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INTERNATIONAL FINANCIAL FACILITY FOR AVIATION SAFETY (IFFAS)

QUESTIONS AND ANSWERS  


Q :   What is the IFFAS?

A :   The IFFAS will be a mechanism for financing safety-related projects for which States cannot otherwise provide or obtain the necessary financial resources. It will be driven by an administrative charter based on the principles of transparency and sound management, and on a selection of projects to be funded on a priority basis through the USOAP (see CSG IFFAS-IP/1 containing a transitional administrative charter which spells out principles of operation of the IFFAS and a resolution of Council approving the charter).


Q :   Why an IFFAS?

A :   Over the past seven years, during which an IFFAS has been discussed at ICAO, it has been recognized and demonstrated, particularly through an extensive study carried out by the Secretariat in 1998, that there exists a need to finance safety-related projects in certain areas of the world and that there was no existing funding mechanisms or collection modalities within the existing aviation system to provide funding for their needs.


Q :   What are the principles and strategic facts supporting the establishment of an IFFAS?

A :   Firstly, based on the fact that there is a demonstrable need for the establishment of an IFFAS, Assembly Resolution A33-10 endorses the concept of an IFFAS (clause 2 a). The Resolution goes on to lay down principles which would apply to the development, establishment and operation of an IFFAS (clause 2 b). In addition to the principles established in Resolution A33-10, aviation safety is one of the most important factors in civil aviation, and it is recognized by the ICAO Strategic Action Plan as being a major element of consideration within ICAO. Assembly Resolution A33-9 (Resolving deficiencies identified by the Universal Safety Oversight Audit Programme and encouraging quality assurance for technical cooperation projects) in clause 2 urges the Secretary General to ensure that ICAO provides, when requested, reasonable assistance within available resources, to help States to obtain the necessary financial resources to fund assistance projects by Contracting States, industry organizations or independent consultants.


Q :   Can there be other mechanisms, such as those offered under the technical cooperation programme substituted for an IFFAS mechanism?

A :   No. Firstly, because Assembly Resolution A33-10 clearly identifies an IFFAS mechanism and lays down principles for such a mechanism, as explained above. Secondly, because the other existing mechanisms that may reflect a vague similarity to the IFFAS, such as the ICAO Objective Implementation Funding Mechanism, do not have the features of the IFFAS as stipulated in Assembly Resolution A33-10, particularly clause 3 b).


Q :   What is the link between the IFFAS and the Technical Co-operation Bureau?

A :   A clear distinction must be drawn between the roles of each institution, namely:

  1. the IFFAS as a financial facility or a mechanism to provide financial support to States; and,
  2. the Technical Co-operation Bureau, as responsible for providing technical and financial assistance to States in the development and implementation of technical cooperation projects, as well as in the mobilization of funds.

At the option of Contracting States, technical cooperation projects may be implemented by States themselves, by ICAO, through the Technical Co-operation Bureau, or by any third party other than ICAO, including development banks, bilateral/multilateral institutions, lending institutions or any other development partner.

As long as a technical cooperation project document of a participating State is approved by the IFFAS Governing Body, the State may request financial support from the IFFAS, notwithstanding who the party responsible for the management and implementation of the said project may be, as described above. Therefore, such funds may also be used in conjunction with available State funds or any other resources provided by donors.


Q :   What is the status of the IFFAS and what is its link to the ICAO Council?

A :   Assembly Resolution A33-10 requests the Council to pursue the establishment of an IFFAS, clause 3 c) of which clearly provides that the management strategy of the IFFAS should be developed on the principles of, and in conformity with, the existing ICAO legal regimes (any independence of the IFFAS from ICAO involvement is expressly restricted in clauses 2 b) and 4) to independence from ICAO’s Programme Budget). These provisions effectively preclude the creation of a new legal entity with its own legal personality.

The appropriate legal basis for the IFFAS, in accordance with the above-mentioned principles of Resolution A33-10, is enshrined in Chapter XV of the Chicago Convention, particularly Articles 69 and 70.

Council involvement in the IFFAS can also be culled from Resolution A33-10, clause 7, where Council is requested to report to the Assembly on the progress of the IFFAS.


Q :   What different types of services will an IFFAS offer?

A :   Primarily, the IFFAS will offer loans, in exceptional cases by way of part subsidy and part loan. Also, in extremely needy instances, the IFFAS may offer grants, as appropriate. Recovery of loans would be through a guarantee offered by a State or a reputed bank (see administrative charter for details).


Q :   What will be the nature of the staff servicing the IFFAS?

A :   Resolution A33-10 provides for a management structure within the ICAO legal regime. Article 54 h) of the Chicago Convention is clear on this point. Any staff benefiting from ICAO status is under the authority of the ICAO’s chief executive officer, appointed by the Council, i.e. the Secretary General, and such staff shall be subject to rules established by Council, as per Article 58 of the Convention (Staff Regulations refer). An example may be taken in this regard from African Civil Aviation Commission (AFCAC), European Civil Aviation Conference (ECAC), and Latin American Civil Aviation Commission (LACAC) where staff are officially ICAO staff having contracts signed by Secretary General, under the “service” authority of whom they stand.


Q :   What system of quality control and auditing would the IFFAS employ?

A :   Operative clauses 3 d) 5) and 6) of Resolution A33-10 provides for a transparent and simple management mechanism with, inter alia, measures to assure quality control and to assess effectiveness and efficiency at all levels and adequate provision for the auditing of accounts. There is an ICAO auditing system in the “existing ICAO legal regime”, which could be made formally and directly applicable to IFFAS. IFFAS being under ICAO’s umbrella, should be subject to the external auditor’s jurisdiction. As required for this purpose, and if necessary, adjustment of the terms of reference of the external auditor could be made, as it would entail additional costs to be recovered from IFFAS. The internal auditor’s jurisdiction should also cover IFFAS (in particular, staff appointed by the Secretary General). Also, as has already been mentioned, operative clause 7 of A33-10 states that report of the Council to the next Assembly should include a performance assessment and audited financial statements.


Q :   How will funds received from participating States be used?

A :   Assembly Resolution A33-10, clauses 3 d) 4) call for safeguards to ensure the proper effective and efficient application of funds. Therefore, use of funds both for the administration of the IFFAS and for financial assistance provided toward safety-related projects would have to be clearly identified on the basis that firstly there will have to be some allocation of funds for administrative purposes. Where the allocation of funds for implementing projects are concerned, in order to accommodate instances where IFFAS funds are not fully allocated immediately to projects, the IFFAS structure should incorporate a Financial Facility management component. The on-going pool of funds that remains in excess of project distribution can be allocated to a trust management account in order to generate maximum return on available resources. Management of the funds in trust will require an investment policy, under which the excess finances are managed.


Q :   What would it cost to administer the IFFAS?

A :   Initially, the IFFAS Secretariat would consist of one or two officers. These officers can be provided by the Secretariat to perform IFFAS-related tasks in addition to their substantive duties on a costrecovery basis. Quantity of work put in by Secretariat staff may be assessed through time sheets already in use and costs may be apportioned accordingly. It is not envisioned that this would be a major burden on IFFAS funds. Throughout the existence of the IFFAS, the Secretariat structure supporting the IFFAS should be lean, so as not to impose a heavy financial burden on IFFAS assets.


Q :   Once an IFFAS is established, would it survive in the long term? Would the market, i.e. demand for and supply of services be sustained?

A :   The need for an IFFAS has already been demonstrated by an indepth Secretariat Study (C-WP/11235). A subsequent survey conducted resulted in positive responses from States who confirmed that there was a demonstrable need for funding safety-related projects. On the supply side, contributions of States have been encouraging.

The sustainability of the IFFAS would largely depend upon the principles applicable to its management and the use of funds. The IFFAS could involve mobilization of private financial resources that may be available and encourage investment by the private sector. Assistance partnerships, under the IFFAS umbrella could be made available.


Q :   Once an IFFAS is established, how could it be organized?

A :   Once an IFFAS is established through resolution of the Council and in accordance with the principles of an administrative charter already recognized by that resolution, a core group of one or two officers (initially from the Secretariat along the lines mentioned above) could start administering funds. A technical group could identify suitable projects through the USOAP.


Q :   Does IFFAS have a regional significance?

A :   Definitely. Throughout discussions in the Council, the idea of global application of principles on a regional basis has been favoured. Regional promotion of IFFAS is already being carried out at workshops, seminars and other meetings at which ICAO organizes or participates in the regions. States are being sensitized to the IFFAS. The regional applicability of IFFAS will be in cooperation with regional financial institutions and such regional bodies as the African Civil Aviation Commission (AFCAC), European Civil Aviation Conference (ECAC) and Latin American Civil Aviation Commission (LACAC).