State to continue to pump €11m a year into struggling airline

THE Government will continue to pump around €11m a year into Aer Arann even though the airline is loss making and battling to survive.

More than €33m of taxpayers’ money was given to the airline over the past three years despite it losing €18m during that period.

The airline, which has gone into interim examinership, was awarded contracts from the Department of Transport back in 2008 to provide Public Service Obligation (PSO) routes as part of the Government’s policy to support regional airports.

Aer Arann provided full financial statements to the department as part of its application for the contracts to provide these state-funded routes between regional airports such as Galway, Sligo and Knock.

The application was made in 2008 and the High Court heard this week that the airline lost €6m that year and a further €6m the following year.

A spokesperson for the Department of Transport said in awarding the contract “it would have been satisfied it was a viable company” and that, even if it was loss making “would have been able to fulfil the terms of its contract”.

The airline will receive a total of €39m between July 2008 and July 2011, including:

- €10m for services at Galway Airport

- €12.6m for services at Knock and Derry airports

- €17m for routes to Sligo and Donegal airports

The contracts run up in July 2011 and the airline will continue to make money from it until then.

The policy will be reviewed this autumn in the context of considerations of the recommendations in the Bord Snip report.

The Department of Transport has given strong indications that the policy will not continue because regions are now served by improved rail and road links.

The Labour Party has called on the Government to take “all possible steps” to ensure the airline continues as a going concern.

Spokesman on Transport Joe Costello said it was a vital cog in air travel infrastructure.

“Were the company to fail it would greatly reduce services to our regional airports and would be a further blow to our tourism industry which is already under great pressure,” he said.