Airport subsidies - Cuts a riskto regional development

The future of regional airports is being put in doubt as a result of the Government’s decision to consider cutting subsidies as part of the €3 billion savings required in the December Budget.

Transport Minister Noel Dempsey has strongly indicated that routes will be axed, based on a recent report on the Value for Money Review of Regional Airport Policy.

The Government will be considering Colm McCarthy’s suggestion in his Bord Snip report of last year that abolishing the €2 million operational grants for airports and the €15m provided through the Public Service Obligation (PSO) routes was a means of saving money. He argued that the “continued support of loss- making air services is unsustainable”.

In a relatively small country, there are 13 functioning airports. Four of those carry fewer than 250,000 passengers annually. New EU rules coming this year alter the PSO guidelines to require 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 National Development Plan for 2007-2013 stipulated that “the key role of regional airports is to complement that of the state airports and to help promote regional development.” In a recent survey of 670 businesses in the Galway region – including the multinational Hewlett Packard – 43% indicated that air access to the county was either important or an essential factor in their decision to locate in the area. More than 60% of those flying from Galway to Dublin were business travellers and 40% were travelling to make connections to international destinations.

The inspiration behind the development of regional airports was to promote regional development rather than to fulfil an existing demand for such services. Hence, while many routes may become sustainable with future development, they may be difficult to justify at present, especially where road and rail links have been greatly improved.

Ryanair’s Michael O’Leary has described the PSO programme as “crazy”. His company has announced that it is to replace its three Kerry-Dublin PSO return flights with single return flight run on a commercial basis from the end of October. Ryanair blamed increased charges, including a €4 tax on return tickets, a 40% increase in airport fees and a 25% increase in Irish Aviation Authority charges. The Transport Minster on the other hand, has accused Ryanair of getting its sums wrong in adopting a predatory approach in undercutting Aer Arann in the tender for the route.

Since Kerry Airport opened in 1969 the area has been enhanced as a tourist destination and a number of multinational businesses have developed. Businesses in the remoter regions must not be discriminated against. They should retain access to air services.

The revised National Development Plan for 2010- 2016, published last July, suggested it would be “prudent to reconsider” regional airport policy. People accept that cuts have to be made, but these must be prudent and fair.