Mr. Ronan Gallagher:

It will be one application to one organisation for a series of certificates. There will be one point of contact and one certification, or separate certifications, will issue. The digitalisation aspect is just to speed up what is currently a paper exercise, and benefits will come from providing information once and having it held and, therefore, tracked. It will provide for much better engagement with licence holders.

The Chairman and the Senator asked about preliminary costs. We have not fixed them but I am able to comment on the margins with relative confidence because we have done some work on that, although we have not got it down to the finer detail. There are 685 members of staff in the whole organisation of the IAA. Of that, only 120 will become part of the new regulators. The vast majority are air traffic control staff located at the airports and at the facilities in County Clare, and they will not move at all. It will be just a nameplate change. The only staff affected are those at the headquarters in D'Olier Street and they are mostly the corporate staff associated with the commercial entity. Over time, although it can be managed, they are likely to move to their own headquarters and the CAR staff are likely to move in. Costs are associated with those moves. The marginal aspect relates to some loss of efficiency due to everyone not being packed into the one building. There will also be some additional HR costs. While they will probably not be high, we have not yet had a debate on what is appropriate. At a high level, there are approximately 710 members of staff between the two organisations. At the end of the process, there should still be 710 staff between two organisations, just distributed differently. On the face of it, that should not give rise to a significant cost base.

It was reported in the annual report of the IAA that the cash reserves are in excess of €200 million, of which the Exchequer received a dividend for last year of €18 million, comprising an ordinary dividend and a special dividend of €12 million. That was the case for the past two years, based on advice from NewERA. It is a cash amount because of the profitability of the IAA, which has grown in the meantime and is therefore quite a substantial amount. The appropriate distribution, in respect of assets and liabilities, will be considered in the round. Similarly, what cash reserve is appropriate for the two organisations to be set off with will be considered, as will be what cash reserve is excessive. Those decisions are beyond my pay grade and we have not yet come to them.

That brings us back to the point about pursuing a reform agenda for organisations that are performing well and are financially robust, which is a change from previous efforts.

There are a few elements involved with getting ahead of the curve. While it is not absolutely explicit, there is a growing legal obligation in the EU to have a separation of these powers, as has been made clear in EU policies and laws. Some 23 of the 27 member states have separated air navigation services from aviation regulatory oversight, which leaves four countries which have not, namely, Ireland, Cyprus, Greece and France. We are an outlier in that sense.

It is difficult to speculate about what could go wrong with the current set-up. The issue is that we have a substantive, financially robust and profitable commercial wing that represents most of the staff in the organisation on the one hand, and a smaller, non-commercial regulator on the other, whose tasks include overseeing the company's strong commercial wing. While there are not necessarily explicit problems with that, one can see where pressure may come in over time. It is much better, in the round, to have a regulator that is absolutely separate in its legal status, powers, and management, which is strong enough and in a robust enough position to call the service provider to account if need be. That is more difficult within one organisation that shares a chief executive and board.

Deputy Catherine Murphy asked about staff and workforce planning. I agree with her that we need to have a baseline to start from, and we have been very conscious of building enough flexibility into that. The workforce plan has not been submitted to the Minister for approval but it introduces a discipline not to have a regulator growing beyond what it needs to be. The regulator will be fully financed from industry and various other streams and is therefore cost-based. It will be accountable to both the Oireachtas and the industry in terms of what it proposes to charge. We do not want to put either the Minister or the Department in a position where they are second-guessing whether the IAA needs two additional civil aviation engineers or three extra security personnel. That is a matter for the company and we do not want to micro-manage it in that way. The purpose of workforce planning is to have the company clearly set out a three-year plan, and report back to us annually on whether it is following that plan. If there are changes to the plan, it needs to be able to explain what those changes are. It is not intended to do anything more than that.

Reference was made to the Comptroller and Auditor General. At the moment, the commercial IAA company is not audited by the Comptroller and Auditor General but has its own auditors. An annual general meeting, AGM, is held at which the Minister is represented as a shareholder. That is the system that currently applies. After this legislation is enacted, the IAA will fall under the Comptroller and Auditor General's remit. There will be more oversight and the Minister will continue to have a shareholder relationship with the commercial entity.

I refer to the issue of codes, fees, and the regulator's relationship with customers. The rationale for removing the commercial entity from the IAA and leaving it as a regulator is that it will not upset the existing licences and certificates and that there will not be any change. We are aiming to have as little impact on the IAA's customers as possible and are relatively confident that, due to the way in which we have structured the legislation, the industry will not notice any difference. The Department also runs an industry forum, which includes a regulatory working group. We have been bringing our thought process through that forum and will continue to do so, in order to sense-check it against the industry and ensure customers are aware of what is happening as well.

The Aircraft Noise (Dublin Airport) Regulation Bill 2018, which was enacted in May, made Fingal County Council the competent authority for aircraft noise. Originally, that legislation would have made the IAA the noise regulator but it fell foul of the fact that it had a significant commercial interest in increased aircraft activity at Dublin Airport, to the extent that, according to legal advice, it was conflicted. Debates were held in the Chamber on conflicts, or perceived conflicts, involving Fingal County Council, which seemed to arise from the council's role as a planning authority and rate collector. However, the position of both the Department and the Minister is that that does not represent a conflict, because the council has various functions. My perspective, having been involved in both that discussion and this one, is that the noise requirements are much more closely aligned with planning and environmental protection than they are with technicalities around aircraft movement, although that is part of it and the IAA will have to feed into that process as well. The most important skill set required of the noise regulator was the ability to run public consultation campaigns, understand environmental and planning directives, ensure the airport is developed in a sustainable way and understand how the noise mitigation measures fit into that. I would argue that, even in the future when we have an independent, non-commercial aviation regulator, Fingal County Council's responsibility as the competent authority for noise, as set out in the Aircraft Noise (Dublin Airport) Regulation Act 2019, is appropriate. People are free to disagree with that, but we have thought long and hard about this and are strongly of that view.

On the HR issues, there are not as many differences in pay as we anticipated when starting this process, as the pay scales are relatively closely aligned. We have agreed with staff representative bodies that people will transfer to no less favourable terms and conditions, which is a standard undertaking. We are also mapping out the appropriate future structure of the regulator, including management and pay levels, in tandem with the management of both organisations. Where staff conditions do not precisely match when transferring over, staff will hold what they have in a personal capacity, and we will get to an optimum structure over time. However, the gap is quite narrow and does not seem problematic. The most difficult part will be bringing clarity to people's pensions and pension funds, and ensuring entitlements already earned are properly protected into the future. Again, we have had good engagement with staff, management and staff representative bodies on that. While we have not reached a formal agreement yet, there is no sense of a wide chasm between us. We are confident on that front.

There are some issues with the expertise available to both the IAA and CAR. Having a separate regulator will allow us to strengthen the functions currently spread across the IAA and CAR, particularly in consumer affairs and how they deal with their client bases. The IAA's staff are mostly civil aviation engineers, who can inspect aircraft and ensure they are sound. It also employs legal personnel and people familiar with EU regulations on work practices. Its staff checks flight hours and runs that type of system as well.

Reference was made to breaches of practices, or mis-movements in aircraft, at airports. Much of those would fall under the remit of the air traffic control provider, which is responsible for managing planes in the air, as well as during take-off and landing. Under this legislation, it will be the IAA's job to oversee that, so if there are incidents, the air traffic control provider will have to report them to the regulator. Part of the regulator's role will be to investigate whether those incidents were properly dealt with and whether the systems were properly rolled out. That role exists at the moment, but it is all under the one roof.

I expect that there would be a more robust tension in that relationship in the future in a positive way.

Regarding who charges what, most of the air traffic control provider's income comes from en routecharges - planes that do not ever land in Ireland. Of its €200 million revenue a year, €122 million comes from en routeservices. That is transatlantic traffic. Terminal services, which are the three Irish airports, account for €25 million. Then there are amounts separated elsewhere. The fees of the safety regulator, the residual regulatory function in terms of non-traffic control stuff, are in the region of €22 million. That is the amount of charged in certificates to Irish airlines and their aircraft and pilots' examinations. Less than €500,000 of that is down to aerodrome fees in respect of licensing. We are looking to introduce charges for aviation security because we are investing in the IAA's oversight capacity in that space - in other words, going out and checking that airports primarily have proper aviation security arrangements in place.

On the set-up costs, when we come back before the committee we will be much clearer. The costs are not significant.