Hildegarde Naughton (Galway West, Fine Gael) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I thank the House for the opportunity today to introduce the Air Navigation and Transport Bill 2020. As we all know, I am bringing this Bill to the House at an incredibly difficult time for Irish aviation.

Our airports, airlines, travel trade and tourism sectors have all suffered an unprecedented collapse in business as a result of Covid-19. Jobs have been lost and incomes decimated in a sector that has delivered tremendous growth pre-Covid.

I have met many people across the industry since coming into office, including employers, small businesses and staff representative bodies. I know that what they want most is a safe route back to trading. That is what we all want for them too and what my main focus will be this year. It will not be easy and at this moment especially it can be difficult to see past the imperative of minimising all but essential travel. However, Irish aviation is incredibly resilient. We have two of the most successful and financially robust airlines in Europe. We have an aviation leasing sector that is world leading and we have modern, high-performing airports.

With continued Government support I am absolutely sure Irish aviation will recover quickly and rebuild the global connectivity that is so important for our economy. So far, Government support for the aviation industry is close to €200 million. It is estimated that more than €100 million in financial support has already been made available under the central schemes for Irish airlines and airports, including the wage subsidy scheme, the alleviation of commercial rates and others.

In addition to these general business support measures, the Government has also agreed a revised €80 million funding package specifically for Irish aviation. As a start, the regional airports programme 2021 to 2025 has recently been launched, with a budget allocation of €21.3 million. It will be targeted at supporting our regional airports in Donegal, Knock and Kerry. A further €32 million is being provided through a new Covid-19 regional State airports programme for Cork and Shannon airports, with another €26 million being set aside to help address airport liquidity issues for Dublin, Cork, Shannon, Donegal, Knock and Kerry.

While on the subject of supporting Irish aviation, I acknowledge the work of the Oireachtas Joint Committee on Transport and Communications Networks, which committed much of its time last year to examining the plight of Irish aviation and making recommendations on how to help it back on its feet. The committee's report identified many of the key issues and contains sensible policy proposals which align closely with the Government's objectives. It reveals a broad political consensus about the importance of aviation and State supports and the need for a co-ordinated effort between industry and the Government in setting out a realistic and clear path for recovery.

It is against this challenging background that I introduce the Air Navigation and Transport Bill 2020. This Bill looks to the future and seeks to put in place a modern regulatory system that will underpin Irish aviation for the next decade and more. An internationally competitive and sustainable aviation industry needs a strong and reputable regulatory regime, which is what this Bill provides. The current regime was put in place in the early 1990s, and although it has served the industry well over that time, the institutional structures no longer reflect international best practices. This Bill addresses that matter.

The Bill has three main objectives. It will merge the regulatory functions of the Irish Aviation Authority, IAA, with those of the Commission for Aviation Regulation, CAR. In doing so, it establishes a single independent and strengthened aviation regulator. It establishes a new commercial semi-State company to manage Irish-controlled airspace. It also makes changes to how the airport charges are set at Dublin Airport by putting a greater emphasis on the needs and expectations of the consumer.

For the most part, the Bill provides for the redesignation of existing regulatory and business functions. Aviation is a highly regulated industry and the Irish system is mostly formed from adherence to international conventions and agreements and EU law. Much of this Bill is concerned with ensuring these international obligations are properly assigned and the new institutional structures are robust.

Taking each of the three objectives of the Bill in turn, I will first summarise the provisions of the merger of the regulatory functions of the Irish Aviation Authority and the Commission for Aviation Regulation. Currently, between them, these two State bodies are responsible for licensing airlines and individual aircraft; issuing airport operating licences, pilot licences and travel trade licences; inspecting compliance with aviation safety and security standards; setting airport charges at Dublin Airport; consumer rights under EU legislation protecting air passengers; and a range of other related tasks. The industry is required to engage with both entities and there is considerable overlap and interlinking with the engagement. This Bill will streamline the relationship, creating a one-stop regulatory shop, so to speak. The Commission for Aviation Regulation functions will be fully merged into the Irish Aviation Authority.

The second objective of the Bill is to establish a new stand-alone commercial State company to provide air navigation services. This service is currently provided by the IAA, which has a dual regulatory and commercial function. This dual model was conceived in the 1990s and regulatory developments in international aviation since make it something of an outlier. It is simply not good practice to have a commercial and regulatory function in the same organisation, especially when part of the regulatory remit involves oversight of the commercial business. It is a self-regulation arrangement, which is not an idea that finds much support nowadays. Therefore, as we merge the commission's regulatory functions into the IAA, we will at the same time remove the commercial business and set it up in a wholly separate State company.

Both of these steps - merging the regulatory functions of the IAA and CAR while establishing a new commercial State air navigation company - involve the reassignment of staff and the redistribution of assets and liabilities. The Bill provides a clear and fair legal structure for the transfer of functions, land, assets and staff. On the matter of staff in particular, employees will move with their current positions on no less favourable terms and conditions. This commitment is set out in the Bill and it means staff remuneration and pension entitlements will not be affected by the institutional changes. The vast majority of staff will not notice any material change in their day-to-day work. There will be only minimal changes with respect to office locations in and around Dublin city centre and this will be on an agreed basis.

I am glad to say my Department, the IAA and the CAR have maintained an open and very constructive dialogue with staff and their representative bodies on the provisions of this Bill. I am advised there is broad support for the reforms and comfort with the provisions of the Bill on terms and conditions.

The third objective of the Bill is to make changes to how airport charges are set at Dublin Airport. Under the Aviation Regulation Act 2001, the Commission for Aviation Regulation is responsible for setting the maximum price that Dublin Airport can charge airlines for use of its facilitates. It is a complex economic regulatory process but its purpose is to ensure that the price charged by Dublin Airport, which is ultimately paid for by airline customers, is fair and sufficient to cover the development and maintenance of the airport. In setting a maximum price, the regulator effectively frames the medium-term development plan of Dublin Airport.

The proposed changes set out in the Bill are based on recommendations arising from an independent review of the current framework, a review which included extensive industry and public consultation. The changes do not alter the main thrust of the existing price-setting regime but rather make incremental improvements that have the effect of strengthening the role of the regulator for the benefit of consumers. This part of the Bill contains policy changes, whereas the provisions on the institutional changes to the IAA and the CAR are almost exclusively about moving around existing functions. For that reason, I will take time to introduce these proposed policy changes.

First, the Bill provides for a change to the statutory objectives of the airport charges regulatory regime. Throughout the aforementioned independent review process, it became clear that the overarching objective for the regulator should be to protect the interests of consumers while maintaining high standards of safety and security. This idea is reflected in the Bill, which sets out that the primary statutory objective of price setting at Dublin Airport shall be "to protect and promote the reasonable interests of current and prospective users of Dublin Airport". That objective is set above all others.

The Bill also for the first time requires the regulator to take account of Government policy on climate change when making a decision on the price and the medium-term development of Dublin Airport. There are a number of other noteworthy policy amendments and improvements.

Currently, the Minister for Transport has the power to provide policy directions to the regulator, which must be considered when making a decision on airport charges. This power has been used by previous Ministers, but on reflection, it is difficult to square such a provision with the idea of strong, independent regulation. Therefore, it is proposed to remove it and instead provide that the regulator must have regard to current Government aviation policy. This will ensure that the regulator's periodic review of airport charges will be appropriately framed within the context of current Government policy, but without being subject to specific Ministerial instructions which could cut across regulatory independence.

Another change proposed in the Bill is to place a new obligation on the regulator to produce a statement of strategy every three years, setting out details and indicators of its performance. This is an additional level of accountability and transparency and is intended to dovetail with greater independence in decision-making. The Bill also introduces some additional flexibility into the regulatory process, by allowing the regulator to extend its current decision on the maximum airport charge price for up to two years. Currently, the regulator reviews and resets the maximum airport charge at Dublin Airport every five years. This will continue to be the norm, but the Bill allows for some flexibility around this, so long as all parties - the regulator, the airport and the airlines - agree that it is in the common interest to apply it.

Changes are also proposed to the regulatory appeals process. Currently, where an appeal of a regulatory decision on airport charges is made, the Minister for Transport is required to appoint a panel of up to three experts to hear the appeal. That panel of experts has the power to revert the regulatory decision back to the regulator for reconsideration. However, during the review of the regime, concern was raised from all sides about his process. It was suggested that any ministerial involvement was inappropriate and that the process had no teeth, with the appeals panel having no ability to direct the regulator to make changes to the determination. Ultimately, it is recommended that the current process be abolished. That is what I am providing for. In its place, it is proposed that all parties may appeal a regulatory decision directly to the courts. While there would normally be concerns raised about pricing the ordinary person out of an appeals process by requiring them to engage professional legal expertise at possible great expense, all of the appeals lodged under the current process to date have been taken by either airlines or the airport authority. Indeed, I understand that it is the practice in the current appeal process to employ legal representation, although it is not required. The likelihood of a single individual taking an appeal on this matter is remote.

Finally, to ensure that the airport charges regime continues to deliver on its proposed new objectives, there is a new provision for periodic reviews of regulatory policy. Such a review will consider the effectiveness of the current regime and will make recommendations for any changes. It will include stakeholder engagement and be cognisant of any changes to market conditions. Aviation is an ever-changing industry and it is critical to Ireland's economic interests. Therefore, it is important that we get the level of economic regulation right and so it is prudent to provide for future review of the regime to ensure that what we have is working.

In conclusion, this Bill contains important institutional and regulatory reforms which, if enacted, will provide a regulatory framework more suited to the demands of 21st century aviation. We are currently operating under structures first envisaged almost 30 years ago. Time to refresh is overdue. I know the industry is in a very difficult place at the moment and I have no doubt that it has more pressing concerns than regulation. However, my focus has to be on more than just the immediate crisis. The Government agreed an €80 million financial package for Irish aviation before Christmas, which will be rolled out through various support schemes in the coming months. If more is needed to be done, it will be done. This Bill is looking to what we need post-crisis and it is seeking to put in place now the structures that will serve Irish aviation for the next decade and more. It strengthens independent regulatory oversight, it addresses institutional structures that are outdated and it makes changes to ensure that consumers are better served and that their rights and expectations are recognised and acted upon. I look forward to this debate on the Bill and to discussing it in more detail on Committee Stage. I commend the Bill to the House.

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