THE future of regional airports such as Kerry, Galway and Sligo is in serious doubt as the Government looks at cutting vital subsidies as part of €3 billion of savings to be made in December’s Budget.
The Cabinet is to discuss the future of Government-funded Public Service Obligation (PSO) routes and whether or not they should be renewed when contracts expire next year.
Transport Minister Noel Dempsey has strongly signalled the routes would be axed and believes they are no longer viable in the context of improved road connectivity.
He will bring a memorandum to the Government in the coming weeks to “set out policy in relation to their future funding” based on a recently completed report on the Value for Money Review of Regional Airport Policy.
The department believes “more stringent conditions” should apply to regional airport subsidies “having regard to the availability of other transport connections and especially rail services with a travelling time of three hours or less”.
A €2 million operational grant for six airports along the west coast is up for renewal at the end of this year.
A separate €15m a year is provided by the state through the PSO routes, mostly operated by Aer Arann.
As part of its review, the department has consulted with management of six regional airports, which now fear for their future if their “lifeline” PSOs are cut.
Managing director of Galway Airport, Joe Walsh, said: “Without Government support, we will have significant challenges. We need the Government to provide these services for businesses and industry in the region.”
The airport carried out surveys among businesses in the region, including multinationals like Hewlett Packard and Boston Scientific, with more than 80% saying air accessibility was essential to their location in the west.
Mr Walsh said the Government “risked making short-term decisions without thinking of the long-term implications”.
Ryanair chief Michael O’Leary described the subsidies as “crazy”. The airline said PSOs are “the greatest money-wasting schemes, which to date has cost the Irish taxpayer more than €150m – over three times the cost of the e-voting machines”.
A spokesperson for Mr Dempsey said the review was carried out to help him in “evaluating the appropriate scale of a regional airports programme in subsequent years, bearing in mind the improved surface links under the National Development Plan and Transport 21”. He will also consider updated EU legislation, according to the spokesperson.
The new EU rules, due to come into force this year, change the PSO guidelines by requiring member states to have “particular regard to other transport modes, especially where there are suitable train services with journey times of less than three hours”.
The ending of the PSO routes was recommended by An Bord Snip in July 2009.
In February of that year, Mr Dempsey said the subsidies could “no longer be justified”.
The Government’s revised capital spending plan for 2010-2016, published inJuly, said: “The case forregional development of airports has been driven more as a supply rather than a demand-led policy, inspired by regional development goals rather than to satisfy the latent demand in the market.”
© Irish Examiner Ltd. All rights reserved