Aer Arann subsidy unfair - ICG

The level of subsidies paid to Aer Arann should be reviewed by the Government as they unfairly assist the airline against its competitors, the Irish Continental Group (ICG) claimed yesterday.

Mr Eamonn Rothwell, chief executive, said Aer Arann was eating into ICG's markets and while the company welcomed competition, the subsidies had created an unfair situation.

He was speaking after the company's annual general meeting in Dublin.

Mr Rothwell said Aer Arann was now flying to several UK destinations, including Birmingham and Manchester and it appeared to be a profitable airline.

He questioned the need for the airline to receive subsidies awarded as part of public service obligation (PSO) contracts.

"Its not exactly a level playing field.

"We do have a problem with taxpayers' money being used in this way, " he said.

He pointed out that Ryanair had made similar complaints.

"Its one 'helluva' subsidy. About €12 million in total as I understand it," said Mr Rothwell.

"It just needs to be regulated a bit more. Somebody needs to review it," said Mr Rothwell.

The issue surfaced after ICG chairman Mr Tom Toner revealed that car traffic on its ferries was down 12 per cent in the first 16 weeks of the year. Mr Toner partly blamed a recent dispute at the company for this fall.

He pointed out that car numbers in the ferry sector generally were down 7 per cent during this period.

Mr Rothwell said the dispute was a major factor behind the 12 per cent drop, but the competition from airlines and a perception that Ireland was an expensive location did not help.

He said the company was very concerned about high port charges in Dublin.

He said that unlike Dublin Airport, ICG could not appeal the charges to an independent body.

Mr Toner told shareholders that despite the problems, trading in the first quarter was broadly in line with ICG's expectations.

"As is normal the key trading period is the summer period when the bulk of our tourism earnings are generated and we look forward to the coming summer season with confidence."

Mr Toner, who has chaired several Irish plcs, informed the meeting he was stepping down as chair of ICG after 17 years. He will be replaced by Mr John McGuckian, also chairman of UTV.