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Applying for an AOC - What is Financial Viability Assessment (FVA)?
What is Financial Viability Assessment (FVA)?
Paragraph S28(1)(a) of the Civil Aviation Act 1988 states that CASA must issue the AOC if satisfied about certain matters. Paragraph 28(2) states “The financial position of the applicant is one of the matters that CASA may take into account in forming a view for the purposes of Paragraph (1)(a)”.
A FVA is carried out to provide CASA with information about the financial position of the AOC applicant in accordance with Paragraph 28(2).
Requirement for Financial Assessments
The types of applications affected by FVA are described in the CASA Air Operator’s Certification Manual (AOCM), Section 2.4. In some cases you, the applicant, can perform the assessment. This is called the “FVA Self Assessment”. In other cases, such as more complex operations, a more detailed assessment will be conducted by CASA.
Do I need a Financial Viability Assessment?
Depending on the type of operations you propose to have, you may be required to undertake a CASA Assessment or an applicant self-assessment using FVA Applicant Assessment Form 064.
We have provided a list below to help you determine which type of assessment you need to undertake.
- Initial issue of an RPT AOC
- Adding RPT for the first time to your existing AOC
- Initial issue of an AOC for passenger carrying charter using turbine aircraft
- Adding first turbine aircraft to your existing RPT or charter AOC
- Adding a passenger carrying charter using turbine aircraft for the first time to your existing AOC
The information required for a CASA assessment is provided after the AOC application is submitted - the AOC applicant will be contacted by CASA advising of the requirement when the application gets underway.
- Initial issue of a passenger carrying charter AOC except when using a turbine aircraft
- Adding passenger carrying charter to your existing AOC except when using a turbine aircraft
An Applicant Assessment is submitted when you submit your AOC application.
If any of the above criteria for CASA assessment or applicant assessment does not apply to your application, you do not need to undertake a Financial Viability Assessment.
For information on requirements for CASA Assessment, please refer to Part 2.4 of the AOCM.
There are two steps in the self-assessment process:
- Prepare a 3-year cashflow forecast
- Explain how any cash shortfalls will be covered
The FVA Applicant Assessment Form (Form 064) is only a summary and a detailed cashflow forecast is required in order to identify operating costs. In many cases, you will already have a cashflow forecast prepared for business planning purposes or to support a loan application.
What is the cashflow forecast?
The cashflow forecast must cover three years of operations. This is to identify the impact of longer term operational items such as loan repayment or engine overhauls.
The AOCM includes a worked example: self-assessment and explanatory notes
This will assist you to identify and understand what is required. This example is only a guide. The actual costs will be different for each applicant.
Why a FVA is important and the safety benefits of preparing a cashflow forecast?
A cashflow forecast will provide advance warning of financial obligations that will impact on commercial operations. Income can fluctuate and will depend on the revenue generated and collected from flying operations. Expenditure may be partly fixed and partly variable. Some expenditure items such as fuel and maintenance may reduce if flying is reduced. Other expenditure items such as loan repayments, rent and wages are relatively stable. Operators may also need to plan and program for significant cash outflows required to cover overhauls.
Most operators are aware of the factors affecting cashflows and understand the minimum flying hours or load factors required to cover fixed costs. But there are risks that safety might be affected if unexpected cashflow problems arise, or if there is no plan to cover known cash requirements. These risks can be managed if operators use their knowledge to prepare a cashflow forecast.
For further information
For more information on Financial Viability Applicant Assessments, contact the CASA Service Centre. For Financial Viability CASA Assessments, contact the Financial Assessment Team on 131 757.