CHAPTER SEVEN FEES, CHARGES AND INCOME GENERATION. Summary. Introduction. Landing and Navigation Charges

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1 CHAPTER SEVEN FEES, CHARGES AND INCOME GENERATION Summary This Chapter deals with the charges that MOD makes for various services provided to civil aircraft at MOD airfields, the circumstances in which services may be provided free of charge or at a reduced rate and the circumstances where additional charges should be made. It also covers arrangements under Income Generation (formerly Wider Markets ). Introduction 7.1 For the purposes of charging, a MOD airfield is defined as an area prepared for the accommodation (including any buildings, installations and equipment), landing and take off of aircraft. Every aircraft, other than MOD aircraft, must pay for the services provided at a MOD airfield, unless there is provision in this JSP for a waiver or reduction of the charges. 7.2 MOD airfields may offer a variety of services to civil aircraft including navigation services, housing and parking. Charges must be levied for all of these services except where the circumstances fall within the standing waivers set out at Annex F to this chapter, or a discretionary waiver has been authorised by the holder of an appropriate financial delegation. Standing reductions to the usual charges are set out at Annex B to this chapter. Any abatement of charges beyond these standing reductions must be approved by the TLB Holder or by someone to whom they have delegated the authority. For more information on abatements and waivers see Paragraphs 7.20 to Landing and Navigation Charges Charges applicable 7.3 The current charges for landing and navigation services at MOD airfields are detailed at Annex A to this Chapter. No reduction in charges should be made because any airfield facilities are not available. All aircraft 7-1

2 landing at MOD airfields must be charged in accordance with these Annexes unless an alternative rate has been authorised by the appropriate budgetary area and endorsed by their TLB (see Paras 7.6 to 7.9 below). 7.4 Any services utilised by civil aircraft at MOD airfields must be provided at no cost to MOD. Services to civil aircraft are provided from irreducible spare capacity within the Station or unit, which for wider strategic or other reasons must be retained, but which may be deployed on repayment tasks if their use does not cause detriment to their primary role. For example, Fire, Crash and Air Traffic Control services may have to be available 24 hours a day, but are not fully utilised for Defence tasks at all times and can therefore be used to handle civil aircraft within the spare capacity available. 7.5 Where services are provided to civil aircraft out of normal watch hours however, it is possible that the provision of these services could result in a cost to MOD, e.g. civilian overtime or expenses associated with calling out Service personnel. To ensure that any costs incurred are recouped, charges for civil aircraft movements outside normal watch hours are subject to an additional cost. Details of the additional costs and how to apply them are at Annex C to this Chapter. Income Generation (IG) - formerly Wider Markets Initiative 7.6 Under IG, service providers are encouraged to generate income, primarily from exploiting irreducible spare capacity on a commercial basis. Stations or Units may at their discretion base their rates of charge not on the standard rates provided in Annexes A-D to this Chapter, but on what the local market will bear. This should ideally be done on the basis of the full resource cost of providing the facilities, increased to the level prevailing in the market. 7.7 If the standard rates contained in this JSP are below the local market rate, there is a danger that MOD will be accused of using tax payer funded assets to undercut the private sector. Similarly, if the standard rates are above the local market rate, MOD will be failing to compete. Stations and Units, particularly those used by larger volumes of civil aircraft, are therefore encouraged to set their own landing, parking and housing fees to levels which equate to the prevailing market rate. It is permissible to do this only if the amounts to be charged do not fall below the marginal cost to MOD. Local budget managers can advise on the definition of the terms full and marginal cost. Note that the Indemnity Administration Charge detailed at Annex G to this Chapter may NOT be amended locally see also Paragraph All proposals to deviate from the rates published in this JSP must be subject to proper scrutiny. Stations and units will in all cases be required to produce a business case justifying the charges which they plan to introduce. 7-2

3 In order to provide scrutiny and control, all business cases should be submitted to the TLB Senior Finance Officer for approval in accordance with JSP 368 Chapter 2 Annex Stations or Units receiving relatively few civil aircraft may choose to continue to apply the standard rates which are set out in the Annexes to this Chapter and are adjusted periodically. However, all civil aircraft utilising a Station or Unit must be charged under the same scheme. Stations and Units are to charge visiting civil aircraft on the same basis and not treat one customer differently to another. Value Added Tax 7.10 The figures quoted throughout this JSP are exclusive of Value Added Tax (VAT), which must be charged at the current standard rate on all charges (except the Indemnity Administration Charge) raised at MOD airfields in the UK. However, some civil users may be able to produce a valid EU VAT Registration Number, which under certain circumstances will result in VAT being zero rated. See Annex H to this Chapter for more details. Enquiries on the application of VAT should be directed to MOD s VAT focal point in Financial Management Policy & Development (FMPD) on Reduced charges 7.11 In certain circumstances the MOD considers it appropriate to reduce some or all charges at MOD airfields. Details of the circumstances where charges may be reduced without reference to higher financial authority are at Annex B to this Chapter. Civilian Police Forces 7.12 The MOD should not automatically reduce or waive charges in respect of use by civilian police forces, even where such use is operational. However, where arrangements have been made for them to operate out of a Station or Unit as a lodger unit, they may be charged a monthly rate, calculated with the assistance of Defence Infrastructure Organisation (DIO) and TLB finance staff. While this will include an element for landing fees etc, they need not be charged for each individual movement. This policy includes police operated air ambulances Where land has been prepared on non-airfield sites for use by Police helicopters and Police operated air ambulances, they should pay a fee for usage calculated by DIO. Parking and Housing fees 7-3

4 7.14 Details of standard parking and housing fees are at Annex D to this Chapter. Indemnity Administration Charge 7.15 Details of Civil User Indemnity Administration Charges are at Annex G to this Chapter. Stations and units are to charge the Short Term or Casual Use rate for each landing, unless the captain of the aircraft is able to show proof of exemption. Such proof is provided to the civil user by Air DRes Civil Use. Recovery of Charges from Civil Users Procedure 7.16 Depending on the Station or Unit, payment may be made in cash, by cheque supported by a bank guarantee card or by credit card. Stations and Units are advised to ascertain the proposed means of payment from the captain of the aircraft in advance to ensure it is acceptable The CO or Head of Establishment is responsible for collecting aircraft landing, housing, parking fees, and for Casual users the Civil User Indemnity Administration Charge (IAC). Landing, housing and parking fees are to be credited to the appropriate service receipt RAC, details of which can be obtained from the Station or Unit Budget Manager. IAC receipts however must only be charged to UIN D3500B, RAC RLB Landing, housing, parking fees and Civil User Indemnity Administration charges are to be detailed on MOD Form 400. Guidance on the completion of this Form and the handling of outstanding accounts is at Annex E to this Chapter. Recovery of charges from military aircraft not exempt from charges 7.19 Where a military aircraft is not entitled to free facilities as described at Annex F to this Chapter and charges are not recovered before the aircraft leaves the Station or Unit, MOD Form 400 is to be forwarded to the Financial Management Shared Services Centre at Liverpool. See Annex E to this Chapter regarding the use of MOD Form 400. Abatement and Waiver of Charges 7-4

5 7.20 In accordance with JSP 368 Chapter 2 Annex 2.16 TLB holders have limited authority to abate or waive landing and parking fees. TLB holders are empowered to delegate such authority. Where they have done so, officers to whom that authority has been delegated will be in receipt of a formal letter of delegation. Station Commanders not in receipt of such a letter must submit any request to waive or abate charges to the TLB holder, or in accordance with instructions issued by the TLB Where there are mutual benefits to both the user and the MOD, and these benefits are evenly balanced, or are in favour of the user, abatement should be considered. Where the benefits are exclusive to MOD, or the larger share of mutual benefits falls to the Department, the approving authority may consider a waiver. In either case full details of the decision and its justification are to be retained for audit purposes The charitable status of an organisation or event is not in itself sufficient justification to waive or abate charges. Some specific benefit to defence must be identified. Further guidance on waivers and abatements is available in JSP 368 Chapter 2 Annex Air Ambulances 7.23 MOD does not charge landing or parking fees for any ambulance landing where a life is at risk and/or a patient is being transported from a place of danger to a place of safety, e.g. from the scene of an accident to a hospital In addition, landing and parking fees may be waived at MOD airfields for those air ambulance services represented by the Association of Air Ambulances. Note that this additional waiver does not apply to police or Scottish Executive Health Department (SEHD) sponsored air ambulance services because it would be inappropriate for the MOD to subsidise SEHD, police or local authority expenditure As MOD is not funded to support air ambulance services, charges should still be raised to cover food, fuel, accommodation, stores and utilities. Charges should also be raised to recoup any additional costs incurred by MOD as a result of operating an airfield outside of normal hours solely to cater for ambulance landings. Air ambulances are charged for fuel at the lower Other Government Department (OGD) rate MOD must not subsidise commercial companies operating costs. Where a commercial company operates an aircraft under contract to an air ambulance trust, the waiver of landing and parking fees and the reduction in fuel charges will only apply if the company undertakes in writing to pass the 7-5

6 savings on to the trust. No increase in a commercial company s profits must result from this waiver Queries concerning this waiver and applications to extend it to other air ambulance operators should be addressed to DFM-FMPA-Ahd-Charging Policy (see Appendix 5). Charges for Aircraft under Charter to the United Nations or Military Aircraft Provided by Non UK Governments on the UN s Behalf UN flights and charter flights should be charged for any services provided at MOD airfields including landing, parking and housing fees. The individual companies or countries should be charged, and MOD should not be responsible for charging the UN direct. It is the responsibility of the company or country concerned to obtain reimbursement from the UN Some aircraft chartered by the UN may be provided by a country with which we have a reciprocal arrangement for the waiver of landing, parking and housing fees. This arrangement however does not apply when the aircraft are operating on charter to the UN. 7-6