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

I thank the House for the opportunity today to introduce the Air Navigation and Transport Bill 2020. As Senators will be aware, the Bill was subject to pre-legislative scrutiny by the Joint Committee on Transport, Tourism and Sport in July 2019. The Bill was published on 4 December 2020 and passed all Stages in the Dáil on 7 July this year.

This Bill has been considered by the Oireachtas in the context of the impact of the Covid-19 pandemic on the aviation industry. It is estimated that during the pandemic, the Government has assisted our airlines and airports with general business support measures worth in excess of €300 million. In addition to these measures, the Government has also agreed a revised €80 million funding package specifically for Irish aviation. This funding will be made available primarily to our airports through a number of schemes.

We are now beginning to emerge from the impacts of the pandemic. We have two of the most successful airlines in Europe, an aviation leasing sector that is world leading and modern, high-performing airports. The Irish aviation sector is beginning to recover and will rebuild the global connectivity that is so important for our economy.

It is against this backdrop 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, reputable regulatory regime and that is what this Bill provides for. The current regime was put in place in the early 1990s and while it has served the sector well over that time, the institutional structures no longer reflect international best practices. This Bill addresses that situation.

The Bill has three main objectives. First, it merges 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. Second, it establishes a new commercial semi-State company, AirNav Ireland, to manage Irish-controlled airspace. Third, it makes changes to how 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 making sure these international obligations are properly assigned and the new institutional structures are robust.

I will take each of the three main objectives of the Bill in turn, the first of which is the merger of the regulatory functions of the IAA and the CAR. At present, 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 interlinkage in the engagement. This Bill will streamline the relationship and create a one-stop regulatory shop, so to speak. The CAR functions will be fully merged into the IAA.

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 then make it something of an outlier. It is simply not good practice to have a commercial and regulatory function within 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 ideal and nor does it find much support nowadays. Therefore, as we merge the CAR regulatory functions into the IAA, at the same time we are removing the commercial business and setting it up in a wholly separate State company to be called AirNav Ireland.

Both of these steps, namely, 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. With regard to 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 that the existing remuneration and pension entitlements of staff will not be affected by the institutional changes. In fact, the vast majority of staff will not notice any material change in their day-to-day work. There will be only minimal changes in terms of office location in and around Dublin city centre and this will be on an agreed basis. My Department, the IAA and CAR have aimed to maintain an open and constructive dialogue with staff and their representative bodies on the provisions of this Bill. I am advised that there is broad support for the reforms.

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 the use of its facilities. 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 aviation, climate change and sustainable development 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 to which I wish to draw the attention of Senators.

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 of its performance indicators. 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 to extend a determination, 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. The 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 this 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. Am I out of time?