Ms Anne Nolan:

I thank the Chairman and wish the members of the committee a good afternoon.
I am honoured to have been the chairman of the Irish Aviation Authority for the past four years. I am here today because the Minister for Transport, Tourism and Sport has asked me to serve a second term as chairman of the authority. I thank the committee for the invitation to present an overview of my professional background and the key challenges facing the authority in the next few years. I look forward to answering any questions after my brief presentation.
I qualified as a pharmacist in 1982 and obtained a master's degree in business administration from University College Dublin in 1993. In recent years I have completed a number of modules in the director of development programme at the Centre for Corporate Governance at UCD. I also regularly attend courses provided by the Institute of Directors which focus on corporate governance, board dynamics and the duties and responsibilities of a chairman.
I have spent practically all of my career working in safety-critical environments. From 1982 to 1987 I worked in retail pharmacy and pharmaceutical wholesaling. In 1987 I joined the Federation of Irish Chemical Industries, a trade association that used to represent all of the rapidly growing chemical, pharmaceutical and allied industries in Ireland. In 1994 the pharmaceutical part of the business, which supplies medicines to the health services, became the Irish Pharmaceutical Healthcare Association. I was appointed the first chief executive of the association in July 1994.
It would be worthwhile for the committee if I briefly touched on the work of the IPHA and the sector it represents. In common with aviation, the sector is highly innovative and creates a large number of high-quality jobs. For a country this size, we have an immensely vibrant pharmaceutical sector which employs more than 25,000 people directly and as many more in support services. Between 2011 and 2013 more than €1.7 billion was invested in the sector, which led to the creation of an additional 1,500 jobs.
In addition to my role as CEO of the IPHA, I have served on the board of the Irish Medicines Board for ten years and the board of the Food Safety Authority of Ireland for six years, and I have also served as chairman of their respective audit committees. I was a member of the Council of the Pharmaceutical Society of Ireland, which regulates pharmacists, for four years. I also served nine years on the Irish board of the Smurfit Graduate Business School. I currently serve on the board of the Association of the European Self-Medication Industry and the executive committee of the European Federation of Pharmaceutical Industries and Associations. I am an assistant professor and lecturer in management science at the school of pharmacy at Trinity College Dublin.
In July 2010 I was appointed as the fifth chairman of the IAA, having first been appointed to the board as a non-executive director in 2006. Collectively, my experience as a senior executive in the pharmaceutical industry and as a board member of three regulatory authorities, along with my academic qualifications and my 27 years of experience in the FICI and IPHA boardrooms, have enabled me to effectively and positively discharge my duties as chairman of the IAA. I am truly delighted to have been asked to serve a second term, as we have commenced a number of key strategic projects, alliances and commitments. I would very much like to be part of the IAA during this very exciting time and as these strategic initiatives come to fruition.
I shall give a short overview of the Irish aviation industry. It is important to contextualise Ireland's role in the global aviation industry as well as its impact on the Irish economy. I know the committee is aware that the aviation sector is hugely important to Ireland, because other IAA chairpersons who have attended the committee have underlined that point. Our island status means that we are far more dependent on aviation than many of our continental neighbours and trading partners. The sector contributes just over €4 billion to our GDP, of which €1.9 billion comes from aviation directly, €1.3 billion comes through the supply chain and the remaining €900 million comes from associated spending by people employed in aviation. The sector supports 26,000 jobs directly and a further 16,000 in the supply chain. Ireland's tourism industry, which is hugely dependent on aviation, accounts for a further €5.3 billion contribution to GDP and 180,000 jobs.
As the committee will be aware, aviation is a highly competitive and global business. It is marvellous to see Ireland play a leading role in the industry. Ireland punches well above its weight in the global aviation industry thanks to the pioneering efforts of its predecessors, who were able to turn dreams into reality and capitalised on Ireland's collective determination and world-class skill set.
There are approximately 20,000 large aircraft such as Boeing 737s and Airbus 320s in operation globally at this time. As many as 8,000 of them are leased, of which 4,300 are managed out of Ireland. This represents a quarter of the world's entire fleet. This business all started under the late Dr. Tony Ryan through GPA, and now nine of the world's ten largest aircraft leasing companies are located here. They employ more than 2,000 people directly and indirectly in challenging, satisfying and well-paid jobs.
We have achieved a leading position in the air finance and leasing sector. We are seen as a global powerhouse in that area. We also have a number of highly successful and much-admired international airlines which between them carry a staggering 112 million passengers on nearly 700,000 flights around Ireland and Europe and to the US. There were 12,000 more flights in 2013 than in 2012, which marks 12 consecutive years of consistent growth for this sector of the Irish aviation industry. Due to the successful leasing industry and the size of some of our airlines, there are more than 1,200 aircraft on the Irish register, including 750 large aircraft. As a result, Ireland is Boeing's single largest customer outside of the USA, a truly phenomenal position.
Furthermore, the Irish aviation sector is composed of many entities and activities beyond the more familiar areas such as airports, successful airlines and leasing companies. For example, Ireland has a very strong tradition and reputation in the aerospace sphere. In particular, the maintenance, repair and overhaul sub-sector plays a vital role in supporting the wider aviation sector in Ireland, including airline and airport activity, aircraft finance and leasing activity and manufacturing. There are many other businesses which service the sector, such as pilot and aviation engineer training facilities, aeromedical centres, simulator farms, specialist aviation seat and carpet makers, export-focused component manufacturers and academic institutions, to name just a few. Ireland is also home to a number of corporate aviation companies supplying private aviation services to clients. We also have a thriving and enthusiastic general and sports aviation community.
When I first joined the IAA board I was truly struck by the size of the sector here and the range of activities going on at any one time. Ireland's geographical location means it has a strategic prominence in the north Atlantic. In terms of air traffic management, it stands as the marshalling yard between Europe and North America. As much as 90% of all air traffic to and from the US travels through Irish airspace, which is the busiest oceanic airspace in the world. On any given day the IAA is charged with the safe handling of approximately 1,800 flights which pass through Irish airspace. This happens at our air traffic control facility in Shannon, 24 hours in a day and 365 days a year.
Dublin Airport is currently the seventh largest airport in Europe in terms of passenger numbers. While it suffered dreadfully during the downturn, there is now a sharp upswing. So far this year there has been a 7% growth in air traffic numbers.

The utilisation of the main runway is among the best in Europe and the number of aircraft it can safely handle per hour is second only to Gatwick, which has a superior ground infrastructure to Dublin, enabling easier access to the runway. I have highlighted all of these facts because the sheer scale of the contribution that aviation makes needs to be borne in mind when reviewing the role and contribution of the Irish Aviation Authority, IAA.
Turning to the IAA, the company has a key role to play across all of the sectors I have just mentioned. The IAA is responsible for the management of Irish controlled airspace covering some 451,000 sq. km. Air traffic management includes the provision of operational services, engineering and communications in our vast airspace and the provision of the related air traffic technological infrastructure.
We are also responsible for the safety regulation of the civil aviation industry in Ireland and, in recent years, we have taken on responsibility for aviation security regulation in Ireland.
I would like to highlight some key points about the IAA for the committee. The IAA’s remit is to always act in the public interest first and foremost, and safety is at the very heart of our business. It is, in essence, our corporate mission and underpins everything we do. The board and the executive management foster a culture throughout the organisation where safety is paramount.
The authority ensures that Irish civil aviation operates to international and European safety standards and systems in accordance with international agreements and protocols. The safety regulation directorate, SRD, of the IAA is charged with overseeing the implementation of these standards and its activities, in turn, are subject to regular independent audits by the International Civil Aviation Organisation, ICAO, the European Aviation Safety Agency, EASA - I am sorry; we speak in acronyms a lot - and Eurocontrol. I do not know what that stands for but it is the international air traffic management organisation based in Brussels.
The IAA has an excellent track record in the discharge of its duties and obligations as aviation safety regulator for Ireland. In July 2013, for example, Ireland was ranked first out of 29 European states for the measure of effectiveness of safety management by Eurocontrol. In 2011, Ireland was ranked among the best in the world for civil aviation safety oversight, following an intensive international audit by the ICAO conducted during 2010. We were ranked by ICAO third in Europe and fourth worldwide, ahead of countries such as the USA, Germany and the Netherlands.
We achieve this high standard through our risk based oversight process, which focuses on three main aspects. First, our rolling surveillance programme involves the auditing of all Irish registered airlines wherever they operate. These audits cover their aircraft, flight crews, maintenance, fuel facilities and so on. The spot checks can be planned – or unplanned and unannounced.
Second, it is important to understand that the primary responsibility for safety lies with the operator and thus each airline is itself responsible for the safe operation of its service through the implementation of what we call a safety management system, SMS, which is effectively an internal control system. We audit their SMSs to ensure they meet the highest international standards and to ensure that they comply with all regulatory requirements.
Third, we monitor airlines and the overall system performance through the mandatory and voluntary incident occurrence reporting systems. Irish air operator certificate holders must report any occurrence which affects or is likely to affect the safety of the aircraft to the IAA. These reports are analysed to assess the safety risks associated with the incident. If an elevated safety risk is identified, appropriate action will be taken by the authority. The IAA recently participated in a survey of international reporting rates, the results of which indicated that Ireland has a strong reporting culture.
I will make some brief comments on our financial position. The IAA is completely self-funded and receives no funding from the State. Our revenues are generated through charges and fees, which are among the lowest in Europe, raised from our regulatory clients and airline customers in respect of their regulatory and operational activities.
The IAA is a profitable company.In 2013, we generated an operating profit of €25.7 million on a turnover of €173.5 million and paid a dividend to the shareholder of €4.8 million from our after-tax profits. The IAA’s multi-annual financial plan envisages, ceteris parabus, that we will make the same contribution in the years ahead.
The IAA has no debtand we have adequate cash to service our planned expenditure on our critical technological needs over the next five years.
The IAA has no pension issues. In accordance with the requirements of FRS17, plans were put in place a number of years ago to eliminate the pension deficit. I am pleased to say that the IAA remains on target to achieve its forecasted reduction in the pension deficit by 2018.
Seventy-five per cent of our income is derived from our international activities. For example, over 68% of our revenue comes from en route air traffic, that is, traffic that flies through our airspace without ever landing, and British Airways is our largest customer in that regard.
The authority’s competitive position is among the very best in Europewith well below average charges to customers and high levels of operational performance and project delivery. Our en route costs are among the lowest for Eurocontrol member states, the fourth lowest overall in 2014. Our gate to gate average financial cost effectiveness was €385 against a European average of €423 as determined in June 2013 by Eurocontrol.
We have one of the highest customer satisfaction ratingsfor an ATC service. The 2013 customer survey of the IAA’s top 25 revenue generators showed a very high level of satisfaction with our activities at 90.94%, which is up from 90.8% in 2012.
We employ approximately 650 highly skilled peoplesuch as experienced commercial airline pilots, aircraft engineers, and air traffic controllers. These personnel are located at five locations throughout Ireland.
To ensure productivity and efficiencies are as good as they can be, and to ensure the long-term viability of the organisation, the IAA has entered into a number of strategic partnerships and allianceswith other air navigation service providers, regulatory authorities and the private sector. In the short to medium term this gives us access to cutting edge aviation management and safety technologies. For example, our COOPANS air traffic management system is the most modern system in Europe, and this ensures efficiencies in the deployment of our personnel and savings for our airline customers.
In December 2013, we became a shareholder in an entity called Entry Point North, which is an international air traffic control training academy. In January 2014, the IAA became a shareholder in a very interesting company called Aireon, which is a provider of space based satellite ATC surveillance systems.
As part of our endeavours to support Irish aviationand with a view to promoting the importance of the industry, we have developed a number of ancillary events and activities such as FlightFest in September 2013, which was the largest free public event of The Gathering last year, and only last week we sponsored the inaugural Aviation Industry Awards, which have been established to give recognition to the leading businesses across our industry.
I will briefly address our approach to corporate governance in the authority. The IAA is a wholly owned commercial semi-State company which was established under the Irish Aviation Authority Act 1993, and is governed by the provisions of that Act as well as the Air Navigation and Transport Acts and, like all private companies, the Companies Acts. We also comply with a number of other pieces of legislation and policies such as the Code of Practice for the Governance of State Bodies and the Ethics in Public Office Act. The board insists on the highest standards of governance, and we monitor progress towards that objective regularly.
I will outline some of the key features of our company. In short, the IAA is a safety focused, financially independent, profitable, well-managed and well regarded international business, which works at the very heart of the aviation sector in Ireland to ensure that our airspace is as efficient and safe as it can be.
There are many challenges in the years ahead. As Chairman of the IAA it is incumbent upon me to support the board and the executive in their efforts to properly deal with all of these challenges and in their aspirations to achieve and exceed the organisation’s goals. I will set out our key challenges. First, we must above all else maintain our high safety record. We must never be complacent about safety matters. We must never take it as a given, and we must continue to ensure that it remains our primary focus and that it is at the heart of everything we do. This will be achieved through our robust three-pronged safety oversight processes comprising of our rolling safety surveillance programme; our oversight of the airlines’ safety management systems, and our constant monitoring of the incidents and occurrence reports.
Second, we must innovate continuously and invest in the right technology.

That is a key pillar that helps us to provide a safe, efficient and competitive service which will meet our customers’ needs. That is why we are planning to continue to invest in modern systems and infrastructure. We are well ahead of other states in that regard through our cutting edge automated safety oversight tools, highly advanced air traffic management, ATM, system and participation in the company to which I referred, Aireon, which will be a step change in air traffic surveillance in the years ahead.
Next, we must continue to improve our efficiency and reduce costs. Our customers and stakeholders require this of us. Almost 80% of our business is now subject to economic regulation, with the objective of driving down costs even further. As a very lean business already, especially relative to other companies across Europe, that is a challenge to be met. Innovation in our processes, technology and procedures will help us to achieve this.
We must continue to remain financially independentand ensure a return to the shareholder. This will be achieved through robust oversight by the board of the IAA’s planning and investment strategies and financial functions.
With the European Union looking to liberalise the European air traffic management market through implementation of the Single European Sky legislative package, the IAA must keep on top of the proposed changes. We must develop further relevant and productive strategic partnerships and allianceswith other jurisdictions with a view to ensuring the success of existing and proposed functional airspace blocks, FABs, which are designed to reduce costs to airspace users.
We must start to prepare for an uplift in the Irish and global economies. The IAA has received planning permission to build a new tower at Dublin Airport. We put the project on hold about five years ago on account of the economic downturn and the consequent slump in traffic at State airports, including Dublin. Traffic has now started to pick up and we estimate that we will be back to 2008 levels by 2020. If that happens, the single runway at Dublin Airport will not be enough to handle all aircraft. We would like to see the DAA and the Government take the initiative to construct a parallel runway. We could then go ahead with our tower project and by 2020 the IAA would be in excellent shape to meet capacity demands at Dublin Airport.
As chairman of the IAA, it is my strongly held view that Ireland should continue to support and encourage this sector, that we should exceed normal expectations and position Ireland as a true centre of excellence in aviation. Through this approach, the aviation industry will be able to provide more high quality jobs, more taxes and wealth in the economy and Ireland’s reputation as the best little country in which to do aviation business will grow and grow.
I thank the Chairman and members for their attention. I am happy to take their questions.