O’Leary agrees to arbitration in route row

RYANAIR boss Michael O’Leary has agreed to arbitration in a bid to resolve the row with Transport Minister Noel Dempsey regarding services on the Kerry-Dublin route and state airline subsidies.

The development arose from a meeting yesterday in Tralee, between Mr O’Leary and elected representatives of Kerry’s four local authorities.

The councils are also requesting the Department of Transport to enter into binding arbitration with the airline in the hope of breaking the impasse.

Both Ryanair and the minister have accused each other of breaching the contract under which the airline provides the service with the aid of an annual €1.7 million public service obligation (PSO) subsidy.

Ryanair has informed the department of its intention to reduce the Kerry-Dublin schedule from three return flights daily to one from October 31. It will also be pulling out of the PSO contract and will provide one daily return flight on a strictly commercial basis.

Councillors have called for the retention of the full services on the route which were used by more than 100,000 passengers last year.

Aer Arann, meanwhile, is to hold discussions with the department about taking up slots on the route to be left vacant by Ryanair.

Two long-serving Kerry TDs, John O’Donoghue, Fianna Fáil, and Jimmy Deenihan, Fine Gael, met Aer Arann boss Pádraig Ó Céidigh, on Wednesday.

Mr O’Donoghue afterwards described the meeting as “very successful”.

Mr O’Leary meanwhile, claimed it would be cheaper for the taxpayer if Ryanair stayed on the PSO route. He claimed it would cost more than €1m per year extra to subsidise Aer Arann if it was to come back.

At a news briefing yesterday, Mr O’Leary also rejected suggestions that he wanted to eliminate Aer Arann as a competitor and dismissed the rival airline as being “like a pimple on the backside of a bull”.

In 2008, Ryanair outbid Aer Arann for the PSO contract on the Kerry-Dublin route. Aer Arann had been receiving an annual subsidy of €3m over the previous three years, but the Ryanair bid of €1.7m per year was successful for the period to 2011.

Ryanair was providing a far superior service to the “frequently delayed and often cancelled Aer Arann service,” Mr O’Leary claimed.

He said Ryanair had no objection to Aer Arann operating on the route for the next eight months, provided it was getting the same subsidy as Ryanair. However, there could be problems under EU competition law if a subsidised airline was competing with a commercial service on the route.

The Ryanair chief stressed he had no problem with Kerry Airport — the issue was that Government had “moved the goalposts” by increasing costs on the route by €660,000 per annum.

He said Ryanair intended to tender for the new Kerry-Dublin PSO contract when it came up next June. However, he maintained the PSO subsidy should be paid directly to airports rather than airlines.


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