air Shows

3.3 Air Safety Infrastructure3.3.1 Airports Division3.3.2 Flight Inspection3.3.3 Aviation Security3.3.4 Aeronautical Information Services 3.3.5 Airspace Safety 3.3.6 Air Traffic Services 3.3.7 Special Issues

3.4 Aircraft Safety Operations3.4.1 Airworthiness3.4.2 Personnel Standards3.4.3 Flight Operations3.4.4 Aviation Medicine

3.5 Quality Assurance and Client Services 3.5.1 Quality Assurance3.5.2 Client Services3.5.3 Promotion of Continuous Improvement

Chapter 4: Corporate Governance4.1 Responsibility4.2 The King Code of Corporate Governance and Conduct4.3 Board of Directors

4.3.1 Executive Commiittee 4.3.2 Audit Commiittee 4.3.3 Human Resources Committee 4.3.4 Accidents and Incidents Committee

4.4 Internal Financial Controls4.5 Risk Management4.6 Management Reporting4.7 Employee Participation and Skills4.8 Administrative Matters

Chapter 5: Annual Financial StatementsContentsFinancial Statements - IntroductionReport of the Independent AuditorsReport of the DirectorsIncome StatementBalance SheetStatement of Changes In EquityCash Flow StatementNotes to the Cash Flow StatementAccounting PoliciesNotes to the Annual Financial Statements

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1.1 INTRODUCTION

The Accounting Authority of the South African Civil AviationAuthority (CAA) hereby submits the Annual Report andFinancial Statements, for the period 1 April 2002 to 31 March2003, to the Executive Authority.

The Report consists of five chapters. Chapter 1 contains a high-level overview of the CAA, its mission and statutory functions,statements by the Chairperson and the Acting Chief ExecutiveOfficer's (CEO) and the relationship with the ExecutiveAuthority. Chapter 2 deals with important and notable humanresource issues. Chapter 3 contains a set of performancemeasures used to track the overall progress towards theachieving of the CAA's Business Plan goals. Chapter 4contains the report of the Audit Committee and Chapter 5contains the audited Financial Statements for 2003, togetherwith a description of how the CAA is financed.

Because the CAA Business Plan formally defines theorganisation's mission and goals and its long-range objectives,together with the key strategies necessary for achieving suchmission, it is very important that the actual relationship thatexists between the Financial Statements and all other plans berecognised.

One of the objects of this Report is to bring together, on acomparative basis, the Business Plan - including the mission,goals and objectives - and the actual performance delivered bythe Organisation, in order that the reader may have acompletely open and transparent view of the activities of theCAA.

The Report has been prepared in order to meet therequirements of the Public Finance Management Act, theDivision of the Revenue Act and the Treasury Regulations. ThePublic Finance Management Act, 1999, specifies that:

$ The financial statements for each year must be prepared inaccordance with generally recognised accounting practice;

$ The annual report and financial statements fairly present thestate of affairs of the entity and:! Its business; ! Its financial results;! Its performance against predetermined objectives; and ! Its financial position as at the end of the financial year

concerned;$ The annual report and financial statements must include

particulars of:! Any material losses through criminal conduct, any

unauthorised expenditure; and fruitless and wastefulexpenditure that occurred during the financial year;

! Any disciplinary steps taken as a result of such losses; ! Any material losses recovered or written off; and! Any other matters that may be prescribed.

PAGE 1SOUTH AFRICAN CIVIL AVIATION AUTHORITYANNUAL REPORT

GENERAL INFORMATION

2002 - 2003

CHAPTER 1: GENERAL INFORMATION

SOUTH AFRICAN CIVIL AVIATION AUTHORITYANNUAL REPORT

INTRODUCTION

2002 - 2003

The 2002-2003 CAA�s AnnualReport provides us with yetanother useful insight ofresponsibilities shouldered bythe CAA and the tremendousaccomplishments during theyear. On behalf of the Boardof the Civil Aviation Authority,we are proud to record theseachievements in the phaseof extremely challengingenvironment.

The Board of the CAA isappointed by the Minister ofTransport in terms of the

South African Civil Aviation Authority Act No 40 of 1998 and isaccordingly charged with playing an important good governancefunction in relation to the CAA. To this end, the Board meets atleast four times per annum to receive and review relevantorganizational reports and approve key decisions and policies.However, much of the legwork of the Board is conducted in itssub-committees; the Finance and Audit, Human Resources, andAccident and Incident sub-committees. The CAA has clearlybenefited from their contributions and from the varied skills,competencies and leadership which reside in our boardmembers.

As we have always maintained, the CAA's mandate is critical todeveloping and sustaining the aviation sector in a broadereconomic development of the continent in general, and SouthAfrica in particular. Aviation safety, security and developmentare the core of the CAA's activities and mandate. This mandatecannot be the sole responsibility of the regulator - the aviationsector and stakeholders have a critical role to play in ensuringsuccess of our regulatory function. It is for this reason that theCAA encourages partnership and voluntary compliance basedon common commitment to the highest levels of aviation safetyand security.

Clearly, there are serious challenges in ensuring effectiveoversight and investigative activities. We emphasisepartnership with the industry as the key to safe skies in SouthAfrica. We also need to improve our corporate governance,especially now that the industry pays for the services we offer.Lessons from the past experiences should serve as a catalyst tomove us forward faster.

In the current financial year we are proud of our contribution tointernational aviation through various forums, particularly ourparticipation in the International Civil Aviation Organisation(ICAO), and the African Civil Aviation Committee (AFCAC). TheSouth African Development Comittee (SADC) region has beenone area of focus in the current year as well. This region, morethan at any other time, needs to harmonise the regulatoryenvironment and take advantage of opportunities created by theNew Partnership for Africa's Development (NEPAD).

The concept of sustained payment for services is beingaccepted by the industry with challenges of improved servicesand relationship with the industry. The financial report for the2002-2003 fiscal year has been Audited by the auditors and isreflected in this annual report.

On behalf of the Board, I would like to express our gratitude tothe contribution made by Mr. R.V. Mokgatle to the Board and itsdeliberation, skills and passion for his work during his tenurewith the Board. Mr. Mokgatle resigned during this financial year.We thank him for the job well done and we wish him the best inhis new endeavours. At the same time, I also want to welcomeMaj Gen N.L.J. Ngema, who joined the board at the end of thisyear.

In this centenary of the Wright brothers' pioneeringachievements, founders of modern aviation, the CAA remainscommitted to our mandate through principled partnership withthe industry.

Israel Biziwe Skosana

Chairperson

1.2 BOARD CHAIRPERSON'S STATEMENT


INTRODUCTION

2002 - 2003

As a civil aviationr e g u l a t o r yorganisation, ourmost important toolof trade is expertise- that intellectualproperty which byits very nature is asmobile as thehuman who holdsit, needs constantimprovement and isas useful as one'sability to put it intouse.

Over the years since the establishment of the CAA, thechallenge has always been acquiring and maintainingappropriate expertise, in order to deliver on the Organisation'smandate, which is highly driven by international standards.Adding to the challenge is managing transformation with respectto, inter alia, employment equity so as to maximise benefitsthereof. Over the past year 48 employees joined theOrganisation in the core mandate areas (aviation safety andsecurity) and of these 40 percent were from previouslydisadvantaged groups of the population. However, the nationalpool of expertise remained low amidst a growing civil aviationindustry (Industry) and increasing service standards, both ofwhich have fueled the mobility of the expertise. The currentlylow accessibility of aviation technologies by a large sector of thepopulation has also meant limited movement from thegrassroots level towards meeting demand, all of thesesuggesting the need for a national strategy on civil aviationexpertise.

Financially, the CAA has remained within statutory requirementsof the user-pay principle. However, due to financial difficultiesexperienced by the Industry, annual fees' escalations have hadto be curtailed which, in turn, restricted the organisationaldevelopments to further improvements on processes andstaffing in order to improve delivery on mandate. In order toensure a sustainable organisation, increased attention has alsobeen put on recapitalisation. With the increase in the passengersafety charge having taken place in April 2002, the CAA expectsto meet more of its obligations; which brings me to the need fora change of processes from manual, paper-based state to anintegrated information technology (IT) state that will facilitateaccuracy and speed up delivery.

In phasing out the IT hardware that was introduced with theOrganisation nearly five years ago, one of the priorities hasbeen the increase of office flexibility, particularly for those staffmembers whose tasks entail extended out-of-officeengagements such as inspectors, investigators, etc. Equippingthese members of staff with Notebook [computers] has meant,inter alia, that they can carry our entire legislation and referencematerial, weighing several kilograms in hard copies, along with

them while on fieldwork, thereby improving on productivity anddelivery.

On the international front, we continued to pursue the approachof mutual and multilateral engagements with sisterorganisations in the Southern African Development Committee(SADC) Sub-region, together with whom we have realisedsignificant achievements at continental levels. In January 2002we facilitated the successful hosting of an Extraordinary SADCCivil Aviation Committee (CAC) meeting and otherwisesupported a number of CAC activities with expertise.

The CAA played an active role in sending national delegationsto all major civil aviation events including the International CivilAviation Organisation (ICAO) 5th Worldwide Air TransportConference, the 34th Extraordinary Session of the Assemblywhere South Africa was elected to the ICAO Council, and the11th Air Navigation Conference. We also participated in anumber of ICAO working groups and provided a Panel memberand supporting expertise to the ICAO Flight Crew Licensing andTraining Panel, which was established to undertake specificstudies with a view to advising ICAO on technically practical andoperationally feasible provisions on flight crew licensing training.The CAA also had an aviation security (AVSEC) inspector listedin the ICAO auditors' roster, whom we have agreed to makeavailable to assist ICAO in conducting AVSEC audits of states inthe region.

Our safety supervisory activities, particularly inspections for theissue of licenses and approvals, as well as surveillanceactivities, remained on track despite stretched human resourcesin these disciplines. With the exception of a limited number ofcases, Industry compliance with regulatory provisions continuedto show improvement.

To give effect to the policy of consultation and partnership withthe Industry, the CAA made full use of its standing consultativecommittees: the National Airspace Committee (NASCOM), CivilAviation Regulations Committee (CARCOM) and the CivilAviation Safety Committee (CASC) which is better known as theNational Aviation Safety Committee (NASC). There wereseveral other engagements aimed at addressing specific issuessuch as the recent international standard for equipping aircraftwith Airborne Collision Avoidance System (ACAS).

Considerable achievements have been made in the rule makingarea, with regulatory amendments in over 20 parts of the civilaviation regulations (CARs) being promulgated into law. Thefollowing are highlights of the developments in this area: Part 65(Air Traffic Service Personnel Licensing); Part 91 (AirborneAvoidance Collision System); Part 139 (Aerodromes andHeliports: Licensing and Operations); and Part 187 (FeesRegulations).

Considerable progress has also been made on Part 61(Personnel Licensing) and Part 108 (Aviation Cargo Security)which are the subject of consultations with the Industry. The new

1.3 ACTING CHIEF EXECUTIVE OFFICER'S STATEMENT


INTRODUCTION

2002 - 2003

National Aviation Safety Plan (NASP) draft completed anextensive consultative process with various stakeholders and isnow in its final stages of approval and promulgation into law.

In line with ICAO recommendations, the CAA has alsodeveloped regulations providing for monetary penalties for non-compliance with CARs, a critical development given the impactof 11 September, 2001 attacks in the USA. Once theseregulations are promulgated into law by the Minister ofTransport, the CAA will for the first time be able to imposesignificant administrative fines for various wide-ranging non-compliances for which there were no appropriate sanctions.

We are keeping a close watch at developments in the economicregulation of air transport, where the world-wide trend is lesserand lesser regulation and new models of facilitating freer tradeare being adopted. Safety is a joint responsibility, shared by theindustry and the regulators. Of critical importance for a safetyregulator therefore, is the trend towards virtual airlines, whichwould have the effect of changing the equations ofaccountability for safety. This will pose a certain and realchallenge in rule making, inspector capacity, audit approachesand international co-operation, among others.

In the area of accidents and incidents investigation, we haveseen little change from the past years in terms of numbers ofoccurrences. This is an encouraging sign however, consideringthe significant growth in aviation activity, particularly aircraftmovements, which South Africa has continuously experiencedin recent years. Not withstanding, a number of safety andsecurity promotion activities, including seminars, safetyadvisories in magazines and aeronautical information circulars,were undertaken. Also significant has been the intake of six (6)accident investigation trainees, who once they complete trainingwill increase the investigation capacity by almost 100 percentfrom where it had dropped to due to natural attrition. Thisdevelopment will result in an improved quality of investigationsand reporting, as well as a much needed reduction in the time ittakes to release investigation reports.

The Confidential Aviation Hazard Reporting System (CAHRS)continued to add valuable information to the safety effort, albeitwith limited input so far. The experience gained to date points totwo items that must be addressed to improve the System�seffectiveness. The first is that awareness of existence of theSystem is still low, and the second is the apparent lack of clarityon what has to be reported to CAHRS. Both shortcomings areto be addressed through an awareness campaign.

Noting that our core mandate includes overseeing thedevelopment of the Industry, we have also put increasedattention on the development of regulations that, whileachieving minimum safety standards, avoid imposing undueeconomic burden on the Industry. This is particularly importantfor grassroots aviation, without which the upper levels of theIndustry will not enjoy much success. Among the consideredapproaches is the modification of requirements for aerodrome

rescue and fire fighting capacity, which will shift the emphasistowards the results rather than the means of compliance.

It is my view that despite various challenges, most of which areexpectable parts of civil aviation, the industry is safe, and weshould focus on being safer, if only to keep up with increasingpublic demands, sustaining competitiveness with other modesof transport, and giving our Industry business players an edgein the global arena.

Seizing this opportunity, I wish to express my thanks to the civilaviation industry for its understanding and participation in thesafety and security effort, all other stakeholders for theirsupport, the CAA Board for its guidance, and above all the CAAstaff for their commitment to the Organisation's objectives andresolve through sometimes trying corporate ups and downs.

Seboseso Machobane

Acting Chief Executive Officer


INTRODUCTION

2002 - 2003

1.4 BOARD OF DIRECTORS

Phuti Tsukudu

Khutso MampeuleGraeme Conlyn

Zukile NomveteNothemba Mlonzi Lucky Ngema

Israel Biziwe Skosana

Trevor Abrahams

1.7 LEGISLATIVE MANDATE

1.6 VISION AND MISSION STATEMENT

The Department ofTransport's mission is towork, together with the SouthAfrican provinces and theother countries in theSouthern African Region, in atransparent, accountable andresponsible manner, in orderto be able to provide anaffordable, safe andsustainable national andinternational system by:

! Planning a new transport infrastructure and a means ofimproving mobility in the country, thereby improving thequality of life for all;

! Regulating the transport system to ensure its efficiency andeffectiveness, so as to prevent strife and also to create anenvironment of healthy competition;

! Supporting the transport system through the granting,where necessary, of appropriate and justified subsidies; and

! Managing the transport system so as to ensure that it isproperly maintained and that forward planning forrehabilitation, improvements and enhancements istimeously effected.

The Vision of the CAA is:

To be a global leader in aviation safety

The Mission of the CAA is:

To regulate, control and promote aviation safety and security,and oversee the functioning and further development of civil

During the past year, the CAA performed several activities onbehalf of the Department of Transport, of which the following arehighlighted:

The provision of inputs in order to assist in the processing ofLicensing Council Applications, Bird Strike Assessments,Compilation of Civil Aviation Regulations (CAR's) and TechnicalStandards (CATS), Aviation Policy Development, attendance atNASC and ICAO meetings, issuing of ICAO state letters,facilitation of CARCOM meetings, assistance with the issuing ofForeign Operator Permits, including route checks, Noise andEnvironment Policy Development, International and domesticlicensing meetings, attendance of Global Navigation SatelliteSystem (GNSS) Study Group, Africa-Indian Ocean Planningand Implementation Regional Group: 13th Meeting (APIRG 13)and several SADC meetings.

PAGE 6 SOUTH AFRICAN CIVIL AVIATION AUTHORITYANNUAL REPORT

INTRODUCTION

2002 - 2003

1.5 INFORMATION ON THE MINISTRY

aviation in South Africa by means of:

! Partnerships with industry as well as local and internationalstakeholders;

! High levels of customer service;! Compliance with international civil aviation standards; and! High levels of staff competence.

The South African Civil Aviation Authority was established interms of the Civil Aviation Act 1998, as a new entity, on 1October 1998.

Statutory Functions:

The objects of the CAA are to control and regulate civil aviationin the Republic and to oversee the functioning and developmentof the civil aviation industry and, in particular, to control, regulateand promote civil aviation safety and security.

The functions of the Authority are to:

! Administer the civil aviation laws, as prescribed by the CivilAviation Act;

! Recommend to the Minister, any introduction or amendmentin respect of civil aviation safety and security legislation;

! Make recommendations to the Minister in respect of theconclusion of any international agreement with anotherstate, government or international organisation, whichappears to be consistent with the Authority's objectsmentioned in 1.6;

! Perform any other functions as are delegated to it by, or interms of, any other law;

! Execute orders issued in terms of section 6 of the CivilAviation Act;

! Perform functions incidental to any of the previouslymentioned functions.

The CAA sees the above as requiring it to promote and supportcontinuously improving levels of safety throughout the civilaviation industry. Longer-term safety objectives and strategicgoals have been defined in a five-year strategic plan.

1.8 STAFFING The CAA is led by an eight member Board that consists of sevennon-executive directors, who are appointed by the Minister ofTransport on a three yearly basis, and the CEO who is appointedby the non-executive Board members. The Board providesoverall leadership and management direction. Reporting to theCEO are seven Executives with thirty-three Divisional andOperational Unit Managers carrying out the organisation'smission. The offices are based in Pretoria, Gauteng and, as at31 March 2003, the total staff complement was 193.

CAA Organogram

Staffing Distribution


INTRODUCTION

2002 - 2003

2.2 SUMMARY OF PERSONNEL COSTS AND CHANGES

2.1 INTRODUCTION

The CAA is an equal opportunities employer. This ensures thatno applicant or employee receives less favourable treatmentthan any other on the grounds of gender, disability, colour, raceor ethnic origin. The CAA is also aiming to establish andmaintain competitive salary rates and to undertake staffconsultations on a range of topics affecting the workforce. Thestatistical information set out in this chapter provides high-levelinformation on key HR issues.


HUMAN RESOURCE MANAGEMENT

2002 - 2003

CHAPTER 2: HUMAN RESOURCE MANAGEMENT

Department Total Costs Number of Positions Resignations Number of New Vacancies Estimated staff as at Filled staff as at Positions to number of

31/3/02 31/3/03 be filled staff as at 31/03/04

Aircraft 7,515,309 37 4 (2) 39 9 8 56Airports 2,134,151 11 - - 11 2 4 17Airspace 2,096,076 13 1 (1) 13 2 1 16Aviation Medicine 752,166 3 - - 3 1 - 4Aviation Security (AVSEC) 1,014,501 6 - (1) 5 2 1 8Calibration 1,006,171 7 - - 7 - - 7Executive 2,937,875 5 1 (1) 5 2 1 8Executive Support 847,680 6 3 - 9 1 - 10Communications 390,029 2 1 (1) 2 2 - 4Corporate Services 4,431,911 28 6 (2) 32 3 - 35Flight Operations 6,972,083 27 16 (9) 34 8 - 42Legal 1,485,812 5 1 - 6 - - 6Licensing & Examinations 2,040,500 18 - (1) 17 4 - 21Quality Assurance 571,281 1 1 - 2 2 - 4Safety Promotion 1,810,540 10 - (2) 8 9 1 18

36,006,085 179 34 (20) 193 47 16 256

COURSE ATTENDED No of people

Advanced Trauma Life Support (ATLS) 1Advanced Legislative Drafting 3Air Traffic Service Assistant (ATSA) Phase 1 2AVSEC Management 1Cabin Safety 1Citation II 2Communication, Navigation, Surveillance/Air Traffic (CNS/ATM) Seminar 1Comptia A+ 1Corel Draw 1Corporate Governance Certificate 2Commercial Pilot Licence 1Client Services Training 4Conventional Very High Frequency Omni Directional Radio Range (CVOR) SysteMS Office Basic & Advanced Concepts 1Distance Measuring Equipment (DME) SysteMS Office Basic & Advanced Concepts 1

Doppler VOR (DVOR) SysteMS Office Basic & Advanced Concepts 1Finance Related Training 2Fire-fighting Phase1 7Flight Operations Course 1Flight Training 3Human Resources (HR) Related Training 17Information Security 5Initial Pilot Crew Resource Management (CRM) Presentation 20Introduction to Navigation Aids 1Legal / Regulations Training 8Management Training 7Microsoft (MS) Office Basic & Advanced 93Safety Office Management 1Safety Supervision Flight Inspector 1SDF Training 1Secretarial /Personal Assistant (PA) Training 1Soft Skills Training 29Teambuilding Session 3


HUMAN RESOURCE MANAGEMENT

2002 - 2003

2.4 SKILLS DEVELOPMENT

2.3 EMPLOYMENT EQUITY PROFILE

Staff GrowthCAA staff profile March 2003

The following two tables show a comparison between the staffprofi le as at the date of the establishment of the CAAon 1 October 1998, and again as at the reporting date:

CAA STAFF PROFILE AS AT 31 MARCH 2003White Indian Coloured African Total

Total Male 59 7 5 39 110Total Female 44 3 2 34 83Total 103 10 7 73 193

CAA STAFF PROFILE AS AT 1 OCTOBER 1998White Indian Coloured African Total

Total Male 52 1 2 23 78Total Female 35 0 3 13 51Total 87 1 5 36 129

A summary of the various courses attended by staff members is shown below:

3.2 AVIATION SAFETY PROMOTION

3.1 KEY OBJECTIVES

The following key objectives were set at the beginning of thereporting period:

Operational objectives:

! To set civil aviation safety and security standards andensure compliance through scheduled and ad hocsupervisory inspections;

! To collect, process and disseminate prescribed aeronauticalsafety information;

! To enhance civil aviation safety through making safetyrecommendations arising from accident and incidentinvestigations, analysing aviation safety data, developingand implementing safety promotion campaigns andactivities; and

! To provide advice and service to ensure organisationalcompliance with the law and to minimise risks.

Organisational objectives:

! To record, interpret and report the activities of theorganisation in financial terms and, to protect its assets;

! To provide advice and support in developing and optimisingthe use of HR;

! To develop, implement and maintain an IT infrastructure;! To develop, implement and maintain a two-way

communication process to facilitate positive relations withstakeholders;

! To develop, implement and maintain a quality managementsystem to ensure world-class service delivery ; and

! To ensure the viability of business activities.

The following key strategic projects were identified so as toensure that the strategic objectives are achieved:

! The improving of the efficiency of specified organisationalfunctions;

! The positioning of the CAA as a credible world-classregulator;

! To clarify the CAA's roles and relationships with both similarand political organisations in South Africa and in the SADC;

! To speed up international co-operation, with specialemphasis on SADC, ICAO, Africa Civil Aviation Committee(AFCAC) and other CAA's; and

! To develop the organisation on a commercially orientatedbasis.

Accident and Incident Investigation is a function of the AviationSafety Promotion Department, which is also responsible for thecarrying out of accident prevention activities in South Africa bymeans of:

! Investigating aircraft accidents and serious incidents inorder to determine the causes;

! Identifying, collecting and analysing relevant safetyinformation for the monitoring of safety trends, detection ofsafety hazards and for statistical reporting;

! Making safety recommendations based on occurrenceinvestigation reports and other relevant sources ofinformation;

! Devising and implementing strategies for the proactiveelimination of hazards;

! Planning and implementing complementary safetypromotion activities;

! Partnering with other local, regional and global safetystakeholders in improving safety; and

! Monitoring the outcome of the implementation of variousactions designed to improve safety.

The fundamental goal of Aviation Safety Promotion is toencourage, in the strongest possible way, the aviationcommunity to adopt and maintain high safety standards. Thisgoal flows from the mandate of the CAA to control, regulate andpromote civil aviation safety and security.

The Aviation Safety Promotion Department incorporates threeareas:

1. Accident and Incident Investigation; 2. Safety Information; and 3. Safety Promotion.

3.2.1 Accident and Incident Investigation

This is one of the key activities of the CAA and is carried out onbehalf of the Department of Transport which, as a signatoryState to the Chicago Convention of 7 December 1944, isresponsible for adhering to the provisions of this Convention. Interms of Annexure 13 of the ICAO Chicago Convention, theCAA has a mandate to investigate the cause of aircraftaccidents and incidents in South Africa.

The fundamental purpose of an aircraft accident investigation isto determine the facts, conditions and circumstances relating tothe accident, with a view to establishing the probable causethereof, so that appropriate steps may be taken to prevent therecurrence of such an accident and of the factors that led to it.The nature of the investigation is not to apportion blame to anyparty involved, but to take remedial rather than punitive action.

Once an investigation is completed, a report, which includessafety recommendations by the Investigator in Charge, issubmitted to the Internal Accident Review Committee (IARC),


PERFORMANCE REVIEW

2002 - 2003

CHAPTER 3: PERFORMANCE REVIEW

2002/ Total Total Total Total 2003 Aircraft Aircraft Aircraft Fatalities

Register Accidents AccidentsAPR 7,800 18 2 4MAY 7,916 14 1 3JUN 7,826 13 3 5JUL 7,849 14 0 0AUG 7,864 13 2 2SEP 7,881 8 1 1OCT 7,895 17 0 0NOV 7,923 25 4 5DEC 7,927 12 2 4JAN 7,956 14 1 2FEB 7,984 9 1 1MAR 8,028 13 2 3

170 19 30

Number of Fatals / Fatalities

A further 1,903 incidents were reported by the different operatorsvia the Aeronautical Fixed Telephone Network (AFTN) system.These were investigated at different levels, some by the AccidentInvestigation Division and some by other CAA Divisions.

During the year, a considerable number of accidents wereinvestigated. Two of these were high profile, as is shown in thefollowing short briefs:

HAWKER SIDDELEY 748 FATAL ACCIDENT NEAR GEORGEON 1 JUNE 2002

The aircraft, Hawker Siddeley HS-748 2B registration ZS-OJU,was on a scheduled freight flight from Johannesburg toBloemfontein and then to George. The aircraft arrived over theGGV beacon at about 0456Z on 1 June 2002 and after theaircraft had flown a hold pattern they proceeded with theInstrument Landing System (ILS) approach pattern to land onRunway 29. Poor weather conditions with rain and very windyconditions prevailed over the aerodrome area. The ILS patternwas flown for Runway 29, but the approach was abandonedclose to the aerodrome and two witnesses heard the aircraftover the aerodrome.

which will then finalise the findings, establish the probablecause and issue the necessary safety recommendations.

Should it then be considered necessary, theserecommendations are communicated to owners and operatorsof aircraft and other role players in the industry. Airworthinessdirectives and/or mandatory advisory notices may be issued inorder that any technical or mechanical problems that may havearisen can be addressed.

During the period 2002/2003, 170 accidents were investigatedof which 62 were conducted on-site.Of the 170 accidents, 19 were fatal accidents and resulted in 30fatalities.

A total of 39 Serious Incidents were investigated andsubmitted to the IARC.

Total Aircraft Accidents

Annual Average Growth w.r.t Aircraft Register andAccidents - 2003


PERFORMANCE REVIEW

2002 - 2003

The pilots flew the "go-around" procedure, but the track of theaircraft was too far to the North and when the pilots turned theaircraft for their next attempt to fly an approach they were tooclose to the mountains. The aircraft impacted the OuteniekwaMountains in the Van Dalenskloof, 7.6 nm from the GGV beaconon a bearing 065° Magnetic at a position S33° 54' 42" E022° 28'33.6". The two pilots and the one passenger on board were killed.

A report on theaccident will soon bereleased.

CESSNA 402C FATAL ACCIDENT NEARPIETERMARITZBURG ON 29 NOVEMBER 2002

The aircraft, a Cessna 402C registration ZS-KNW, was on acharter flight from Polokwane to Pietermaritzburg. Thepassengers on board were high-ranking officials from theKwaZulu Natal Department of Transport. Poor weatherconditions prevailed over Pietermaritzburg with a low cloudbase over the aerodrome. The pilot flew the "break cloud NonDirectional Beacon (NDB) 16 procedure" at Pietermaritzburg.This procedure entails flying a pattern over the beacon ORI andthen descending to OBI where after the aircraft must be turnedto the left to reach Runway 16 (refer to procedure).

When the aircraft was inbound for the beacon ORI, it impactedthe ground in a level attitude close to the beacon, at about16h30. The aircraft impacted the ground almost at the crest ofthe hill and then bounced over the hill and down a ravine. Oneof the passengers was fatally injured, two occupants were in acritical condition and two were seriously injured.

3.2.2 Safety Information (Research, TrendAnalysis and Statistics)

The Safety Information Division monitors and identifies potentialproblems arising from accident and incident reports and aims toidentify potential problem areas and potential safetydeficiencies. Local and international safety trends and keysafety indicators are monitored, researched and analysed inorder to establish whether South Africa is on a par with theglobal civil aviation community.

Safety Indicators identified include the number of AircraftAccidents and Incidents, the number of Airspace Incidents, thenumber of Defective Components and compliance with Rulesand Regulations.

Mismanagement of fuel, flying in or into adverse weatherconditions, exceeding the limitations of an aircraft, over-loadingof aircraft and to density altitude are still the major causes ofmost of the aircraft accidents. These causes are analysed andcertain trends are addressed in various ways such as thepublication of safety related articles in the CAA's safety-magazine, The Safety Link, which is published quarterly andfour editions of which have been published.

The June 2002 publication focused mainly on Helicopters andincluded articles such as "Understanding Dynamic Roll Over".In August 2002, the greater portion of the magazine wasdedicated to the very contentious issue of "Weight andBalance". It addressed the strict requirements of the regulationson Weight and Balance and the importance thereof, especiallywith regard to light aircraft. The November 2002 issueaddressed the dangers of flying in/into adverse weather. CrewResource Management (CRM), the management of Error(awareness, detection and correction), was the main feature ofthe March 2003 edition.

The Safety Information Division is responsible for thepublication of The Safety Link as well as the Facts and Figuresdocument that is distributed on a regular basis to the aviationindustry.

The "human factor" is often the determining factor in accidentsand incidents. This is clearly indicated in the following table,which summarises the main causal factors, as identified foraccidents that were finalised during the calendar years of 1999,2000, 2001 and 2002.

BROAD CAUSAL FACTORS YEAR1999 2000 2001 2002

Mechanical / Engine / Power Plant Factors 11 24 26 29Aircraft Operational Factors 4 10 7 3Pilot / Flight Crew Factors 145 92 78 119Maintenance / Servicing Factors 23 12 9 4Weather Related Factors 3 12 3 6Collision Related Factors 12 2 7 10


PERFORMANCE REVIEW

2002 - 2003

The following table shows the number of accidents, based ondifferent types of operations:

SECTOR OF OPERATION YEAR1999 2000 2001 2002

Scheduled 17 11 6 2Charter / Small Commercial 12 22 13 25Agricultural 9 5 4 9Training 20 18 22 25Aerial Survey / Observation 6 2 1 0Private 91 74 68 91Sport / Recreational 22 2 11 17Military 0 0 1 0

3.2.3 Aviation Safety Promotion

The Aviation Safety Promotion Division either communicates thesafety recommendations made in the Accident and Incidentreports to the relevant role players or, should a more broad-based programme be required, develops and co-ordinates asafety management strategy in co-operation with the relevantrole players.

This includes several aspects such as the hosting of safetyseminars to alert the industry and pilots to the dangers of certainpractices and safety promotion activities at air shows.

Aviation safety presentations were delivered as follows:

April 2002: Potchefstroom Air Show. June 2002: Bethlehem Air Show, Tzaneen Air Show,

Pannar in Greytown and at a WonderboomAirport management meeting.

July 2002: Durban Air Show.September 2002: International Air Travel Association (IATA)

training session, several CAA staffmembers were involved in safety promotionactivities at the Aerospace Africa Air Showat Waterkloof.

October 2002: Defence Flying Club and KrugersdorpFlying Club.

November 2002: Radio procedures seminar and PretoriaFlying Club.

December 2002: An accident investigation and safetymanagement workshop was attended inDar-Es-Salaam and several presentationswere given at the workshop.

March 2003: Ground school for private pilots of theDefence Flying Club.

3.2.4 Safety Awareness Month - June 2002

The CAA launched the Safety Awareness Campaign in June lastyear focusing on the introduction of the Confidential AviationHazard Reporting System (CAHRS). The CAA website wasalso updated to inform the industry on how the new systemworks and how anybody can contribute to the enhancement ofsafety levels in any area of aviation.

The CAHRS entails the receipt, analysis and de-identification -removing all information that may relate to the identity of thereporter - of aviation safety reports. Periodic reports of findingsobtained through the reporting system are published anddistributed to the public and the aviation community asapplicable.

A selected team investigates these confidential reports and allidentifying details are destroyed once all the requiredinformation has been collected.

All hazard reports submitted via either e-mail or facsimile arereceived in a secure office at the CAA, accessible only to theCAHRS Administrator. Hazard reports submitted by post aresent to a postal address specifically allocated to the CAHRS andonly the Administrator is responsible for receiving and dealingwith this mail.

No information contained in the hazard reports will be used forlaw enforcement or punitive purposes unless it reveals a definitecriminal act or a confirmed repeat offence. By making the fullestpossible use of the potential of the CAHRS, the aviationcommunity provides vital information that allows the CAA toconduct a thorough trend analysis and, by so doing, assist in theprevention of accidents and incidents.

The Airport Safety Workshop Programme is a CAA initiative thatwas instituted as a result of the many requests from the industryfor a workshop focusing on various aspects of Airport Safety. Atask team of industry representatives with specialist knowledgepresented a number of related safety workshops during the yearand role players that attended include personnel operating onthe airside of an airport, fire and rescue personnel, aerodromeoperators and staff, aerodrome maintenance, (OHSACT) andcontractor's staff.

The CAA hosted workshops in Johannesburg and Durbanduring October 2002 to enhance the knowledge andunderstanding of the safe shipping of dangerous goods. Trendsrevealed that the majority of Dangerous Goods incidents stemfrom a lack of training, leading to incorrect classification andpackaging, marking, labelling and this, therefore, formed thecore focus of the workshops.

The information provided gave vital guidelines as to howconsignments should be handled and shipped because, as hashappened in the past, a situation can become catastrophicwhen procedures are not adhered to. The workshops providedessential knowledge on what is expected regarding theregulations in terms of responsibility and training.


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3.3 AIR SAFETY INFRASTRUCTURE

3.2.5 Air Shows

During the past year, the CAA embarked on a quest to increaseaviation safety at air shows.

Last year, many CAA staff members attended various air showsaround the country, ranging from small bush fly-ins to theinternational Africa Aerospace & Defence Air Show atWaterkloof Air Force Base. The CAA was welcomed with openarms, not only by the public, but by the entire aviationcommunity. This direct interaction between the public and themembers of staff enabled queries to be addressed at a personallevel. Air shows were used as a good opportunity to introducepending topics of discussion such as the new fee structureaccompanied by the handing out of booklets. Also distributedwere leaflets containing information ranging from Air Rage toDangerous Goods. A better understanding of how the CAAoperates, resulted in members of the public adopting a morepositive and patient attitude towards the CAA. This led to thedevelopment of an open communication channel for the public.These attempts were aimed at getting the industry to view theCAA as an ally, rather than as an enemy.

The CAA played many roles at the air shows. TheCommissioner launched a "National Air Show Award"Programme at the Bethlehem Air Show. This competitionrewards those who strive for excellence in aviation safety and,currently, is still running. Categories in the competition range frompublic amenities to air traffic control and safety. The CAA observedthat safety standards at air shows were generally high and thatthings ran remarkably smoothly. Forums were held at the airshows to inform and educate the public on various safety issues.

The CAA also worked very closely with the Aviation Training andDevelopment Foundation (ATDF) and handed out informationon Career Paths to interested parties.

Air Show Safety Promotionhas played a valuable andmuch needed role within theCAA, both as an Authorityand friend to the AviationIndustry.

3.3.1 Airports Division

The CAA provides leadership in the planning and developing ofa safe, secure and efficient national airport system. ThisDivision certifies airports and periodically inspects not onlythose airports for compliance with established safety standardsas required by the Civil Aviation Regulations (CAR's), but alsohelistops, heliports and off-airport structures that may affectsafety of air navigation.

The Division also manages the whole range of aviation radiofrequencies for the Independent Communications Authority ofSouth Africa (ICASA), by considering and either approving orrejecting applications for the allocation of radio frequencies toprivate operators (mainly aircraft and navigation aids),aerodrome operators, etc. in accordance with ICAO standards.

Adherence to the safety standards is ensured through aprogramme of scheduled annual licence issue or renewalinspections, ad-hoc (surveillance) inspections and non-compliance follow-up inspections of all licensed aerodromes.Informal training through workshops is presented countrywideas part of the CAA safety promotion effort.

Achievements

Activity Business Actual Actual Plan 2003 2002

Aerodrome Inspections 140 137 133Helistops and Heliports 20 2 4(including 37 commercial aerodromes)Radio Masts 720 702 715Licence of intent 4 1 2

Achievements Graph

One new airport licence was approved during the year and SouthAfrica now has 137 public and private licensed airports. Twohelistop approvals were issued during the year and it is anticipatedthat growth in this area will increase, with special consideration toresource allocation and regulation development.


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PERFORMANCE REVIEW

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Four new navigational aid installations were approved, viz; anew ILS at Kruger Mpumalanga International Airport and thereplacement of the ILS at George, Port Elizabeth andJohannesburg International Airport.

Four new airport licences were approved during the year, viz;Tommy's Field, Kruger Mpumalanga International Airport,Tsitsikama and St Francis Field Airport. The Division performsan Emergency Procedure Exercise at each licensed airport inthe country on a biannual basis. All Airport Company of SouthAfrica (ACSA) owned airports, as well as privately ownedairports; Richards Bay, Lanseria, Wonderboom and GrandCentral were subjected to this procedure during the year. Oneairport failed the exercise and had to re-do it within a specifiedperiod. Three airports' licences were rescinded by the CAA dueto non-compliance, but the airports re-opened after correctiveaction was taken. One airport licence was suspended by theenforcement committee, but was re-instituted after two weeks.A licence of intent was issued in respect of Delmas Aerodrome.

A highlight for the Division was the consultation and approvalprocess of the Kruger Mpumalanga International Airport that wascompleted within a very short period. The developers approachedthe CAA with complete construction details only four months priorto the scheduled completion of the project in August 2002.

Aeronautical Information Circular (AIC) 50.4 was drawn up anddistributed in order to enable aircraft to operate to and fromvarious airports, under special provisions that justify the risks andmaintain safety levels, without those airports necessarily havingcomplied with the requirements for Rescue and Fire Services.This decision was long overdue and is in the best interest ofsome remote places, such as Springbok and Kleinzee.

Four military aerodromes, requested for use by South AfricanAirways (SAA) as diversion aerodromes, were inspected duringthe year for CAA's approval, in terms of the provisions of Part137 of the CAR's.

Safety promotion workshops were held at Johannesburg,Lanseria, Cape Town, Bloemfontein, Nelspruit and Durban

Airports. The focus for the year was on airside safety, the areathat indicates the most deficiencies during inspections.

Part 139 of the CAR's is in the process of being updated, basedon practicality, clarity and completeness. The original four sub-parts have been increased to eleven in order to allow for a morelogical grouping of related regulations. The CATS documentsthat were not addressed during the original drafting process inthe late nineties are now, for the first time, being addressed. Theproposed new regulations were scheduled to be published onthe CAA Website during May 2003, for initial comment.

The Division has continued to fulfil an essential consultation rolein the evaluation and development of new aerodromes as wellas the upgrading of existing ones. This early involvement hassimplified the subsequent approval of upgrades.

Major inroads were made in a previously identified risk area, viz;the lack of Rescue and Fire Fighting Services, by having anumber of training sessions, workshops and emergencyexercises at some of the airports. Assistance was also given tosome airports for the refurbishing and purchasing of fire tendersto ensure that the relevant rules and regulations are compliedwith, and to assist in the bringing about of a saving on costs.

The Division acquired a theodolite to measure runway camber.This capability became necessary, as there were several casesof aquaplaning on runways with inadequate camber duringheavy rains, as happened at Cape Town International Airport.

3.3.2 Flight Inspection

This operational unit's function is to inspect and verify that thesignals of the radio navigation aids used by aircraft are, in fact,being correctly transmitted, in order to ensure that accuracy andreliability are maintained. These inspections are normallyperformed on the ground but, in order to ensure that aircraftreceive these signals accurately, it is also necessary that groundequipment be tested from the air. The navigation aids are, inaccordance with international standards, inspected at regularintervals. The unit inspects all radio navigation aids in SouthAfrica and some in the rest of Africa.

Achievements

There were 162 inspections predicted and 176 performed. 113inspections were completed during 2002. Flying hoursincreased from 250 hours in 2002 to 409 hours in 2003. Theactual flying hours are higher than the predicted flying hours of352, mainly because of unscheduled inspections.

In-house training has been conducted on a continuous basis,and one flight inspector attended Flight Inspection System (FIS)Tactical Air Navigation (TACAN) training in France.

There was norequirement to issueany non-complianceagainst any client.

Maintenance of the CAA flight inspection aircraft wasoutsourced during the year, and the CAA therefore no longeroperates an Aircraft Maintenance Organisation.

3.3.3 Aviation Security

AVSEC Division has a mandate to carry out securitysupervision, research and development in order to preclude civilaviation security incidents, commonly referred to as Acts ofUnlawful Interference. The objectives are geared towards theanticipating of future threats to civil aviation security and theputting of preventative measures in place. The guidingprinciples of the security of aviation in South Africa are theNational interest, obligations to ICAO as a contracting State, theCivil Aviation Act, the Safety Regulations of 1981, the CivilAviation Offences Act No. 10 of 1972, and the NASP.

A project team was established in June 2002, comprising theDivision and a CAA Legal team, in order to revise the regulationsand technical standards for aviation security. The 2002 NASPdocument has been completed and is in line with the TenthAmendment to ICAO Annexure 17 - Security. The Fifth Amendmentto the Civil Aviation Safety Regulations of 1981 is being finalisedand will be translated for publication in the Government Gazette,and final approval by the Minister of Transport. The amendmentsto the Civil Aviation Act, to incorporate aviation security have beendrafted and are being finalised.

The Division improves the safety of civil aviation through theapplication of specific security measures, as security is one ofthe aspects of a safe industry. AVSEC was involved mainly inthe following activities:

Audits and inspections, both scheduled and ad-hoc, of securitymeasures introduced to reduce the probability of unlawfulinterference in aviation, and the setting of standards to ensurethe sustainability of such measures within the airport, airline andcargo agent environment. An example of a securitysystem/measure implemented to safeguard civil aviationoperations against acts of unlawful interference is the CentralScreening Point, consisting of the Archway Metal Detector(AMD) and X-ray screening technology for the screening ofaircraft passengers and carry-on baggage;$ Investigation of safety and security related incidents; and$ Membership on the National Aviation Safety Committee

(NASC), which is an advisory body to the Minister ofTransport regarding any aviation security related matter.The objectives of the committee are to:! Co-ordinate the development and implementation of

aviation security measures and procedures;! Recommend and review the effectiveness of civil

aviation security measures and procedures,commensurate with the threat; and

! Ensure that both the CAA and other relevant agenciesin the aviation industry are represented to advise onaviation security policy;

$ Membership on the CARCOM; $ Research, understand and develop all new standards and

policies;$ Effective liaison with government in order to be able to meet

the security goals of international airports; and$ Security inspectors performing their duties as Authorised

Persons, in terms of the Civil Aviation Act.

Areas of security that are overseen include access control byauthorised persons and vehicles, perimeter barriers (includingresponse times to breaches), passenger screening, registers forrotation and operational testing of security equipment, trainingrecords, security programmes, contingency plans, crisis controlpoints, vulnerability (security measures implemented versus theexisting threat).

Achievements

The NASC and the AVSEC Division were involved in theinstituting of increased security measures during the period after11 September 2001. This Division was requested to provideassistance to the National Security Structures in order to adviseon security measures at airports and the impact on nationalsecurity.

An aviation security incident database has been establishedand incident reports are sent electronically to the databaseadministrator, who compiles monthly reports. The database,however, needs further development, especially in the area oftrend analysis. The NASP was completed and forwarded to theLegal Department for finalisation of legal aspects, after which itwill follow other channels to the Minister of Transport forapproval. This process is also coupled to the amendments tothe security related regulations, specifically the Cargo SecurityRegulations and Safety Regulations.

The Divisional International Standards Organisation (ISO)Procedure [SS001] has been revised to incorporate therestructuring and refinement of the actions followed duringsecurity overseeing functions.

Twenty two Airports were audited and, for the most part, theycomplied with the licensing requirements. Partnerships, throughthe establishment of special projects, were ongoing with certainairports to ensure compliance with the regulations, especially atUmtata, Plettenburg Bay and Polokwane Airports.

The Division was requested by the South African Police Service(SAPS) Priority Committee and Core Command to assist withthe planning of the air defence system for the African Unity -World Summit on Sustainable Development (AU) - (WSSD). Atechnical committee, consisting of the AVSEC Division, SAPSand the Intelligence Community was established. A total of twomonths planning resulted in the successful implementation ofthe air defence system. The Senior Manager of the Division waspresented with a certificate by the Assistant Commissioner forCrime Intelligence in acknowledgement of the work andcommitment during the WSSD operations.

The Division also assisted the SAPS Operational Co-ordinationDivision with the planning and implementation of securitymeasures during the International Cricket Council (ICC) WorldCricket Cup Tournament.


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The annual audit by the United States Transportation SecurityAgency was conducted from 23 - 27 September, and focussedon SAA, ACSA, Johannesburg International Airport (JIA) andCAA security operations. The audit highlighted the fact theSouth Africa is fully compliant with United States requirementsand it was also highlighted that, in a number of areas, the USsecurity requirements were exceeded.

Skyjacking Policy and Procedure: A technical task team wasestablished in August 2002, consisting of the AVSEC Division,SAPS, South African Air Force (SAAF), and Air Traffic andNavigation Services Company (ATNS) representatives. Thedraft document was completed and handed to the NationalAirspace Committee (NASCOM) representatives during theDecember 2002 meeting, for comment. It is envisaged that thefinal document will be handed to the Security Cluster of Cabinetby May 2003 for approval and thereafter implementation by therespective persons concerned.

The Division extended its assistance and co-operation to theZambia Anti-Corruption Unit investigations.

The manual of procedures was fully updated, including therestructuring implementation, and was incorporated into the ISO9001:1994 procedures.

A security inspector was trained by ICAO in September 2002, inthe field of aviation security audits. This is South Africa's onlyaccredited aviation security auditor serving on both the ICAOAVSEC Audit Team and the AFCAC AVSEC Panel.

3.3.4 Aeronautical Information Services

The Aeronautical Information Services (AIS) Operational Unitensures that aeronautical information essential for the safety,regularity and efficiency of air navigation is distributed to allrelevant parties. This will include two types of services, viz; thepublication of the Integrated Aeronautical Information Package(AIP) as required by ICAO, and the sale of AIS relatedpublications. One component of the Integrated AeronauticalInformation Package is the AIC, which means a noticecontaining information that does not qualify for the origination ofa NOTAM or for inclusion in the AIP but which relates to flightsafety, air navigation, technical, administrative or legislativematters. The aeronautical publication means a publicationcontaining aeronautical information of a lasting character,essential to air navigation, as issued by the Authority.

Responsibilities include the compilation, verification, publicationand dissemination of aeronautical information, and otheraeronautical information related activities, the processing ofapplications for parachute jumps and applications to ICAO for allaviation designators.

Clients include aerodrome licence holders, ATNS, ACSA,representative organisations, foreign authorities, otheraeronautical information service providers, internationalorganisations, aircraft and associated manufacturers, aircraftowners and staff.

Achievements

The objective of collecting, processing and disseminatingprescribed aeronautical safety information was reached andwas in keeping with all 12 internationally set deadlines and wastimeously published. Four quarterly amendments to the AIP'swere issued on schedule, together with a reprint of the AIP thatwas issued with the July 2002 amendment.

Activity 2002 Units 2003 UnitsAIP sales 117 211AIP subscriptions 590 587Parachute jump applications 454 314Application for RTF call sign 3 4ICAO Required documents issued 136 119 113 087Publication documents sold 752 507

3.3.5 Airspace Safety

The primary function of the Airspace Safety Division is toprovide airspace management to ensure safe use by all eligibleusers, protection of life and property under the airspace and theenabling of advanced technologies and concepts in airspaceusage. The Division also undertakes elaborate co-ordinationand co-operation programmes with neighbouring airspaceauthorities, as well as ICAO, to ensure seamless application ofairspace standards. Vehicles used by this Division include theNASC and several other national and international forums,some of which it chairs or facilitates.

3.3.6 Air Traffic Services

Air Traffic Controllers (ATC's) provide an integrated set ofservices to ensure that aircraft operations are safe. Controllersat airport towers direct aircraft that are taking off, landing, orflying within the visual range of their tower.

ATC's use various surveillance and communication systemsincluding computers, radar, radios, and other instruments anddevices to provide guidance to aircraft in flight in the form of anAir Traffic Service (ATS). Trained personnel at units on theground constantly monitor these systems and track thelocations, directions, altitudes and speeds of individual aircraft.ATC's ensure that aircraft maintain safe distances apart and canwarn aircraft should they come too close to each other. ATC isalso used for the safe co-ordination of landings and takeoffs atairports. The collective structure that provides ATC is known asATM.

The Operational Unit approves and monitors the provision ofATS at 19 South African airports, and training at two aviationtraining organisations. The ATNS Company is currently the soleprovider of ATS in South Africa. There are two organisationsoffering ATS training, namely ATNS and the SAAF.

NASCOM is scheduled to meet four times a year to discuss andrecommend to the Commissioner for Civil Aviation appropriatechanges to South African airspace that will improve the safetyand efficiency of its use by the aviation community.


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The Operational Unit is responsible for the development ofProcedures for Air Navigation Services and Operations (PANS-OPs). Activities for this section include designing and verifyinginstrument flight procedures and the preparation of aeronauticalcharts.

The Unit also manages the licensing of ATS personnel. A totalof 194 ATC's and 70 Air Traffic Service Assistants (ATSA's) holdcurrent CAA licences. This is an increase of 14 % over the 2002figure of 232 licences.

AchievementsAir traffic graph

Each of the 19 South African ATS Units with current approvals,and the two approved ATOs, were inspected twice during theyear. One new ATS Unit was approved during the year and onewas closed down. One inspection for the annual renewal andone unannounced surveillance inspection were carried out inrespect of each unit/ training organisation.

All units and training facilities were found to be mostly compliantwith the CAR's. One serious issue was addressed, but to theCAA's satisfaction. Shortcomings in respect of the provision ofmeteorological data were addressed by the convening of a workgroup tasked with proposing amendments to the relevantregulation.

The ATS Operational Unit undertook a revamp of the ATSlicensing procedure, including improved controls, to thesatisfaction of our clients. The ATS licensing database has alsobeen transferred to MS Access to enable ease of monitoring.

The Operational Unit spent a considerable amount of time in co-ordinating NASCOM meetings and also provided a secretariat.The Committee met five times during the year, the Chairmanhaving convened an additional meeting in November, to finaliseairspace for the new Kruger Mpumalanga International Airport.As a result, new airspace with instrument procedures, effectivefrom 23 January, was published.

Implementation of the key part of the National Airspace MasterPlan, the re-structuring of South Africa's airspace andimprovements in the efficiency of utilisation (the flexible use ofairspace concept - FUA), drew to a close towards year-end withmost of the significant changes already published. A firstmeeting of the Procedure Design Forum, comprising membersfrom the CAA, ATNS and SAAF, was held at the CAA in April. Anelectronic database was completed to facilitate the reprint of theAIP.

Airspace Management Task Force meetings were attended inDakar, Senegal, where the implementation of regional planswas discussed.

ATS took part in drafting an AIP Supplement in respect of theWSSD during August/ September, as well as one for the ICCWorld Cricket Cup held in SA.

ATS also took part in a SAAF meeting to direct movementcontrol at the aerodromes affected by the December solareclipse.

3.3.7 Special Issues

The ATM issues that had plagued Grand Central airport for along time were eased by the appointment of ATNS as theservice provider. The takeover of the service provision continuesto be monitored by ATS to ensure that safety improvements areeffective.

The CAR's and CATS continue to be reviewed and revisedwhenever a requirement was identified such as during audits, aswell as during liaison with Industry and service providers.

ATS facilitated the implementation of applicable requirements inrespect of the building of the new Kruger MpumalangaInternational Airport. Numerous meetings were attended tofinalise the permanent airspace at the new airport and all dataand graphics relating to the airport, including the new NelspruitSpecial Rules Area, were prepared within tight schedules tomeet the publication deadline for the AIP Supplement, thusenabling the airport to commence full operations in January2003.

There was continuous work in the field of international co-operation with regard to ATM. ATS also met with delegates fromthe newly formed Kenyan CAA to brief them on current activitiesand practices.

The Operational Unit investigated the connection for the CAAwith Motsetta. This system is an enhanced aeronautical telexinterface and does away with the old teletypewriters.

ATS took part in a Meteorological Services Work Group meetingheld at the CAA in January. Draft amendments to currentlegislation, in respect of meteorological equipment required atairports, were proposed at this meeting and further developed atlater meetings.


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3.4 AIRCRAFT SAFETY OPERATIONS


PERFORMANCE REVIEW

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3.4.1 Airworthiness

'Airworthy' means that an aircraft meets the requirements of itstype design and is in a fit condition for safe flying operations. Anairworthiness certificate is issued pursuant to the Civil AviationAct of 1998 and certifies that, as at the date of issue, the aircrafthas been inspected and found to be airworthy. It has, therefore,been shown to have met the requirements of the applicablecomprehensive and detailed airworthiness code. Suchcertificate is effective as long as maintenance, preventivemaintenance and modifications are carried out in accordancewith Parts 21, 43 and 91 of the CAR's, as applicable, and theaircraft remains registered in South Africa. Each personmaintaining or altering or performing preventative maintenanceshall do the work in such a manner and use material of such aquality, that the condition of the aircraft, airframe, aircraft engine,propeller, or appliance is at least in original or proper state. Themethods used to do maintenance are detailed in the operationsmanual. The Division must also approve any alteration to themanual.

Airworthiness Inspectors inspect all aircraft so as to be able toissue certificates of airworthiness and to ensure the continuedairworthiness of aircraft. Inspectors must ensure that aircraftmaintenance is correctly undertaken and that aircraft ownerscomply with the requirements.

The Technical Auditors inspect aircraft maintenanceorganisations to ensure that they have the necessary premises,tools, manuals, equipment and knowledge to safely maintainaircraft. An organisation is granted a licence if it can show that itcomplies with the requirements. These requirements are laiddown in a Manual of Procedure drawn up by the company,which manual states how the organisation intends carrying outits work/maintenance tasks.

The Certification Engineers are responsible for the acceptanceof all new aircraft into the civil register. They inspectmanufacturing organisations. They must inspect and approveall modifications to all aircraft, liaising with the organisations thatdesigned and proposed the modifications, and also deal withany other issue that could affect the aircraft's flying ability.

GNSS trials were authorised and commenced in November,organised and supervised by ATNS. These trials are todemonstrate the suitability of using space-based navigationsystems for non-precision approaches locally. This will help topave the way for legislation to enable aircraft operators to usethe GNSS system in SA. The airports at which this is takingplace are Johannesburg, Cape Town and Durban.


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NUMBER OF REGISTERED AIRCRAFT

Aeroplanes and Helicopters1999 2000 2001 2002

Aeroplane - 1 piston engine 2,282 2,285 2,280 2,299Aeroplane - 2 piston engines 695 706 701 698Aeroplane - 3 piston engines 1 1 1 1Aeroplane - 4 piston engines 3 5 5 9Agricultural piston engine 144 143 144 144Aeroplane - 1 turbo prop engine 66 68 79 83Aeroplane - 2 turbo prop engines 201 215 237 249Aeroplane - 4 turbo prop engines 10 10 10 8Agricultural turbo prop engine 43 45 48 46Aeroplane - 1 turbo jet engine 1 1 1 1Aeroplane - 2 turbo jet engines 157 160 164 176Aeroplane - 3 turbo jet engines 17 20 27 29Aeroplane - 4 turbo jet engines 20 20 21 26Helicopter - piston engine 228 248 258 263Helicopter - 1-turbine engine 191 202 208 208Helicopter - 2-turbine engines 59 60 62 70Helicopter - 3-turbine engines 1 1 1 1Sub-Total 4,119 4,190 4,247 4,311

LS1/Non Type-certificated Aircraft (NTCA):1999 2000 2001 2002

Glider 319 317 320 321Glider motorised 51 60 73 80Amateur built aeroplane - I engine 513 506 556 586Amateur built aeroplane - 2 engines 0 1 2 1Amateur built helicopter 49 47 47 49Amateur built gyrocopter 57 82 92 95Amateur built microlight 1,758 1,926 2,014 2118Amateur built gyro glider 1 1 5 5Amateur built fixed wing -turbojet 1 1 1 1Research aircraft 6 5 5 5Limited aircraft 127 125 124 123Hot air balloon 81 87 94 95Airship 2 2 1 1Veteran single engine 122 118 120 120Veteran twin engine 1 1 1 1Paraplane 15 15 15 15Sub Total 3,103 3,294 3,470 3,616Total 7,222 7,484 7,717 7,927

At the end of the 2002/3 financial year, there were 7,927 aircraft on the South African Civil Aircraft Register.

A total of 4,311 (54 %) of the total aircraft are Aeroplanes, Helicopters or Agricultural aircraft while 3,616 (46%) are LS1 or Sport andRecreational aircraft. The group Microlight aircraft has shown the biggest growth rate and represents 2,118 (27%) of the total aircraftregister. The aircraft group Aeroplane with 1 piston engine is still the largest group of aircraft on the register at 2,299 (29%).


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Activities and Achievements

2003 2002 2001Part Activity Business Actual Actual ActualNo Plan Units Units UnitsPart 11 Exemption Applications 63 96 70 66Part 21 Issue of new Certificate of Airworthiness (COA) 156 246 262 184

Amendment of COA - 20 25 24Re-issue / Renewal of COA 48 28 22 52Issue of Export COA 12 51 38 31Currency Fee Payments 2,040 2,178 1,652 1,297Issue Flight Permits 324 439 436 366Authority to fly NTCA 1,200 1,446 1,114 -Certification of Products and Parts - class 1, 2 and 3 products 18 14 52 40

34 Issue of Engine Emissions Certificates 3 - 3 -36 Noise Certificates 9 4 27 1443 General Maintenance Rules - modifications 672 714 638 60147 Aircraft registration transactions 1 404 374 356 396

Deletions from register 152 143 123 12891 General operating and flight rules, e.g. duplicate mass balance

report, duplicate aircraft equipment list 144 190 145 117145 Aircraft maintenance organisations - approval issues,

amendments and renewals 240 359 400 255147 Design organisations - approval issues, amendments and renewals - 6 8 4148 Manufacturing organisations - approval issues, amendments

and renewals 108 135 118 103Mortgage Transactions 600 606 393 242

Department is also participating in the surveillance/supervisionintegrated inspection programme in conjunction with the FlightOperations Division.

The Department was involved with the initial type acceptance,introduction and continued airworthiness of the Airbus A340fleet to SAA and the finalisation and delivery of the PresidentialBoeing 737-700 ZS - BBJ to the SAAF. An exciting project wasalso the completion of the Millennium Programme for theupgrade of SAA's fleet of Boeing 747-400 cabin interiors.

3.4.2 Personnel Standards

The Personnel Standards Division oversees the credentials andcompetence of pilots, flight engineers, cabin crew, air trafficservice personnel and aircraft maintenance engineers andchecks the compliance against set standards.

Personnel Standards Division consists of two Operational Units,viz:

The Examinations Unit administers the following theoreticalexaminations:

Commercial pilot licence (aeroplane and helicopter), validationof foreign commercial pilot licence, airline transport pilot licence,validation of foreign airline transport pilot licence, aircraftmaintenance engineer licence, flight engineer licence, validationof foreign flight engineer licence, flight attendant licence,instrument flight rating, validation of foreign instrument flightrating, flight instructor rating, flight instructor rating(turboprop/turbojet endorsement).

Operational units were created within the Airworthiness andCertification Sections, especially for NTCA that had beenneglected for a long time. Each unit is dedicated to a specificpart of line operations e.g. Avionics. This process coincidedwith the implementation of a career path programme forinspectors and, as part of the process, the Helicopter Unit andthe Manufacturing Unit for Airworthiness and Certification werealso integrated.

Safety Promotion activities include a successful workshop thatwas conducted with stakeholders from the aviation industry inGauteng. Two follow-up workshops are planned in the nearfuture, possibly in Cape Town and Durban. The Division alsoemployed a Certification Engineer tasked with liaising with theIARC, maintenance of Airworthiness Directives Database,defect reporting and reliability programmes all related to safetypromotion activities.

A training programme for all inspectors is now fully operationaland includes initial and recurring training. All such trainees aremotivated to encourage and ensure skills transfer within the newstructure. Five new members joined the Department. These are:Two trainee Airworthiness Inspectors, one AirworthinessInspector: Avionics and two Certification Engineers. TheDepartment plans to employ five more trainees within the nextsix months.

A complete annual surveillance programme was implementedcatering for four visits to all CAA approved Aircraft MaintenanceOrganisations. These include three ad-hoc audits and onerenewal audit. This programme ensures greater visibility in theindustry as well as ensuring compliance. The Aircraft Safety

Candidates entering for the above examinations have a choiceof writing such examinations either online at the office inPretoria or manually at outstations.

The Licensing Unit issues, renews and validates the followinglicences:

Student pilot licence, microlight pilot licence, private pilot licence(aeroplane and helicopter), commercial pilot licence (aeroplaneand helicopter), airline transport pilot (ATP) licence (aeroplaneand helicopter), flight attendant licence, aircraft maintenanceengineer licence.

Activities

PERSONNEL LICENSING2003 2002 2001

Actual Actual Actual Units Units Units

PART 61LICENCE ISSUESPilots - Students 1,967 1,732 1,524 Pilots - Private 1,325 1,199 1,078 Pilots - Commercial 424 384 314 Pilots - ATP 136 161 188 Pilots - Sporting (Balloons, Microlights, Gyroplanes) 886 482 109 Type ratings 1,927 3,676 5,631 Instructor ratings 264 349 627 Instrument ratings 118 223 3,067 Other ratings 453 530 679 LICENCE RENEWALS / COMPETENCY 7,500 8,736 Pilots (renewal or competency) - Students 700 626 810 Pilots - Private 5,227 4,979 3,917 Pilots - Commercial 1,709 2,172 2,464 Pilots - ATP 1,745 1,950 3,170 Pilots - Sporting (Balloons, Microlights, Gyroplanes) 862 558 291 Pilots - Commercial sporting - FOREIGN LICENCE VALIDATIONSPilots - Private 282 279 131 Pilots - Commercial 162 157 225 Pilots - ATP 389 314 - Pilots - Sporting 19 - Pilots - Commercial sporting -

PART 63LICENCE ISSUESFlight Engineers 3 37 31 LICENCE RENEWALS / COMPETENCYFlight Engineers (renewal or competency) 264 255 217 FOREIGN LICENCE VALIDATIONSFlight Engineers 4 2 1

PART 64LICENCE ISSUESCabin Crew 205 320 1,218 LICENCE RENEWALS / COMPETENCYCabin Crew (renewal or competency) 2,811 2,228 1,470 FOREIGN LICENCE VALIDATIONSCabin Crew 10 -

PART 65LICENCE ISSUESAir Traffic Service personnel 33 27 21 Other ratings 99 2 - LICENCE RENEWALS / COMPETENCYAir Traffic Service personnel (renewal or competency) 355 183 184

PART 66LICENCE ISSUESAircraft maintenance Engineers 208 125 120 Types 8 2 - LICENCE RENEWALS / COMPETENCYAircraft Maintenance Engineers (renewal or competency) 511 545 411

There is a downward trend in the number of ATP Licencesissued and renewals although the foreign licence validationshave increased. This trend may be attributed to various reasonssuch as the cost implications for individuals, market trends orpilots qualifying overseas but flying in South Africa.

There has been a tremendous growth in recreational flying asthe issuing of sporting licences increased by 84 % and renewalsby 54 %. This is in line with the aircraft growth in this area ofaviation. In terms of the ownership of small aircraft, the numberof Aircraft Operators has not increased and it can therefore beassumed that the increase is due more to pilots flying for leisure,rather than for commercial purposes.

It is also notable that the number of Student Pilot Licences hasincreased by 14 % although renewals increased at a muchlower rate. Private Pilot Licences issued increased by 11 %while the renewals increased by 5 %. This may be the result ofpilots being issued with a licence but not carrying on flying aftera period of 12 months or 150 flying hours.

Because advances in aircraft technology during recent yearshave reduced the need for on board Flight Engineers, thenumber of new licences issued in respect of Flight Engineershas decreased.


PERFORMANCE REVIEW

2002 - 2003

The issuing of instructor ratings decreased by 47% during thepast year.

2003 2002 2001Examinations Business Actual Actual Actual

Plan Units Units UnitsPart number 61

Pilots - on-line 7,234 9,090 7,537 7,114 Pilots - written 150 1,070 853 806 Pilots - instructorsEXAMS 750 701 559 - Remarks of examinations 193 53 47 62

Part number 63Flight Engineers 10 11 13 16 Remarks ofexaminations - - - -

Part number 64Cabin Crew 70 80 190 369 Remarks of examinations - - - -

Part number 66Aircraft Maintenance Engineers 139 137 138 113 Remarks of examinations - - - -

Bar chart

Part 61 examinations increased by 21 %, Cabin Crew examinationsdecreased by 15 % and Flight Engineer examinations by 58 %.The number of Aircraft Maintenance Engineer examinationsundertaken remained stable for the past year.

3.4.3 Flight Operations

The Flight Operations Division was created to regulate, controland promote aviation safety and to provide South Africa withsafer skies. The area of supervision covers personnel, airportsand aircraft. Clients include both scheduled and non-scheduledoperators and other operators such as crop sprayer, hot airballoons, etc, general aviation, all organisations that representany of the above-mentioned groups and international or regionalorganisations and bodies.

The functions of the Flight Operations Division include:

! The verification and monitoring of information contained inall operations manuals of every operator, to ensure that allICAO and CAR's are fully complied with, and to ensure theviability of a safe operation before the Department ofTransport issues an Air Service Licence to the applicant;

! The organisation must be inspected to ensure that alloperations are conducted in accordance with specifications,as contained in the approved operations manual;

! If the operator is shown to be complying with thespecifications of the operations manual, and can provide asafe and reliable service, the issue of an operatingcertificate is effected; and

! The carrying out of follow-up inspections at least once ayear to ensure compliance with the terms of the operationsmanual.

The Flight Operations Division also provides the followingservices:

Investigations/Inspections of:

! Incident and accidents for input to the IARC, when required;! Route surveillance checks as per the CAR's, 1997 and

ICAO standards;! Flight simulator checks and certification at least once per

year;! Cabin safety and Flight Engineer surveillance, at least once

per year; and! Inspections on behalf of the Air Service Licensing Council.

Advice:

! The IARC and Air Service Licensing Council, and to carry out adhoc inspections, interviews and prosecutions on their behalf;

! In terms of training, licensing and examination of Pilots,Cabin Crew, Flight Engineers; and

! The provision of information and advice to all stakeholdersto enable them to comply with the requirements of therelevant regulations and standards.

Other:

! The monitoring of adherence to safety and the investigationof alleged contraventions of aviation legislation, includingthe CAR's, 1997;

! The follow-up of corrective action needed by any operator oraviation personnel licence holder to ensure compliance withminimum safety requirements;

! The promotion of a spirit of 'co-responsibility for safety'amongst all operators;

! Input into accident prevention activities; and! Air Show Safety Promotion supervision.

Clients include air transport operations - large aeroplanes, cabincrew, air transport operations - helicopters, helicopter externalload operations, air transport operations - small aeroplanes,agricultural operations, emergency medical services operations,aviation training organisations and dangerous goods.


PERFORMANCE REVIEW

2002 - 2003

Activities and Achievements

Activity 2002 2003

Initial InspectionsPart 121 - Air Transport Operations - large aeroplanes 5 3Part 127 - Air Transport Operations - helicopters 2 6Part 135 - Air Transport Operations - small aeroplanes 5 29Part 141 - Aviation Training Organisations 15 20Part 92 - Dangerous Goods 71 80Part 64 - Cabin Crew 1 2

Follow-up InspectionsPart 121 - Air Transport Operations - large aeroplanes 57 62Part 127 - Air Transport Operations - helicopters 42 44Part 135 - Air Transport Operations - small aeroplanes 146 151Part 141 - Aviation Training Organisations 145 160Part 92 - Dangerous Goods 17 15Part 64 - Cabin Crew 10 14

Surveillance/Unannounced InspectionsPart 121 - Air Transport Operations - large aeroplanes 10 12Part 127 - Air Transport Operations - helicopters 5 7Part 135 - Air Transport Operations - small aeroplanes 10 12Part 137 - Agricultural operations 5 7Part 138 - Emergency Medical Services Operations 5 7Part 92 - Dangerous Goods 30 45Part 64 - Cabin Crew 3 6

Number of operating certificates/certificates of approvalissuedPart 121 - Air Transport Operations - large aeroplanes 62 65Part 127 - Air Transport Operations - helicopters 44 50Part 135 - Air Transport Operations - small aeroplanes 151 180Part 141 - Aviation Training Organisations 160 180

Number of operations manuals verified a) New manuals 27 58b) Amendments to manuals - 12Number of route checks(domestic & international operators) 5 10Number of cabin safety inspections to perform 5 10Simulator inspections and approvals 5 8

The following chart indicates the number of registered operators,newly registered operators, follow-up inspections andunannounced inspections that were conducted during the year.

Future challenges include the streamlining of the administrativeactions surrounding the processing of applications for issue andre-issue of Air Operating Certificate (AOC) and COA�s, by theintroduction of a more efficient system of administration. TheDivision also wants to increase surveillance at airports in SouthAfrica by increasing the numbers of inspectors at airports.Integrated Inspection Cycles also need to be fine-tuned andtraining programmes finalised.

An internal system is planned to improve the smooth flow ofwork within the Flight Operations Division.

3.4.4 Aviation Medicine

Aviation medicine is a medical specialty that focuses on thephysical and psychological conditions associated with aviationtravel. Since piloting aircraft involves great risk and physicaldemands, such as changes in gravity and oxygen, pilots needmedical experts to protect their own and the public's safety.

The Medical Division determines and monitors medicalrequirements and procedures for licensing purposes. ICAOrequirements form the basis of all standards. In addition, thestandards of the FAA, United Kingdom (UK), JAA, Canada,Australia and New Zealand are evaluated. South Africanstandards are then determined accordingly, so as to be on a parwith international best practice.

Aviation medical education and training programmes aredetermined and monitored according to the same procedures asabove. This includes programmes for: cabin crew in first aid andbasic aviation medicine principles, aircrew for commerciallicensing purposes, aircrew involved in air ambulanceoperations and aviation medical examiners.

Operational procedures for medical services, both on boardaircraft and at airport clinics, are determined and supervisedand, also, protocols are developed for the conducting of medicalinvestigations in respect of aircraft accidents.


PERFORMANCE REVIEW

2002 - 2003

3.5 QUALITY ASSURANCE AND CLIENT SERVICES


PERFORMANCE REVIEW

2002 - 2003

3.5.1 Quality Assurance

The CAA implemented a certified quality management system in2000. The importance of quality in the CAA in particular, and inthe industry in general, led to the establishment of a separateDivision to manage quality.

The ISO system was audited twice during the period, by bothexternal and internal auditors, and was found to be effective.During the external audit of April 2002, 4 minor findings wereraised and 2 observations made. These findings andobservations were addressed by July 2002 and cleared duringthe October 2002 audit. During the October 2002 audit, 1 minorfinding was raised and 3 observations made. The finding andobservations were addressed and closed in February 2003, tobe signed off by the external auditors in April. The auditorscommended CAA on the effectiveness of the internal audits andfound that all complaints and corrective actions were welldocumented. It was reported that the staff is committed to thesystem, which commitment is upheld by a dedicatedmanagement team.

Compliance with the ISO International Quality Standard wasmonitored by means of an audit process and the effectivenessof the system is measured by means of a quarterly trendsanalysis.

Compliance with the ICAO standards and recommendedpractices was measured in terms of Annexures 1, 6, and 8.ICAO visited the CAA on 12 and 13 November 2001 for a follow-up audit in terms of their Safety Supervision Audit of 1999.Action plans for the outstanding recommendations in respect ofthe development of detailed technical training and surveillanceprogrammes were in process during the period. Progress wasmonitored and reports were submitted to ICAO on request. Thelengthy process involved in the promulgation of theamendments to the CAR's necessitated target dates beingpostponed so that many of the amendments were still in thepipeline at the end of the financial year.

3.5.2 Client Services

Although the implementation of a "Service and ConsultationCharter" for the CAA enjoys a high priority, the fact that the staffof the newly established Quality Assurance and Client ServicesDivision had not yet been appointed during this period entailsthis objective being addressed only during the next financialyear. The focus of the Division, however, will still be to improveall levels of the quality and service provided by CAA staff. TheSenior Manager of the Division was appointed in January but, todate, no staff members have been appointed in the operationalunit of client services.

3.5.3 Promotion of Continuous Improvement

The various managers responsible for the respectiveoperational areas deal with queries and complaints by means ofthe Continuous Improvement System, introduced through the

ISO quality management system. Because of vacant posts notyet having been filled, the centralised system for dealing withcustomer queries and complaints could not be addressed duringthis period

The CAA's Continuous Improvement Process proposes thenecessary corrective action required for the solving of problems,indicates the measures to be taken in order to prevent thereoccurrence of such problems and identifies opportunities forimproving current systems, processes and policies. Seen in thelight of the promotion of continuous improvement, therestructuring of the CAA had a major impact on all the systemsand processes then in use. New systems and processes havebeen introduced and old ones have been updated. Policies havebeen revised. Corrective actions and preventative measureswhich, early in the year, had been identified and implementedfrom divisional level up, have led to new training initiativescovering all areas where shortcomings existed.

4.3 BOARD OF DIRECTORS

4.2 THE KING CODE OF CORPORATE GOVERNANCE AND CONDUCT


CORPORATE GOVERNANCE

2002 - 2003

CHAPTER 4: CORPORATE GOVERNANCE

4.1 RESPONSIBILITY

The Directors are responsible for monitoring and reviewing thepreparation, integrity and reliability of the company's financialstatements, accounting policies and information contained in the

meetings, makes decisions within its terms of reference so as toenable the organisation's strategies to be implemented.

4.3.2 Audit Committee

The Audit Committee, which is chaired by a non-executiveDirector, consists mainly of non-executive Directors. It meetsannually and is responsible for reviewing the audit process andthe interim and annual financial reports. The members of theAudit Committee have unrestricted access to both internal andexternal auditors with regard to all financial reporting matters.

4.3.3 Human Resources Committee

The Human Resources Committee meets periodically to dealwith human resource and relation policies and practices and ischarged with the responsibility of driving vital issues ofemployment equity, employee participation, training andsuccession planning. The Committee is chaired by a non-executive Director and consists mainly of non-executiveDirectors.

4.3.4 Accidents and Incidents Committee

The Accidents and Incidents Committee meets periodically inorder to receive, review, comment and endorse all accident andincident policies. The committee also reviews reports onaccidents and incidents, and recommendations associatedtherewith, it also monitors the implementation ofrecommendations and the progress of accident and incidentinvestigations.

annual report. This responsibility is supported by internal controland risk processes implemented by management andindependently monitored for effectiveness.

The Directors endorse and comply with the code of corporatepractice and conduct recommended in the first King report, asapplicable. However, due to the nature of the business and thefact that the activities are not systems driven, non-compliance in

the area of internal financial control exists and is furtherexplained below. By supporting these codes, CAA demonstratesits commitment to the highest standards of integrity and ethicalconduct in dealings with all its stakeholders.

The Board of Directors consists of seven non-executivedirectors, six of whom are independent. Board appointments arebased on a mix of skills and experience and the Board meetsquarterly to evaluate the performance of the CAA and review thestrategic direction of the organisation and other matters relatingto the achievement of the organisation's strategic objectives.

Remuneration in respect of non-executive Directors is set out onpage 38 of the Notes to the Annual of the Financial Statements.

The Board places full responsibility for the overall managementof the organisation on the CEO who, in turn, is empowered todelegate duties to the management team.

In the execution of their duties the Directors follow agreedprocedures, seeking independent professional advice wherenecessary. The Board has identified the need to appoint aCompany Secretary and all Directors will have access to theservices of the Company Secretary in future.

The performance of the Directors is an essential component ofcorporate governance.

The Board is supported by various committees that help it fulfilits duties and responsibilities:

4.3.1 Executive Committee

The Executive Committee consists of the CEO and general andexecutive managers and operates in terms of a writtenmandate. It is chaired by the CEO and, between Board

4.4 INTERNAL FINANCIAL CONTROLS

4.5 RISK MANAGEMENT

Financial controls focus on critical risk areas. These areas areidentified by management and evaluated by the internal andexternal auditors.

The Directors of the company acknowledge their responsibilityfor the systems of internal controls, and are of the opinion thatthe standards set by management and the implementation ofsystems of internal control which are designed to providereasonable assurance as to the integrity and reliability of thefinancial statements and to safeguard, verify and maintainaccountability of the CAA's assets, are adequate. Further, theDirectors are of the opinion that the accounting controls areadequate and that the financial records may be relied on forpreparing the financial statements and maintainingaccountability for the company's assets and liabilities.

The Directors are also of the opinion that appropriateaccounting, supported by reasonable and prudent judgmentsand estimates, is applied on a consistent basis. These systems

and controls include the proper delegation of responsibilitieswithin a clearly defined framework, effective accountingprocedures and adequate segregation of duties, and aremonitored throughout the organisation.

! Management is responsible for implementing internalfinancial control, ensuring that personnel are suitablyqualified and that appropriate segregation of duties exists.Processes are in place to monitor internal controleffectiveness, identify and report material breakdowns andto ensure that timely and appropriate corrective action istaken, where necessary.

! The five/seven year user fee increase plan was approved bythe Minister of Transport;

! Research into a proposed new accounting package wasdone and this will be implemented during an eight-monthperiod in the next financial year. The package will ensurebetter service delivery, integration and managementreporting capabilities;

PricewaterhouseCoopers and MSGM were contracted duringthe year to construct a Risk Management and Fraud PreventionPlan. Implementation took place in February 2003 and forty-tworisks were identified by management and rated according tolikelihood and impact. Action plans for each risk area were

subsequently developed and progress in respect of the actionplans is currently being monitored by the Quality AssuranceDivision. The project was completed with the drafting of actionplans to minimise the identified risks in the various Divisions ofthe organisation;

4.6 MANAGEMENT REPORTING The organisation subscribes to a management reportingdiscipline, which includes the preparation of the annual budgets.

Performance relative to budget and prior period is monitoredand reported to the Board of Directors.

4.7 EMPLOYEE PARTICIPATION AND SKILLS Staff members are presented with opportunities to enhance theirskills through internal and external training courses. Employeeparticipation in the decision-making process is encouraged. The

organisation is committed to providing equal employmentopportunities and endorses the philosophy of employmentequity

4.8 ADMINISTRATIVE MATTERS! The CAA implemented a new process for purposes of a file

registry, and submitted a filing system proposal to theNational Archives;

! Several policies were updated and upgraded, such as theProcurement and Tender Policy, and the Travel Policy;

! Several forms have been created to improve internalservice delivery and recordkeeping, and to keep the ITDepartment notified of changes that do occur within theCAA; and

! IT Training Manuals and workshops have been developedfor all users.


CORPORATE GOVERNANCE

2002 - 2003


ANNUAL FINANCIAL STATEMENTS

2002 - 2003

CONTENTS PAGE

Financial Statements - Introduction 29Report of the Independent Auditors 30Report of the Directors 31Income Statement 34Balance Sheet 34Statement of Changes in Equity 35Cash Flow Statement 35Notes to the cash flow statement 36Accounting Policies 36Notes to the Annual Financial Statements 38

The annual financial statements set out on pages 34 to 42 were recommended for approval by the Audit and Finance Committee, givenfinal approval by the Board of Directors on 26 August 2003, and are signed on its behalf by:

Mr Z Nomvete : Deputy Chairperson (Board of Directors)

Mr K Mampeule : Chairperson (Audit and Finance Committee)

CHAPTER 5: ANNUAL FINANCIAL STATEMENTS



2002 - 2003

5.1 FINANCIAL STATEMENTS - INTRODUCTION

The preparation and presentation of the annual financialstatements of the organisation, and all other informationincluded in this annual report, is the responsibility of theDirectors and is done on a going concern basis. The Directorsare of the opinion that adequate resources exist to support theorganisation on a going concern basis.

The information provided in this annual report has beenprepared in accordance with the provisions of the PublicFinance Management Act and complies with South AfricanStatements of Generally Accepted Accounting Practice. TheDirectors are satisfied that the information contained in thefinancial statements fairly presents the results of the operationsfor the year and the financial position of the group at year-end.The financial statements which appear on pages 34 to 42 wereapproved by the Board of Directors on 26 August 2003 and aresigned on its behalf by:

Mr Z Nomvete: Deputy Chairperson (Board of Directors)

Mr K Mampeule: Chairperson (Audit and Finance Committee)

REPORT OF THE INDEPENDENT AUDITORS TO THEDEPARTMENT OF TRANSPORT ON THE ANNUALFINANCIAL STATEMENTS OF THE SOUTH AFRICAN CIVILAVIATION AUTHORITY FOR THE YEAR ENDED 31 MARCH2003

Introduction

The annual financial statements of the South African CivilAviation Authority set out on pages 31 to 42 for the year ended31 March 2003, have been audited in terms of the South AfricanCivil Aviation Authority Act, 1998 (Act No 40 of 1998) and thePublic Finance and Management Act, 1999 (Act No 1 of 1999).These financial statements are the responsibility of theAuthority's Board of Directors. Our responsibility is to expressan opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with statements of SouthAfrican Auditing Standards. Those standards require that weplan and perform the audit to obtain reasonable assurance thatthe financial statements are free of material misstatement. Anaudit includes:

! examining, on a test basis, evidence supporting theamounts and disclosures included in the financialstatements,

! assessing the accounting principles used and significantestimates made by management, and

! evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for ouropinion.

Opinion

In our opinion the financial statements fairly present, in allmaterial respects, the financial position of the Authority at 31March 2003, and the results of its operations and cash flows forthe year then ended in accordance with Generally AcceptedAccounting Practice in South Africa and the Public Finance andManagement Act, 1999 (Act No 1 of 1999) ("PFMA").

Emphasis of matter

Without qualifying our opinion above, we draw attention to thefollowing matters

Matters not affecting the financial statements

! The annual financial statements were not submitted to theauditors in terms of the PFMA section 55(1)(c) within twomonths after the year-end.

! The Authority incurred expenses that, had necessary carebeen exercised, could have been avoided. In terms ofPFMA section 55(2)(b), these fruitless and wastefulexpenditure are disclosed in the Directors' report.

! The Authority did not compile and as such include, in thecorporate plan or strategic plan, a materiality and significantframework in accordance with section 28.1.5, 28.2.1, 29.1.1and 30.1.3 of the Treasury Regulations.

! The Authority's audit committee has not established an auditcharter to guide internal audit as required by section 27.1.6of the Treasury Regulations.

! The Authority has not established procedures for thequarterly reporting to the Minister of Transport (executiveauthority) in accordance with section 30.2.1 of the TreasuryRegulations.

Deloitte & Touche26 August 2003



2002 - 2003

REPORT OF THE INDEPENDENT AUDITORS

The Directors present their report for the year 01 April 2002 to31 March 2003. This report, in terms of the South African CivilAviation Authority Act, 1998 (Act No 40 of 1998) and the PublicFinance Management Act, 1999 (Act No 1 of 1999), addressesthe performance of the South African Civil Aviation Authority(Authority), the results of its operations as well as the cash flowinformation for the year ended.

Responsibility statement

The Directors are responsible for the preparation, integrity andfair presentation of the financial statements of the Authority. Thefinancial statements have been prepared in accordance withStatements of Generally Accepted Accounting Practice in SouthAfrica, and include amounts based on judgements andestimates made by management.

The going concern basis has been adopted in preparing thefinancial statements based on forecasts and available cashresources and these financial statements reflect the viability ofthe Authority.

The independent accounting firm, Deloitte & Touche, which wasgiven unrestricted access to all financial records and relateddata, has audited the financial statements. SizweNtsaluba VSPwas appointed as internal auditors.

Nature of business

The Authority is the regulator of all civil aviation activities inSouth Africa. Its primary function is to control and regulate civilaviation in South Africa and to oversee the operations anddevelopment of the civil aviation industry, with a particularemphasis on the controlling, regulating and promotion of civilaviation safety and security.

The Authority was established as a juristic body in terms of TheSouth African Civil Aviation Authority Act, 1998, (Act 40 of 1998).At the same time the South African Civil Aviation AuthorityLevies Act, 1998 (Act No 41 of 1998) was promulgate to enablethe Authority to impose passenger, fuel or any other levies uponthe aviation industry, allowing it to generate revenue to fund itsoperations.

Corporate governance

The Directors are responsible for preparing financial statementsthat fairly present the affairs of the CAA as at the end of thefinancial year, together with income and cash flow statements.The Directors are responsible for approving them, while theexternal auditors are responsible for auditing and reporting onthem. Management prepared the financial statements as set outin this report in accordance with the statements of South AfricanGenerally Accepted Accounting Practice ("SAGAAP"). They arebased on appropriate accounting policies consistently appliedand supported by reasonable and prudent judgements andestimates.

The internal audit function is independent of management. Itexamines and evaluates the Authority�s activities with theobjective of assisting members of executive management andthe Board to discharge their responsibilities effectively. Theinternal audit function reviews the reliability and integrity offinancial and operating information, systems of internal control,the means of safeguarding assets, the efficient management ofthe entity's resources, and the conduct of its operations.

The internal controls and systems are designed to providereasonable assurance as to the integrity and reliability of thefinancial statements and to adequately safeguard, verify andmaintain accountability of the Authority's assets.

To ensure that the Authority�s business is conducted in amanner that is above reproach, the Board, Management andStaff have agreed to a code of conduct, which seeks to ensurethat high ethical standards prevail throughout the organisation.Accordingly, all Directors, managers, and employees areexpected to strive for adherence to the embodied principles, tofoster an ethical culture within the CAA.

Board of Directors (BoD)

The BoD decides on all material matters affecting the entity andthus controls all significant financial and administrativedecisions. The Board Authority delegated responsibility for theoverall management of the entity to the Chief Executive Officer("CEO"), whose actions it oversees and who has the authority tosub-delegate to the management team.

The BoD is specifically responsible for the approval of theexecutive organisational structure, which consists of the CEO,the General Managers and the Company Secretary. To furtherpromote an environment that is conducive to the enhancementof corporate governance, the BoD has oversight over theselection, appointment and termination of all executivepositions.

With the exception of the CEO, the BoD exclusively comprisesof non-executive directors who were chosen for their industryexpertise, skill and acumen.

Board Sub-Committees

Finance and Audit Committee (FAC)

The majority of the FAC members, including the Chairperson,are non-executive directors. Both external and internal auditorshave unrestricted access to the Chairman of the FAC. Thecommittee meets periodically to review the financial statements,accounting policies and practices, internal controls, findings ofthe auditors and the management of the risk areas. TheAuthority maintains systems of internal controls in order toprovide reasonable assurance as to the integrity and reliabilityof financial statements and to adequately safeguard andmaintain accountability of the assets of the Authority. Such



2002 - 2003

REPORT OF THE DIRECTORS

controls are based on established policies and procedures. Theeffectiveness of these systems of internal control is monitoredand reported to this committee.

Human Resources Committee (HRC)

The HRC meets periodically to deal with the CAA humanrelations policies and practices and is charged with theresponsibility of driving vital issues of employment equity,employee participation, training and succession planning. Thecommittee is comprised mainly of non-executive directors and ischaired by a non-executive chairperson.

Members of the Board of Directors

Mr IB Skosana (Chairperson: BoD) Appointed 01 Oct. 1998 Reappointed 01 Nov. 2001Mr Z Nomvete (Deputy Chairperson: BoD) Appointed 01 Nov. 2001

(Chairperson: AIC)Mr T Abrahams (CEO) Appointed 01 Oct. 1998 Reappointed 01 Nov. 2001Mr V Mogatle Appointed 01 Nov. 2001 Resigned 23 May 2002Mr K Mampeule (Chairperson: AFC) Appointed 01 Nov. 2001Ms P Tsukudu (Chairperson: HR) Appointed 01 Nov. 2001Mr CB Conlyn Appointed 01 Oct. 1998 Reappointed 19 Jun. 2002Maj Gen L Ngema Appointed 19 Jun. 2002Ms N Mlonzi Appointed 01 Oct. 1998 Reappointed 01 Nov. 2001

With the exception of Mr T Abrahams, all the remaining directors are non-executive.

BOARD MEETING ATTENDANCE FOR THE PERIOD 01 APRIL 2002 TO 31 MARCH 2003

Accidents and Incidents Committee (AIC)

The AIC meets periodically to receive, review, comment andendorse all accident and incident policies. The committee alsoreviews reports on accidents and incidents andrecommendations associated therewith. It also monitors theimplementation of recommendations and the progress ofaccident and incident investigations.



2002 - 2003

NAME ACCIDENT AND FINANCE AND HR AND FULL BOARDINCIDENT BOARD AUDIT REMUNERATION

TOTAL MEETINGS IN FIN YEAR 4 6 4 8Mr Israel Skosana N/A 4 (invited) 1 (invited) 5Mr Zukile Nomvete 3 6 N/A 5Ms Phuti Tsukudu N/A 5 4 8Mr Khutso Mampeule N/A 5 4 8Ms Nothemba Mlonzi 4 2 (invited) N/A 5Mr Graeme Conlyn 2/3 # 2 (invited) N/A 6Maj Gen Lucky Ngema 1/3 # 2 (invited) ¾ # 6Mr Trevor Abrahams 3 ** 5 ** 3 ** 4 **

Legend: # - Directors only joined Board on 19 June 2002. ** - CEO on compulsory leave since 4 December 2002.

Funding

In terms of its enabling legislation the Authority is mandated togenerate its funding requirements from the imposition of userfees and industry charges.

There was no subsidy received from Government during thefinancial year, as the previous year's subsidy of R2 million was

the final payment received. The Authority was self-funded fromthe beginning of this financial year.

The Authority continues to conduct the full accident and incidentresponsibilities on behalf of the National Department ofTransport (NDoT), resulting in the cost of these services beingcharged to the DoT.

Review of operations

The Authority complied with the primary purpose and objectiveas set out in the Act, which was to promote and supportcontinuously improving levels of safety throughout the civilaviation industry.

Events subsequent to balance sheet date

The Directors are not aware of any matter or circumstancearising since the end of the previous financial year that is nototherwise dealt with in the financial statements, which couldsignificantly affect the financial position of the Authority.

Reporting of any material losses resulting fromcriminal conduct

Subject to the outcome of a disciplinary hearing still in progressat year-end, the Authority has not incurred any material lossesthrough criminal conduct.

Financial results

In terms of the provision of its enabling legislation, the CAA is anon-profit making organisation, mandated to operate on a costrecovery basis. Consequently, the Authority cannot distributeany accrued surplus, but would be expected to adjust its userfees and indirect charges to reflect reduced accumulatedsurpluses that are deemed to be excessive.

The financial results of the CAA appear on pages 34 to 42,which include the income statement, the balance sheet, thecash flow statement, the statement of changes in equity, as wellas notes to the annual financial statements.

Income Statement

The Authority made an operating loss for the year of R4,7 million(2002: R1 million). This resulted mainly from a delay in theanticipated increase in the Safety Charge and User Fees, whichwere initially planned to be increased in August 2002. Theincrease was delayed until after the financial year andimplemented from 01 April 2003.

Bad debts recovered

Bad debts recovered disclosed on the face of the incomestatement relate to amounts recovered from debtors, for whicha provision for bad debts was created in the prior financial year(refer to note 5). This is disclosed separately, after operatingloss, as it does not relate to revenue generated in the currentfinancial year's operations.

Fruitless and wasteful expenditure

During the current financial year, the following payments weremade and management has taken corrective measures toensure that such expenditure does not recur:

! To the South African Revenue Service (SARS) for interest

(R784 000) and penalties (R196 000) resulting from VATassessments relating to the financial years 2001 and 2002;

! SARS for interest (R57 000) and penalties (R293 000)resulting from PAYE assessments relating to the financialyears 1999, 2001, 2002 and 2003; and

! Other interest (R28 000) on the late payment of supplieraccounts during 2003.

Statement of Changes in Equity

The CAA is a self-funding entity and no longer receives aGovernment subsidy. The continued operational existence ofthe CAA is dependent upon the maintenance of its asset base,consisting mainly of aircraft and calibration equipment (88% oftotal fixed assets). It is imperative that sufficient reserve isretained to provide for the replacement and expansion of thisasset base. An Asset Replacement Reserve has therefore beencreated out of accumulated funds to provide for the necessaryfunds. This reserve will be increased over time to match theplanned dates of aircraft replacements and expansions.

In previous years, the CAA received payments from the DoTthat are reflected under Capital and Reserves on the balancesheet. These amounts are intended as follows:

! R1 082 000 for pilot training for the historicallydisadvantaged to encourage transformation. This will beundertaken during the 2004 financial year;

! R550 000 for the establishment of civil aviation regulations.This project is still in progress.

As required by statements of GAAP (AC 134: Accounting forgovernment grants and disclosure of government assistance),these amounts will be applied to the related expenditure whenincurred in the 2004 Annual Financial Statements.

Materiality

In respect of amendments to the Treasury Regulations in May2002, the Office of the Auditor-General issued a guideline thatobligates the Directors to assess and set materiality limits withrespect to the financial statements. In the preparation anddisclosure for the year under review, the Directors have appliedthe concept of materiality, both in terms of the nature andquantity of individual amounts and events. Thus, disclosures ofall such material amounts and events have been made in theannual financial statements, which the Directors considerimportant in the understanding of the financial statements.



2002 - 2003

RevenueStaff and Directors' costsOther operating costsDepreciation Operating loss for the year Bad debts recovered Finance costsInterest received Surplus for the year

ASSETS

Non-current assetsEquipment

Current assetsInventories Trade and other receivables Bank and cash balances

TOTAL ASSETS

EQUITY AND LIABILITIES

Capital and reservesNon-distributable reservesAccumulated funds

Current liabilities Trade and other payablesFinance lease obligationsProvisions

TOTAL EQUITY AND LIABILITIES

BALANCE SHEET as at 31 March 2003

1 72 908 176 67 282 9042 (41 264 018) (34 737 276)3 (29 542 637) (26 796 600)4 (6 780 622) (6 741 324)

(4 679 101) (992 296)5 2 469 034 -6 (869 007) (231 082)

4 253 200 3 060 6941 174 126 1 837 316

7 24 224 121 31 407 992

51 068 797 41 920 7228 994 552 967 6539 16 729 545 6 849 877

10 33 344 700 34 103 192

75 292 918 73 328 714

63 192 790 62 018 66411 46 275 518 43 275 518

16 917 272 18 743 146

12 100 128 11 310 05012 9 825 552 9 749 760

- 154 30413 2 274 576 1 405 986

75 292 918 73 328 714



2002 - 2003

INCOME STATEMENT for the year ended 31 March 2003

Notes 2003 2002R R

Notes 2003 2002R R

43 275 518 16 905 830 60 181 348- 1 837 316 1 837 316

43 275 518 18 743 146 62 018 664- 1 174 126 1 174 126

3 000 000 (3 000 000) -46 275 518 16 917 272 63 192 790

65 497 542 66 196 142(69 465 099) (55 989 321)

A (3 967 557) 10 206 8214 253 200 3 060 694(869 007) (231 082)(583 364) 13 036 433

- (20 660 453)(1 604 938) (335 460)

B 1 584 114 12 100 489(20 824) (8 895 424)

- (323 670)(154 304) (1 137 752)(154 304) (1 461 422)

(758 492) 2 679 587

34 103 192 31 423 605C 33 344 700 34 103 192

CASH FLOW STATEMENT for the year ended 31 March 2003



2002 - 2003

STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2003

Balance at 31 March 2001Surplus for the yearBalance at 31 March 2002Surplus for the yearAsset replacement reserveBalance at 31 March 2003

CASH FLOW FROM OPERATING ACTIVITIESCash receipts from customersCash paid to suppliers and employeesCash (utilised in) generated from operationsInterest receivedInterest paidNet cash (outflow) inflow from operating activities

CASH FLOW FROM INVESTING ACTIVITIESReplacement of assets and overhaul of aircraftAdditions to equipmentProceeds on disposal of aircraftNet cash outflow from investing activities

CASH FLOW FROM FINANCING ACTIVITIES Decrease in long-term liabilitiesDecrease in short-term liabilitiesNet cash outflow from financing activities

Net (decrease) increase in cash and cash equivalentsCASH AND CASH EQUIVALENT AT BEGINNING OF THEYEARCASH AND CASH EQUIVALENT AT END OF THE YEAR

Non-distributable Accumulated reserves funds Total

R R R

Notes 2003 2002R R

ACCOUNTING POLICIES for the year ended 31 March 2003

A. RECONCILIATION OF SURPLUS FOR THE YEAR, TO CASH (UTILISED IN) GENERATED FROM OPERATIONS

Surplus for the year

Adjustment for:Depreciation Interest received Loss (profit) on the sale of aircraftFinance costs

Surplus before working capital changes

Working capital changes:(Increase) decrease in inventoriesIncrease in trade and other receivablesIncrease in trade and other payablesIncrease in provisions

Cash (utilised in) generated from operations

B. PROCEEDS ON DISPOSAL OF AIRCRAFT

Cost price of aircraftLess: accumulated depreciationBook value at selling date (Loss) profit on sale of aircraftProceeds on disposal of aircraft

C. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand, balancewith banks and investment in money market instruments.Cash on hand and balances with banks

1 174 126 1 837 316

3 820 502 3 163 9296 780 622 6 741 324

(4 253 200) (3 060 694)424 073 (747 783)869 007 231 082

4 994 628 5 001 245

(8 962 185) 5 205 576(26 899) 307 415

(9 879 668) (1 086 762)75 792 5 796 460

868 590 188 463

(3 967 557) 10 206 821

4 462 638 19 223 669(2 454 451) (7 929 763)2 008 187 11 293 906(424 073) 806 583

1 584 114 12 100 489

33 344 700 34 103 192



2002 - 2003

NOTES TO THE CASH FLOW STATEMENT for the year ended 31 March 2003

2003 2002R R

The principal accounting policies adopted in the preparation ofthese financial statements are set out below and are consistentwith those of the previous year, except for the adoption of a newpolicy for an asset replacement reserve.

Basis of preparation

The financial statements have been prepared on the accrualbasis in accordance with Generally Accepted AccountingPractice and under the historical cost basis.

Equipment

Equipment, with the exception of the aircraft, are stated athistorical cost to the organisation, less accumulateddepreciation. Depreciation is calculated on historical cost usingthe straight-line method over the estimated useful lives of theassets. The method and rates used are determined by therelevant conditions in the industry. Aircraft is stated at valuationless accumulated depreciation. The valuation was doneeffective 1 October 1998, being the date of inception of the CAA.

The recorded value of depreciated assets is periodicallycompared to the anticipated recoverable amount if the assetswere to be sold. Where an asset's recorded value has declinedbelow the recoverable amount, and the decline is expected to beof a permanent nature, the decline is recognised as an expense.

The annual depreciation rates and estimated useful life are asfollows:

Aircraft 15% 6,67 yearsCalibration equipment 16,67% 6 yearsOffice equipment 16,67% 6 yearsFurniture and fittings 16,67% 6 yearsComputer equipment 33,33% 3 yearsMotor vehicles 20% 5 yearsLeased computer equipment 33,33% 3 years

Inventories

Inventories are stated at the lower of cost or net realisable value.Cost is determined on the weighted average basis. Redundantand slow moving inventory are identified and written down withregard to their estimated economic or realisable values.

Foreign currency transactions

Transactions in foreign currencies are accounted for at the rateof exchange ruling on the date of the transaction. Gains andlosses arising from the settlement of such transactions arerecognised in the income statement.

Revenue recognition

The invoiced value of sales and services rendered, excludingvalue added tax, in respect of trading operations is recognisedat the date services are provided.

Employee benefits

The organisation participates in a defined contribution fund,which is governed by the Pension Fund Act 1956, (Act No 24 of1956) and in which all employees participate. Currentcontributions to retirement benefit funds are charged to theincome statement in the period incurred.

Financial instruments

Financial instruments carried on the balance sheet include cashand cash equivalents, trade and other receivables and tradeand other payables. The particular recognition methodsadopted are disclosed in the individual policy statementsassociated with each item.

Financial assets

The Authority's principal financial assets are bank and cash andtrade receivables. Trade receivables are stated at their nominal

value as reduced by appropriate allowances for estimatedirrecoverable amounts.

Financial liabilities

Financial liabilities are classified according to the substance ofthe contractual arrangements entered into. Financial liabilitiesinclude finance lease obligations, bank overdrafts and trade andother payables.

Finance charges are accounted for on the accrual basis and areadded to the carrying amount of the instrument to the extent thatthey are not settled in the period in which they arise.

Trade and other payables are stated at their nominal value.

Provisions

Provisions are recognised when the organisation has a presentlegal or constructive obligation, as a result of past events forwhich it is probable that an outflow of economic benefits will berequired to settle the obligation and a reliable estimate can bemade of the obligation.

Employee entitlements to annual leave and long service leaveare recognised on accrual to employees. A provision is madefor the estimated liability for annual leave as a result of servicesrendered by employees up to the balance sheet date.

A provision for obsolete stock on aircraft spares is made basedon an annual identification process of items with a shelf life thatwill expire in the near future.

A provision is made for doubtful debtors when the recoverabilityof specific debtors is uncertain.

Accounting for leases

Leases of equipment where the Authority assumes substantiallyall the benefits and risks of ownership are classified as financeleases. Assets leased in terms of finance lease agreements arecapitalised at amounts equal at the inception of the lease to thefair value of the leased asset, or, if lower, at the present value ofthe minimum lease payments and is depreciated in accordancewith the policies applicable to equivalent items of equipment.The corresponding rental obligations, net of finance charges,are included in other long-term payables. Lease financecharges are amortised over the duration of the leases by usinga constant periodic rate of interest on the remaining balance ofthe liability for each period.

Leases, under which the risks and benefits of ownership areeffectively retained by the lessor, are classified as operatingleases. Obligations incurred under operating leases arecharged to the income statement in equal instalments over theperiod of the lease, except when an alternative method is more representative of the time pattern from which benefits arederived.



2002 - 2003

ACCOUNTING POLICIES for the year ended 31 March 2003 (continued)

1. REVENUE

Revenue comprises:

Aircraft passenger safety charge

User feesAccident and incident investigationsFuel levy! Current year! Reduction in provision from previous year Government subsidy Other income

2. STAFF AND DIRECTORS' COSTS

Included in staff costs are:

Defined contribution plan expense

Directors' emoluments for services as Directors Executive DirectorSalaries Provident fund contributionsNon-executive Directors: feesTotal Directors' emoluments

3. OTHER OPERATIONS COSTS

Operating costs are arrived at after taking into account thefollowing:

Auditor's remuneration:Audit feesPrior year under accrual

36 687 958 32 842 630

26 484 867 22 816 8355 441 999 4 519 5004 044 747 4 006 0492 546 832 4 006 0491 497 915 -

- 2 205 275248 605 892 615

72 908 176 67 282 904

5 612 606 5 143 577

751 489 668 869648 172 576 039103 317 92 830466 456 452 630

1 217 945 1 121 499

158 900 120 000138 000 120 000

20 900 -



2002 - 2003

NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2003

2003 2002R R

Trade receivables

Trade receivables are carried at anticipated realisable value. Anestimate is made for doubtful receivables based on a review ofall outstanding amounts at year-end.

Asset replacement reserve

The asset replacement reserve represents a portion ofsurpluses generated during the financial year based on assetreplacement needs and funds availability. This reserve iscreated to enable the Authority to maintain an asset base that isin line with the aviation safety mandate.

ACCOUNTING POLICIES for the year ended 31 March 2003 (continued)

NOTES TO THE ANNUAL FINANCIAL STATEMENTS



2002 - 2003

3. OTHER OPERATIONS COSTS (continued)

Rental in respect of operating leases:Land and buildings Computer equipment and bulk filing Equipment

Future minimum lease payments:Up to 1 yearComputer equipment and bulk filing

The lease agreement for premises currently occupied expireson 30 September 2004. The current average monthlyinstalment for other operating leases is R20 385 and will be R17199 in the next year

(Loss) profit on the sale of the aircraft and other assets

4. DEPRECIATION

AircraftCalibration equipment Furniture and fittings Computer equipment Motor vehiclesLeased computer equipment

5. BAD DEBTS RECOVERED

Provision for doubtful debts: safety charges under-billing:opening balanceUnder provision from previous yearInvoiced during the current yearProvision for doubtful debts: closing balanceBad debts recovered

The CAA receives details for scheduled departing passengersfrom domestic airports on a monthly basis. The data is receivedin an electronic format and used to invoice passenger carriers.The CAA experienced electronic data transfer problems withACSA during the 2002 financial year resulting in an under-billingto most of the airlines.

5 668 829 3 472 9073 929 908 3 197 5711 494 295 -

244 626 275 336

6 875 166 8 390 3914 838 068 3 440 4912 037 098 4 949 900

(424 073) 747 783

3 484 857 3 663 0031 967 120 839 248

438 344 387 951682 666 610 100

72 740 81 140134 895 1 159 882

6 780 622 6 741 324

5 133 024189 342

5 322 366(2 853 332)2 469 034

2003 2002R R

2003R

for the year ended 31 March 2003 (continued)

- 212 700869 007 18 382869 007 231 082

Opening Closing balance Additions Disposals balance

R R R R

27 684 964 - (4 462 638) 23 222 32611 478 996 464 004 - 11 943 0002 687 741 281 091 - 2 968 8322 048 785 865 290 - 2 914 075

363 700 - - 363 7003 542 146 - (71 157) 3 470 989

47 806 332 1 610 385 (4 533 795) 44 882 922

Opening Charge for Closing balance the year Disposals balance

R R R R

10 022 262 3 484 857 (2 454 452) 11 052 667828 365 1 967 120 (11 024) 2 784 461

1 207 518 438 344 (12 631) 1 633 231992 660 682 666 (5 474) 1 669 852145 480 72 740 - 218 220

3 202 055 134 895 (36 580) 3 300 37016 398 340 6 780 622 (2 520 161) 20 658 801


5. BAD DEBTS RECOVERED (continued)

At the end of the 2002 financial year R5,133 million was broughtto account but simultaneously provided for as a doubtful debt(see note 9). These under-billings were invoiced and partiallyreceived during the current financial year. These amounts havebeen included as part of bad debts recovered separatelydisclosed in the income statement. An additional billing of R189342 was accounted for in the current year. A provision fordoubtful debt reflects the net outstanding balance not receivedat year-end in respect of the under-billings.

6. FINANCE COSTS

Financing costs comprise:! Finance lease liability! Interest paid

Interest paid relate to penalty interest on Value Added Tax(VAT), Pay As You Earn (PAYE) and late payment of othersupplier accounts.

7. PROPERTY AND EQUIPMENT

Cost price

AircraftCalibration equipment Furniture and fittingsComputer equipmentMotor vehiclesLeased computer equipment

Accumulated depreciation




2002 - 2003

2003 2002R R




2002 - 2003


Net book value


8. INVENTORIES

Stationery Aircraft spares! Cost price! Less: Provision for obsolete inventory

9. TRADE AND OTHER RECEIVABLES

Trade receivables: passenger safety charge under billing Less: provision for doubtful debtors(See note 5)

Trade receivablesLess: provision for doubtful debtors Other receivables

The carrying amount of trade and other receivablesapproximate their fair value. The amounts presented in the balance sheet are net ofallowances for doubtful receivables, estimated by managementbased on prior experience and the current economicenvironment.

10. BANK AND CASH BALANCES

The carrying amount of bank balances and cash approximatetheir fair value. The entity's cash resources are placed with ahigh credit quality financial institution.

Bank balances consist of:! Petty cash and cashier float! Current accounts! Funds on call

12 169 659 17 662 7029 158 539 10 650 6311 335 601 1 480 2231 244 223 1 056 125

145 480 218 220170 619 340 091

24 224 121 31 407 992

231 526 235 356763 026 732 297840 470 984 281(77 444) (251 984)994 552 967 653

- -2 853 332 5 133 024

(2 853 332) (5 133 024)13 933 014 5 400 85115 307 469 6 796 937(1 374 455) (1 396 086)2 796 531 1 449 026

16 729 545 6 849 877

3 100 1 5003 426 637 5 274 834

29 914 963 28 826 85833 344 700 34 103 192

2003 2002R R


11. NON-DISTRIBUTABLE RESERVES

Assets transferred from the NDOTAsset Replacement Reserve

This amount consists of the value of assets transferred to theAuthority from the NDOT, at incorporation of the Authority, aswell as an Asset Replacement Reserve. Details of the non-distributable reserve are shown in the Statement of Changes inEquity, page 35.

12. TRADE AND OTHER PAYABLES

Trade payablesOther payables! VAT! Income received in advance! Other

13. PROVISIONS

Leave pay provision:Opening balance Additional provisions made Closing balance

Bonus provision:Additional provisions made

Total provisions

The leave pay provision is based on the number of leave daysdue and cost to the company. Bonus provision is based onperformance.

14. TAXATION

The Civil Aviation Authority is exempt from normal taxation.

15. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to correctlyreflect the amounts and disclosures on a basis consistent withthe current year.

43 275 518 43 275 5183 000 000 -

46 275 518 43 275 518

2 727 826 2 336 4007 097 726 7 413 3605 208 649 198 8421 215 658 435 525

673 419 6 778 9939 825 552 9 749 760

1 405 987 1 212 398490 306 193 588

1 896 293 1 405 986

378 283 -

2 274 576 1 405 986



2002 - 2003


2003 2002R R


GLOSSARY OF TERMS/ACRONYMS

ACSA Airports Company of South AfricaAFCAC African Civil Aviation CommitteeAFTN Aeronautical Fixed Telephone NetworkAIC Aeronautical Information CircularAIC Accidents and Incidents CommitteeAIP Aeronautical Information PackageAIS Aeronautical Information ServiceAMD Archway Metal DetectorAOC Air Operating Company/CommitteeAPIRG Africa-Indian Ocean Planning and Implementation

Regional GroupATC Air Traffic ControlATDF Aviation Training and Development FoundationATLS Advanced Trauma Life SupportATM Air Traffic ManagementATNS Air Traffic and Navigation ServicesATO Air Traffic OrganisationATP Airline Transport PilotATS Air Traffic ServicesATSA Air Traffic Service AssistantAU African UnityAVSEC Aviation SecurityBoD Board of DirectorsCAA Civil Aviation AuthorityCAHRS Confidential Aviation Hazard Reporting SystemCAR Civil Aviation RegulationCARCOM Civil Aviation Regulations CommitteeCASC Civil Aviation Safety CommitteeCATS Civil Aviation Technical StandardsCEO Chief Executive Officer CNS Communication, Navigation, SurveillanceCOA Certificate of AirworthinessCRM Crew Resource ManagementCVOR Conventional VORDME Distance Measuring EquipmentDoT Department of TransportDVOR Doppler VORFAA Federal Aviation Administration (US)FAC Finance and Audit CommitteeFIS TACAN Flight Inspection System Tactical Air NavigationFUA Flexible use of AirspaceGAAP Generally Accepted Accounting PracticeGGV This is a VOR at George AirportGNSS Global Navigation Satellite SystemGPS Global Positioning SystemHR Human ResourcesIARC Internal Accident Review CommitteeIATA International Air Transport OrganisationICAO International Civil Aviation OrganisationICC International Cricket Council ICASA Independent Communications Authority of South AfricaILS Instrument Landing SystemISO International Standards OrganisationIT Information TechnologyJAA Joint Aviation Authority (Europe)JIA Johannesburg International AirportMS MicrosoftMOU Memorandum of understandingNASC National Aviation Security CommitteeNASCOM National Airspace CommitteeNASP National Aviation Security PlanNDB Non Directional BeaconNDOT National Department of TransportNOTAM Notice to AirmenOBI Omni Bearing IndicatorOHSACT Occupational Health and Safety ActORI Operational Readiness InspectionPA Personal AssistantPANS-OPS Procedures for Air Navigation Services and OperationsPAYE Pay as you earnRTF Radio Transmission FrequencySAA South African AirwaysSAAF South African Air ForceSADC Southern African Development CommitteeSAGAAP South African Generally Accepted Accounting PracticeSAPS South African Police ServiceSDF Simplified Directional FacilityTACAN Tactical Air Navigation

UK United KingdomVAT Value added taxVOR Very High Frequency Omni Directional Radio RangeWSSD World Summit on Sustainable Development


GLOSSARY OF TEARMS/ACRONYMS

2002 - 2003


NOTES

2002 - 2003

NOTES

CIVIL AVIATION AUTHORITY

South African Civil Aviation AuthorityPrivate Bag X08Waterkloof, 0145Tel: +27 12 346 5566Fax: +27 12 346 5979E-mail: [email protected]: http://www.caa.co.za

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SOUTH AFRICAN

annual report 2002-2003 - south african civil aviation

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