I would like to welcome Mr. Philip Gaffney, the chairperson designate of Iarnród Éireann. As Mr. Gaffney was sitting in the ante-room, he will have heard the previous declaration concerning the Defamation Act, so I do not need to repeat it. I now call on Mr. Gaffney to make his opening statement.
Iarnród Éireann: Chairman Designate
Mr. Philip Gaffney
It is an honour to have been nominated by the Minister, Deputy Varadkar, for reappointment as the chairperson of Iarnród Éireann. I am pleased to have this opportunity to attend the committee meeting today. My intention is to tell the committee a bit about myself and my background, reflect on the past three years as chairperson of Iarnród Éireann and set out my plans for the company and the board for the next three years, should I have the privilege of being reappointed.
I was born in Glasgow 66 years ago, brought up in the east end of the city, and educated by the Marist Brothers and through the Glasgow Education Department's school system. I joined British Railways in August 1965 on a five-year engineering student training scheme and attained a higher national certificate in electrical and electronics engineering at Glasgow College of Technology. On completion of this training scheme, I was appointed to various roles in the delivery of re-signalling schemes in Scotland and London, most notably the major rationalisation of Kings Cross station.
In 1977, I joined the Hong Kong mass transit railway corporation as a train control and signalling engineer for the construction of the original line of the network. Over the following 28 years with the Hong Kong MTR, I held a variety of engineering and operations management positions including chief engineer and operations director. My final position was as managing director, operations and business development. When I left Hong Kong in December 2005, the network had grown to five lines, carrying 2.5 million passengers on a daily basis and was the most intensively used, most reliable and most profitable metro in the world.
In 2000, I was part of the executive management team which successfully launched the company on the Hong Kong stock market. From 2002, I was the director responsible for developing and implementing an international business strategy, which now sees Hong Kong MTR operating in London, Stockholm and Melbourne, as well as Beijing and other Chinese cities.
In December 2005, I retired from Hong Kong MTR and relocated to west Cork where I still live. I was fortunate to be appointed to the Iarnród Éireann board as a non-executive director, a position I held for just over five years. In July 2011, I was appointed non-executive chair in the revised CIE group and companies governance structure.
In addition, I am a non-executive director of Crossrail, London, the largest railway infrastructure project in Europe. Through my own company, Phil Gaffney Consulting Ltd., I provide advisory services at board and senior management level to a variety of railway industry companies and authorities. Currently, I am advising the New South Wales Government on the introduction of the first rapid transit railway line in Sydney.
Since I became chair of Iarnród Éireann in 2011, the overriding challenges have continued to be financial. The board, management and staff have worked to address these. We have suffered an unprecedented reduction in income, primarily in the form of public service obligation or PSO payments, but also through lower passenger revenue. While reducing our cost base, which we have done to the tune of €73 million over the past five years, we have operated an expanded network with three new lines opening as well as a number of new stations.
We have also seen a significant reduction of 75% in the amount of capital funding available to us over five years. Therefore, not only have programmes to expand our capabilities and capacities come to a halt, but this has also reduced the volume of essential renewals and overhaul to infrastructure and rolling stock.
We have delivered efficiencies, reduced our staff numbers to their lowest level ever, reduced overtime, made savings through re-tendering services and contracts, and improved our fleet efficiency. In addition, we have implemented lean management techniques which have seen other railways from around the world coming to Ireland to learn from our practices. At the same time we have increased the service levels we provide to our customers as measured by passenger train kilometres, while maintaining an excellent safety performance.
On the issue of safety, I should note that last night we had the first ever derailment of a DART train, just south of Bray. Fortunately, the 33 passengers on board and the driver were not injured. It is clear that the derailment occurred due to the train striking a coping stone from a wall above the railway which had been dislodged in what appears to have been a deliberate act. We are working closely with the Garda to seek out who was responsible for this act. Actions such as this are extremely serious and reprehensible and, in this case, could have resulted in fatalities among passengers and staff.
In the past three years we have delivered efficiencies and implemented on schedule the internal reorganisation of Iarnród Éireann required under European Union regulations which had previously been the subject of a derogation for Ireland. This included the establishment of separate railway undertaking - a train operations organisation - and infrastructure manager organisations within Iarnród Éireann. We have improved customer facilities, including the provision of free Wi-Fi and online resources. We have become more commercially and customer focused and commenced the Customer First programme which will be central to ensuring strong customer relationship management and dynamic yield management, among many other benefits.
At board level, I have introduced changes to our financial reporting and procurement processes which have resulted in greater transparency at all levels of the organisation and improved procurement of services and contracts to the benefit of our suppliers. This has also provided greater protection for Iarnród Éireann staff and value for money for our funders.
Thankfully, we are seeing recovery in the numbers travelling with us across all passenger services, as well as growth and new business opportunities in the freight business. We have met and exceeded punctuality and reliability statistics under the public service obligation contract with the National Transport Authority and, most crucially, operated safely. This has all been achieved while reducing our cost per kilometre by 20% in the past three years and a cumulative 33% in the past five years. Notwithstanding this, the position of Iarnród Éireann remains extremely critical. We are seeking to agree a series of pay and productivity measures with our workforce, including a temporary forgoing of pay increases for a period of 20 months, with the sums involved ranging from 1.7% to 6.1%. The senior management team and board, including me, have already implemented these proposals in our own terms. Alone, however, these changes will not be enough - far from it.
That brings me to the challenges and my vision and plans for Iarnród Éireann in the next three years. This will be a period which will determine the role railways will play in the future of transport in Ireland for the coming generations. Today, resulting from the reduction in PSO payments of almost 40% from what was already one of the lowest levels of PSO payment in Europe and reduced capital funding, the current network we manage and service levels we deliver are not sustainable and there is a real threat to the solvency of the organisation. We must grow our revenues further. Working with the CIE Group, the Minister, the Department and the National Transport Authority, we must determine if the current network and services are to be supported adequately, from infrastructure to fleet maintenance to all service operations.
Investment is required in the national rail network. Unlike the bus companies or Luas, Iarnród Éireann is responsible for the infrastructure on which its services operate. In this regard, agreement on a new multi-annual contract in respect of rail infrastructure is absolutely imperative to secure the future of the railways in Ireland. Capital funding is required to maintain our rolling stock fleet at its current standard. We have transformed the quality of the trains on which our customers travel, moving from the oldest train fleet in western Europe to the youngest, through significant investment in the period from 2000 to 2010. If we are to ensure the return to the taxpayer from the significant investment in the fleet, we cannot allow these assets to deteriorate. If it is decided not to invest, to sustain safe and reliable operations, the extent of our current network will have to be reviewed. Also, initiatives which require expanded operations must be adequately funded for the whole-of-life cost. The position is that stark and I am focused on working with all stakeholders in ensuring there is an understanding of the issues we face and we emerge a stronger and more sustainable organisation.
There is a strong role for Iarnród Éireann in meeting the transport needs of the country - in urban areas and nationally. We can generate a return for the economy, for instance, by connecting Dublin Airport to the rail network and expanding the DART network, including DART underground, to effect a significant modal shift from private to more sustainable public transport. There is scope for improving speeds on the network to reduce journey times and improve our service offering and competitive position. While the challenges are great, the opportunities can be greater still. I look forward, therefore, to the opportunity of working with the board, management and staff of Iarnród Éireann in meeting these challenges and opportunities and providing our customers with transport solutions which are safe, service oriented and sustainable.
I thank Mr. Gaffney for his stark presentation which contained a number of red flags. It is informative to hear about his success in Hong Kong and elsewhere and the significant challenges facing Iarnród Éireann. He referred to a substantial reduction in the amount of capital funding available to the company. A reduction of 75% over five years is significant in any industry. There must be a cliff edge, a point at which reductions must not only cease but be rolled back. Failure to do so will call into question the safety of the services operated by Iarnród Éireann.
Mr. Gaffney has noted that the cost per kilometre operated by Iarnród Éireann has declined by 20% in the past three years and 33% in the past five years. Again, there must be a point at which it is no longer possible to reduce costs without adversely impacting on the safety of the service.
I am concerned by Mr. Gaffney's comment that PSO payment levels and the reduction in capital funding are not sustainable and present a significant threat to the solvency of Iarnród Éireann. I am also concerned by his statement that should a decision be taken not to invest in the company, it will be necessary, to sustain safe and reliable operations, to review the extent of the current network. Is there a plan B? Has Iarnród Éireann examined the routes it operates? Are routes that depend on the payment of a public service obligation subsidy more vulnerable if the company is forced by economic circumstances to review or reduce its current operations?
What discussions are taking place with funding agencies and Government? What is the state of industrial relations within the company? I am aware the workforce has taken significant pay reductions. Have senior management and the board of directors made similar sacrifices?
I thank Deputy Colreavy. Mr. Gaffney may wish to respond.
Mr. Philip Gaffney
The Deputy is correct. My presentation was stark because that is the reality. We will not compromise safety as that is our primary responsibility. That is why we are in detailed discussions and analysis with the NTA on working out what is the correct level of both PSO and capital funding to sustain the network as it is. I am a professional railway man and have been for more than 40 years and I am not in the business of closing railway lines but am seeking to open them if at all possible. We are carrying out a detailed review with the NTA and will be going back to the Department on the outcome of that review, laying out the options for funding models for the network. Each line will be looked at in terms of inputs and outputs. That work is ongoing and will continue for some time. However, if that funding level is not sustainable both in terms of safety and reliability and from the financial aspect we will have to look at the service being provided. There is no plan B. Nothing has been identified as yet and I hope that will not come about.
The operating cost per kilometre is a good measure of efficiency not necessarily driven by cuts but it is also a measure of the return on investment which was made in the late 1990s and 2000 in new trains, removing level crossings and some resignalling. We are seeing the return from that technology in driving down these costs. That is not entirely negative and I think there is scope for more of that.
Sorry, I did not suggest it was negative.
Mr. Philip Gaffney
Apologies, I misinterpreted the Deputy. In terms of industrial relations, the staff has seen reductions in overtime and allowances. There are reports that we are in negotiations with staff for further reductions, as the Deputy said, averaging 1.6% to 6% at senior levels. Those reductions have already been implemented for all the management staff of Iarnród Éireann as well as for board members and myself. We have been working very hard with our staff and unions to ensure we do not get into a position whereby there is any stoppage of service due to staff action. We will continue to engage with the unions to ensure that does not happen.
I thank Mr. Gaffney. Following on from what Deputy Michael Colreavy said, Mr. Gaffney mentioned that the PSO payments have been reduced considerably from what were already the lowest PSO payment levels in Europe, in comparative terms. How do the cost structures of the company compare in terms of pay levels or cost per kilometre of network Europe-wide?
Mr. Philip Gaffney
I do not have detailed benchmarking for that. I am aware from a very small review of certain railways with which I am familiar that the cost per kilometre, which is the standard way of measuring it, compares very favourably with most networks; particularly in terms of cost per train kilometre, we are very efficient. In terms of cost per train kilometre, we are certainly in the top half in terms of efficiency.
I thank Mr. Gaffney, and call Deputy Seán Kenny.
I welcome Mr. Gaffney to the committee. I missed the beginning of his presentation but I think he appeared before the committee on a previous occasion as I recall listening to him speak on the Hong Kong metro and his work in Scottish Rail. As he said he is a professional railway man I wish him success in his role. There is no doubt he has painted a very stark picture. I hope the new Minister for Transport, Tourism and Sport, whoever he or she happens to be, will listen to him.
My constituency includes 13 DART stations from Clontarf Road to Howth and out to Clongriffin and Portmarnock. Queries and problems arise all the time around the manning of stations and security on the DART at night, as well as what can happen at weekends in Howth when many people descend on the area, many carrying alcohol. How that is to be managed? I am aware of private security on the DART and that sometimes the assistance of the Garda Síochána is required. That is a problem that needs to be managed, especially when people, particularly women, may feel afraid getting off at an unmanned station late at night. These are issues that need to be addressed. Much of this is down to anti-social behaviour, which is outside the control of Iarnród Éireann. Mr. Gaffney mentioned what happened in Bray this morning and said he thought it was a deliberate act that somebody had caused a derailment. Unfortunately, those types of actions happen. Currently there is also a problem with people stealing overhead cables for the metal content. That is dangerous because somebody will get electrocuted if they continue to do that. These are the problems that arise on the DART, which provides an outstanding service to commuters. I travelled on it this morning. The question of security and unmanned stations at night is a real issue.
Mr. Philip Gaffney
I thank Deputy Kenny. The issue of security on the DART is a cause for concern particularly with regard to anti-social behaviour. As the committee is aware, some weekends many people gather in places such as Howth. When we have prior information intelligence from the Garda Síochána or local information we put additional resources in place and we are in continuous engagement with the Garda. We look at the various social media sites to ascertain what is happening.
On a broader front, going forward there will be unmanned stations and we have to accept that. We have one example of what can be done, not in the Deputy's constituency, in Broombridge where we had very active engagement with the Garda and the local community. Broombridge had a very poor record for many years but we have improved its appearance and reduced significantly the amount of anti-social behaviour through working with the community and engaging with a person part-time to bridge the gap.
We are concerned about anti-social behaviour across the rail system, particularly the DART and at weekends, and we are working hard to improve in this regard.
I thank Mr. Gaffney for coming before the committee. As a fellow west Cork man, I am particularly pleased he has made the journey to Dublin. Mr. Gaffney's CV is very impressive and he can be particularly proud of having worked with British Rail and in Hong Kong, an extraordinary achievement. Iarnród Éireann will be all the better for his chairmanship. Having listened to his presentation, I would describe Mr. Gaffney as an enthusiast.
Mr. Philip Gaffney
Passionate and professional.
That is reassuring. As other members mentioned, Mr. Gaffney's presentation demonstrated typical Glasgow, brutal honesty and paints a difficult scenario if options are not taken to support the networks. As he is aware, since the 1950s we no longer have a rail network in west Cork and can see the lost opportunities now because of the decisions taken then.
If Mr. Gaffney is faced with no choice but to review the network and consider line or station closures, how will he deal with that difficult prospect? Such a decision would not be popular. Will he give his views on the possibility of increasing or decreasing rail fares? The figures published in the past few days regarding increasing passenger numbers throughout the network are encouraging. In light of the challenges facing the company, how will Mr. Gaffney deal with industrial relations?
About this time last year, the train accident occurred in Galicia. Unfortunately, I had the misfortune to see that carnage at first hand. Has Iarnród Éireann considered what lessons could be learned from that accident? I know the full investigation process has not been gone through in regard to that accident, but I presume Iarnród Éireann has considered what lessons might be learned and how it might avoid such issues occurring here.
One issue that has arisen in regard to passenger numbers relates to the management of events. I hope Iarnród Éireann has not factored in certain concerts this summer as part of its business plan for 2014 and hope we do not see fare increases as a result of the cancellation of some events.
Deputy John O'Mahony resumed the Chair.
I thank Mr. Gaffney for his presentation. I concur with Deputy Harrington in regard to Mr. Gaffney's background and experience. It is great to see someone with passion along with professional knowledge in his area of expertise.
I have a serious concern in regard to the incident in Bray last night. It is appalling that this was done deliberately. This could have been catastrophic and the headlines today could be very different. I support Iarnród Éireann's and Garda efforts to bring those responsible to justice.
I commend Iarnród Éireann on being one of the only groups or organisations to have shown common sense and decency this week in regard to what it has done in regard to the cancelled concerts. From a public relations point of view, it was a positive move by Iarnród Éireann to refund fares and I hope this is acknowledged widely. It has been well reported in the media and was a wise and decent move and demonstrates the only common sense we have seen on the issue this week. Fair play to Iarnród Éireann on that.
Deputy Harrington touched on the issue of fares. There is some excellent value where tickets are purchased online. However, sometimes people have to make a journey at short notice and fares in that case can be very expensive. Also, people may not be able to make an online booking within a few hours of their travel time and feel they are being fleeced when they go to the station. Is this an issue Mr. Gaffney may tackle? I appreciate there are extra costs associated with booking at stations, but high fares leave a sour taste. Will Iarnród Éireann consider more flexibility in the case where somebody has booked on line but needs to get an earlier train? Generally they have to pay extra to change.
In regard to the long term, what is Iarnród Éireann's vision in regard to cutting journey time on intercity and longer distance routes? I acknowledge significant work has been done on this in recent years, but how will the reduced journey times be achieved? Will this require better stock or will it require track infrastructure to be improved? Are there other areas I may not be aware of, such as signalling or crossings, that require improvement? Iarnród Éireann must compete with our new and ever expanding motorway network, and hopefully in ten or 20 years cities like Cork and Limerick will be linked up. The possibility of making the journey quickly by car will make it difficult to justify the expense of taking the train. How will Iarnród Éireann deal with that?
Recently, a friend of mine contacted me about the DART app, which is giving wrong information about the last DART trains leaving Connolly Station. Will Mr. Gaffney check this out? Apparently, the app tells people there is a train at "X" time, but the last train time is before that. This happened last Monday and I received a call on Tuesday about it.
On a local issue, there is an ongoing issue in regard to the level crossing at Stagmount in Kerry, between Rathmore and Killarney. The situation there between local residents and Iarnród Éireann is at an impasse and local residents are aggrieved. Will Mr. Gaffney give this issue his personal attention to try to breach the impasse? If I can assist in that, I will be happy to do so. The issue is causing significant grief and surely a common sense solution can be found.
Following on Deputy Griffin's query, I presume Iarnród Éireann constantly reviews services, pricing and the frequency of services in line with consumer needs. How often does such review take place or is it continuous? People may need to get to work by 8 a.m., but a train may not arrive at its destination until 8.10 a.m. Are issues such as this - frequency and timetables - constantly reviewed in order to encourage new passengers?
I am aware that Iarnród Éireann tries to encourage as much online booking as possible. I would like to give some constructive criticism in this regard that I hope Mr. Gaffney will take on board. I had reason to book a return journey online for my family to travel from Waterford to Newry, County Down. However, for some reason the online booking facility would not allow me tick the box for the return journey.
I submitted an online query to Iarnród Éireann's customer service four days ago which said it would respond as soon as possible. Happily, the family is in County Down, having used Iarnród Éireann but I have not received any response to my query. That can be quite frustrating for the customer. I am saying this in a constructive way for Mr. Gaffney to pass on the need for more interaction, especially in this day and age of information technology.
I have a local question. Why is the Waterford train always on the furthest platform at Heuston Station?
That is the micro-question.
Mr. Philip Gaffney
Deputy Harrington asked about options for closure. We are carrying out a very detailed review, line by line, and will have a range of options. Closure of a line is the absolute last option. We have nothing of that kind on the table. We are considering reducing services if the public service obligation, PSO, does not match what is required. I have said, and it has been agreed, that it would be done in an integrated way, particularly with Bus Éireann. If a gap is created, we should work with our colleagues in Bus Éireann to try to improve that. There is nothing on the table regarding any options for closure, but if we must proceed to considering adjustments, we should do so in an integrated way.
Deputies Harrington and Griffin mentioned decreasing fares. We are not in a position to consider reducing our revenue. Total revenue is a combination of volume and price and we are very actively trying to get that balance right. There is quite a difference between the DART and commuter lines and intercity services. The DART and commuter line fares are relatively inflexible. Many people using them have significant benefits arising from the tax saver option. We have been very aggressive in setting fares for intercity services. The €9.99 promotion is a good example. One area of investment is the customer first programme which will give us much greater ability to adjust fares to meet demand and to be more flexible in how we price our fares, which will answer some of Deputy Griffin’s questions.
While it is of no comfort to those who have to shell out the money, our fares are very low by European standards. When one compares similar journeys, for example, Drogheda to Dublin and Luton to London, our fare is one-third of the UK fare, when one takes tax saver into account. We could be much smarter about how we structure our fares. The customer first programme will give us more tools to do that.
Industrial relations are not particularly challenging. In my time as chairman we have had a very committed workforce which generally enjoys coming to work every day and doing its best for the company. It has taken a hit on take-home pay, as has management. In all our discussions with staff and unions we have insisted, and I encourage it at board level, through the work of directors, that we continue the dialogue and that we never stop talking. We have a cost containment committee chaired by the chief executive, and the unions are members of that. That committee examines every single line of expenditure, except payroll.
We analyse every major incident that happens overseas, such as the Spanish derailment, get what information we can and consider it in respect of Iarnród Éireann. We require investment. A programme has been identified for automatic train protection, which would have prevented that accident. A pilot scheme for that will take place later this year. This is one of the areas of capital funding which I hope will come through in the years to come.
We treat special events as windfall, and they are not, thank God, factored into our budget. I thank the Deputy for his comments on our response, which was entirely appropriate to the cancelled concerts and the refund.
We have reduced intercity journey times and are trying to reduce them further. We hope that within this year we will be able to introduce at least one express train, a morning train from Cork to Heuston which will do the journey in two hours. We do not require any investment in trains or signalling, but to sustain a two-hour journey, including the current stopping pattern, would require investment in track to get it up to the level required for higher speeds.
What is the current journey time from Cork to Dublin?
Mr. Philip Gaffney
It is 2.5 hours.
The new one would be two hours.
Mr. Philip Gaffney
Yes two hours would make quite a difference. We are also considering Dublin to Belfast.
What time does Mr. Gaffney envisage that train arriving in Dublin? Would it serve people who need to be in Dublin for business hours?
Mr. Philip Gaffney
Yes. We introduced a 6 a.m. train earlier this year, which arrives at 8.30 a.m. It would be great to have a service around that time for people who could be attending meetings in the city centre by 8.30 a.m.
That is amazing. That would be very good.
Mr. Philip Gaffney
That would be a huge improvement. There is Wi-Fi throughout the train and that will give us quite a competitive advantage.
I do not have any answers to the question about the DART app but I know somebody who will get them for me.
I do not know Stagmount level crossing personally but I assure the Deputy, following Deputy Harrington's comment, I will not go about dealing with it in my usual brutal Glaswegian fashion. I will be a bit more sympathetic.
We constantly study the loading of trains. We make adjustments to timetables at least annually. That process, however, rests with the National Transport Authority, NTA. We do not have the authority or autonomy to change timetables. We have to conform to that process. We do, however, consider loading all the time.
In answer to Deputy Coffey I will look into why one cannot get a return Waterford-Newry ticket online and why he did not get a response from customer service. Waiting four days for one is totally unacceptable. I will respond directly to the Deputy on that.
I cannot answer his question about the platform for the Waterford train. I have many friends in Waterford and I hear this often.
It is not deliberate.
I hope it is not discrimination.
Mr. Philip Gaffney
Absolutely not.
On behalf of the committee I thank Mr. Gaffney for appearing before us today and engaging in a very worthwhile discussion. I propose to send the Official Report of today’s discussion to the Minister for Transport, Tourism and Sport for his information and consideration and I wish Mr. Gaffney well for the balance of his term in the post.