Better rail links leave airlines high and dry
Published 04/07/2010 | 05:00
AN AIRLINE subsidy of €15m may be scrapped because of the improved rail and road services between the regions and Dublin.
The current Public Service Obligation (PSO) contracts for services linking Dublin Airport with airports at Derry, Donegal, Sligo, Knock, Galway and Kerry commenced on July 22, 2008, and are due to expire on July 20, 2011. The €15m annual cost of the subsidies was earmarked in the McCarthy report as superfluous in the light of improved road and rail to the same locations.
Concerns were raised about the future of the subsidies at the annual general meeting of Kerry Airport this week, where numbers on the domestic routes have plummeted, with volumes down by as much as 40 per cent year on year. The general recession as well as unsuitable flight times were given as reasons for the downturns.
And despite the €1.75m-a-year subsidies on the Kerry route, Ryanair had to be losing money on the routes, the meeting heard.
The airline has out-tendered Aer Arann, which had been receiving over €3m a year for the Kerry route, but was providing more flights. Despite plummeting numbers using the service, the grant-aided Kerry link may survive the axe that is set to fall on regional airport with less than a three-hour rail journey from the capital.
The department yesterday said: "Under updated EU legislation governing these services, more stringent conditions will apply to future PSO arrangements, having regard, for example, to the availability of other transport connections and especially rail services with a travelling time of three hours or less."
Ryanair, which receives €1.75m in annual subsidies on the Kerry route, but which is felt to be losing money on route,s with usage below 20 per cent on many, said it had made "no decision" on whether it would tender again for the route.