Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the Senator for raising this important issue. The position which has arisen is most regrettable and came about from the failure of the Pilot Training College, PTC, a privately-owned and operated flight training school, to meet its contractual obligations to its students in the completion of their training in Florida. I fully understand the frustration felt by the students involved and their families and I expressed my sympathy when I met some of their representatives on 20 July last. Unfortunately in the current economic climate, many businesses have failed, leaving their suppliers, etc., out of pocket, including businesses where a State body has a regulatory role.

It is important that the role of the Irish Aviation Authority, IAA, with regard to flight training organisations is properly understood. The IAA has responsibility for approving and overseeing flight training organisations in Ireland and the primary functions in this regard are the oversight of the safety, quality and standard of the training being delivered, the conduct of examinations and flight tests. It considers whether the company has sufficient resources to safely provide the training required to the internationally-determined standards but has no involvement in, or responsibility for, the contractual arrangements between PTC and its students. The IAA's role in the approval and oversight of flight training organisations is based on European rules and, unfortunately, PTC is not an isolated example, as there have been other similar failures in other countries in the recent past, with students suffering losses also.

As part of its regulatory role, the IAA completed audits on PTC in May 2011 and April 2012 and on PTC Florida in April 2011 and in October 2011. The IAA also made site visits in the first quarter of 2012 and in June 2012. During these various inspections it was clear that PTC complied with all EU and international requirements as a flight training organisation and there was no indication of any deficiencies. PTC's accounts were signed off by professional auditors and were not qualified in any way.

EU and international requirements state clearly that the financial evaluation carried out as part of the approval and oversight process is not intended to be a consumer protection provision. However, the IAA has tried to offer assistance to affected students where possible. On 26 June, when the IAA was notified that PTC were ceasing all training activities, it immediately despatched a representative to Florida to secure the records of all students, and all training carried out to date was credited towards the students' final qualifications where possible. The IAA has also worked with other flight schools to explore how students might complete their training elsewhere at as reasonable a cost as possible.

I am advised by the IAA that some 79 students have opted to continue their training with other approved Irish flight training organisations, 20 of whom are self-funded students. There are a further 19 self-funded students who have remained in Florida to pursue their training under the US system, with another 24 who have not decided on their future career. As a gesture of goodwill and without prejudice, the IAA funded the costs of students who wished to return to Ireland and 65 students availed of this offer.

On 26 July the High Court appointed an examiner to PTC Ireland. The IAA worked with the examiner to assess the options available but unfortunately two weeks ago the examiner advised the court that a potential investor had withdrawn and it ordered the liquidation of PTC. Whereas I and my Government colleagues sympathise with the plight of the students and their families who have suffered considerable financial losses through the collapse of this company, neither the Government nor the IAA accepts any liability in this regard. The Irish taxpayer cannot be liable for a company's debts just because it had an approval of some form from a State agency.

The Senator asks about reports that a new company has been established at the same address as PTC. I understand that a company, Clearsky Pilot Training College Limited, has been registered at that address. The IAA has not received any application for approval from the company involved. However, following these reports, last Thursday, 4 October, the IAA inspected the premises of the company in question and found that the company is providing refresher training for an international non-EU client. That training does not meet the standard required for an Irish or EU pilot's licence. Should this new entity wish to provide training meeting stringent EU standards, like any other company it will have to apply to the IAA for approval.

While the Companies Acts do not come within my remit, I am advised that a registered company is a legal entity separate from its owners, shareholders and directors. The owners of a limited liability company are liable only for the amount of money that they have invested in the company and are not liable for the entire debts of the company. PTC was such a limited liability company. Distressing as it may be for all creditors of PTC, whether students or firms, under the Companies Act, if a person is the owner or director of a company that is put into liquidation, the directors and owners are legally entitled to establish or continue to be involved with another company and the debts of the first company do not transfer with the owners or directors to the new company. Creditors of the failed private entity should pursue the recovery of their debts with the liquidator if possible. As I have said already, neither the Government nor the IAA accept any liability for a private company's debts. Nevertheless, I acknowledge the Senator's comments that the students and their families have been wronged. They have been wronged by the company involved and not the Irish taxpayer.

I cannot provide a figure on how much has been lost but it will amount to several million euro. It is important to bear in mind that this does not just affect the young guy down the road or his mother but other parties are also involved, such as foreign airlines, a business in Florida and many other creditors. It would not be possible for the Government to compensate some creditors because we have sympathy, but not compensate all creditors. That would run into many millions of euro, including payments to foreign colleges, students and airlines.

I cannot answer the question of why the company accepted money up to the point that it ceased trading but unfortunately it is not uncommon for a business to continue to operate until the day it ceases trading. I do not know if the Director of Corporate Enforcement or the Garda are involved in this case and I cannot speak for them. I hope they will take an interest in the case and if there is a case to be answered in terms of company law or any other matter.