Aer Arann Islands offered to communities for €1

Protracted dispute continues over PSO contract which company says makes service not viable

The owner of Aer Arann Islands has offered to sell the airline for €1 to the Aran Island communities amid an ongoing dispute with the Department of Arts, Heritage and the Ghaeltacht.

The airline, and its principal shareholder Senator Pádraig Ó Céidigh, employs 40 staff. It has been in a protracted dispute over its Public Services Obligation (PSO) contract with the department.

The PSO, worth €800,000 annually, requires the airline to provide 3,500 flights each year to Inis Mór, Inis Meáin and Inis Oírr on a fixed schedule.

Galway Aviations Services Ltd, trading as Aer Arann, has claimed the terms of the contract, which is almost two years through its four-year term, are too onerous. The airline says it faces deductions from allowances if it provides extra flights or departs from schedule.

The 2017-2020 contract covers about 3,500 annual flights between the three Aran Islands and the Connemara airport at Indreabhán.The service has carried 42,000 people annually at peak, but this figure has fallen to just over 30,000 under the latest PSO terms.

During high season in the summer, the airline provides up to 30 flights a day for tourists but that falls to the bare minimum during the winter when the service is used by islanders.

The airline has claimed the current PSO contract means it is running at a loss and cannot continue as a viable operation.

Mr Ó Ceidigh announced earlier this year he cannot run the airline after December 6th, due to restrictions on the contract which is due to run until 2020. The number of passengers has fallen from more than 40,000 at peak service to 30,000 last year.

The department has appointed consultants to provide an alternative service on an emergency basis after December 6th. However, the airport used in Connemara, Aerfort na Minne in Indreabhán is also owned by the airline. The nearest alternative airport is Shannon Airport in Co Clare but that has been ruled out for practical purposes.

Tarlach de Blácam, owner of globally traded Inis Meáin knitwear, said the community-owned island companies in all three islands had looked very seriously at taking over the airline and had carried out due diligence. “We are utterly reliant on an air service in the island and cannot do without one,” he said.

He said the communities had been willing to take over Aer Arann but wanted certain conditions . They included sufficient funding to carry out ongoing maintenance on the three aircraft (one its fleet of three ‘Islander’ planes is currently in the hangar awaiting maintenance and another is due for annual maintenance in January). He said the service needed to be improved through modernisation and marketing to encourage more passengers. “If we were to accept it we would have to make sure that a big investment was made and that Aerfort na Minne was available.”

However, because the airline is already in receipt of the PSO contract, any further State funding might be regarded by the EU as a form of State aid. Other options explored in relation to community-ownership have included receiving a loan or preference shares from Udarás na Gaeltachta. However, such moves have not been sanctioned by the department.

Some three years ago, plans to replace Aer Arann with a helicopter service from Galway Airport was abandoned because islanders objected to helicopters, saying they were unsuitable unless the equivalent of a Sikorsky. The base for the service was to be Galway Airport, despite the fact that no arrangement had been made with local authorities to reopen the airport, which had closed several years beforehand.

Lawyers for Galway Aviation Services and the department, and Minister of State Seán Kyne have been in negotiations in an effort to ensure a continuity of service.

It is understood one possible solution is a new PSO contract may be put out to tender with Aer Arann continuing to operate on a temporary basis. It is understood if the terms of the new contract are more favourable, Aer Arann may be one of the bidders.

Harry McGee

Harry McGee

Harry McGee is a Political Correspondent with The Irish Times