Kerry TDs and senators have been urged to lobby for the retention of the PSO which is worth €1.7 million a year, on the Kerry to Dublin route.
There are fears the subsidy could be dropped as part of cutbacks and in line with a recommendation in the An Bord Snip Nua report.
Transport Minister Noel Dempsey has announced a review of PSOs to the country’s regional airports when current contracts end in June 2011.
At the weekend, Jerry O’Grady of Killarney Chamber of Tourism and Commerce said the breakdown of the contract on the Kerry to Dublin route would have a major effect on business. He called for an all-out effort to ensure the contract is retained on the route when it comes up for renewal. At present, there are no flights on the route operating with the subsidy, following the withdrawal of Ryanair from its contract last month.
Ryanair, which had been providing three daily return flights between Kerry and Dublin, was engaged in a bitter row with the Government and pulled out because the Government would not increase the subsidy.
The Government said Ryanair was in a breach of contract by reducing the service to one flight per day. Ryanair is now providing just one daily return flight on a purely commercial basis.
To date, efforts to get an alternative airline to take up the PSO contract on the route have failed.
Deputies John O’Donoghue (FF) and Jimmy Deenihan (FG) were delegated to meet Aer Arann which previously held the Kerry/Dublin PSO contract, but no agreement has been reached.
Ryanair boss Michael O’Leary has threatened legal action against the Government if it agrees to pay Aer Arann more than it had paid his airline to service the route.
Mr O’Leary has also indicated Ryanair will again tender for the PSO contract if it comes up for renewal next year.