Draft Amended Aviation sub-sector code of 2016 and the Summit for the Review of Civil Aviation Policy of 2021

In March 2021 the Department of Transport hosted a summit for the Review of Civil Aviation Policy and specifically B-BBEE transformation.

During the summit reference were made to the following legislation, Policies, Strategies, and information:

• The B-BBEE Act (53/2003): Transport Sector Broad-Based Black Economic Empowerment (B-BBEE) Codes in Gazette 39744 dated February 2016
• Broad-Based Black Economic Empowerment Amendment Act
• The National Development Plan (NDP – 2030)
• The Aviation Sector Code
• The Employment Equity Act
• The Skills Development Act
• The Competition Act
• White Paper on National Transport Policy, 1996
• National Civil Aviation Policy, 2017
• Draft National Civil Aviation Transformation Strategy, 2018

Arising from the summit a concise summary is given below.

Policy Statement

1. The Department of Transport should formulate a national civil aviation transformation strategy for implementation in the aviation industry in line with the Aviation Sub-Sector Broad-Based Black Economic Empowerment Charter, working closely with other organizations in the aviation industry.
2. Maximum utilization of existing consensus-building mechanisms, such as NEDLAC, to negotiate the evergreen contracts and solicit buy-in of organized labour into Government transformation imperatives.
3. Stimulate the aviation industry by creating an enabling operational environment for South African Original Equipment manufacturers (OEM) to access international markets.
4. Stimulate the aviation industry through designated groups’ business investment initiatives – aviation business incubation programmes.

Policy provisions must support NDP (National Development Plan) objectives and maximise opportunities for creating employment prioritizing vulnerable groups by:

A. Increase employment opportunities and broaden ownership of assets to designated groups.
B. Diverse workforce of skilled, technical, professional, and managerial occupational roles reflecting the racial, gender and disability groups in the country.
C. Active participation and empowerment of women, youth, and people with disabilities.
D. Effective support of the role of women as leaders in all sectors of society.

The Aviation B-BBEE Codes have been developed to advance the objectives of the B-BBEE Act.

The Codes also constitute a framework and establish the principles upon which B-BBEE will be implemented in the Aviation Sector and are intended to:

I. Create economic growth through ownership, management control, and enterprise and supplier development in the Aviation Sector;
II. Ensure the entry of women, youth, and people living in rural areas at all levels of the industry; and
III. Provide the basis for the sector’s engagement with other stakeholders including government and labour.

Aviation charter alignment process to revised Codes of Good Practice

Issues identified

1. The Transport Sector Charter Council is entrusted to facilitate and popularize the Integrated and Sub-Sector Charters of Transport (one of which is Aviation) and scorecard.
2. The aligning of the transport codes with the DTIc revised codes (from initial seven to five) has not been completed.
3. There is a need for independent analysts to review and align the draft codes gazetted, compilation of new documents, and stakeholder engagements in line with factoring covid-19 pandemic challenges (at the time of the summit).
4. Review process might be required when the new Charter Council is established.
5. Aviation B-BBEE charter codes gazette in 2009 are still in force delaying transformation progress further.
6. Direct result of the non-existence of the Charter Council.

The Desired Outcomes

A. Accelerated programmes of industry-specific enterprise and supplier development.
B. An effective aviation economic transformation framework and implementation mechanisms.
C. Sustainable aviation framework for SOEs binding foreign suppliers of technology-intensive products and services to a set of BEE obligations.
D. Restructured aviation assets institutional arrangements to increase black participation at all levels (shareholding/employment/procurement services and goods).
E. Innovative funding and incentives to support the development and growth of black businesses to accelerate the achievement of ownership targets.
F. Effective socio-economic programmes for the development of aviation entrepreneurship targeting youth, women, and people with disabilities.
G. Promote the creation of Aviation sector B-BBEE consortia share ownership schemes.
H. Sustainable and career-driven employment opportunities in the aviation industry.
I. Increased Industry intake of internship candidates to support skills development.
J. Strategic partnerships between industry and government in aviation youth development corps – aviation youth flagship projects.
K. A transformed and growing aviation sector – Increased participation in shareholding, employment, and procurement of goods and services.
L. Aligned National Civil Aviation Transformation Strategy to ICAO programmes and other applicable programmes.
M. An effective aviation economic transformation framework.
N. Accelerated programmes of education and training and enterprise development.
O. Effective transformation monitoring, evaluation, and reporting mechanisms for the aviation industry.

The Steps to undertake

 Re-establishment of a Transport Sector Charter Council to conclude the alignment process to the Codes of Good Practice.
 Conduct assessment on aviation industry transformation compliance and progress achieved.
 Development of aviation economic transformation framework and monitoring mechanisms in line with economic transformation framework.
 Strategic collaborations between public and private funding agencies to develop innovative funding mechanisms for BEE entities seeking to invest in aviation.
 The Transport Sector Charter Council has been appointed, and the alignment process has been concluded.

OBJECTIVES OF THE AVIATION SECTOR CODES

1. The Aviation B-BBEE Codes have been developed to advance the objectives of the B-BBEE Act.

The Codes also constitute a framework and establish the principles upon which B-BBEE will be implemented in the Aviation Sector and are intended to:

I. Create economic growth through ownership, management control, and enterprise and supplier development in the Aviation Sector;
II. Ensure the entry of women, youth, and people living in rural areas at all levels of the industry; and
III. Provide the basis for the sector’s engagement with other stakeholders including government and labour.

OBJECTIVES OF THIS STATEMENT ASC000 – GENERAL PRINCIPLES AND THE LARGE ENTERPRISES SCORECARD

A. Specify the measurement principles and industry-specific principles of Broad-Based Black Economic Empowerment (B-BBEE) within the Aviation Sector;
B. Specify the application of the Aviation Sector Codes and the basis for measurement under the Aviation Sector Codes;
C. Indicate the qualifying threshold for a Measured Entity to qualify as an Exempted Micro Enterprise (EME) or Qualifying Small Enterprise (QSE) within the Aviation Sector;
D. Specify the method of measuring Start-Up Enterprises;
E. Specify the elements of B-BBEE measurable under the Large Enterprises Scorecard, the Large Public Sector Scorecard, and the Qualifying Small Enterprises Scorecard of the Aviation Sector Codes;
F. Specify the basis for determining compliance by Entities with the Aviation Sector Codes; and
G. Provide for the Effective Date of the Aviation Sector Codes.

SCOPE OF APPLICATION

The scope of the Broad-Based Black Economic Empowerment (B-BBEE) sector code is limited to the Aviation Industry inter alia:

1. Scheduled and non-scheduled airline operations, including passenger, freight, charter, and general aviation;
2. Aircraft maintenance, including engine and component overhauls and spare parts;
3. Airline Service Providers;
4. Ramp handlers;
5. Airside operators;
6. Private;y Owned Pilot Training Institutions;
7. Privately Owned Airports;
8. Airport facilities and services such as Handling Agents etc.; and
9. Air Navigation and technical service providers.

This Charter will have an impact on other sectors of the economy that are not aviation specific, for example, general services such as catering, retail, and other services.

The empowerment requirements for non-South African domiciled airlines differ from those for Aviation in general and are captured in the Foreign Owned Airlines B-BBEE Scorecard.

DEVELOPMENT OF THE AVIATION SCORECARDS

The Department of Transport embarked on a nationwide consultative process to solicit views and inputs in the sector to align the Aviation Sector Codes to the Amended B-BBEE Codes of Good Practice. The Aviation Codes, once approved and published, will be the only basis for the application and recognition of B-BBEE initiatives undertaken by the Aviation Sector.

The participation of all major stakeholders was encouraged and submissions were obtained from various constituencies. The Minister of Transport was involved and consulted in the drafting of the sector code and will provide continuous support for the codes going forward. The Codes as published will be based on the definitions, principles, and methodologies of transformation outlined in the B-BBEE Act and the B-BBEE Codes of Good Practice issued by the dtic. Where there is any conflict the Codes of Practice takes precedence.

Sector-specific sub-elements will be clearly defined in the Aviation Codes.

BROAD-BASED BLACK ECONOMIC EMPOWERMENT ELEMENTS

This Draft Amended Broad-Based Black Economic Empowerment Sub-Sector Code for the Aviation Sector seeks to encourage all stakeholders to pursue a transformation agenda according to the broad guidelines set out in the BEE National Strategy and B-BBEE Act. It is a measurement of the B-BBEE elements that determine the level of B-BBEE contribution by the measured enterprise. There are five basic elements, namely:

1. Ownership
2. Management Control
3. Skills Development
4. Enterprise and Supplier Development
5. Socio-Economic Development

This concludes a basic summary of the Aviation Sector’s sub-sector code overview. Future articles will delve into more specific detail of the B-BBEE elements, priorities, definitions, and means of measurement.