Brian Hayes (Dublin South West, Fine Gael)
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Question 255: To ask the Minister for Transport if the costs associated with the public service obligation services are being separated from the costs associated with the commercial services, or could there be the possibility of cross subsidisation, that is, could the staff that are being paid from the public service obligation services be used to work on the commercial services that are in competition with a private company; and if he will make a statement on the matter. [9556/08]

Noel Dempsey (Meath West, Fianna Fail)
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Under EU Council Regulation (EEC) No. 2408/92 of 23 July 1992, the Government has established Public Service Obligation (PSO) air services between Dublin and the regional airports at Sligo, Donegal, Knock, Kerry, Galway and Derry. Exchequer subvention is paid in respect of these services on the basis that they are considered vital for the economic development of their regions, and that they would not be provided by the airlines on a fully commercial basis. Selection of the air carriers providing the PSO air services is by means of an open competitive tendering process.

Payment of the subvention in respect of each service under the PSO contracts is the lesser of the fixed price agreed with the airline for the year in question or the actual losses incurred by the airline in operating the service during that year, taking account, inter alia, of all direct, indirect and allocated costs, as certified by the airline's Auditor. These arrangements are in line with EU rules and regulations governing PSO services. No Public service obligation payment is made to the Railway Procurement Agency (RPA) in respect of Luas services.

The position in relation to Irish Rail, Dublin Bus and Bus Éireann is that the 3 companies include in the notes to their annual Financial Statements a note analysing total revenue and expenditure over social and commercial activities in line with the principles of EU Directive 2000/52/EC. I am informed by both Dublin Bus and Bus Éireann that their commercial services do not benefit from the compensation paid to both companies in respect of their public service obligations. The issue does not arise in the case of Iarnród Éireann, as it is the sole provider of services on the railway network.