Mr. Ronan Gallagher:

The Minister has asked me to thank the Chairman and the committee members for setting aside the time to facilitate pre-legislative scrutiny of the general scheme for the air navigation and transport Bill 2019.

I will begin by explaining the policy background to this proposed legislation. In August 2015, the Minister published the national aviation policy. Included in that policy document was a commitment to restructure the regulatory functions of the IAA and CAR to reflect developments at EU level and international best practice. Government policy to reform the IAA was further reinforced following an independent review of the airport charges regulatory regime in Ireland, which took place during 2016 and 2017. That independent review led to the publication of the national policy statement on the review of airport charges in September 2017, and it, too, included a commitment to reform the way aviation is regulated. I believe the committee has been provided with copies of both of these policy documents.

Following on from these stated policy objectives, the Government approved a proposal in September 2017 to implement structural reforms of aviation regulation, involving a merger of the safety regulatory division of the IAA with CAR, to form a stand-alone aviation regulator under the name of the Irish Aviation Authority. The Government also agreed that the existing air traffic control side of the IAA would be reconstituted as a separate, State-owned commercial company. In the period since, the Department has led a detailed due diligence process examining all the issues related to this reform proposal, including staffing, financial and legal implications. This work has informed the general scheme before us today.

Moving on to the rationale underpinning this policy objective, as it is currently structured, the IAA has a dual mandate. It provides commercial air traffic control services, while also regulating aviation safety and security, including the regulation and inspection of its commercial customers, the airlines, as well as its own air traffic control systems. The IAA’s founding legislation dates from 1993, more than 25 years ago, and while there has been continuous independent audits of its regulatory performance over that period, which has shown the IAA to be a high performing organisation by international benchmarks, the regulatory model provided for in the 1993 Act is not unsurprisingly somewhat out of date. The founding Act was about putting aviation regulation on a sound, independent footing, at a remove from the Minister and the Department. That was the right thing to do at the time and it represented a significant step and undertaking. It has also worked insofar as it has allowed Ireland to develop a technical expertise that perhaps would not have been possible within a Civil Service Department. However, much as there has been in other sectors, there have been major developments in aviation regulation practices, principles and norms since the early 1990s, and it is fair to say that our administrative arrangements have not kept suitably apace with these. The dual commercial regulatory mandate of the IAA, as it is currently structured, is largely an outlier in a European and international context, notwithstanding the company’s high international reputation.

The IAA’s high performance as a regulator is an important point. More often than not, reform proposals come about as a result of a crisis event which points to a systemic failing, after the damage has been done, so to speak. In this instance, the Minister is reforming from a position of relative strength, and the question then posed is: why is he fixing something that is not broken? The Minister’s response is now that he has identified what the right thing to do is and he is clear that the current arrangements are sub-optimal, it is right to reform and put in place arrangements that are fit for purpose and match modern regulatory needs. In that context, it is very difficult to argue for no change, where we have a State body that has important non-commercial oversight functions, and at the same time a commercial mandate to run a service on a for-profit basis. This leads it to have a regulatory oversight and enforcement relationship with the airlines and at the same time a commercial relationship as a provider to the airlines of air traffic control services. If we look across Europe, that model is now hard to find. If we also consider the new EU Regulation 2018/1139 for aviation safety, which requires member states to "ensure that their national competent authorities are independent when taking technical decisions on certification, oversight and enforcement and exercise their tasks impartially, and transparently and are organised, staffed and managed accordingly", then the case for reform of the current arrangements is all the more pressing.

I would like to take the committee through the main provisions of the scheme. It is relatively straightforward. The scheme creates a new State-owned commercial air traffic control operator, largely based on the provisions of the 1993 Act, which will be reconstituted as the Irish air navigation authority. This commercial function is therefore removed from the IAA. In addition, the scheme provides for the dissolution of the Commission for Aviation Regulation and the transfer of its functions to the IAA, to form a new, all-encompassing aviation regulator. The name of the Irish Aviation Authority will be retained by the new regulator. The regulatory provisions of that 1993 Act and the Aviation Regulation Act 2001, which underpin the functions current assigned to CAR and the IAA, will continue, for the most part, to apply to the functions of the newly formed regulator. There are some amendments to be provided for which I will touch on later.

The general scheme is made up of 86 heads in eight Parts. Part 1 of the general scheme is the preliminary and general provisions. All of the heads in this Part are replicated from the 1993 Act. These include the Short Title, definitions, application of the scheme to State aircraft, making of regulations, ministerial powers of direction, disposal of moneys received by the Minister and expenses. These are all standard provisions.

Part 2 of the scheme is broken into three sections. Section 1 comprises 29 heads and deals with establishing the Irish air navigation authority.

This company is to be established as a new commercial body under the Companies Act 2014 to provide air navigation services. The new company is to be set up on the same commercial basis as provided for in the Irish Aviation Act 1993 using largely identical provisions. The objectives of the air navigation service provider are also set out in this Part. They are primarily to provide air navigation and communication services within the State; operate and manage terminal services; impose charges for use of its services; give effect to the purposes of the Eurocontrol Convention and any other international agreement. This Part also provides that the company will set out its articles of association with approval from the Minister and consent from the Minister for Public Expenditure and Reform. Further set out is the issuing of shares to the Minister, transfer of lands, properties, rights and liabilities and the payment of dividends to the Exchequer. They are largely housekeeping provisions required when reallocating functions. There are also, of course, provisions around annual report of accounts and auditing. These are standard provisions based on those of the 1993 Act. Staff members of the IAA whose work mainly relates to air navigation services will transfer to the new company, provided they are agreeable, and there will be close co-ordination with staff and their representative organisations.

Section 2 is made up of 11 heads and relates to dissolution of CAR. All the functions of the CAR will transfer to the IAA. In addition, all the staff of the CAR will transfer too, on the same terms and conditions as they currently have, working in tandem with the staff representative organisations, as appropriate. Further provided for is the transfer of land and properties belonging to the CAR, along with all rights and liabilities.

Section 3 consists of eight separate heads setting out new provisions, which will made by way of amendments to the Irish Aviation Authority Act 1993. There will be a new requirement placed on the IAA to publish a statement of strategy and other reports related to its functions, particularly around safety audits and inspections. The IAA will have the ability to recruit staff, but must submit a rolling three-year workforce plan to the Minister on an annual basis. Powers will also be provided to the IAA to require the payment of fees for the application or renewal of certificates and licences, and any other functions which are set out in the schedule to the scheme to comply with EU and international law. The IAA will also have the power to make orders to give effect to EU regulations as necessary and appropriate.

Part 3 of the scheme relates to fees and charges of the air navigation service provider. The service provider may make regulations requiring the payment of such fees and charges to the company, the Minister or Eurocontrol, depending on what the payment relates to. These fees and charges may be imposed on aircraft operators, aircraft owners or on the managers of airports used by such aircraft or on them all should the need arise. All these provisions are carried across from the 1993 Act.

Part 4 is split into two sections and deals with provisions in relation to Eurocontrol and the International Civil Aviation Organization, ICAO. These include membership fees, attendance at international meetings, the ability to take proceedings against a person to recover fees due to Eurocontrol and the making of regulations requiring operators to keep records of aircraft movements.

Part 5 of the scheme relates to enforcement issues. There are nine heads in total in this Part, three of which are entirely new provisions. It had been proposed to give the new air navigation service powers relating to the appointment of authorised officers, the issuing of search warrants and the ability to bring proceedings. However, following consultation since publication, these provisions will be removed as it is agreed that only the regulator requires these powers. The head relating to the indemnification of staff against any action arising in exercise of their functions will remain. The other six provisions in this Part are about joining up the currently separate powers of the CAR and the IAA.

Part 6 provides for transitional arrangements. This means that all orders and regulations outlined in the 1993 Act will continue in force while this legislation is being progressed through the enactment process. Any legal proceedings under way involving the air navigation service provider will also continue as normal. It also sets out the transfer of land and property, rights and liabilities from the IAA to the new Irish air navigation authority. Arrangements are also included for transitional financial provisions around payment of staff, goods and services.

Part 7 of the scheme relates to miscellaneous provisions. These include rates payable to the local authority by the new air navigation service provider and annual performance statements from the IAA regarding aviation safety regulation performance. There is also a requirement for the IAA to arrange for another civil aviation body to undertake a peer review of the performance of its regulatory functions. A further requirement is to appear before the Committee of Public Accounts when requested in relation to its accounts and internal controls, and to any other Oireachtas committee as necessary in regard to its functions.

The final Part contains only one head, designating the IAA as the competent authority for EU regulations outlined in Schedule 1 of the scheme, some of which would have previously been the responsibility of the CAR.

This scheme may seem extensive on first look, but for the most part, it is largely about reassigning existing functions and legal mandates set out in the IAA Act 1993 and the Aviation Regulation Act 2001. Where appropriate, the general scheme also seeks to clarify and update references to functions related to EU legislation, which have been introduced since the original legislation. The merger of the IAA's safety and security regulatory functions with CAR's economic and consumer protection functions will create a one-stop-shop for economic, safety and security aviation regulation in Ireland and it will ensure that Ireland's approach to aviation regulation is in line with international best practice. I am happy to take any questions the committee have in relation to the general scheme.