REPORT. to the MINISTER FOR TRANSPORT. for the year ended 31 DECEMBER 2008

Transcription

1 REPORT to the MINISTER FOR TRANSPORT for the year ended 31 DECEMBER March 2009 Commission for Aviation Regulation 3 rd Floor Alexandra House Earlsfort Terrace Dublin 2 Tel +353 (0) , Fax +353 (0) info@aviationreg.ie

2 TABLE OF CONTENTS FOREWORD... 1 PRICE REGULATION... 4 AIRPORT CHARGES... 4 CAPEX GUIDANCE... 7 AVIATION TERMINAL SERVICES CHARGES... 7 CURRENT CAPS AND CHARGES... 8 ACCESS TO INSTALLATION FEES... 9 APPROVAL OF PERSONS OF REDUCED MOBILITY (PRM) ASSISTANCE CHARGES WORK PROGRAMME FOR LICENSING AND APPROVALS AIR CARRIER LICENSING THE COMMISSION S ROLE LICENSING ACTIVITY AND COMPLIANCE OTHER DEVELOPMENTS Awareness Campaign and the Introduction of Licence Discs Revision of Third Air Package Ownership and Control Monitoring ongoing financial fitness of licensed air carriers WORK PROGRAMME FOR GROUNDHANDLING APPROVALS THE COMMISSION S ROLE APPROVALS AND COMPLIANCE OTHER DEVELOPMENTS WORK PROGRAMME FOR TRAVEL TRADE LICENSING THE COMMISSION S ROLE LICENSING ACTIVITY AND COMPLIANCE CESSATION OF TRADING TRAVELLERS PROTECTION FUND UNLICENSED TRADING REDUCING COMPLIANCE COSTS ii

3 COMPLIANCE TRAVEL TRADE REGIME REVIEW WORK PROGRAMME FOR CONSUMER PROTECTION - AIR PASSENGER RIGHTS THE COMMISSION S ROLE TOTAL COMPLAINTS RECEIVED TYPES OF COMPLAINTS RECEIVED RESOLUTION OF COMPLAINTS OTHER WORK WORK PROGRAMME FOR CONSUMER PROTECTION PERSONS WITH REDUCED MOBILITY THE COMMISSION S ROLE TOTAL COMPLAINTS RECEIVED OTHER WORK Inspections Increasing Awareness WORK PROGRAMME FOR SLOT ALLOCATION THE COMMISSION S ROLE DESIGNATION OF DUBLIN AIRPORT AS COORDINATED ENFORCEMENT ACTIONS BY THE COORDINATOR WORK PROGRAMME FOR GENERAL, LEGAL AND ADMINISTRATIVE FUNCTIONS CHANGE MANAGEMENT TRANSPARENCY STAFFING COSTS USE OF OUTSIDE CONSULTANTS AUDIT COMMITTEE ADMINISTRATIVE OBLIGATIONS FINANCIAL LEVY FINANCIAL STATEMENTS DRAFT 2008 FINANCIAL STATEMENTS iii

4 NET INCOME FIXED ASSETS CURRENT ASSETS FINANCED BY CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES CASH FLOW STATEMENT INCREASE/(DECREASE) IN CASH BALANCES APPENDIX I - COMMISSION PAPERS ISSUED IN iv

5 FOREWORD After a number of years of strong growth in Irish aviation, 2008 brought a sudden and sharp weakening in the air travel business. This affected the work of the Commission in a number of ways. Five travel companies that participate in the bonding scheme administered and operated by the Commission closed down in the second half of The Commission processed over 2,000 claims for financial redress for refunds and repatriations in respect of booked flights that did not operate and organised 11 special flights in order to repatriate more than 1,500 passengers. Thus, in a six-month period the Commission had to process more bond-related work than in the previous 8 years, and perhaps more than in the entire history of this licensing and bonding scheme. The cost of these operations a total of over 3.8 million was mainly borne from the bonds that licensed travel companies are required to enter into with the Commission. However, in the case of one company, Fáilte Travel Limited, the costs of claims exceeded the value of the firm s bond by over 1.5 million. This expenditure was financed from the Travellers Protection Fund (TPF), established to provide funds where a bond proves to be insufficient. The legislation provides that where the TPF is utilised to supplement an insufficient Bond, the Fund is an unsecured creditor of the collapsed licensee. In the interests of protecting the TPF and to try to recover the monies owed to it, the Commission successfully petitioned the High Court to appoint a Liquidator to Failte Travel Limited and that process is underway. In the current economic downturn, the Commission has scrutinised very carefully the financial resources of firms it licenses in the travel trade, airline and airport ground-handling sectors to seek to ensure that firms have the financial means to provide the services they offer. In 2008, the Commission initiated a special inquiry of travel trade companies regarding their finances, and also made a separate enquiry of some Irish-registered air carriers. The Commission refused a tour operator s license to 2 applicants during 2008; in 1

6 one case, this resulted in an appeal to the High Court, where the Commission s decision was upheld. Apart from dealing with the impact of the economic downturn, the Commission in 2008 continued to carry out its other roles. Preparatory work was undertaken for a new Dublin Airport price cap for the next regulatory period (after 2009). In order to assess service quality at Dublin Airport, while maintaining incentives for efficiency, the Commission issued two policy papers in June, while in October the consultation process on the setting of the maximum level of airport charges at Dublin Airport for the next regulatory period was started by the publication of an Issues Paper. That paper invited responses on all aspects of the next price cap determination. In line with the approach to capital investment consultation by regulated firms set out in its 2007 guidance paper, which encouraged these bodies and their users to seek to directly agree on the nature and costs of investments, the Commission also attended meetings during 2008 with the Dublin airport operator and airport users on future capital investment at the airport. Legal challenges and appeals to the price regulation work of the office continued during In February, the hearing of an unsuccessful challenge by Ryanair by way of judicial review took place in the Commercial Court against the Commission s decision in July 2007 that reviewed the 2005 Airport Charges Determination. Arising from this case, the Department of Transport established an Aviation Appeal Panel to determine whether any parts of the 2007 interim review decision should be referred back to the Commission for re-examination. In December 2008, the Panel referred certain matters back to the Commission for review. The Commission in February 2009 decided to affirm its Interim Review Determination. There were some new developments on the air passenger rights side during The Commission issued its first Directions for non-compliance by airlines following investigations of complaints by the travelling public.. In July, the Commission s role was extended by the Department of Transport to passengers with disabilities and with reduced mobility (PRM); in December, the Commission published a notice which called on the DAA and the airlines to 2

7 cooperate to resolve the disagreement which had arisen regarding the establishment of a charge on airlines related to the services provided to reduced-mobility passengers. The Commission also invited interested parties to submit their views on this issue. In carrying out its roles, the Commission seeks to balance minimising regulatory and licensing costs with ensuring that the work of the office is of the highest standard. To this end, the Commission participated in a review of public sector efficiency, identifying and implementing economies deriving from changes to its internal administration. The Commission also accepted a new function regarding passengers with disabilities and with reduced mobility, without seeking additional staffing resources. It also undertook a review of the travel trade licensing regime for the Department of Transport. In addition, the Commission launched a new website which it believes will be easier for the public and for regulated and licensed entities to use, and which will allow further computerisation of the work of the office in the future. The Commission also indicated its openness to revised institutional arrangements for price regulation to reduce agency duplication. Furthermore, it proposed that its roles in regard to approval of airport ground-handlers and most of the regulation of access-to-installations charges could be discontinued. I am indebted to my colleagues, whom I thank, for the fact that in a year when worsening economic conditions added substantially to their work, the office carried out its normal duties as well as repatriating and refunding many thousands of travellers in a timely manner. I also thank the other individuals and organisations that contributed to the work of the Commission during Cathal Guiomard Commissioner 31 March

8 PRICE REGULATION The Commission s Role The Commission: sets a price cap limiting the total revenues per passenger that the DAA can collect from airport charges at Dublin airport; sets a price cap limiting the total revenues per tonne of maximum take-off weight (MTOW) that the IAA can collect from aviation terminal services charges at Cork, Dublin and Shannon airports; has to approve charges airports levy on airlines to fund assistance to passengers with reduced mobility (PRM) and has to approve any changes to the fees charged by the airport authorities at Cork, Dublin and Shannon airports for access to installations needed to provide ground handling services. The Commission has no power to regulate other charges, including: car park charges at airports, and more generally non-aeronautical charges (except those levied for access to installations needed for ground handling services at Cork, Dublin and Shannon airports); en route air traffic charges the IAA sets; and Non-PRM charges at Knock, Kerry, Galway, Waterford, Donegal and Sligo airports. Airport Charges The Commission published two policy papers in 2008: CP3/2008: Consultation on quality of service issues at Dublin Airport, and CP4/2008: Consultation on efficiency incentives (rolling schemes) at Dublin Airport. Nine responses were received from a wide range of interested parties on quality of service issues. Two responses were received on efficiency incentives schemes. Careful consideration by the Commission of all responses received provided the Commission with a sound basis for its initial proposals on quality 4

9 of service and rolling schemes published as set out in the October 2008 Issues Paper (see below). In October 2008, the Commission officially started the consultation process on the setting of the maximum level of airport charges at Dublin Airport for the next regulatory period beginning in 2010 with the publication of the Issues Paper (CP6/2008). The Commission will need to make a new determination of airport charges by the end of The Issues Paper commenced the period of engagement with all stakeholders on the approach that the Commission should take in the setting of airport charges from The Issues Paper also presented the timetable for the 2010 determination, which is repeated here. In the Issues Paper, feedback was encouraged on all aspects of the price cap setting process, including: the calculation of the price cap itself, the approach to service quality, passenger forecasts, operating and capital expenditures, the cost of capital, commercial revenues and the financial viability of the DAA. Following the Commission s publication of Maximum levels of airport charges at Dublin Airport, Final Decision on Interim Review of 2005 Determination in July 2007, ( the Interim Review ), Ryanair initiated a Judicial Review. The case was heard in the Commercial Court division of the High Court in February In a decision in April 2008, Mr. Justice Clarke asked the Commission to provide clarification of certain statements contained within the Interim Review decision paper concerning the inclusion of capital expenditure in the RAB. In May 2008, following receipt of this clarification, the Commercial Court dismissed Ryanair s challenge in its entirety. In May 2008, Ryanair wrote to the Minister to request that an Appeal Panel be established to consider the Commission s July 2007 decision on the Interim Review. In August 2008, the Department of Transport invited the submission of appeals from interested parties on the Commissions July 2007 decision on the Interim Review. The Department received four appeals, from the DAA, DACC, Aer Lingus and Ryanair. Following receipt of the appeals the Minister established a three-person Aviation Appeal Panel to consider whether there were sufficient grounds for referring the Commission s decision on the Interim 5

10 Review back to the Commission to be re-examined. In November and December 2008, the Appeal Panel held a number of oral hearings with the Commission and three of the appellants to address the content of each individual party s submission. Upon consideration of the DAA s and Ryanair s appeals, the Appeal Panel in December 2008 decided to refer some aspects of the Interim Review back to the Commission. The Appeal Panel having considered the subject matter of the appeal by Aer Lingus and the DACC confirmed the Commission s determination in relation to those appeals. The Commission published its decision on upon referral of the Interim Review decision on 23 February Presentations & Conferences During 2008, members of the economic team in the Commission made a number of presentations and attended meetings with interested parties, including the IBEC Transport and Logistics Council, the IDA and the NCA, on the setting of a price cap on airport charges at Dublin Airport The Commission gave a presentation on the use of cost benefit analysis and other impact analysis tools at an Irish inter-regulator workshop in February The Commission attended and gave a presentation at the third round of the European aviation regulators meeting, which was held in Dublin in June 2008 to discuss the treatment of capital expenditure at airports. The Commissioner, Cathal Guiomard appeared at the Oireachtas Joint Committee on Economic Regulatory Affairs in February He also gave a presentation on airport price regulation and commercial revenues at the Hamburg Aviation Conference in February and the Airport Charges Directive to a meeting of Airports Council International (ACI) Europe in Berlin in October. The Commissioner chaired a number of sessions at a conference organised by the Irish publication, Competition on Irish regulation issues in November. 6

11 International discussion groups Continuing the work commenced during 2007, the Commission continued to offer observations to the Department of Transport during negotiations on the text of the EC Directive on Airport Charges, which is still being discussed at European Union level. A member of the economic team also attended the ICAO Conference on the Economics of Airports and Air Navigation Services in Montreal in September During the first six months of 2008, the Commission attended European Commission funded discussion groups on projects investigating the implementation of pricing reforms in transport networking, called IMPRINT-NET and on cost allocation of transport infrastructure costs, called CATRIN. Capex Guidance In follow up to the publication of a guidance paper on the approach to capex consultation, CP8/2007, the Commission was involved in consultation meetings to discuss capital investment at Dublin Airport. The Commission attended a meeting arranged by the DAA in March and then a number of meetings arranged by the Dublin Airport Capex Consultation Committee (DACC) from May The DACC was formed in April 2008 to consult with the DAA on future capital investments at Dublin Airport. The DACC also formed a forecasting sub-group to discuss traffic forecasts for the forthcoming 2010 Determination on maximum levels of airport charges at Dublin Airport with the DAA. The Commission regularly attends the meetings on traffic forecasts. The group has been formed with a view to producing by March 2009 a revised baseline traffic forecast for Dublin Airport from Aviation Terminal Services Charges In March 2007 the Commission published a final determination on the maximum level of aviation terminal service charges that the Irish Aviation Authority (IAA) may impose was the second year of a regulatory period for these charges that started in March 2007 and will continue until December

12 The price cap formula includes milestones which increase the aviation terminal service charges should the IAA build air traffic control towers at Cork and Dublin Airports. During 2008 the Commission did not receive any indication that the IAA has built a control tower to an operationally ready standard. It was anticipated in 2007 that the Cork air traffic control tower would be built in Therefore the ATSC provisional price cap of 2.28 per tonne of departing aircraft remains as determined in the compliance statement, CP11/2007. Current caps and charges The following table summarises the current charges and price caps regulated by the Commission. This information is published on the Commission s website and is updated annually for any changes in the published charges. Regulated Price Caps Type of Price Cap The Value of the Price Cap Relevant document Average revenue per passenger yielded through airport charges at Dublin Airport during 2009 Aviation Terminal Services Charges (ATSCs) at Dublin, Cork and Shannon airports during 2008 Should not exceed 7.39 per passenger Should not exceed 2.28 per tonne of departing aircraft (assuming that the maximum take off weight will be 9,922 million tonnes) December CP7/2008 December CP11/2007 Some of the charges shown in the table below are classified as charges for access to installations, also known as ATI charges. The main ATI charges relate to check-in desk charges at the three DAA airports. section on ATI charges has further information. The following 8

13 Charges approved by the Commission Type of Access Charges Cost of Access to Installations Relevant document Annual check-in desk fee at Dublin Airport 25,000 per desk March CP1/2008 Flexible hourly rental fee for additional check-in desk at Dublin Airport 30 per desk March CP1/2008 Common User Terminal Equipment ("CUTE") fees at Shannon Airport 0.30 per embarking passenger May CN4/2007 Annual check-in desk fee at Cork Airport 13,075 per desk per annum December CN2/2006 Half Hourly (or part thereof) rental fee for additional check-in desk at Cork Airport 5.23 per desk December CN2/2006 CUTE fees at Cork Airport from 1st January 2007 Annual check-in desk fee at Shannon Airport 0.24 per embarking passenger 8,787 per desk per annum per hour (or part thereof) December CN2/2006 October CP8/2004 Access to Installation Fees In February 2008, the Commission received an application from the DAA for approval of its proposed changes to the check in desk rental charging structure at Dublin Airport. As part of the public consultation on the DAA s application to change charges, the Commission published a notice (CN1/2008) inviting representations from interested parties. In March 2008, the Commission 9

14 published its decision to approve the DAA s application for an increase in the check-in desk rental charges at Dublin Airport. Several of the airline responses to CN1/2008 discussed the interaction between the costs and revenues of installations at the airport with airport charges. Consequently, in March 2008, the Commission published a notice (CN2/2008) discussing the interaction between ATI fees and regulated airport charges and invited comments on how the two regimes could be better aligned, if possible at the time of the next airport charges price cap. To date, two responses have been received to CN2/2008 The DAA asked the Commission in February 2008 for its view on whether selfservice kiosks (SSK) required its prior approval as an access to installation fee. The Commission published CP2/2008 in March 2008 inviting comments on its view that the installation of SSKs does not require its prior approval. In April 2008 the Commission decided that the installation of an airline s or a ground handler s SSK does not require the Commission s prior approval. In June 2008, Ryanair initiated a challenge in the High Court by way of Special Summons to the Commission s decision to approve the DAA s application to increase check in desk charges at Dublin Airport. That challenge was struck out by the High Court in July 2008 on the basis that Ryanair had not adopted the correct process in order to bring the challenge. Approval of Persons of Reduced Mobility (PRM) Assistance Charges The Commission is responsible for ensuring that any charges levied by airports on airlines to fund assistance to passengers with reduced mobility are reasonable, cost-related, transparent and established in cooperation with airport users. The Commission s role as the National Enforcement Body covers airports providing commercial passenger air services; principally: Cork, Donegal, Dublin, Galway, Ireland West (Knock), Kerry, Shannon, Sligo and Waterford. 10

15 Since Regulation 1107/2006 came into force, a dispute has arisen between some of the airport users and the Dublin Airport Authority in relation to the per passenger levy of 0.33 imposed at Dublin Airport. In December 2008, the Commission published a notice on PRM charges at Dublin Airport, (CN5/2008) which assessed whether the DAA s proposed PRM charges of 0.33 per passenger, complied with the criteria set out in the regulation. The notice invited interested parties to submit their views on implementation and compliance with article 8 of Regulation (EC) No. 1107/2006 regarding imposing such a charge. Eleven submissions were received in January The submissions received in response to CN5/2008 indicate that both the airport management body and the airport users are willing to engage in discussions in relation to the establishment of that charge. The Commission has recommended that the DAA and the airline users cooperate in establishing a charge and that these discussions take place and it is expected that they will commence in early Work Programme for The Commission is working towards the calculation of the price cap on airport charges from 2010, as per the time-table published on its website in Following a consultation process with the industry and other interested stakeholders, it is intended that the determination of the price cap from 2010 onwards will be published in September Should the Commission receive any applications to change existing or introduce new access to installation fees from the DAA, it will initiate an approval process. The Commission will work with airport managing bodies and airlines to ensure implementation of the regulation concerning persons of reduced mobility. It will emphasise the spirit of cooperation between airports and airlines that is the hallmark of the provision of assistance by them to passengers with disabilities. 11

16 Proposed Timetable for the 2010 airport charges review February 2009 March 2009 May 2009 July 2009 September 2009 DAA to provide the Commission with details of planned capital projects for the post-2009 period, including costs and timing of projects and evidence of user consultation or support. DAA to provide the Commission with the latest version of its financial model, incorporating the latest information on capex, opex, passenger numbers and financial ratios. Commission to publish draft determination. Interested parties to submit responses to the issues paper Commission to publish final determination. This timetable is subject to change. The Commission will maintain an up-todate timetable on its website. 12

17 LICENSING AND APPROVALS AIR CARRIER LICENSING The Commission s Role The Commission is responsible for granting Air Carrier Operating Licences. This permits the holder to engage in the carriage by air of passengers, mail and/or cargo for remuneration and/or hire. The Commission only licenses applicants whose principal place of business is in Ireland. The Commission ensures that licensees meet relevant requirements regarding financial fitness and insurance cover. The Commission is not responsible for safety regulation. Air carriers involved in commercial air transport operations also require an Air Operators Certificate (AOC) issued by the IAA. Licensing Activity and Compliance At the end of 2008, there were 18 Irish airlines licensed by the Commission. During the year, the Commission issued two new licences, revoked one operator s licence, while another operator ceased trading. Three operators were subject to a one-year review of their licences all retained their Operating Licences. All licence holders were subject to continued monitoring to ensure that they complied with the relevant legislation concerning insurance cover, ownership and control details, and financial viability. Of the 18 licensed Irish airlines, 8 hold Category A licences which permit them to carry passengers, cargo and/or mail on aircraft with 20 seats or more. The remaining 10 operators hold Category B licences, permitting them to carry passengers, cargo and/or mail on aircraft with fewer than 20 seats and/or less than 10 tonnes MTOW. The following list details all licensed Irish airlines (both Category A and B) at 31 December 2008: 13

18 List of Licensed Irish Airlines at 31/12/08 Category A Aer Lingus Ltd. Air Contractors (Ireland) Ltd. Airlink Airways Ltd. T/A Private Sky CityJet Ltd. Comhfhorbairt (Gaillimh) T/A Aer Arann Ryanair Ltd. Starair (Ireland) Ltd. Westair Aviation Ltd. Category B Celtic Helicopters Ltd. CHC (Ireland) Ltd. Executive Helicopter Maintenance Ltd. Gaelic Helicopters Ltd Galway Aviation Services Ltd T/A Aer Arann Islands Irish Helicopters Ltd. Metro Helicopters Ltd. Premier Executive Jets Ltd. Premier Helicopters Ltd. Sky West Aviation Ltd. Other Developments Awareness Campaign and the Introduction of Licence Discs After consulting with Operating Licence holders in 2007, the Commission issued licence discs to all small aircraft and helicopter operators to be displayed in their aircraft as listed on their AOC s in early Operators were advised to affix the licence disc somewhere visible in the passenger compartment of the aircraft. The purpose of the display of a licence disc is so that the travelling public can immediately recognise and identify a licensed operator. The industry responded positively to the introduction of licence discs. The Commission took a stand at the Holiday World Exhibition which took place in the RDS Simmonscourt from 24 th -27 th January 2008, taking the opportunity to highlight the introduction of the Licence Disc and encourage the travelling public to look out for this disc when booking/travelling with a charter operator. In addition, a list of licensed air carriers was displayed to remind the travelling public that they should only book with holders of a valid Operating Licence and be wary about the risks of travelling with unlicensed operators. 14

19 In July and August 2008, in co-operation with the Irish Aviation Authority (IAA), the Commission continued with its Awareness Campaign by publishing a joint advertisement in the print media advising the public of the function of the Commission and IAA with regard to air carrier licensing and warning about the risks of using unlicensed air carriers. In 2008, the Commission also commenced visits to smaller airports specialising in executive/charter operations to introduce and brief the management there on the regulatory role of the Commission with regard to air carrier licensing. Revision of Third Air Package The new EU rules for the operation of air services in the Community entered into force on 1 st November This Regulation (EC 1008/2008) consolidates and updates the set of liberalisation measures known as the Third Air Package which was adopted by the European Commission in The Commission for Aviation Regulation continues to be the competent licensing authority under the new Regulation for the purposes of licensing of air carriers in Ireland. The key areas of change are the introduction of stricter requirements on the financial conditions which all EU air carriers must fulfil and the monitoring of these by Member States. The new Regulation also clarifies the criteria for the granting and validity of the operating licence and introduces stricter requirements for the practice of wet leasing aircraft registered outside the EU while easing the requirements relating to the leasing of aircraft registered in the EU. A wet lease is when the aircraft is operated under the AOC of the lessor. During 2008, the Commission issued a document which sets out the main changes to the air carrier licensing requirements under the new Regulation for all licensed Irish air carriers and published a procedures document for 15

20 granting, suspending and revoking operating licences which is available to download from the Commission s website, Ownership and Control Holders of operating licences must be able to satisfy their licensing authority on an ongoing basis that it remains both majority owned and effectively controlled by Member States and/or national of Member States. The test of ownership and effective control are separate and both have to be met to achieve compliance. The Commission considered two complex proposals during one from an existing operating licence holder planning a change in the ownership/control of that company and the other from a new applicant. In the case of the existing licence holder, this company also holds licences in four other Member States. Given the implications of the proposal on a number of other operating licence holders in other parts of the EEA 1, the Commission discussed the proposal with its counterparts in those Member States and the European Commission. The Commission was involved in examining several rounds of documents and attended a number of meetings in relation to this proposal. By the end of 2008, agreement had been reached by all parties on the proposal concerned and the Commission was waiting on final documents giving effect to the items discussed in meetings before formal approval could be issued. In relation to the case of the new applicant, the Commission s examination of the ownership and control structure of that company resulted in a decision not to grant an Operating Licence due to non-compliance with the provisions of the legislation in this area. 1 European Economic Area means all EU countries and Norway, Iceland and Liechtenstein. 16

21 Monitoring ongoing financial fitness of licensed air carriers In accordance with the Commission s role in monitoring the financial fitness of licence holders, an Information Request was issued to all Category A licence holders in October 2008 in response to a number of factors which include volatile fuel costs, weakening consumer demand and the ongoing national and international economic crisis. Licence holders were requested to supply management accounts and certain traffic/cost data until such time as the Commission decides this is no longer warranted. Work Programme for 2009 The Commission will work during 2009 to seek to extend the functionality of the website by providing a facility for online applications by airlines for air carrier operating licenses and renewals. The Commission will continue to promote awareness by advising the public to ensure their operator is licensed and warning about the risks of travelling with unlicensed operators. The Commission plans to carry out more visits to airports and groundhandling companies with executive jet/charter facilities and will work with other aviation authorities to improve awareness of licensing requirements in this area. A more detailed guidance note on the ownership and control requirements applicable to existing licence holders and new applicants will be published to assist this work. In the context of the current economic climate, the Commission will require more regular and detailed financial reports from Category A licence holders. 17

22 GROUNDHANDLING APPROVALS The Commission s Role The Commission grants approvals to companies engaged in groundhandling activities at Cork, Dublin, and Shannon airports. Groundhandling broadly comprises all those services required by an aircraft between landing and take-off, e.g. marshalling aircraft, loading/unloading, refuelling, baggage handling, passenger handling, aircraft maintenance. An airline may choose to provide services for itself (self-handling), or contract with another company (third-party handling), be it an airline or a dedicated groundhandling company. The Commission also ensures that groundhandling approval holders comply with legal requirements such as financial fitness, holding necessary insurance, and technical competence. The Commission has no responsibility for dealing with passenger queries about lost or damaged baggage or more generally to arbitrate in instances of consumer dissatisfaction with a groundhandler. Approvals and Compliance At the end of 2008 there were 12 approved self-handlers and 41 approved suppliers of ground handling services (or third party handlers) operating at Cork, Dublin, and Shannon airports. Of the approved self-handlers, 4 are also approved to provide services to third parties. The self-handlers figure is down three from last year, while there has been no change in the number of third party handlers. During 2008, the Commission granted 1 new self-handling approval and 2 new third party handling approval during This was offset by 4 parties voluntarily surrendering their approvals: two of these parties, a self-handler and a third party handler, surrendered their approvals as they were no longer operating in Ireland; a third party handler sold its business to another 18

23 operator; and a self-handler went into administration and ceased trading. Also, two self-handling approvals expired in 2008 and were not renewed. Groundhandling activity is summarised in the table below. Licensing Activity Self handlers 3rd-Party breakdown- Handlers Situation 1 st January New approvals issued 1 2 Revocations 0 0 Voluntary surrender of approval 2 2 Approval expired and not 2 0 renewed Total at 31 st December The Commission also renewed six approvals that expired in 2008 approvals are granted for five years. The affected companies were forwarded a renewal form to complete if they intended continuing to supply groundhandling services. All groundhandlers are required to provide proper financial information annually, and the Commission ensured this was done in Groundhandling companies providing services to third parties were required, under the regulations, to submit separated accounts. All groundhandlers had to submit updated insurance details to ensure that they had the required level of insurance cover. A list of groundhandling operators (both self-handling and third party) approved by the Commission at 31 December 2008 is set out in the table overleaf. 19

24 List of Approved Groundhandlers at 31/12/08 Third-party handlers A.T.R.S. Limited ACA Air Cargo Associates Limited T/A ACA International Air Atlanta Aero Engineering Limited Air Contractors (Ireland) Limited AirOps Airport Ticketing and Travel Service Limited Alpha Flight Services (Ireland) Limited Aviance UK Limited Delta Airlines Dublin Limited Derichebourg Multiservices Limited DHL Express (Ireland) Limited EFG Inflight Limited FBO Dublin Limited (T/A Encore FBO Dublin) Fingal Aviation Services Limited Gate Goumet Ireland Limited Greencaps Limited Hoyer Ireland Limited ICTS (UK) Limited Knights Cleaning Services Limited Monarch Aircraft Engineering Limited Oceanbridge Groundhandling Limited (T/A Universal Aviation) OCS One Complete Solution Limited Scandinavian Airlines System (SAS) Servisair (Ireland) Limited Shannon Aerospace Limited Shell Aviation Ireland Limited Signature Flight Support Dublin Limited Signature Flight Support Shannon Limited Sky Handling Partner (Cork) Limited Sky Handling Partner (Shannon) Limited Sky Handling Partner Limited South Aer Services Limited Specialist Airport Services (Ireland) Limited T/A Fernley Airport Services SR Technics Ireland Limited Tedcastles Aviation Fuels Limited Thomson Airways Limited TNT Express (Ireland) Limited United Parcel Service of Ireland Limited US Alliance Flight Support Limited Westair Aviation Limited Worldwide Flight Services (Ireland) Limited Self handlers Aer Lingus Limited Air Contractors (Ireland) Limited CHC Ireland Limited CityJet Limited Comhfhorbarit (Gaillimh) T/A Aer Arann Delta Airlines Inc. Irish Helicopters Limited Ryanair Limited Scandanavian Airlines System (SAS) Starair (Ireland) Limited Thomson Airways Limited Westair Aviation Limited 20

25 Other Developments The Commission reappraised its role in approving groundhandlers during The purpose of this reappraisal was to assess the continuing need for approving groundhandling operations under the existing Regulations and processes. The Commission intends to consult with the Department of Transport in 2009 on the Commission s proposal that its roles in regard to approval of airport ground-handlers and most of the regulation of access-toinstallations charges could be discontinued. Work Programme for 2009 Monitoring of groundhandling companies will take place to ensure compliance and assess any applications received for groundhandling authorisations. Four groundhandlers approvals are due to expire in 2009; a renewal form will be forwarded to these handlers during the year. The Commission will continue to monitor areas of interest in relation to groundhandling at EU level. 21

26 TRAVEL TRADE LICENSING The Commission s Role Tour operators and travel agents are required to be licensed and bonded to sell or offer to sell overseas travel originating within the State to destinations outside the State. The Commission: licenses travel agents and tour operators selling overseas travel; administers a bonding scheme for travel agents and tour operators; processes claims for refunds and repatriation in the event of a travel agent or tour operator going out of business; investigates instances of alleged illegal trading and, when necessary, prosecute illegal traders. The Commission s role does not encompass: licensing travel arrangements for domestic travel in Ireland; handling consumer complaints about travel agents, tour operators, hotels, luggage or airlines; handling complaints about advertising (except where it relates to possible illegal trading). Licensing Activity and Compliance In 2008 a total of 356 firms were granted licences. This is down from 364 in 2007 and 371 in There is a downward trend in the number of both licenced travel agents and tour operators. In October 2008, the Commission refused to renew a licence for a tour operator as the criteria for renewal were not met. The decision of the Commission was subsequently appealed to the High Court by the tour operator, Manorcastle Limited. Following a full hearing, the High Court dismissed the applicants appeal and awarded costs to the Commission. 22

27 In December 2008, the Commission also refused a licence to a new applicant for a tour operator licence for failing to meet the necessary criteria as set out in the Act. Cessation of Trading In 2008, 1 travel agency and 4 holders of both tour operator and travel agency licences collapsed. 3 of the collapses resulted in passengers being stranded overseas and as a result the Commission was obliged to arrange for 11 aircraft to repatriate over 1,500 passengers from locations across Europe. In addition to repatriating passengers, the Commission later processed claims for refunds from over 2,000 consumers who could not travel as booked. The draft figures for the total amount paid out relating to claims arising from collapses in 2008 amount to over 3.8 million. In the case of the collapse of one tour operator, Failte Travel Limited, where the cost of claims exceeded the value of the firm s bond by over 1.5 million, the High Court approved the Commission s Petition to appoint a Liquidator to the company. Travellers Protection Fund The Commission continues to administer the Travellers Protection Fund and the most recent annual accounts audited by the Controller and Auditor General (2007) were laid before the Houses of the Oireachtas in December Due to the Failte Travel Limited collapse, a shortfall existed in relation to the Bond cover. The Travellers Protection Fund was relied upon to make up the shortfall. The draft figures for the amount paid out from the Travellers Protection Fund to date in this case amounts to over 1.5 million. 23

28 Travel Tour Total Agents Operators Number at 1 st January New Renewals Non Renewals Bonds Called Down Renewals Refused New Refused Balance 31 st December Unlicensed Trading It is illegal to conduct business as a travel agent or tour operator in Ireland without a licence. During the year, Commission increased the number of visits to the premises of entities believed to be trading illegally and also requested various persons believed to be contemplating offering a travel product that required a travel agents licence to attend at the offices of the Commission to discuss their trading status. The imposition of a levy on late licence applications has improved compliance with more applications being submitted in 2008 in a timely manner. In some case applicants for licences were visited by the Commission to inspect books of record to determine that trading did not occur following the expiry of their licences. In all the Commission received 24 written complaints alleging trading by unlicensed entities, which were investigated and appropriate action taken. Newspaper classified advertising is occasionally used by unlicensed traders. In 2008 it was made a condition of all licences that all licence holders identify themselves by name or licence number in all written advertising in future. 24

29 Reducing Compliance Costs In 2008 the Commission prepared for the implementation in 2009 of a web based interactive facility, which will be available both to the travel trade and to the general public. This involved the revision of the existing paper application process, which was updated to allow for changes required under the EC Services Directive coming into effect in The new process will allow the travel trade to apply for licences on-line and to submit accounts electronically. Compliance The overall objective of the Commission is to: Implement a full transition to a computer based internal procedure and process system; Seek to develop on-line interaction with the travel trade to facilitate compliance issues; Visit newly licensed businesses to provide assistance in compliance matters; Identify weaknesses in the current licensing regime, engage with all stakeholders and develop proposals to streamline the overall process. Travel Trade Regime Review 2008 Following a request from the Minister for Transport to the Commission in May 2008 to conduct a study into the effectiveness and coherence of the existing regulatory framework, and, on the basis of this assessment, to consider the need for reform, the Commission undertook a regime in Ireland. review of the travel trade At the end of 2008, the Commission submitted a report to the Minister for Transport on "Reform of Travel Trade Legislation in Ireland". The report to the Minister draws on extensive feedback received from industry and consumer groups as part of the consultation process undertaken by the Commission. The Commission has published on its website the twenty-nine formal submissions it 25

30 received during the consultation process. The Commission's report makes six recommendations: 1. Allow for the possibility of switching to a collective insurance scheme, ending the requirement that all tour operators and travel agents have separate bonds in place. 2. End the automatic requirement that firms qualifying for an audit exemption from the Companies Registration Office nevertheless have to produce audited accounts to qualify for a travel-trade licence. 3. End the legal requirement for companies to separately get both a travel agent s licence and a tour operator s licence if the business currently holds a tour operator s licence. 4. Extend the duration of licences, accompanied with stronger powers for the licensing body allowing it to suspend licences. 5. Make the enforcement of the licensing regime easier. 6. End the licensing and bonding requirements for occasional organisers of travel services (such as schools and parishes). The Commission looks forward to receiving the Minister s views on these recommendations. Work Programme for 2009 The Commission intends to: Implement a transition to web based interactive facility with the travel trade; Implement an online complaints form in respect of allegations of unlicenced trading; Update existing travel trade regulations by changes made to the Statutory Instruments. 26

31 CONSUMER PROTECTION - AIR PASSENGER RIGHTS The Commission s Role The Commission is the National Enforcement Body for flights departing from Irish airports or arriving into Ireland from another European Union country or that arrive into Ireland from a non-eu country on an EU-registered carrier. Accordingly, the Commission: Handles complaints relating to cancellations; Handles complaints relating to delays of two hours or more; Handles complaints about denied boarding and downgrading. The Commission inspects Irish airports to ensure airlines comply with the Regulations. The Commission works with counterpart enforcement bodies in the EU in respect of complaints arising at non-irish airports. Complaints not relating to the Regulation are redirected to the appropriate body. Amongst other things, the Commission does not have the authority to handle complaints regarding: Baggage, taxes and airline charges, including fuel surcharges; Customer services; Booking or ticketing errors and visa issues; Refunds due to illness or bereavement; False advertising; On-board services or in-flight issues; Late arrivals at check-in; Airline booking conditions and website problems; Safety issues. Total Complaints Received In 2008 the Commission received a total of 2894 request for information and assistance under Regulation (EC) 261/2004. Each request was examined for a possible infringement of the Regulation. Of the enquires received, 413 indicated a possible breach of the Regulation and were then treated as complaints. 227 of these complaints related to flights departing from outside 27

32 the State. The Commission worked to validate these non-irish complaints before passing them to the relevant national enforcement bodies for further investigation. The Commission carried out investigations into the remaining 186 cases. Of these, 179 were found to relate to flights departing from an Irish airport and 7 related to flights from a third country arriving into Ireland on an EU licensed carrier. Origin of flight Number of complaints % Irish departure Non-Irish departure inside EU Outside EU on an EU-licensed carrier 7 2 Total 413 Irish Departure Non Irish Inside EU Outside EU on Eu carrier The table below shows requests for assistance on a month-by-month basis. The summer months and the Christmas period are generally when the Commission receives increased requests for assistance, broadly reflecting travel patterns. July 2008 was especially busy owing to extensive cancellations and delays resulting from the radar problems at Dublin Airport. At the time, the air passenger rights team provided information for passengers through the media and at the airport. The Commission subsequently received over 600 requests for assistance from affected passengers in respect of this incident. 28

33 After August 2008, 92 of these complaints were received via the Commission s new on-line complaints procedure Queries received Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec Types of Complaints Received There are four main categories of complaints falling within the Commission s remit under Regulation 261/2004: cancellation, long delays (greater than two hours), denied boarding and downgrades. The majority of complaints received in 2008 pertained to cancellations. The table below shows a breakdown of the number of complaints by category for flights from an Irish airport in Type of Complaint Number of complaints % Cancellations Long delay (i.e. greater than 2 hours) Denied boarding 7 4 Downgrade Other Total % Resolution of Complaints The Commission records all infringements of the Regulation to ensure that compliance is monitored on an ongoing basis. Complaints regarding noncompliance are investigated with the relevant airline. The Commission can issue a Direction under the Aviation Regulation Act 2001 to enforce compliance 2 The Other category represents complaints which initially appeared to fall within the remit of Regulation (EC) 261/2004 but subsequent investigation revealed that this was not the case. 29

34 where necessary. Legal proceedings can arise in the event that airlines do not comply with Directions issued by the Commission. Of the 186 complaints received in 2008, the Commission has already completed its investigation into 104. Of those cases, the final outcomes were: In 51 cases, the relevant airline paid compensation, provided a refund or made an acceptable alternative offer to the passenger on foot of the Commission s intervention. In 27 cases the complaint was either withdrawn by the passenger or the airline was deemed exempt from paying compensation by the Commission as the extraordinary circumstances exception contained in Article 5(3) was considered applicable. In 19 cases, the Commission recorded infringements of the Regulation. However given the nature of the infringements involved, no financial redress was payable to the passengers. The Commission records this information and it may subsequently be used to support legal proceedings against the offending airlines if practices of continuous non-compliance are established. Finally in the remaining 7 cases, investigation by the Commission revealed that there was in fact no breach of the terms of the Regulation. Advice on the other complaint resolution options available was provided to the passengers in these cases. The table below provides a summary of the above information: Resolution Number of complaints % Compensation paid by airline Offer by airline accepted 2 2 Refund of ticket or expenses incurred for care not provided by airline