Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

Under the Regional Airports Programme 2011-2014, Exchequer support for regional airports is provided under a number of schemes, including a public service obligation, PSO, air services subvention. This programme reflects the outcome of the 2010 value for money review of Exchequer expenditure on the regional airports programme. Following the review, a decision was taken to reduce to two the number of routes covered by the PSO air services scheme.

The Exchequer provides supports under the scheme to Aer Arann-Stobart Air for the Kerry to Dublin route and Loganair for the Donegal to Dublin route. The review took account of a number of factors, including the performance of the services, the requirement to make best use of scarce Exchequer resources, improvements to the road network and changes in European Union legislation covering PSO air services. The decision to maintain the PSO air services to counties Kerry and Donegal had regard to the fact that the former is not yet connected to the major interurban motorway network as the Ballyvourney-Macroom road is not complete and the latter is not connected to either the motorway or rail network.

Exchequer funding for PSO air services schemes provides financial support to airlines, based on a competitive tender, to operate essential services serving peripheral or development regions. These services are considered vital for the economic development of the regions in question and would not be provided on a commercial basis. Under the current contract, which ends in November, a total of almost €12 million will have been paid to Aer Arann-Stobart Air in respect of the Dublin to Kerry route and more than €10 million will have been paid to Loganair in respect of the Dublin to Donegal route over the lifetime of the respective contracts.

Regional airports were developed in the 1980s to provide for improved connectivity both nationally and internationally. However, the development of the major interurban roads programme and improvements to the rail network in the intervening period have reduced the importance of regional airports for connectivity within Ireland. Today, regional airports are largely viewed as being important because of a level of international connectivity that they bring to a region for tourism and business.

Arising from the Ireland West Airport Knock study, the Government decided to continue the funding for regional airports under a new post-2014 programme, which is being developed in my Department. This is in line with the draft national aviation policy which will be finalised in the coming months. The new programme will have to comply with the revised European Union guidelines on state aid which came into effect in April this year. While the 2014 EU guidelines on state aid to airports and airlines have application to other Union guidelines on state aid, the current PSO air services scheme and any future air services schemes must comply in particular with Regulation (EC) No. 1008/2008. These regulations require that a notice of invitation to tender must be published in the Official Journal of the European Union, with a deadline of two months for submission of tenders from the date of publication of the notice.

It is planned to shortly hold a new PSO air services competition, that is, a public tender process, for the Donegal to Dublin and Kerry to Dublin routes post-2014. As part of this process, it is planned to extend the current contracts to next February to ensure continuity of service pending the outcome of the tender process. It is expected that a limited budget of some €12 million per annum will be available for current and capital expenditure under the regional airports programme from 2015 onwards. With an average cost per annum for the two PSO routes from Kerry and Donegal of more than €7.5 million per annum based on existing figures, a final decision on whether to maintain both routes post-2014 will be taken when the cost of subvention becomes clear from the tenders submitted.

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