The report recommends the ending of PSO, ending state subsidies for loss making regional airports (Regional Airport Management Operational Grants Scheme), and a review of the capital grants for airport infrastructure, most of which hadn't been drawn down due to planning delays.
Sligo, Donegal and Galway depend most on the subsidy to cover their operating costs, that and the PSO flights make up the bulk of their income, putting them in a difficult position
if the cuts are implemented. DOT hinted at the cuts after the last PSO agreement, so Aer Arann have been changing their focus over the last to more UK based aircraft and charters.
Waterford also receives the subsidy but has no PSO routes. Knock and Kerry made modest profits in recent years and so were not subsidised, but that may change with the downturn.
Dil ireann - Volume 651 - 10 April, 2008 - Written Answers. - Departmental Expenditure.
From the report:
"D.1 Discontinue the Public Service Obligation for regional air services €15.0m
The Group understands that regional airports have traditionally served a regional development purpose rather than a required transport purpose. However, the Group also notes that, in many instances, the Exchequer is backing the provision of the other new, much improved transport links (road, rail) to the same locations. With this in mind, and also considering the Government’s developing climate change agenda and commitments under current and future international emissions agreements, the continued support of loss-making air services is unsustainable. The Group proposes that after expiry of the present contracts this scheme be discontinued."...
"D.2 Discontinue operational grants for regional airports €2.0m
Reflecting the comments above in respect of Exchequer support for regional air services, the Group recommends the abolition of the Regional Airport Management Operational Grants Scheme when the current round expires in 2010."
"Capital consequences
The Group is strongly of the view that the cancellation of the two aviation schemes outlined above should be linked to the capital grants scheme for regional airports. Approved by Government in 2007, under the scheme each of the six regional airports is set to receive capital grants ranging from €4m to €27m. A significant reduction in budgeted expenditure for this scheme should be achieved."