I thank the committee for the opportunity to address it. I regret we were unable to attend before Christmas due to diary commitments. However, we are very happy to be here today to assist the committee and contribute to the debate on this important issue.
The aviation industry is recognised as a key enabler of economic growth throughout the world and contributes something like 8% of European GDP. The scale and speed of the development of airport infrastructure currently taking place in Asia, India and the Middle East, illustrates the need to ensure adequate capacity in Europe to protect our competitiveness relative to such growth areas. I am sure members of the committee are relatively familiar with this context. In an Irish context, as an island, airports play a pivotal role in national and regional development. We must ensure the provision of adequate infrastructure and the elimination of unnecessary costs and processes, as referred to by Mr. Grealis. Hence, publication of new draft European legislation relating to aviation last year was important to all industry and clearly it is something in which this committee has taken a keen interest.
The proposed airport charges directive is one of three papers published together as part of an airport package. Last week, the European Parliament adopted a legislative report accepting the amendments to the initial Commission text recommended by the Transport Committee. The draft text will now proceed towards its second reading, probably in April or May. The Dublin Airport Authority has been actively involved in the review process on behalf of the three Irish airports under its aegis, Dublin, Cork and Shannon, and has discharged a representative role also in the context of European airports. In this process we have worked closely with the Department of Transport and the key committees in the European Parliament. In this regard, I particularly want to acknowledge the assistance and effort of the Irish Members of the European Parliament, Mr. Eoin Ryan, MEP, on the Economic and Monetary Affairs Committee, and on the Transport and Tourism Committee, Mr. Seán Ó Neachtain, MEP and Mr. Jim Higgins, MEP. Their work on the draft text has helped ensure the incorporation of revisions which were important from the perspective of the Irish airports, particularly Cork and Shannon, and indeed Knock. In this process we have worked very constructively with the Department of Transport. We have adopted a key role in discussions between the representative body of Europe's airports, ACI Europe, and European Commission officials and Members of the European Parliament in order to ensure the best possible outcome to this process.
The underlying rationale of the directive is that there is a need for economic regulation of airports to ensure non-discrimination and efficiency. The Dublin Airport Authority is fully in favour of good regulatory practice. We support non-discriminatory and transparent charges at airports. We believe in meaningful and effective consultation. We agree it is necessary to have timely investment in appropriate infrastructure, which protects the ability of our economy to grow and flourish. Our principal concern with this directive and regulation generally relates to the question of balance, an issue also touched on by Mr. Grealis. We believe it is necessary to achieve an appropriate balance between protecting the interests of the consumer and overburdening in particular smaller airports with red tape and administrative inefficiency. It adds costs for airports and airlines and ultimately for passengers.
The sections we took issue with in the draft text were those which added cost and complexity without any value for the customer, in our opinion. The DAA in this regard identifies the ultimate customer as the passenger. Regulation should ensure general economic welfare is safeguarded, where normal market dynamics do not apply. We want to provide adequate facilities for customers, both the passenger and the airline, and ensure the facilities we build will be appropriate and adequate for a reasonable period of time ahead. Because one cannot build half a terminal, it makes sense to build one to accommodate growth for a number of years. In considering such issues, airlines generally and in the nature of their commercial mandate, take a shorter term perspective to airports. However, airlines have the flexibility to shift aircraft from one airport to another overnight or indeed alter their activity or go out of business. If all decisions about what facilities are needed at an airport are predicated simply on what today's airlines say they want, there is a danger that in the future we will face an infrastructure deficit because of the inability to make adequate investment now for a reasonable period ahead. This is the context of much of the debate and hyperbole surrounding the second terminal, T2, at Dublin Airport. Our passengers tell us they want an improvement in service standards and we want to deliver. This requires significant urgent investment.
The interests of passengers and airlines are not always identical, although the airlines often say otherwise and are not willing to pay, very often, for the facilities their clients may favour. DAA wishes to build facilities of a reasonable standard to meet the expectations of a travelling public. We believe we should ensure that as the airport grows there are such things in time as people movers to allow travellers to move over extended distances, there are adequate basic facilities and the building is heated or cooled and that there is adequate circulation space. We do not believe that installing these is in any sense gold-plating, but simply meeting the reasonable expectations of the travelling public. As already mentioned, the original Commission text has been modified in some important respects, which we welcome from the viewpoint of Cork and Shannon in particular. I shall touch on those briefly before concluding.
The original draft said that all airports over 1 million passengers should be regulated. This would mean Cork and Shannon would be regulated and potentially Knock, in due course - Mr. Grealis has indicated the problems with this in terms of competing in the marketplace. This threshold has now been increased to a more reasonable figure of 5 million passengers per annum. Transparency was another issue which we were concerned with, and the initial requirement to provide very detailed cost reports to airlines. The DAA fully supports giving appropriate information on airport costs, and does this already. However, aside from confidentiality concerns, which are important, as mentioned by Mr. Grealis, the original provisions would have added an enormous burden in manpower and technology, particularly to small airports, the costs of which would have been passed on to users.
We are pleased that after review, the Parliament has reduced the requirements to the type of provisions which currently apply in more mature and developed regulatory environments. Our views in this regard were similar to those of the Department of Transport and the aviation regulator in Ireland and the UK.
Finally, turning to consultation, the DAA was concerned about the administrative burden, not just on airports, but as noted by Aer Arann at the committee's last meeting on this issue, on airlines also that would have to participate at each of the regulated airports they service if the original consultation proposals were followed through. We are pleased that this has also been moderated and there is a recognition that one size does not fit all. We retain concerns about some sections in the revised text. Pre-financing is an important issue, particularly for small airports which occasionally need to invest large sums a considerable time before the benefits are visible.
In addition, in regard to independent appeal provisions, we have previously put on record our view that there is a need for greater regulatory accountability than currently applies for Dublin Airport. We will work actively on the draft directive text with our colleagues at other airports and with ACI Europe to ensure that the interests of all stakeholders in this process are protected. We look forward to working further with the members of the European Parliament, the Department of Transport and other parties in this regard.
We referred earlier to the airport package. Another regulated part is the action plan for airport capacity and safety in Europe. We retain some concerns that the underlying approach in the two papers is not consistent. The directive focuses on measures to keep costs down in order to sweat assets. In contrast, the action plan is directed to ensuring there is adequate capacity to meet future demand so that airports can grow in line with the Lisbon Agenda. However, the draft directive does not explicitly make provision for adequate investment in infrastructure for the future while the action plan does not specify that expansion costs need to be recouped by commercial operators. We believe that in such legislation the future development of appropriate infrastructure at airports must be safeguarded in the interests of the economic communities which they serve - regional, national and Europe-wide - and for the protection of the Irish economy.
The DAA is progressing its investment plans at Dublin in a cost-effective and efficient manner. Pier D and Area 14 are the first steps. We believe that following a period of under-investment, and resultant difficultly for passengers as well as congestion at the airport, we are now set on an investment programme of approximately €1.2 billion between now and 2009 to transform Dublin Airport.
