It is the policy of the Government to encourage as wide a range as possible of reliable, regular and competitive air services to and from Ireland. The central tenet of this policy is the belief that a strong, competitive and efficient network of air links are vitally important for developing our trade and tourism sectors, particularly having regard to our island status and peripheral location.
Under European air transport liberalisation measures, any air carrier licensed by a European economic area, i.e the 15 member states of the European Union plus Norway and Iceland, may introduce air services on any route within the EEA without any Government or EU controls, subject only to the availability of airport slots at either end of the route and overall safety considerations. As a result, the provision of air services on any particular route is essentially a matter for the commercial judgment of the individual airline.
On internal routes, where air carriers are not prepared to provide air services on a commercial basis, the Department is empowered under EU regulations to impose a public service obligation, PSO, and to provide subvention to air carriers to operate scheduled service to specified standards. My Department provides subvention on six PSO routes linking Dublin with Kerry, Galway, Knock, Sligo, Donegal and Derry. The total cost of subvention to the Exchequer is now running in excess of €20 million per annum.
I am currently considering the outcome of an expenditure review of PSO air services, which points to the dramatic escalation of subvention costs in recent years.