Seanad debates

Thursday, 19 December 2013

Adjournment Matters

Pilot Training Colleges

2:45 pm

Photo of Caít KeaneCaít Keane (Fine Gael)
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I think the Minister is familiar with this matter. It concerns the pilot training college that went into liquidation. There are still many students who have huge bank loans which they cannot afford to pay. Some had to give up their training; some had to borrow again to re-train. They thought that as the Government was involved in granting the licence to the training college it should take some responsibility to establish if there is any way to work this through to the satisfaction of the students and their parents. Through no fault of their own some had to come back from America, which involved extra flights and expense. We have seen what can be done, and was rightly done for those who suffered from having pyrite in their homes, through no fault of their own.

I would like the Minister to look sympathetically on this case. It was raised at the Oireachtas Joint Committee on Transport and Communications but as I am not a member of that committee I am not aware of what happened. At the time the committee said that it would conduct a forensic examination of what happened, why, who was responsible and what could be done. I do not think, however, that the committee carried out that examination. I do not know why. The Minister may not know either but I would like to know if the committee did proceed with that examination and publish its findings. I look forward to hearing the Minister’s response and what he can do about this matter.

Photo of Leo VaradkarLeo Varadkar (Minister, Department of Transport, Tourism and Sport; Dublin West, Fine Gael)
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I thank the Senator for raising this issue. The situation that arose with regard to the Pilot Training College, PTC, Waterford, in July 2012 was most regrettable and came about from the failure of PTC, a privately-owned and operated flight training school, that reneged on its contractual obligations to its client students in respect of the completion of their training in Florida. I met with some of the representatives of the students on 20 July 2012 and I fully appreciate the frustration felt by the students involved and their families, and I sympathise with their plight. 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, however, that the role of the Irish Aviation Authority, IAA, with regard to the oversight of pilot training colleges is properly understood. The IAA appeared before the Oireachtas Joint Committee on 24 October 2012 to discuss the issue of PTC among other topics and the committee received a very full account from the IAA of its role and the actions it had taken in so far as its statutory responsibilities were concerned. The IAA has responsibility for approving and overseeing flight training organisations in Ireland. The authority's 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. It has no involvement in, or responsibility for, the contractual arrangements between PTC and its students or for overseeing the financial viability of the company. The IAA's role in the approval and oversight of flight training organisations is based on European rules. Unfortunately, PTC is not an isolated example. There have been examples of failures of similar organisations in other countries in the past decade as well, for example, in the United Kingdom where the UK Civil Aviation Authority approves the operation of flight training organisations, a number of flying schools ceased operations with students suffering losses.

The question has been raised as to whether such companies should be bonded. This is not common practice in other jurisdictions and to introduce such a scheme in Ireland would be likely to result in schools leaving this jurisdiction to set up elsewhere where there are no bonding requirements. That is, however, still under consideration. When it appeared before the committee in October, 2012, the IAA outlined the very significant steps it had taken in an attempt to help the students involved.

When the IAA was notified on 26 June 2012 that the Florida Institute of Technology was ceasing all training activities due to non-payment for services delivered, including room and board and that the matter had been referred to the institute’s attorneys, the IAA immediately sent a representative to Florida to liaise with the students and offer assistance where possible. The IAA secured the training records of all the students and all flight and ground training carried out in California up to then was credited towards the students’ final qualifications where possible. The IAA also worked successfully with other flight training centres to explore how the students involved might complete their training elsewhere at as reasonable a cost as possible. Furthermore, with my agreement, the IAA funded the flight costs of those self-financing students in Florida who had an existing contract with PTC and who wished to leave the United States of America. The offer was made as a gesture of goodwill and without prejudice. I understand that some 65 students availed of this flight home at the time.

The IAA completed several audits on PTC in 2011 and 2012. During these various inspections it was clear that PTC complied with all EU and international requirements as a flight training organisation. There was no indication of any deficiencies. Those 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. It focuses purely on safety resources requirements that staff are suitably qualified and the proper internationally determined standards of training are being delivered. PTC’s accounts were signed off on 29 August 2011 by professional auditors and were not qualified in any way. The accountants were satisfied that the group, including PTC would continue as a going concern.

Regrettably, as I said to the representative group on 20 July neither the Government nor the IAA will be able to compensate them for moneys lost and we have no liability in this regard. While we have great sympathy for the students and their families, it was not possible to isolate them from other PTC creditors, foreign or Irish, nor to offer compensation funded by taxpayers to such a group. In July 2012, the High Court appointed an examiner to handle the affairs of PTC. The IAA worked with the examiner in assessing the options available but on 28 September 2012 the examiner advised the High Court that the final potential investor had withdrawn and the court authorised the liquidation of PTC.

The examiner advised the High Court that the final potential investor had withdrawn and the court authorised the liquidation of PTC. The IAA revoked the approval of PTC Florida on 20 August 2012 and the approval of PTC Waterford when the company was being wound up. I understand that the liquidation of PTC is ongoing in accordance with company law. Any alleged breach of company law is a matter for the Office of the Director of Corporate Enforcement.

2:55 pm

Photo of Caít KeaneCaít Keane (Fine Gael)
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I thank the Minister. I suppose he means there is nothing he can do. The matter of the liquidation of the company has been referred to the Office of the Director of Corporate Enforcement. I do not know what will happen in that regard. It has also been referred to the Garda Bureau of Fraud Investigation. If an arm of the State is licensing any educational body or a private company in particular, the Department should make careful inquiries. I do not mean to infer that this body was set up as a money-collecting machine but it can happen where money is collected from students and then the company is liquidated after two years, leaving students stranded. There will need to be safeguards. I believe this company was taking bookings from students in the knowledge that the company was not viable. I look forward to the report of the Director of Corporate Enforcement. I ask the Minister to consider my suggestion.

Photo of Leo VaradkarLeo Varadkar (Minister, Department of Transport, Tourism and Sport; Dublin West, Fine Gael)
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The difficulty in this case was the amount of money lost by the students. Many of them paid their fees up front and lost a significant amount of money. It is the case that businesses fail. For example, driving schools are licensed by the State and if they fail we do not compensate everyone who did not receive the lessons they paid for. Shops, restaurants, hotels, are all licensed by the State and people are not compensated when these go out of business, nor do they seek compensation. What is different in this case is the amount of money. Even if the IAA determined at a certain point that PTC was financially unsound, all it could have done would be to shut it down. The students would still have lost their money. In my view the only solution in the long term is either an insurance or a bonding scheme or what is now much more the practice whereby people pay fees monthly or quarterly. Very few schools, if any, demand fees up front.