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The cost of insurance coverage for certain third-party liabilities arising from ―acts of war‖ or terrorism increased dramatically as a result of the September 11, 2001 terrorist attacks. In the immediate aftermath, aircraft liability war indemnities for amounts above $50 million were, in the absence of any alternative coverage, provided by the Irish Government at pre-September 11, 2001 levels of coverage on the basis of a perpassenger surcharge. In March 2002, once such coverage was again commercially available, Ryanair arranged coverage to replace that provided by the government indemnity. The replacement insurance coverage operated on the basis of a per-passenger surcharge with an additional surcharge based on hull values. Ryanair‘s insurers have indicated that the scope of the Company‘s current war-related insurance coverage may exclude certain types of catastrophic incidents, which may result in the Company seeking alternative coverage. Ryanair to date has passed increased insurance costs on to passengers by means of a special ―insurance levy‖ incorporated in each ticket.
During the 2006 fiscal year, Ryanair established Aviation Insurance (IOM) Limited (―AIL‖), a wholly owned insurance company subsidiary, to provide the Company with self-insurance as part of its ongoing riskmanagement strategy. AIL underwrites a portion of the Company‘s aviation insurance program, which covers not only the Company‘s aircraft but also its liability to passengers and to third parties. AIL reinsures virtually all of the aviation insurance risk it underwrites with recognized third parties in the aviation reinsurance market, with the amount of AIL‘s maximum aggregate exposure not currently subject to such reinsurance agreements being equal to approximately $16.5 million. In addition to aviation insurance, AIL has underwritten most of the single trip travel insurance policies sold on Ryanair.com since February 1, 2011.
Council Regulation (EC) No. 2027/97, as amended by Council Regulation (EC) No. 889/2002, governs air carrier liability. This legislation provides for unlimited liability of an air carrier in the event of death or bodily injuries suffered by passengers, implementing the Warsaw Convention of 1929 for the Unification of Certain Rules Relating to Transportation by Air, as amended by the Montreal Convention of 1999. Ryanair has extended its liability insurance to meet the appropriate requirements of the legislation. See ―Item 3. Key Information—Risk Factors—Risks Related to the Airline Industry—The Company Faces the Risk of Loss and Liability‖ for information on the Company‘s risks of loss and liability.
Ryanair has agreements with the DAA, the Irish government authority charged with operating Dublin Airport, to lease bag-drop counters and other space at the passenger and cargo terminal facilities at Dublin Airport. The airport office facilities used by Ryanair at London (Stansted) are leased from the airport authority;
similar facilities at each of the other airports Ryanair serves are provided by Servisair plc or other service providers.
Ryanair‘s logo and the slogans ―Ryanair.com The Low Fares Website‖ and ―Ryanair The Low Fares Airline‖ have been registered as Community Trade Marks (―CTMs‖). Ryanair has also registered the CTM for the word ―Ryanairhotels.com.‖ A CTM allows a trademark owner to obtain a single registration of its trademark, which registration affords uniform protection for that trademark in all EU member states. The registration gives Ryanair an exclusive monopoly over the use of its trade name with regard to similar services and the right to sue for trademark infringement should another party use an identical or confusingly similar trademark in relation to identical, or similar services.
Ryanair has not registered either its name or its logo as a trademark in Ireland, as CTM-registration provides all of the protection available from an Irish registration, and management believes there are therefore no advantages in making a separate Irish application.
Ryanair‘s trademarks include:
Community (Word) Trade Mark registration number 004168721 comprised of the word ―Ryanair‖ in classes 16, 28, 35, 36, 37, 38, 39 and 42 (Nice Classification);
- Community (Figurative) Trade Mark registration number 001493329 comprising the following graphic
in classes 16, 35, 36, 37, 38, 39 and 42 (Nice Classification) and class 27.5.1 (Vienna classification);
- Community (Figurative) Trade Mark registration number 00446559 comprising the following graphic
in classes 16, 35, 36, 37, 38, 39 and 42 (Nice Classification) and class 22.1.16 (Vienna classification);
- Community (Figurative) Trade Mark registration number 000338301
comprising the following graphic representation:
in classes 16, 35, 36, 37, 38, 39 and 42 (Nice Classification) and class 22.1.16 (Vienna classification)
Liberalization of the EU Air Transportation Market Ryanair began its flight operations in 1985, during a decade in which the governments of Ireland and the U.K. liberalized the bilateral arrangements for the operation of air services between the two countries. In 1992, the Council of Ministers of the EU adopted a package of measures intended to liberalize the internal market for air transportation in the EU. The liberalization included measures that allow EU air carriers substantial freedom to set air fares, provided EU air carriers greatly enhanced access to routes within the EU, and also introduced a licensing procedure for EU air carriers. Beginning in April 1997, EU air carriers have generally been able to provide passenger services on domestic routes within any EU member state outside their home country of operations without restriction.
Ryanair is subject to Irish and EU regulation, which is implemented primarily by the Department of Transport, Tourism and Sport (―DTTAS‖), the Irish Aviation Authority (―IAA‖), the European Commission, and the European Aviation Safety Agency (―EASA‖). Management believes that the present regulatory environment in Ireland and the EU is characterized by high sensitivity to safety and security issues, which is demonstrated by intensive reviews of safety-related procedures, training, and equipment by the national and EU regulatory authorities.
Commission for Aviation Regulation “CAR”. The CAR is currently primarily responsible for deciding maximum airport charges only at Dublin Airport. See ―Airport OperationsAirport Charges‖ above.
The CAR also has responsibility for licensing Irish airlines, subject to the requirements of EU law. It issues operating licenses under the provisions of EU Regulation 1008/2008 (formerly 2407/92). An operating license is an authorization permitting the holder to transport passengers, mail and/or cargo by air. The criteria for granting an operating license include, inter alia, an air carrier‘s financial fitness, the adequacy of its insurance, and the fitness of the persons who will manage the air carrier. In addition, in order to obtain and maintain an operating license, Irish and EU regulations require that (i) the air carrier must be owned and continue to be owned directly or through majority ownership by EU member states and/or nationals of EU member states and (ii) the air carrier must at all times be effectively controlled by such EU member states or EU nationals. The CAR has broad authority to revoke an operating license. See ―Item 10. Additional Information–– Limitations on Share Ownership by Non-EU Nationals.‖ See also ―Item 3. Risk Factors––Risks Related to Ownership of the Company‘s Ordinary Shares or ADRs—EU Rules Impose Restrictions on the Ownership of Ryanair Holdings‘ Ordinary Shares by Non-EU nationals and the Company has Instituted a Ban on the Purchase of Ordinary Shares by Non-EU Nationals‖ above.
Ryanair‘s current operating license became effective on December 1, 1993, and is subject to periodic review. The Flight Operations Department is also subject to ongoing review by the IAA, which reviews the department‘s audits, including flight audits, training audits, document audits, and quality audits. Ryanair‘s current Air Operator Certificate No IE 7/94 was issued on January 28, 2014.
Irish Aviation Authority. The IAA is primarily responsible for the operational and regulatory function and services relating to the safety, security and technical aspects of aviation in Ireland. To operate in Ireland and the EU, an Irish air carrier is required to hold an air operator‘s certificate granted by the IAA attesting to the air carrier‘s operational and technical competence to conduct airline services with specified types of aircraft. The IAA has broad authority to amend or revoke an air operator‘s certificate, with Ryanair‘s ability to continue to hold its air operator‘s certificate being subject to ongoing compliance with applicable statutes, rules and regulations pertaining to the airline industry, including any new rules and regulations that may be adopted in the future.
The IAA is also responsible for overseeing and regulating the operations of Irish air carriers. Matters within the scope of the IAA‘s regulatory authority include: air safety; aircraft certification; personnel licensing and training; maintenance, manufacture, repair, airworthiness, and operation of aircraft; implementation of EU legislation; aircraft noise; aviation security and ground services. Each of the Company‘s aircraft is required to have a Certificate of Airworthiness, which is issued by the IAA. The validity of Certificates of Airworthiness is subject to the review by the IAA. Each certificate is generally valid for a 12-month period. In March 2009, Ryanair received ―Sub-Part (I) approval‖ from the IAA, which gives Ryanair the authority to extend the validity of its certificates, subject to certain record checks and physical aircraft inspections being performed by Ryanair‘s quality department. The Company‘s flight personnel, flight and emergency procedures, aircraft, and maintenance facilities are subject to periodic inspections by the IAA. The IAA has broad regulatory and enforcement powers, including the authority to require reports; inspect the books, records, premises, and aircraft of a carrier; and investigate and institute enforcement proceedings. Failure to comply with IAA regulations can result in revocation of operating certification.
In July 1999, the IAA awarded Ryanair an air operator‘s certificate, which is subject to routine audit and review, in recognition of Ryanair‘s satisfaction of the relevant EU requirements for the operation of commercial air transport (―EU OPS 1‖). The requirements of EU OPS 1 have been incorporated into European law as prescribed in Regulation (EEC) 3922/91 and were applied in full on July 16, 2008. All current regulatory requirements are addressed in the Ryanair Operations Manual Part A (as amended). The current Manual, Issue 3 Revision9, was approved by the IAA on October 31, 2013.
Department of Transport, Tourism and Sport. The Department of Transport, Tourism and Sport (―DTTAS‖) is responsible for implementation of certain EU and Irish legislation and international standards relating to air transport.
In June 2005, the Irish Minister for Transport enacted legislation strengthening rights for air passengers following the enactment of EU legislation requiring compensation of airline passengers who have been denied boarding on a flight for which they hold a valid ticket (Regulation (EC) No. 261/2004), which came into force on February 17, 2005. See ―Item 3. Risk Factors—Risks Related to the Airline Industry—EU Regulation on Passenger Compensation Could Significantly Increase Related Costs.‖ The European Aviation Safety Agency. EASA is an agency of the EU that has been given specific regulatory and executive tasks in the field of aviation safety. EASA was established through Regulation (EC) No. 1592/2002 of the European Parliament and the Council of July 15, 2002, repealed by Basic Regulation (EC) 216-2008. The purpose of EASA is to draw-up common standards to ensure the highest levels of safety, oversee their uniform application across Europe and promote them at the global level. The EASA formally started its work on September 28, 2003, taking over the responsibility for regulating airworthiness, maintenance and air crew issues within the EU member states.
Eurocontrol. The European Organization for the Safety of Air Navigation (―Eurocontrol‖) is an autonomous European organization established under the Eurocontrol Convention of December 13, 1960.
Eurocontrol is responsible for, inter alia, the safety of air navigation and the collection of route charges for en route air navigation facilities and services throughout Europe. Ireland is a party to several international agreements concerning Eurocontrol. These agreements have been implemented in Irish law, which provides for the payment of charges to Eurocontrol in respect of air navigation services for aircraft in airspace under the control of Eurocontrol. The relevant legislation imposes liability for the payment of any charges upon the operators of the aircraft in respect of which services are provided and upon the owners of such aircraft or the managers of airports used by such aircraft. Ryanair, as an aircraft operator, is primarily responsible for the payment to Eurocontrol of charges incurred in relation to its aircraft.
The legislation authorizes the detention of aircraft in the case of default in the payment of any charge for air navigation services by the aircraft operator or the aircraft owner, as the case may be. This power of detention extends to any equipment, stores or documents, which may be onboard the aircraft when it is detained, and may result in the possible sale of the aircraft.