Oireachtas Joint and Select Committees
Tuesday, 17 June 2014
Joint Oireachtas Committee on Transport and Communications
Irish Aviation Authority: Chairperson Designate
I remind members to switch off their mobile phones.
The purpose of this afternoon's meeting is to engage with Ms Anne Nolan, the chairperson designate of the Irish Aviation Authority. We do so in order to discuss the approach she will take when reappointed to the role and to hear her views on the challenges facing the authority. Members will be aware of the Government's decision of May 2011 which put new arrangements in place for the appointment of persons to State boards and bodies. The committee welcomes the opportunity to meet the chairperson designate in public session and hear her views. We trust that this will provide greater transparency in the process of appointment to our State boards and bodies.
On behalf of the committee I sincerely welcome Ms Nolan. I wish to draw her attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they will be entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. The opening statements they have submitted will be published on the committee's website after the meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or any official by name or in such a way as to make him or her identifiable.
I advise Ms Nolan that any submission or opening statements that she has submitted will be published on the committee's website after the meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or any official by name or in such a way as to make him or her identifiable. That is the housekeeping out of the way, so I call on Ms Nolan to make her opening remarks.
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.
I thank Ms Nolan for her overview of the industry. She has demonstrated in her work to date as chairperson that she is more than competent to lead the organisation. I have no issue whatsoever in supporting her to become chairperson again and wish her well in that regard.
The issue of pilot training occupied the minds of members of the committee this year when the training college in Waterford collapsed. I do not wish to revisit the minutiae of the discussions we had with the chief executive and his staff. Does Ms Nolan have a view on the issue of bonding to ensure that in the event of a collapse of such organisations in the future students and their families would not be placed in very difficult financial circumstances?
In the course of her address Ms Nolan referred to the IAA's sponsorship of the inaugural aviation awards. Does she have concerns about the state of the Irish aviation sector when none of the three airlines registered in Ireland won an award? I understand international organisations won the awards. I do not expect Ms Nolan to go into too much detail as I am sure the judges' decision is final, but does it raise issues about domestic airlines?
Ms Nolan referred to the foresight of the IAA in investing in Aireon. Are we to assume that the industry generally is heading towards the use of satellites in managing the flow of aircraft? I suppose it is timely when one considers what has happened to aircraft that are missing, with no end in sight. How far have we moved in the direction that all aircraft will be tracked by satellite?
The IAA made an operating profit of €25.7 million and the dividend to shareholders was based on an after tax profit of €4.8 million. Is Ms Nolan in a position to state the after tax profit figure? If not, can it be provided for the committee by the executive of the IAA at some future date?
Ms Anne Nolan:
The Deputy raised the issue of the pilot training college in Waterford, on which I will comment briefly. It was very unfortunate and we were very sorry to see it happen. It was, as the Deputy said, very difficult for the students involved. We were asked to help as best we could, given that our remit covered the oversight of the safety at the college. One of the problems at the time was trying to secure training records for the students which they needed to be able to move to another training school to continue their training, for which they had paid a great deal of money. We offered advice and help in liaising with students. We sent a captain to Florida and another person to Waterford to try to help the students. We installed a helpline and paid for students to be repatriated. We did our best to try to help them. As I understand it, 183 students managed to continue their training. The outcome is unknown in the case of the other 107 as some of them returned to Bahrain and the countries from which they had come. We were sincerely sympathetic to everybody involved and did everything within our power. We made suggestions as to how this scenario might be prevented in the future and suggested bonding might be a solution. I understand it would be very expensive to do this and that it might, therefore, make the training colleges uneconomic. I do not think there is legally a need for bonding, but it was a suggestion we thought might help. I think students do not pay the lump sum of €80,000 upfront. Payments are staggered which is probably a help and I hope students will not find themselves in this situation again.
It was remarkable that none of the Irish airlines won an award. An independent panel of judges made the awards and the best airlines won on the day. It was such a successful event that there will be an opportunity to enter the competition next year. It does not mean that there is anything wrong with the Irish airlines. Their safety record is on a par with that of the best airlines globally. They are measured and audited to the same extent as every other airline. A better airline pipped them to the post on the day. There is always next year. We look forward to welcoming some members of the committee to the awards ceremony next year.
Aireon is the way to go. We invested in it just after Christmas and it will solve the dreadful problem with flights such as MH370 because radar monitoring ends at a certain point in the ocean. As I understand it, the system will be up and running by 2018 approximately. We intend to capitalise on the opportunities it might present for the authority in the years ahead. There are changes to the EU policy of the Single European Sky and our business will change. We hope it will give us a new lease of life and help us to get bigger and better and create more jobs in the Irish aviation sector.
The Deputy must pardon me as I cannot remember it and did not bring the figure, but I think the after tax profit figure was in the region of €12 million to €13 million. We paid 30% to the Government. The policy is to ask organisations such as ours to pay at least 30%, recognising that sometimes it might be less and sometimes more.
Last year we paid 50% of our after-tax profits. Because of the pension position, for a few years prior to that we were not in a position to pay a dividend and felt we would like to make it up to the State as best we could, so we offered a 50% dividend in 2012. We hope to be able to pay and that our business will be as good as it possibly can be. I hope I have answered the questions.
Her knowledge reflects that. Some of the statistics she has presented are strong and encouraging. Sometimes in those environments one wonders whether one can do more. One does not want to slip into a position where one is comfortable or the company is complacent in terms of how it achieves its results. I congratulate the Irish Aviation Authority on its safety record in particular. Ms Nolan mentioned that in July 2013, Ireland ranked first out of 29 European countries in a measurement of the effectiveness of safety management in the Eurocontrol performance review body annual monitoring report on safety. Is Ireland consistently at the top of the league on an annual basis? While she mentioned that Ireland was top of the league in a given year, I assume that is not an isolated occurrence. I note that the airports over which the Irish Aviation Authority has authority are Shannon, Dublin and Cork. What are the obligations to the smaller airports nationwide in terms of safety and any other areas? Cork South-West is the constituency I represent, and Cork airport is very important for many of the Cork and Munster constituencies. The environment in Cork has been difficult. The statistics show that Dublin Airport is getting ahead, Shannon is doing well in respect of commercial traffic and Cork airport is bouncing along a flat line. Can Ms Nolan outline how the Irish Aviation Authority deals with the airport authority at Cork? Does she have a view as to how we can improve the situation in Cork? I note what she said about Dublin in regard to the second tower and a parallel runway, all of which is excellent news for Dublin, but is there a similar strategy in place to help Cork airport increase its traffic?
I note that parts of the United States, or perhaps all of it at this stage, are allowing the use of electronic devices on board. Is this an issue for the Irish Aviation Authority? Is the matter being discussed? If airlines can demonstrate to the Irish Aviation Authority that it can be done, can the electronic devices be used in a European context over here?
Ms Anne Nolan:
I will try to address as many of the questions as possible. I thank the Deputy for his congratulations. It is effectively my third term. The business is so different and so technical that it takes some time to get up to speed. Everybody speaks in acronyms. By the time one gets ahead of the acronyms, a couple of years have gone by. The role of chairman is a completely different role from that of a regular board member.
The Deputy asked about our statistics and whether we are consistently at the top of the safety league. Yes, we have been at the top for the past four or five years. We are consistently considered to be at the top not only by Europe but also by the International Civil Aviation Organization. They are different bodies and they measure different things. As chairman, I get great comfort from the fact that we are generally at the top. We may not always be first but we might be one, two, three, four or whatever. I would be extremely worried if we were at other end of the business. I am rather pleased from that point of view.
The Deputy mentioned the statistics for Cork airport. I had a look at the latest figures and I thought the committee might be interested to see them. Shannon terminal movements are doing very well and are up 21%, almost 22%. Dublin terminal movements are up 7.5%, and Cork is up, which is good. Every time I have seen figures for the past couple of years, the terminal airports have been down. Overall, our terminal business is up 8.1%. That is why we believe we will need our new control tower in a few years' time, sooner rather than later. We did build a new control tower in Cork a few years ago, so we were trying to help out. I was present at its opening a few years ago but, unfortunately, traffic slumped. Aviation works on a collegiate and collaborative basis and we all try to help each other. While responsibility lies with the airports, in the Irish Aviation Authority we are trying to do whatever we can to help float all boats.
Ms Anne Nolan:
We do not have a specific strategy for Cork, although I am sure Cork Airport has one itself, but we do collaborate very effectively. Some time ago, because apparently there are no flights between midnight and 6 a.m., there was a suggestion that we take our air traffic control men and women out after midnight, but we did not. We said we would keep it going because the local business community requested that we do it as it was important to them. We did that and we will try to help where we can.
On the issue of obligations to smaller airports, we licence the aerodromes but we do not actually provide air traffic control services. I am aware that things are difficult for regional airports, and not only in Ireland. That is a responsibility of the Government, which is looking at the issue. As a citizen, my view is that it would be wonderful if we could afford to keep all of our regional airports. That may or may not be possible. In our aviation promotion policies, the whole idea is to promote the island of Ireland as a centre of excellence for aviation in and out, leasing companies and so on. We are doing our best. As I understand it, there are similar discussions taking place in other countries throughout Europe, and there may be a possibility of remotely controlled tower activities, which might help save a few bob somewhere along the way.
Deputy Noel Harrington mentioned Cork Airport. Ms Nolan mentioned the regional airports. Obviously the airports in Galway and Sligo have more or less closed down in recent years. What is Ms Nolan's overall vision for airports in the country in ten or 15 years' time?
Ms Anne Nolan:
My personal vision is to have as many as possible, and that they would be doing well and thriving. It is a matter for the Government, which has to look at costs. If it does not make any sense from an economic point of view, it is difficult in these times to justify it. The point I was trying to make is that in the Irish Aviation Authority we will try to help wherever we can to increase aviation all over the country and hopefully make it better.
The last question was whether electronic devices would be allowed on board. I guess that is coming at some stage. That is a matter for the European Aviation Safety Agency. We would not-----
Ms Anne Nolan:
I would not say that we have no role in it, but we would not make decisions. Most of the rules and regulations about aviation come from Europe or from the ICAO, and we all move together. There is very little local regulation. We just implement the regulations and make sure the airlines are compliant as far as they can be.
I thank Ms Nolan for a clear and impressive presentation.
The facts presented suggest the industry is in a healthy state and I am not trying to block its movement.
I apologise on behalf of Deputy Dessie Ellis, who also has responsibility for housing and is manfully debating housing legislation in the Dáil Chamber. If some of my questions betray ignorance of the topic, it is because I do not normally handle this subject. I do not see how Ms Nolan gets the time to do all of this. She is an assistant professor in Trinity College. Can she tell me something about the board and how many people are on it? How much of her time does this take from her and other board members?
The IAA covers Shannon, Dublin and Cork. What are the criteria used to limit the airports within the scope of the IAA? There must be some measurable criteria but I do not understand what it is. I would have thought Ireland West Airport Knock is a candidate airport for inclusion.
My criticism concerns how domestic flights within Ireland are organised. For someone who wants to travel from the south or west to Dublin, the biggest seller is that one can get there faster by plane than by train. However, if someone has to join a queue for two hours on the return journey to go through security, the value of internal flights is lost. Would Sligo Airport have closed if those taking flights could be assured they could be in Dublin Airport half an hour before the flight time? I do not believe Sligo Airport would have closed if there was an efficient movement of people for internal flights. I am not saying I know how to solve the problem but I believe traffic numbers would have been improved if that efficiency was possible between Sligo and Dublin.
The IAA also covers civil aviation but I am not sure what non-civil aviation involves. I presume it means military aviation.
There were suspicions, and evidence, of some military use of civil aviation facilities. Where there is blurring of the line, what is the responsibility of the IAA?
I am delighted to hear that the pension entitlements of staff are being resolved under the IAA. Pensioners in the Dublin Airport Authority and in Aer Lingus have had their pensions halved because of new pension arrangements being forced upon them. Does the IAA have any role in examining the terms and conditions of staff in the Dublin Airport Authority or in Aer Lingus?
Ms Anne Nolan:
I thank the Deputy for his kind remarks. With regard to the board and the time commitment, my position as an assistant professor at Trinity College is not full-time position. It is a part-time position and March to May is a busy time when I teach a little management course to pharmacy students but it is not insurmountable. I have been in my day job for 27 years and I am on top of it. It is easy to accept a role like the chairmanship of the IAA. I have the time on a personal level and the facility and ability to get up and down to the authority. We meet seven or eight times a year as board and I have a range of people with very good skills on the board. We have a former chief executive of an airline who is also a pilot. We have aviation and financial experts and yesterday the papers were signed to get another accountant. We have a very good mix of people on a small board. It is quite efficient and when there is a small board it is easy to get through the work programme. There has never been an issue. We all enjoy our work, which helps. I like to think I run an efficient meeting and have a very good chief executive and staff who make sure my job is as easy as it can be. They are very dynamic and they have a great can-do attitude. Nothing is ever a problem and nothing is ever too much, which is a nice environment to work in and makes my job easier. We work well together.
With regard to the criteria of Shannon, Dublin and Cork, it is as simple as economies of scale. It is a matter for the Government but-----
Ms Anne Nolan:
Yes, there is money, costs and efficiencies. We would all like to be able to do everything but we cannot, particularly in straitened times. It boils down to traffic size, throughput and economies of scale.
With regard to domestic flights and security queues, we must take into account the really good roads, which has something to do with the reduction in traffic. Sometimes it is easier to jump in the car and get onto the M50. People can travel to Galway from Dublin in an hour and a half. Maybe that has something to do with it and I would hope that everyone is experiencing a better experience at Dublin Airport. We took over aviation security management at the State airports a year ago. I press the green button with a happy, smiley face which people can press if they are happy with the service. From my experience, the queues are not as bad and the system has been overhauled by our inspectors and auditors. I hope it is better but I do not know that it will bring back Sligo.
Ms Anne Nolan:
I do not think so either.
With regard to pension entitlements, we worked hard to get our pension problems under control. A few years ago, we had a deficit of €234 million on the balance sheet and that was the reason we could not pay dividends. We were out of kilter with the requirements of the Companies Acts. We have managed to solve the problem and we are down to €113 billion. We have asked our pension managers to engage in more aggressive management of the funds and to make sure they reach targets. We bring them in once a year and put them through their paces. As a board, we ensure they are doing the job we asked them to do. All is looking good and we have our fingers crossed. I read in the newspapers about Dublin Airport and Aer Lingus and we do not have any role in solving this difficult problem.
Ms Anne Nolan:
Perhaps. The chief executives of those bodies and the chief executive of the IAA work closely and if there are lessons to be learned about how we managed it I am sure they will take them on board.
Civil aviation refers to non-military aviation and it is a matter for the Government. The IAA has no role in it and it is a matter for the Minister for Foreign Affairs and Trade. Perhaps that answer has been heard from other people. We have no role in the Shannon military issue.
I will try to be as brief as possible. I thank Ms Nolan for the presentation. My first query relates to streamlining of pan-European air traffic control. Does Ms Nolan see opportunities or threats for Ireland in this area? Is there an anticipated timeframe?
There are anecdotal concerns about airlines skimping on fuel, especially low-cost carriers, although I suppose most of them are low-cost carriers at this stage. Apparently some airlines barely put in enough fuel to cover the route. Is the Irish Aviation Authority concerned that if there are unforeseen circumstances an aircraft could run out of fuel? What is the IAA doing to ensure this does not arise?
Reference was made to the IAA budgets. What has the IAA done since the economic collapse in 2007-08 to cut its budget? What measures have been taken? How much of a reduction has there been since then?
What is the position in respect of the ash cloud event? Does Ms Nolan maintain that the IAA handled that as well as possible? Are there things that would be done differently in future and, if so, what are they?
I am not going ask Ms Nolan the question that was often asked of me when I was going around the country looking for jobs, which is "Why should I give you this job?". If I got that question it was certain that I would not get the job.
Ms Nolan must be doing a good job and that is being recognised.
One of the people who interviewed me when I was looking for a job - I have read about him since then, Lord be good to him - was a man Ms Nolan may have come across in her day, Mr. Brendan O'Regan. He had a magnificent vision for Shannon, the surrounding region and Shannon Airport. Many of the achievements at Shannon were down to Brendan O'Regan. Incidentally, he asked me that question, although he gave me the job. Ms Nolan enjoys her work and working with the team and that is paramount.
Ms Nolan said that in 2013 there had been 12,000 more flights than in 2012. How many does Ms Nolan envisage for the current year or to the end of 2014? I was amazed at the number of flights using Irish airspace every day. If my figures are correct, Ms Nolan referred to 1,800 flights through Irish airspace each day, which, according to my mathematics, amounts to 75 flights per minute per day, a phenomenal figure. Does Ms Nolan see that figure rising significantly?
Ms Nolan stated that the authority obtains no funding from the State and that it is a profitable organisation. I applaud the authority for having no pension deficit.
Are there any new developments in the airline industry that will have an impact on how the Irish Aviation Authority conducts its business? Ms Nolan's tenure will end in four years' time. Does she have a vision of what she will have achieved in four years?
What does Ms Nolan do in her spare time?
Ms Anne Nolan:
Perhaps I will reply to Deputy Griffin first, and I hope the Chairman will remind me if I forget anything. Deputy Griffin referred to the ash cloud. When that happened I was acting chairman of the authority, and I was caught in Lisbon in the thick of it, if you will pardon the pun. I was away from all the activity but I got many telephone calls asking me what I was doing and why I was not there, although, obviously, I could not get home. I believe - and we took the view at the time - that the Irish Aviation Authority and the other authorities throughout Europe that were affected by the event took a rather cautious approach. At the time that was absolutely the right thing to do. That was the first time such a thing had happened. Now, each time I meet my Icelandic colleagues I ask them how the monster is doing. Last week they told me it was palpitating. That is a good thing and it means it is not going to explode on us. The chances are that it might happen again, but the European aviation authorities will be in a better position to handle it.
We bought some equipment after the last incident because we had been reliant on what the authorities in the United Kingdom and Eurocontrol were doing. We decided that we needed to be able to take our own measurements for ash cloud readings and so on, so we bought some Lidar equipment. I am unsure of the detail. I understand that if it happens again, when a certain level of ash is detected, individual civil aviation authorities will be able to make their own decisions. In other words, there may not be a blanket closing down of the entire airspace around Europe and we will be able to make our own decisions. Some of the airlines will be kitted out in such a way that they will be able to make decisions as well. Depending on their technology, some of them may be able to fly in heavier ash cloud than others. However, if the ash cloud were to reach a certain level then the Eurocontrol people would step in and close the entire place down. However, hopefully that will not happen again. That is what we will do in future.
Reference was made to skimping on fuel. There is absolutely no possibility of airlines on our register skimping on fuel. I know there have been some reports in newspapers and so on, but they do not do that. They have to carry a certain level and we check that. Our inspectors will turn up at the fuelling depots or on the ramp and explain that they will be travelling with the captain on that day, whether announced or unannounced. The inspectors check that. We watch out for things like that all the time. It is not in the airlines' interests. They have to carry certain levels of fuel. If there are very bad weather conditions on approach to an airport, for example, and the airplane has to go into a holding pattern for a given period, then the fuel will drop to a certain level. The aircraft is then obliged to declare an emergency landing. That is all specified, and commanders of aircraft have to follow the rules; they have absolutely no choice in the matter and we check it regularly. I would not be concerned about it.
Ms Anne Nolan:
I am sure those statistics are available.
Reference was made to streamlining pan-European air traffic control. That is on the cards and it is going through with the single European sky legislative package at the moment. At the moment there are 42 different air traffic navigation service providers throughout Europe. I have the map before me. The committee members are welcome to examine it and it is probably on our website as well. It looks remarkably complicated, unlike in America, where the Federal Aviation Administration is one company that is set up in the same way as the IAA, with safety regulation and air navigation services. The European Union is working towards tidying that up and consolidating it. The Union has put all of us into what are termed functional airspace blocks. Naturally, we are in a block with the United Kingdom. In the past four or five years we have been working very closely with the United Kingdom on various aspects of the provision of air navigation services. Apparently this has resulted in savings of tens of millions of dollars for the airlines. The point is that it will result in savings for airline customers and give passengers a better experience. I remember going to Brussels years ago and we would be in a holding pattern for 20 or 25 minutes before we could land.
I certainly feel that things have improved from that point of view and in general in the context of functional airspace blocks, FABs. The Norwegians, the Swedes and the Danes are involved in an FAB. That is what the EU is trying to do.
There are opportunities for us in respect of this matter but there are also threats. If we do not remain at the top of our game in the context of not investing in best technology available and if, as a result, we only have old technology at our disposal, we will be left behind and we might even be eaten up by our nearest neighbour. Our management team is very much at the forefront in respect of the developments taking place throughout Europe and it is very well regarded. Government policy is that we should be present at all of the discussions which take place in order that we might take advantage of opportunities for Ireland. The last thing I want is for us to disappear off the radar.
We are working in respect of this matter and the Government is very conscious of what is happening. The Minister just launched a draft aviation policy for Ireland. The policy document contains many interesting aspects and it is marvellous that the Minister has introduced it.
Ms Anne Nolan:
Yes, I would think so. There is a suggestion in that regard in the policy document. We must all work together. The motive of the authority in organising policy conferences, etc., is to ensure that those who comprise this community - airports, leasing companies, maintenance, repair and operations or overhaul, MRO, companies or whatever - will work together in the context of assessing what the best policy for Ireland is in the context of job creation. Ultimately, it is all about the latter. It would be a terrible pity if we were to lose all of this expertise we have in the area of aviation.
Ms Anne Nolan:
Yes. It is part and parcel of the day job for those in management and of the strategy of the board. The Aireon satellite system will also provide us with a large number of opportunities.
The Deputy's final question related to budgets and the action we have taken. Purchasing new technology has allowed us to deploy staff more efficiently. For example, we had the capacity to take on the aviation security function. It was a very good fit with our business. People do not have to be let go if new technology comes along. Neither the authority nor its staff is afraid of technology. We will accommodate people if they so wish and if they fit in with the specifications required. We have achieved efficiencies in our operations and in the human resources area. Like all other organisations, there has been a pay freeze for the past four or five years. That has been tough for people. We have cut costs of that nature out of the system.
Ms Anne Nolan:
Our fees were reduced. Again, our expenses are listed in our accounts. We have very few expenses. A couple of members may have been obliged to travel from Cork, Limerick or somewhere else and obviously there would have been travel and accommodation expenses involved. I do not know whether those expenses would amount to more than €2,000 or €3,000 per annum. I hope the Deputy will forgive me for not being able to recall the exact amounts involved. As a board, we are very careful. We are all in it together.
Ms Anne Nolan:
I play a lot of golf and tennis, both of which provide me with a great distraction from my professional work.
I have already dealt with quite a number of the new developments that will have an impact on how we conduct our business. The Aireon satellite system is an exciting prospect and I am looking forward to seeing how it pans out in practice.
Last year there were 12,000 more flights than was the case in 2012. I hope the increase will be as big this year. There has already been an overall rise of 8%.
Ms Anne Nolan:
Ryanair has just ordered another 180 planes, which is absolutely marvellous. Before I came to the meeting, I took the opportunity to go over some of the statistics involved in this regard. Ryanair is now the biggest airline in the world. It already has in excess of 300 aircraft and, as stated, has just placed an order for a further 180. That is absolutely fantastic. Ryanair operates from 63 bases. I was invited to the opening of its new head office and while there I visited the operations room. Ryanair controls all of its bases - and 1,600 flights per day - from this relatively simple room. That is extremely impressive. Ryanair will play its part in increasing our business by facilitating even further flights. The position is looking good at present and I hope it will remain that way.
Ms Anne Nolan:
I cannot have a vision to which safety is not central. I will be really pleased if our safety record in four years time is as good as our current one, if our projects and strategic alliances produce opportunities on which we can capitalise and use to grow our business, if we remain at the cutting edge in terms of technology - thereby facilitating efficiencies and cost savings for the airlines - if the aviation industry pie gets bigger for everybody in Ireland and if the aviation sector in general continues to receive very good support from the Government. All boats will rise with that tide.
In the context of preparing for the uplift of the Irish and global economies, Ms Nolan referred to building a new tower and runway at Dublin Airport. She also stated that by 2020 the level of traffic at the airport will have returned to 2008 levels. I met the CEO of Tourism Ireland earlier today and he painted a very positive picture with regard to the number of tourists visiting Ireland. He suggested that the number of tourists visiting the country will return to the levels which obtained in 2007 and 2008 within a couple of years. Two or three years ago there was a great deal of criticism regarding the construction of Terminal 2 and the fact that it was under-utilised at that point as a result of falling tourist numbers. Obviously, the terminal will see good use in the very near future. The other point the CEO of Tourism Ireland made is that there is a kind of three-tier development of the tourism product in Ireland. Dublin represents the first tier in this regard. It is doing very well but there is a danger that it might again become a tipping point because there are not enough hotel rooms available in the city. The second tier comprises Galway, Limerick, Cork, etc., while outlying rural areas comprise the third tour. There are many tourist attractions in the latter areas which are not benefiting at all from recent developments.
I am not suggesting that the new tower at Dublin Airport should not be built and neither am I contradicting Ms Nolan's view. Tourist numbers dropped in the past as a result of the recession and the fact that Ireland was no longer competitive because prices had gone through the roof. It appears that this could be happening again, particularly in Dublin where there is a shortage of hotel rooms.
Is there a danger of another bubble that will, in the long term, cause problems for tourism in particular as well as traffic? Is there a strategy to spread the numbers visiting the country across the regional airports, thereby ensuring an even spread of development?
Ms Anne Nolan:
I hope that we will not again experience in our lifetimes what we witnessed in the past five or six years. It would be dreadful, so I hope we have learned something. All of the issues raised by the Chairman will be covered during the consultation on the Minister's policy document, which he has just released. The plan set out in the document is to establish an aviation forum that involves everyone in the business, although I am unsure of what he is calling it. It will be the place to thrash out such issues. When we set up a consultation conference in December 2012, Tourism Ireland attended. It is with us in many of these policy discussions. We have to keep an eye on everything. Hopefully, it will not-----
I have recalled what I wanted to ask. Ms Nolan referred to an interesting company called Aireon. I suspect there is more than just an investment in shares involved. Is it a private commercial company? What percentage of its shares does the Irish Aviation Authority, IAA, hold? Are other European aviation authorities also shareholders? It would make sense if there was a commitment to use the company's products as part of the single European sky project.
Ms Anne Nolan:
We made a €30 million investment this year, giving us a 6% share in the company. NAV CANADA, the air navigation services provider in Canada, holds a 51% share. A private company called Iridium, which I understand is American, holds a 24.5% share. ENAV, which I believe is Italian, holds a 12.5% share. Our Danish colleagues in Naviair hold 6%. Space based, the technology will solve the dreadful problem experienced by flight MH370. We hope it will increase possibilities for our business to develop in the years to come.
Ms Anne Nolan:
We must ask for the Minister's permission to make such investments. The Ministers for Transport, Tourism and Sport and Finance are the shareholders. We went through all of those procedures. When considering such an investment, we make an initial presentation on what it entails, conduct due diligence and provide all of the document the Minister needs, but it is for him to approve. We were delighted when he approved this investment last December.
I thank Ms Nolan for her full and articulate presentation and for her answers. She makes performing all of her roles sound easy. From looking through the list, I imagine that she does not have many free moments. On behalf of the committee, I wish her well in the next four years.