I will not delay the committee and will conclude my presentation in ten minutes. My colleagues are Mr. Denis Daly, chief financial officer, Mr. Donie Mooney, director of air traffic management and Mr. Paddy Kennedy, general manager of corporate affairs. I am the chief executive and Mr. Kevin Humphreys is director of safety regulation.
A copy of my brief presentation has been passed to members. It is an overview of our corporate governance, safety regulation, operations in air traffic management, a brief outline of our efficiency and business performance and our objectives for 2010 and beyond.
I will give members some background information. We were established in 1993 and commenced operations in 1994. We are a commercial State-sponsored body. We do not receive State financing from any source — loans, grants, guarantees, subventions or any support. We pay corporation tax like any other commercial semi-State body at 12.5%.
The essence of our mission is safety. We are the safety regulator for the civil aviation industry and we have a number of responsibilities. Our first and primary responsibility is the safety regulation of civil aviation. We also have responsibility for the air navigation services in Irish air space, the air traffic control at State airports and communications on the North Atlantic. We have 659 staff, 319 in the Shannon area, 156 in Dublin-Cork and at the safety regulation at head office. We have 659 in total, but full number of staff is approximately 700 when account is taken of trainees.
The most important and primary corporate objective of the IAA is safety. Nothing else matters. We comply with all international standards and our main function is to act at all times in the public interest.
Regarding the governance and the management of the authority, we have nine members, including a chairman appointed by the Minister for Transport, six non-executive directors, one executive and one staff director. We have board objectives and work plans, which are set every year, and various board committees covering finance, an audit committee, internal audit, personnel appointments, investment planning and such matters.
In terms of governance, the company complies with the revised combined code, the code of practice for State bodies. We also have an IA ethics policy. There is an approaches policy for board members, the Ethics in Public Office Act and a clear division of responsibilities between the board and management is documented.
The chief executive is responsible for all aspects of the day to day operation of the authority but unlike other companies because we are the safety regulator I have specific responsibility for safety regulation under the Irish Aviation Authority Act. The board must hear and consider my advice on operations and safety regulation, which I get from experts, and also I have a right to disagree with the board and to refer safety matters to the Minister, if required, but that has never happened in the history of the authority.
The first major area is safety regulation. With regard to the scope of our activity, we have safety oversight responsibility for 75 million passengers travelling on Irish fleet AOCs in 2009. This includes Aer Lingus, CityJet, Ryanair and all its operations in Europe, Aer Arann and other carriers. We also had safety responsibility for more than 150 million passengers using Irish domestic air space, oceanic airspace and so on in 2009. We have a considerable safety focus and responsibility from that perspective.
In safety regulation our key functions are to set and regulate the safety standards for aircraft, airworthiness, the operating standards of airlines such as Aer Lingus, Ryanair and so on, air navigation, service provision, aerodromes and air space. We are also responsible for the licensing and the medical standards of personnel, pilots, ATCOs, radio officers, engineers and so on and the licensing and certification of aerodrome air carriers, such as Ryanair, service providers and so on.
In terms of the standards adopted in the IAA, we do not have national standards as such. Everything in aviation is international. Therefore, the standards with which we comply are those of the European Union, Eurocontrol, the European Aviation Safety Agency, the ICAO, the JAA and the EUROCAE. Because of the nature of the industry these tend to be international with a much larger remit in terms of the EU than before. I do not propose to go into this in detail but it will give members an idea of the scope of the type of the legislation with which we deal. Uniquely, we also have the power to make statutory instruments.
In terms of independent oversight of the authority, we have independent oversight from EASA and the Joint Aviation Authorities, that is the aviation safety agency in Europe. We have audits on maintenance, operator certifications, simulators, personnel licensing, pilots, air operations such as operations of Aer Lingus and Ryanair and airworthiness which is the physical condition of aircraft for flight. We also have audits on our standards, which are called ESARRS from Eurocontrol. All these have been positive and perhaps the most significant audit we have ever had is currently ongoing. It is the ICAO international civil aviation audit which will be completed in 2010. This is the most significant audit we have seen during the past ten or 15 years and the results of it will be known later in the year.
We are central to the Irish aviation industry in which approximately 15,000 people are employed. In terms of aircraft on our register, we have €83 billion assets under management in terms of the leasing industry, some 3,400 aircraft and they pay €300 million annually in taxes. There are 1,000 high value jobs in the aircraft leasing industry in Ireland and we expect that to grow by 45% over the next three years. This is a significant growth area and one we are keen to promote.
To give members an idea of the size of the industry, there are three commercial State-owned airports in the country, Dublin, Shannon and Cork, six commercial private aerodromes and 19 private licensed aerodromes. In terms of airworthiness, we have 569 large public transport aircraft, which is about double the aircraft in the Netherlands, 515 small aircraft, 111 helicopters, 31 — part 145 — maintenance organisations for commercial aircraft and 22 — part M — for general aviation.
In terms of operations and personnel licensing, we have 3,664 commercial airline pilots, 18 commercial operators such as Aer Lingus, Ryanair and executive jet operations. In terms of air navigation, we licence 385 air traffic controllers. We are responsible for 451,000 sq km of air space.
The commercial operators in the country that we oversee are as follows: Ryanair is our largest with 231 aircraft, Aer Lingus has 45, Air Contractors have 36, CityJet has 25, Aer Arann has 10 and we have 192 heavy aircraft on lease in 22 foreign states, Europe, Asia and the Americas.
We also regulate general aviation, balloons, air shows, microlites, flying clubs, private clubs, training schools — basically everything to do with aviation — and engineers' examinations and such matters.
The other significant part of our business and the main revenue earner is operations-air traffic management. It is important to note that the air traffic management is part of an integrated European system. We are not a stand-alone system; we are integrated into the European system in terms of the flow management and flight management. We have a number of services. We have en route air traffic services in Irish air space — that is the overfliers. We provide ATC at the three State airports. We also provide communications on the North Atlantic and we are one of the cost-effective providers in Europe.
To give an indication using the map, members of the committee can see that 90% of all traffic transiting from Europe to the United States is handled via Irish air space — via the Shanwick or domestic air space. This slide gives a brief indication; it is a radar snapshot of a day. The middle of it shows the aircraft moving over and back on the Atlantic. It quietens off and then they all come back over. This flow happens every day. Some days during the summer in busy periods when things were better, we were handling up to 1,900 aircraft a day en route , over and back to the States.
Last year, our traffic for overflights was down 7.5%. Our terminal traffic was down 17% and our North Atlantic communications were down 7.6%. The trend has continued in the first two months of this year with en route traffic still down 2.2%. Dublin commercial is down another 17%, while Cork is down 10% and Shannon commercial is down 33%. The North Atlantic is down 2%. That is for January and February, on top of the big significant declines last year.
In terms of technology, we have one of the most advanced air traffic systems in Europe. We completed a new system in 2004. As members of the committee can appreciate, there are complex safety systems which require ongoing self-funded investment. We get no funds from the Exchequer. The company is funded entirely by the airlines. We will spend approximately €200 million on new systems over the next five years and we will be making a new air traffic management system live in 2011.
As regards recent initiatives, we had additional air space in 2005; we obtained 95,000 sq. km from the UK. It was the first significant air space transfer in Europe in nearly 20 years. We have a new agreement with Iceland for joint management of communications facilities on the North Atlantic. We are procuring our air traffic management system in a joint procurement with Sweden, Denmark and Austria. It is one of the most advanced in Europe.
We have also done a complete reorganisation of our safety regulation division after a report. We had the first functional air space block as part of the SES2, the Single European Sky with the UK, which we launched in August 2008. Last December, we launched what we call ENSURE, a free-flight zone to the west of Ireland, which will save airlines about €40 million over the next four years in fuel and CO2 emissions.
The operational challenge we have in this area is the Single European Sky. Europe is becoming much more involved. From 2012, we will have to meet European-wide safety, environmental, capacity and efficiency targets. The other issue is that of Dublin Airport. The capacity at Dublin Airport is fine at the moment, but during the boom times, before the dip, we were having problems with physical capacity and there was a need for a second runway. It is important to understand that the Dublin Airport operation is essentially a single runway one. At peak, we can move 48 to 51 aircraft per hour, but not on a sustained basis; that would be at a peak. In our view, there is a need in future for parallel runway operations, but we do not see that happening until 2014 to 2016. In that event, once the DAA tells us that, we will put up a new ATC tower for which we have recently received planning permission, costing €50 million.
The slide shows the north runway for Dublin at the top of the picture. That is the new north parallel runway they propose to put in.
In terms of business performance, I do not yet have the 2009 results. They will be published in April 2010 and are going to the board shortly. In 2008, we had revenue of €167 million, with €12 million profit after tax, so we were profitable. Our debt is quite limited, but the 2009 figures will show a reduction in costs, profit and revenue in line with the traffic drop, but we expect to be profitable.
As regards en route revenue, we make 63% of our income from people who overfly the State. The terminal — that is the airport staff — ATC accounts for 10% of our income, while North Atlantic communications is 11%. Safety regulation, which is independently funded and funds itself, is 14%. Exempt air traffic is 1% — that is generally military overflights that are paid to us by the State for overflight traffic.
To give a picture of revenues, we get 77% of our income internationally so we are only relying on the domestic economy for 23% of our income. Internationally, we are a generator of income to the country. It is a very small proportion domestically. Our largest customer, which a little bit in the wars at the moment, is British Airways.
Our future business performance challenge is basically the same as anybody else's, including the economic recession and declining traffic. In addition, our customers — the airline industry — who pay for all our costs are losing significant money.
This slide deals with what we are going to do for the next number of years. The single most important objective we have is the maintenance of a safety record. We need to stay efficient and cost-effective. Financial independence is very important. We are very conservative financially and we need to stay independent to ensure that we have the funds to invest in the systems we require in future.
We must also adapt the IAA to the conditions created by the Single European Sky and the EASA. We must exploit the new technology and strategic partnerships. In addition, the environment is an increasingly important area in aviation.
The final slide shows a historic landing of the new Airbus A380 at Shannon. Members can see Shannon Aerospace in the background. To give an idea of the size of it, there is a Ryanair 737-800 on the taxi run there at Shannon.
