ISLAMABAD: Reeling under the recent dubious flying licence controversy, a special cabinet committee is meeting on July 29 (Wednesday) to finalise a government plan to set up two separate authorities by segregating the Civil Aviation Authority (CAA) into regulatory and operational entities.

Headed by the Adviser to the Prime Minister on Commerce and Investment Razak Dawood, the cabinet committee will discuss threadbare formalisation of the organisational structure of the CAA by creating the Pakistan Civil Aviation Regulatory Authority and the Pakistan Airports Authority.

A highly-placed source told Dawn that the government’s segregation plan included outsourcing of different airports of the country in two phases — corporatisation of the airports in the first phase for attracting private investors and completion of this transaction in the second phase by involving the Privatisation Commission and appointing financial advisers and investment banking firms.

The decision to segregate the CAA was taken by the government in view of the sensitivity of the operations and involvement of strategic assets — the airspace. Therefore, one entity will be entrusted with the job of regulatory functions while the other will develop and manage functions of the airports.

Special cabinet panel meets on 29th to finalise proposal; outsourcing of some airports part of plan

The July 29 cabinet committee huddle will be the fifth such meeting on the issue and after that the CAA board is also likely to meet. During one of the earlier meetings, apprehensions were expressed by the Ministry of Defence as well as the Pakistan Air Force over the separate infrastructure for joint airspace management as they were of the opinion that it was not advisable in the national security interest.

But after going through the proposed law prepared by the CAA in this regard, the defence ministry suggested that only commercial operations of the airports should be outsourced while security and flight operations should remain intact under the monitoring of the state.

They had also suggested incorporation of a provision in the proposed law enabling the defence forces to take over the airports in case of war, besides a security clearance from the premier intelligence agency (ISI) by making it prerequisite for those companies to which the operations at the airports would be outsourced.

The source explained that airport and air navigation services presently being undertaken by the CAA involved management of 44 airports that included oversight services for all aircraft operating within the country’s airspace.

The decision to set up two authorities was reached during one of the meetings of the cabinet committee in view of the fact that only six of the 44 airports are profitable.

Already two draft legislative bills are ready — one aims to replace the existing CAA Ordinance 1960 while strengthening the scope of the regulatory body in accordance with the international commitment and the other proposes amendments to the CAA Ordinance 1982 for ensuring establishment of an airport company under Companies Act 2017 and enabling the companies to own the title and assets of airports ordered by the federal government.

The law, however, allows the government to transfer shares of the company to the private sector. The law will also allow transfer of employees from the CAA to the company on same terms and conditions for a favourable condition.

In March last year, the government had developed the National Aviation Policy 2019 to make the role of the CAA as a regulator completely independent of service providers with financial and administrative autonomy within a period of two years.

The decision also aims to achieve the objective of the organisational change of the regulator with minimal adverse collateral disadvantage.

Subsequently, the federal cabinet approved in principle the proposal for separation of CAA’s regulatory and service provider functions. Later, the cabinet had at a meeting on May 19 constituted the six-member cabinet committee under Razak Dawood, which also had the aviation minister as its member. Dr Ishrat Hussain, the convener of the Institutional Reforms Committee, had also participated in the proceedings of the committee.

During one of the meetings, the Privatisation Commission had suggested that instead of making a single company for different airports, companies should be incorporated for each airport separately.

Published in Dawn, July 27th, 2020