Oireachtas Joint and Select Committees

Wednesday, 7 June 2017

Seanad Committee on the Withdrawal of the United Kingdom from the European Union

Engagement on Transport Policy

10:00 am

Photo of Gerard CraughwellGerard Craughwell (Independent)
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On behalf of the special committee, I am pleased to welcome Mr. Kevin Toland, chief executive officer, Dublin Airport Authority, and Mr. Aidan Flynn, general manager, Freight Transport Association of Ireland, and their colleagues. The committee has already had a session on transport policy which we found extremely useful. Significant, practical issues emerged during our previous interaction on the issue and I am sure this discussion will be similarly interesting for all of us.

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 an official, either by name or in such a way as to make him or her identifiable.

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 it to cease giving evidence on a particular matter and continue to so do, they are 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 asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable.

I ask Mr. Toland to make his opening remarks.

Mr. Kevin Toland:

I thank the special committee for inviting me to appear on behalf of the Dublin Airport Authority, DAA. I have circulated a brief presentation, the key points of which I will synopsise for four or five minutes before answering questions Senators may have.

Brexit is a key issue for Ireland because we have a very open economy and air connectivity is critical to its functioning. Not only is the United Kingdom withdrawing to some extent from the world stage and the European Union but the United States is also pulling back and taking a different role. For this reason, it is all the more important that we remain connected and active and have air connectivity.

Aviation matters to the economy and country, with 91% of access to the island by air. It is critical for Irish businesses operating internationally and trading outwards and in supporting foreign direct investment and tourism, one of our key industries which employs one in nine workers. The DAA, the company of which I am the chief executive, has been driving growth in the level of air access. We have conducted an economic impact study which shows that Dublin Airport accounts for 117,000 jobs across the economy, with Cork Airport accounting for approximately 11,000 jobs. Approximately 3.5% of gross domestic product is directly associated with air connectivity.

Like all industries, aviation is very much a scale business. People ask me what is Dublin Airport's competition. Our competitors are airports such as those in Brussels and Manchester because we compete with them for aeroplanes and routes. Our competition in the case of Cork Airport is airports such as those in Bristol and Lyons, with which we also compete for aeroplanes.

Ireland has been left very exposed by Brexit. From an air access perspective, approximately 11.5% of air traffic from the European Union is into the United Kingdom, while approximately 53% of UK air traffic is to EU countries. Ireland is by far the most exposed of EU member states, with approximately 39% of our air traffic to and from the United Kingdom. To take the cases of France and Germany, two of the key negotiators of an overall agreement, just 6% and 7%, respectively, of air traffic from these countries is to the United Kingdom. Air access is fundamentally much more important for Ireland which is far more exposed than other EU member states as a result of Brexit.

I will briefly address a couple of key impacts before taking questions from Senators. The common travel area is not only about the Border because Ireland and the United Kingdom also share visa programmes for 18 countries. This is very important for Irish business and the economy in terms of trade and tourism. The chief executive of Dublin Port pointed out that if the common travel area were to fall away as a result of a hard Brexit, the traffic jam from Dublin Port would nearly reach Senator Gerald Nash's home town of Drogheda. While that could be fine in some ways, we would have the same disruption at Dublin Airport and it would be very costly and disruptive to trade. Ultimately, it would act as a disincentive to trade and travel.

Tourism is still one of our critical industries. Approximately 42% of tourists to Ireland arrive from the United Kingdom. This is an iceberg. Dublin Airport passenger numbers are growing strongly this year, with growth of 7% recorded already this year. However, this figure masks the fact that tourist numbers from the United Kingdom are in freefall. Figures published by the Central Statistics Office last week showed that tourist numbers from the United Kingdom had fallen by 10.7% in the first quarter of 2017 and by 6.5% on the figures for the previous month.

The numbers are falling like stones and should not be masked by good performance elsewhere.

While it is an important market for bringing tourists in, often we do not realise that our most important competitor for tourists is the UK. Once people have gone to Paris, Rome, Madrid and London, they tend to look at Wales, Scotland, Devon, Cornwall and the Lake District. These are the areas we are competing with. We are now competing with an economy where sterling is weaker. In that way, those in tourism there are more competitive and we are more expensive in terms of brining in tourists and competing with them. We saw this impact immediately after the vote last June when sterling depreciated. We saw it in the shops in particular. We run a large duty free business. We saw it in our shops in Cyprus and Dublin, where a large number of UK travellers shop.

Another key item is the open skies deal. Many people do not realise what freedom of travel in the European Union means. What it really means is that any EU airline can go from any point to another point with no restraints whatsoever. Since the open skies deal was introduced in the mid 1990s the number of routes has increased fivefold. Committee members will see from our submission that the competition where more than two airlines are competing on a country-to-country route has gone up tenfold. Ireland is a prime example. We see the development of air travel in our country through that lens.

The critical point for the DAA is that we need to deepen our connectivity, especially our long-haul connectivity. We have gone from four routes in 1996 to a total of 24 cities and 34 services on long-haul this summer. We need to defend our share and defend our business in the UK. In particular, we are bringing on our new northern runway in Dublin. We need to bring that on as quickly as possible such that we are not in a position whereby we are unable to keep growing. We need to be able to grow and ensure usable conditions on the runways. This will help to ensure that our economy is safe and secure from the threats that come.

There are positive and negative impacts on everything and it does not end up being all negative. However, we believe Brexit is negative on the whole. A change to the common travel area would be negative, unless the arrangement is preserved. The tourism impact and the open skies impact are crucial. There is an interlocking system of regulation in security and safety as well as in air travel throughout Europe. It has an underlying impact on both economies. Whether we like it, we are dependent on the UK economy for much of our trade and services.

On the other side there are positive impacts. The reintroduction of duty free to the UK could be positive. We believe there will be opportunities for people relocating from the UK to Ireland since it will be the only English-speaking common law part of the European Union. We believe there will be opportunities for transfer business. However, in a net sense we believe it is negative.

Key actions in tourism are vital. We need to act now and spend more money. We need to defend our UK market. We also need to defend against the UK, which is far more active and spends more money regionally. The UK is increasing the number of flights to long haul destinations and has taken a decision after 40 years on Heathrow Airport. We need to ensure the visa regime stays flexible. We need to underpin our connectivity by bringing on more capacity as fast as possible such that in no way will we be held back from the economy growing and developing. We need to do whatever it takes to protect the common travel area and the Border. We need to push hard in order that, whatever else arises, the open skies arrangement in place is kept in future. We need to continue our push within Europe for continued liberalisation. We will miss the UK being at that table. The UK is one of the key advocates for open skies and an open market. As a small peripheral economy, we are absolutely exposed to the market and therefore we want a truly functional open marketplace.

I thank the committee for giving me the opportunity to make my presentation. I hope committee members have seen the document we sent in. It has a clear synopsis.

Photo of Gerard CraughwellGerard Craughwell (Independent)
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I thank Mr. Toland. We will now turn to Mr. Flynn who is general manager of Freight Transport Association Ireland.

Mr. Aidan Flynn:

I am the general manager of the Freight Transport Association Ireland. We are delighted to be invited to present to the Seanad Special Select Committee on the Withdrawal of the United Kingdom from the European Union regarding issues that are of major importance to our members.

FTA Ireland is a not-for-profit membership trade association for the Irish freight, passenger and logistics industries. The association is wholly owned and governed by our members. To date, we have over 300 members, which represent some of the largest freight and passenger operators in Ireland. Our members have more than 25,000 employees and 10,000 commercial vehicles operating between them. Our mission is to help our members to develop safer, more efficient and sustainable supply chains and transport operations. We provide representation, information, training and auditing services for our members. We have a recognised gold, silver and bronze accreditation programme that all our truck fleet members must participate in annually. The programme is designed to recognise operators that demonstrate the highest standards of professionalism and compliance in day-to-day management of drivers and vehicles. The accreditation gives independent verification that operators are meeting minimum legal requirements in terms of driver training and management and vehicle roadworthiness. To date Brakes Ireland, BOC Gases Ireland, McArdle Skeath and National Vehicle Distribution have achieved the gold standard.

There are over 18,000 commercial vehicles on the operator licence list in Ireland. That corresponds to 3,834 operators listed for international and national operations with an average fleet size of 4.7 trucks. Of that figure 12,600 vehicles or 2,351 operators are registered for international haulage. Ireland's geography means that the freight and logistics sector is critical for the country's economic activity and its connectivity to the rest of the world. The majority of freight in Ireland is transported via road. Two thirds of all freight in Europe is transported by road. In 2015, a total of 118.1 million tonnes of goods were transported by Irish goods vehicles. Most export freight is transited via Ireland's ports either as road freight, which is known as roll-on roll-off freight, or as container freight, which is known as lift-on lift-off. Dublin is Ireland's largest port and handles 44% of the total tonnage of goods traded.

The UK is leaving the EU. Contingencies must be agreed and planned to ensure minimal impact to trade and to mitigate uncertainty on rules and regulations or lack of access to markets. What is certain is that the harder the Brexit, the more issues that will arise for the transport and logistics sector as a whole.

Brexit brings many challenges, not least understanding how the supply chain will be impacted and the knock-on effect this will have on the efficient flow of goods into and out of the country, as well as whether this will have negative financial consequences for the competitiveness of the country and the consumer.

The unique relationship between Northern Ireland and the Republic of Ireland cannot be understated during the negotiations. It is testimony to the Government and the Taoiseach that this issue has drawn support from UK and the EU. Having this topic discussed in the early stages of the process will help put shape on what the country must do to prepare for Brexit. Aside from the fact that cross-border trade amounts to approximately €3 billion annually, with approximately €1.5 billion in the food and drink sector alone, the implications for jobs and the movement of people across the Border are extraordinary. No other country in the EU is as reliant on the UK as Ireland as a trade partner and in terms of access to the wider EU market through the UK land bridge. The UK is Ireland's second biggest market after the USA, with almost 13% or €15 billion of Irish exports going to the UK in 2016. The UK purchases 50% of Ireland's beef exports, 42% of our food and drink exports and 55% of Ireland's timber and construction sector exports. Ireland is also heavily reliant on UK products. Most goods imported by Ireland in 2016 came from the UK. The value of this trade is €16.6 billion.

Members of FTA Ireland are concerned about the consequences of Brexit. The world is a different place compared to the 1980s and early 1990s, when border checks and customs checks were par for the course. The current marketplace has grown up based on just-in-time logistics, ease of access to products and services, as well as organised and relaxed borders. In the early 1990s we were sending only 37,000 roll-on roll-off units per annum via the Irish Sea to the UK. Today, the corresponding figure is in excess of 400,000 units per annum from Dublin Port alone.

Ireland, as an island nation on the periphery of the EU, is reliant on getting the majority of its imported and exported goods to and from the EU predominantly using the UK as a landbridge. There is only limited scope to increase volumes by sea and air. While it is true that Ireland does not rely on the UK market for exports or imports as much as in the past, the agrifood sector still does. Restrictions to trade will not only have a devastating impact on this sector but on rural Ireland, where these products are produced and where farmers and local businesses are linked. An obvious solution is to ensure a trade deal with the UK that allows trade to move in a manner we are all used to. This is something we can all pursue.

FTA Ireland has published a position paper that makes three priorities. The first is for no hard border with Northern Ireland and no barrier to trade with the UK. It is vital for the stability of the North and the unique interdependence between Northern Ireland and the Republic that a hard border is avoided. Production processes and supply chains are highly integrated with many businesses operating on an island-of-Ireland basis and many products being partly produced and processed on one side of the Border before being sold on the other side.

Customers and businesses have grown accustomed to the flexibility brought about by the current arrangements. Bringing back the borders of the past will create unnecessary delays and disturb supply chains. A hard Border would also create difficulty for Irish businesses located in Donegal and Sligo because the best route for them to reach the port of Dublin is through UK territory. It is therefore essential that both negotiating teams find solutions that will work for all parties and which will not cause undue delays. An all-island of Ireland approach needs to be taken during the negotiations. The impact and extent of controls should be minimised through greater prioritisation of controls and the use of smart technologies. Mutual product recognition between the EU and the UK should also be guaranteed post-Brexit.

The second priority is seamless transport links between Ireland and the UK. Ireland needs efficient and flexible road transport links to Northern Ireland and Great Britain, as well as an efficient land bridge to continental Europe. Mutual recognition of transport documents, qualifications and licences for road transport operators should continue post-Brexit to limit disruption. Post-Brexit, it is important to ensure that all companies are treated in a fair way by authorities, regardless of their country of origin.

The third priority is a seamless transition to the post-Brexit era. Political uncertainty has a negative impact on business operations not least because of currency fluctuations. A sustained period of uncertainty must therefore be avoided to allow businesses to plan ahead and investments to be made. Negotiators should try to provide as much clarity as possible to businesses as the general framework of the future relationship with the UK. Avoiding a cliff edge for businesses should be the priority of negotiators on both sides.

Ending negotiations with no deal would be the worst case scenario for industry. A suitable transition period will be needed between the UK's exit and the conclusion of a new agreement and new arrangements but this transition can only take place if it is foreseen in the withdrawal agreement with the UK. Negotiators need to agree a phased implementation of new rules to allow businesses, authorities and entities responsible for critical infrastructure, such as ports, to adapt to new arrangements post-Brexit. Industry will need clear and simple processes, but also time and support to train its workforce. Dedicated help should be provided to businesses that have less experience of international trade and operations, especially SMEs.

For frictionless trade or no hard Border on the island, it is clear that new standards of compliance and operation are going to be required that are ambitious and technologically inclusive. It is vital for successful implementation that we plan, resource and support this in time, irrespective of the outcome. FTA Ireland is calling for the appointment of a dedicated Brexit or logistics minister to ensure Government continues to put the needs of Irish industry at the heart of Brexit negotiations. Without a minister operating in this dedicated role, Ireland is at a disadvantage over the course of the negotiations and we must do everything possible to ensure the sustained success of the nation's trading relationship with the UK and the EU member states. While we recognise the work done by civil servants here and in Brussels to date we would strongly recommend a more focused cross-departmental approach that will facilitate the implementation of solutions. The concerns of shippers, freight forwarders, consignors and distribution companies must be listened to in determining the best outcome for Ireland. This will be aided by clear leadership driven by the government of the day but supported by a dedicated minister with responsibility for Brexit and the supply chain.

There are also concerns about skills shortages. To be Brexit ready industry must invest in developing skills, and technological competencies to ensure free flow of goods and services. Too often the transport sector has been bypassed in training and education. Now is the time to invest in upskilling the workforce and preparing an industry to be world leaders. The committee should bear in mind that the average fleet of trucks operating internationally is five vehicles making this SME sector very exposed to sudden sharp change. Support must be forthcoming to provide training and supports in customs processes and also to urgently introduce continuing professional development for transport managers. Currently, to have an operator licence a person needs a transport manager certificate of professional competency, CPC, qualification but there is no follow up to keep a manager up to date with new legislation or systems. This needs to change. Third level colleges should be encouraged to work more closely with the industry on projects that will benefit both the college and the industry in aiding the upskilling requirements.

Due to Brexit it is inevitable that there will be more requirement for customs services. Importers and exporters will have to invest in the services of customs clearance personnel in order for value added tax, VAT, and tariffs to be paid to the Revenue Commissioners in an organised and timely manner or face delays to the movement of goods. Those moving the goods must fully understand the documentation and processes involved in this new era of distribution. It is important that there is a collaborative approach taken in promoting solutions that will work well for all parties. This will ensure better compliance and engagement as well as developing trust, which will be vitally important in reducing the likelihood of delays or product deterioration.

Over the years specialism in the customs and excise sector has diminished considerably, primarily due to the standardisation of systems, the lack of business potential in the private sector and ultimately the lack of demand for these services. The public sector has also suffered because there will be a spike in demand for these skills as a result of Brexit. When it comes to planning for customs in order to ensure that full advantage is taken of the available special procedures and to legally minimise payments, there are very few specialists able to provide a fully professional service. To aid solutions that are viable for all, including a borderless Northern Ireland and ease of movement of goods into and out of the country via the ports, there must be agreed systems, controls and standards of compliance requirements.

There is a great opportunity for Irish international operators to be prepared to compete in a marketplace that demands compliance, professionalism and certification. Consideration will of course have to be given to the cost of adaption and the requirement for business to recruit additional staff and invest in technology. Cognisance must also be taken of solutions that are viable and will not leave any member state in a worse position than it was in prior to Brexit.

Article 50 has been triggered since 29 March 2017. The countdown has begun but negotiations have not. The problem for all will arise if an agreement cannot be made or there is no prospect of an agreement after the two year period. In this scenario there cannot be an extension to the negotiations. Ireland must prepare for this possibility and it is vital that there is clear leadership that will protect the country's interests irrespective of the outcome and strive at every opportunity to get a deal that is best for Ireland. It is certain that the UK will become a 'third country' and that all in the supply chain must plan for this.

We must look on Brexit as an opportunity to revitalise our supply chain and examine how we can get goods to and from Ireland to the other markets. For this to happen we suggest the following: a dedicated minister for Brexit and supply chain. This will aid a co-ordinated approach to working with key stakeholders in determining the issues and preparing solutions at EU and local government levels. We recommend engaging the education sector particularly business and supply chain colleges that can help view the situation from an academic perspective. A lot of research has been carried out on supply chain logistics, resulting in some ideas which are our future solutions. We need to understand some links in the supply chain may be more advanced than others. When technological solutions are introduced the problem will arise that some in the chain will not be able to adapt as quickly as others, we must understand and plan for this eventuality. It is critical for businesses to have a smooth transition in place to what is likely to be a very different regulatory and trade environment. Industry needs time and predictability to adapt. There should be no sudden changes to rules and requirements, and industry needs to be properly consulted every step of the way. In the future, irrespective of the relationship between the EU and the UK, the threat of divergence of rules and standards will always expose Ireland to more trading difficulties than our European partners. For instance, it was recently reported that over 200,000 fidget spinners had been confiscated by the Competition and Consumer Protection Commission due to safety concerns that they did not have the European CE mark. This could become a much more common occurrence given that the UK will not be obliged to meet the same requirements. Shippers need to ascertain as best they can that their contractors are carefully selected and that drivers are subsequently trained and monitored, as required by both the EU and national legislation, as well as for their own peace of mind. It is very important that shippers appreciate the factors affecting the environment through which their goods will pass en route to their final destination. There should be increased funding to support more progressive and fair enforcement at national and EU level. Skillnets funding should be made available to aid the education and upskilling requirements. An accreditation programme needs to be initiated for all levels of the supply chain to aid a viable and efficient solution for Ireland's accessibility to market issues. This can also lead to fast tracking customs at Irish and UK ports and will definitely facilitate ease crossing the Border. We need to exploit the opportunity to improve the whole supply chain and improve professionalism and compliance at all levels. There must be more linked-up thinking.

We remain positive but it is wise to plan for the worst and hope for the best outcome.

Photo of Gerard CraughwellGerard Craughwell (Independent)
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I thank Mr. Flynn for his comprehensive overview and invite Senator Gerald Nash to open the questioning.

Photo of Gerald NashGerald Nash (Labour)
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I thank Mr. Toland and Mr. Flynn for their very comprehensive contributions. I thank Mr. Toland, in particular, for the work he has done with the Dublin Airport Authority, DAA, in recent years. It is common knowledge that he is moving on from that role and it is no exaggeration to say the DAA, Mr. Toland, with the leadership he provided, and his staff have played a central role in the recovery of the economy.

The open skies policy has been enormously beneficial to Ireland in terms of jobs in this country and the development of our export industries. Destinations are now open to Irish people that were not open to us just a few short years ago. Britain's involvement in the open skies policy and associated regulations will lapse when Brexit becomes a reality two years from now. I would like to tease out with Mr. Toland what might happen if there is no replacement agreement that mimics the best elements of open skies and all that flows from that. If there is no replacement, clearly we will be facing a cliff edge that could have catastrophic consequences for Irish jobs, access to Ireland and connectivity. We are obviously hugely dependent on the UK in terms of inbound visitors but also for air traffic more generally. Mr. Toland's submission refers to the fact our traffic dependency on the UK stands at almost 40%, which is enormous. We have teased that out with other contributors at previous meetings of this committee. Realistically, what does Mr. Toland think the prospects are of an arrangement that would mimic the arrangement we enjoy at the moment, notwithstanding the restrictions that will necessarily be in place? We could be facing a cliff edge that could be very damaging for Irish jobs and businesses.

Photo of Paul DalyPaul Daly (Fianna Fail)
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I welcome both delegates and thank them for their insight into what is a vitally important sector in the context of Brexit. As Mr. Flynn rightly said, we must all hope for the best but plan for the worst. In the context of the worst case scenario, what provisions has FTA Ireland made? In terms of both importers and exporters, if the worst case scenario comes to pass, we have a hard Border and roll-on, roll-off operations using the UK as a land bridge become a nightmare, logistically and commercially, one of the alternative options might be lift-on, lift-off. If Mr. Flynn believes that there will be a big move in that direction, are our ports ready to handle that? If the best option, having done the analysis, is air freight, what is the position with our airports? Mr. Toland mentioned the traffic handling capacity of the north runway, but will there be enough capacity if there is a rush on air freight because it is logistically impossible to continue with roll-on, roll-off operations? Perhaps it is outside his brief, but does Mr. Flynn believe our ports are ready to handle potential increases in traffic?

This is a cross-party committee and, as such, it is apolitical. That said, my party and I agree that there is a need for a dedicated Minister for Brexit. We have been told that it is a decision for Government and that, at present, the Government believes it is better to have individual Ministers concentrating on their own briefs but with Brexit in mind. The argument is that people specialising in their own areas is a more effective or better model than having one person loaded with this entire problem. With that in mind, will the witnesses outline the contact they have had with the Minister for Transport, Tourism and Sport and also what feedback or vibes they have been getting from the Department in terms of where it is on the issue of Brexit?

In terms of the worst case scenario and a hard Border, Mr. Flynn referred to lorries travelling to Donegal or other locations in the north west. As he pointed out, the shortest route there is a straight line, which means entering and re-entering Northern Ireland. What contingency plans, if any, does the haulage industry have for such a scenario? This is an on-island issue and does not even concern exporters and importers. Has that been considered in the context of the worst case scenario, which we all hope will not happen?

Photo of Michelle MulherinMichelle Mulherin (Fine Gael)
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I thank the delegates for their presentations. In his presentation, Mr. Flynn set out the priorities and the supports that the freight transport industry would need to transition and get through this intact. What are the members of his organisation doing right now? Are they taking steps or measures themselves or are they banking on the Government responding to the requests they are making? It is a matter of concern that many of those involved in the freight transport sector are small businesses and, as such, it is harder for them to cope with something as strategic as Brexit. What is happening right now or is Mr. Flynn's presentation based on looking towards the future?

We have had presentations on open skies and concerns have been expressed to us that next March could be a real deadline. It has been suggested that if the issues around devising an alternative to open skies are not sorted out by next March, that will impinge on the ability to book flights from March 2019. It was explained that one can book flights with an airline up to one year in advance and, therefore, an agreement would have to be reached well before the 2019 deadline. It makes sense that this would be a priority for the British and the European Union because it involves both passengers and goods. Does Mr. Toland have any reason to believe, from discussions he has had with the Department, that something approximating open skies will not be achieved with the indicative timeframe, that is, by March 2018, as called for by Mr. Michael O'Leary of Ryanair and representatives of other airlines? If it is not achieved, what will happen in terms of flights from Britain to Ireland? What will people have to go through in that context? Mr. Toland has said there is no default position, but I understand we will be falling back on old treaties. What would that entail? What will happen if we get to the cliff edge and do not succeed in pulling back from it?

Photo of Gerard CraughwellGerard Craughwell (Independent)
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I will pose a few questions myself before reverting to the delegates. We all welcomed the announcement of the development of Dublin Airport as a new hub for trans-global flights. Where does Brexit leave the airport in terms of its ability to compete with the likes of Heathrow Airport?

In terms of freight transport, my colleague, Senator Paul Daly, has already referred to roll-on, roll-off operations.

If we were to develop deep sea ports in Waterford and Cork for direct access to the European Union and the Continent, what sort of competitive advantage or disadvantage would it place members of Freight Transport Association Ireland at? Is it likely to cause them more trouble than taking the land bridge route? Mr. Flynn spoke about goods depreciating or suffering from being too long on the road.

Mr. Kevin Toland:

I thank the Senators for their questions and, in particular, Senator Gerald Nash for his kind remarks on our development. I will respond to Senator Michelle Mulherin's question with Senator Nash's one on the open skies and liberalisation. The Senators have really got to the nub of it. It will not wait for Brexit. It will happen six to 12 months before it. If nothing is agreed, airlines will essentially be selling a service they cannot deliver because they will not know if those treaties and the single sky system will be in place. There will be massive uncertainty. I share the concerns that have been articulated by Mr. O'Leary who is one of our key customers. If people move out of the UK, there will be fewer routes and that is where it will all start happening. In an airport, when we build something we have it and have to use it. If an airline has a aeroplane, it can fly it from anywhere to anywhere. We will start seeing a reduction in routes. That will be the first impact. It will start happening early next year. The second impact we will see will be for the routes that stay. It is a very technical matter. An EU airline can go from anywhere in the EU to anywhere else. They will have to start going back to old treaties and nominating airlines per country. There used to be only one nominated by each country. The cost of air transport has come down dramatically while the amount of air transport and connectivity is going up. We will see fewer routes and higher prices kicking in six months before Brexit. It will be very negative. Not all connectivity to the UK would disappear because it is a result of a combination of business, people going on holiday and people going both ways visiting family and relations. We would definitely see a step back, particularly in the regional airports which are a lot more dependent on UK provincial business which is very good business. An awful lot of trade is supported, even though the goods may go by road. Much of the trade and business is done by people going over and back and doing their selling in the UK.

Senator Gerald Nash asked about how it is likely to develop. We think this has been missed by the UK. It is a fairly common view as they get into the detail of a hard Brexit and the negotiations that one of the devils in the detail is aviation. As they get into that detail, they will realise that 50% of their travel is in and out of the EU; therefore, it will be badly impacted after Brexit unless they can get another deal. For us, we are right out there with them. There is a chart in the presentation materials I sent round which shows that. For France and Germany aviation is a big deal but is not the end of the world because 6% or 7% of traffic is into the UK. Who knows how they will look at that. They will weigh up selling Audi cars, BMWs, aeroplanes and other things; therefore, it will not be as important. It will be very dangerous. I do not think anyone has an idea how it will develop.

With regard to Senator Michelle Mulherin's question, aviation is in a very dangerous place because we do not have to wait for Brexit to see what happens. We will probably find out what happens next spring when some of the airlines will decide they will not do things. On top of that there will be a secondary impact for the airlines. If we take an airline such as Ryanair as an example, to operate within the Single European Sky a certain proportion of ownership has to be in the EU. After Brexit, the shares that are held by people in the UK in Ryanair could potentially disqualify it altogether from being an EU airline. There will be another area of complexity to manage. It is a very fast moving business. It operates on trying to be as simple and quick as it can. This will slow it down. It is not a state secret. Ryanair said last week that airports all over Europe are clamouring for planes. It will start basing planes elsewhere where it will have more certainty, where it can sell the flights and where it knows the business will be done.

I will address Senator Paul Daly's question. We have good air cargo facilities in Dublin and we have good facilities in Cork. We would be very open to looking at how we develop and support them. We need to bring on our new runway as quickly as possible because we are at 87% capacity between five in the morning and midnight. We need a longer runway so we are able to get to places like China, South America and further into Africa and Asia to develop new markets for the Irish economy, including trade going out, foreign direct investment and tourism coming in. We need to deal with and remove the too onerous conditions in the current planning permission which curtail our ability to operate the runway for air traffic for passengers and cargo and which also potentially curtail the development of the Irish economy. It is a significant issue but one we will happily work our way through in both Dublin and Cork.

Mr. Aidan Flynn:

I will probably cover a couple of these questions together. Senator Paul Daly asked about options or alternatives post Brexit and worst case scenarios. There are 1 million roll-off, roll-on units sent from Dublin Port to the UK over and back each year. There are 690,000 lift-on, lift-off units out of Dublin Port over and back to the UK each year. There are opportunities to move from roll-on, roll-off to lift-on, lift-off, which suit longer sea journeys. It is very much dependent on the products. If there was a five-hour delay at Dublin Port going out and there was another five-hour delay going through the land bridge at another port, that is a ten-hour delay in total for that product. It would still be a day ahead of the ferry from Dublin to Zeebrugge. It will not suit all types of product.

In terms of deep sea ports, there is absolutely a necessity to look, investigate and support all the main ports in Ireland. There is an opportunity to take a leaf out of the book of main European ports such as Rotterdam and strategically work together to put a plan in place for future development. Ringaskiddy is awaiting the arrival of a new deep sea cargo shipment soon. The deep sea requirements probably open up different types of markets we possibly have not thought about. There are definite opportunities. The road links, infrastructure and all that type of thing need to be worked on. The motorway network between Dublin and Cork really supports that type of stuff and it is really good to see. There is a limit in terms of how quickly that can change and happen. There has to be forward planning because 5% of goods exported are by air freight, which is 35% of the volume. It involves high volume goods and options. A new runway will definitely aid expansion plans with regard to that type of thing.

On the question of a hard border, I spoke about our accreditation programme in my introduction because we are really committed to trying to professionalise and upskill the logistics industry at all levels. There is a skills shortage. The average age of a truck driver is 54 years of age. There is a struggle to get young people engaged in the industry at all levels. This is the stuff we can do now and get supported by Government and the private sector because there is a willingness to do it. There are opportunities in the new apprenticeship programmes in terms of apprenticeship diplomas. An apprenticeship truck driver programme has been in the pipeline for a number of years and is nowhere to be seen.

These things need to be implemented now to help us be much more competitive in this post-Brexit era.

In respect of the issue of a hard Border, without doubt, technological solutions are the way forward. I am convinced there will not be a hard border because there cannot be a hard border. In Donegal and Sligo, in respect of the opportunities if there was one, it is much easier to focus on developing the road infrastructure from Killybegs through Sligo and linking it up with the motorway in Mullingar and so on, but that route in itself would add a couple of hours on to the journey for people. Even with technological smart solutions in customs and so on, goods vehicles will have to be checked. Having spoken to customs and having seen its presentation here, I do not know whether it will be 8% or 10% or whatever the volumes are, but what is key is customs taking a 24-7 approach. When we are looking at expansion within ports, the support and linkage, be it between An Garda Síochána, customs, port officials and everything else, should be all geared up to an efficient programme of delivery and support for the logistics sector. That links in with our call for a Brexit Minister or a future supply chain or logistics Minister. It is vitally important that even from the private sector perspective, it is one port of call.

There is very little engagement from the current Minister for Transport, Tourism and Sport. We would have a very good working relationship with officials in the Department of Transport, Tourism and Sport and provide lots of information to them. Freight Transport Association Ireland has an office in Brussels and we have met the permanent residence in Brussels and Department of Transport, Tourism and Sport officials in respect of this; therefore, we are very open to working with different Departments. If one is looking to go to one Department after the next, the message will get lost. No trust is built up. While one is representing one's members or bringing members like the Kerry Group, Glanbia, DHL or the DAA to these meetings, are they impactful enough? There is a great opportunity for us to have a logistics chain that is respected worldwide through making those decisions now, which will be very positive. I think I have covered all the questions.

Mr. Kevin Toland:

As I neglected to answer the Acting Chairman's question, I apologise. We built Dublin Airport and it is now a very successful airport. We are now 14th in connectivity across Europe and 12th in terms of size. A key feature of that has been building long haul, particularly the gateway to North America. This summer, we will be the fifth most important gateway to North America, which we are very proud of. We think there are great opportunities to keep building that. We will grow by over 20% this year. In the Middle East, we will grow by about 14% or 15% this summer. We are working very actively and hard to advance further connectivity, especially to China where we would be very hopeful of that coming through. One key linchpin of it all is people transferring through Dublin to UK provincial towns and cities. I remember how back in my food days at the time of the foot and mouth scare, I realised that food was not that important at the time in the UK but was very important here. Our reaction and our success in managing that was directly down to the Government understanding it, bringing the industry together and dealing with it. There is a similar issue in aviation. Frankly, I do not think it matters as much in the UK. One can see this if one looks at the way the UK has allowed its air capacity to be gridlocked for 40 years and has just now taken the decision on Heathrow. This summer, a person can fly to 24 or 25 UK airports from Dublin, while they can only fly to seven or eight from Heathrow or Gatwick; therefore, the UK has allowed itself to become unconnected. In developing business with China, believe it or not the UK had a quota on the number of flights from China. It has woken up following the Brexit vote. This is a cautionary note I would add. The UK has quadrupled the number of flights that can come in from China. I still do not know why it would have a ban on it. It is still a big opportunity for us but we will face many threats. The UK is more active and there are more flights from China. The UK is spending more money on regional tourism and has taken the decision to move on with Heathrow after 40 or 50 years of gridlock.

The other question I did not comment on directly concerned what we are doing about it. We have not had direct contact with the Minister for Transport, Tourism and Sport. We have worked with his officials. The Minister has set up a national civil aviation development forum that provides some of the interfaces. We are extremely active. I have met at the highest level in Europe with the permanent and elected officials who handle both transport and aviation. In fact, I had the privilege of briefing the gentleman responsible for aviation, Filip Cornelis, two weeks ago in Cork where we welcomed a number of aviation people to a forum. Commissioner Hogan and his office have been very supportive. We have also worked through IBEC and the Airports Council International. The really important thing is, as Mr. Flynn suggested, a joined-up message, knocking on all the doors and making sure it is well understood. Even if people are waking up late, our perspective is that we cannot be active enough.

Photo of Gerard CraughwellGerard Craughwell (Independent)
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I thank Mr. Flynn and Mr. Toland for coming and giving of their precious time. They have certainly given us a lot of food for thought. The committee continues to sit over a number of weeks. If there is anything the witnesses feel they would like to add, they should feel free to contact the secretariat.

Sitting suspended at 12.15 p.m and resumed at 12.20 p.m.