MINISTER FOR Transport Noel Dempsey has rejected a Ryanair claim that he is to blame for its decision cut its services between Dublin and Kerry.
The airline said yesterday it would reduce the frequency of its daily return flights between the two airports from three to just one from the end of next month.
It claimed it was forced to cut the service because the Government failed to increase the public service obligation (PSO) subsidy which is given to airlines for regional routes which are not considered commercially viable.
The subsidy is given for flights operating from Kerry, Galway and other regional airports. Aer Arann is the main recipient, while Ryanair receives the PSO for its Kerry route.
Ryanair spokesman Stephen McNamara claimed the Minister had refused to increase the payment despite the airline facing additional costs.
“Ryanair will now operate this route on a commercial basis, without any PSO subsidy, thereby saving the taxpayer almost €2 million per annum,” he said.
“Ryanair again calls for an ending to these PSO subsidies under which tiny passenger numbers receive enormous taxpayer subsidies to fund vastly-inflated charges at Irish regional airports.”
Ryanair said it would continue to operate its routes from Kerry to Frankfurt Hahn, London Luton and London Stansted.
In a statement, Mr Dempsey said the claims were “typical” of Ryanair. “The company is once again proving that the truth and Ryanair are uneasy bedfellows.”
All the charges being paid to Ryanair were agreed when the airline signed the contract in 2008.
“Ryanair signed a contract to provide a service to the people of Kerry, three times a day for three years. They should honour all aspects of that contract.”
Fine Gael’s transport spokesman, Kerry North TD Jimmy Deenihan, said Ryanair’s move would have major implications for local businesses and the tourism industry.
“Large businesses like Kerry Group organise their whole schedules around the early morning flight and the late-night flight from Dublin. The removal of the two routes will remove another selling point for Kerry to promote itself as an industrial location.”
A spokesman for Kerry airport described the decision as a major setback for the local economy.
Separately, Ryanair chief executive Michael O’Leary has called on rival Aer Lingus to pay a dividend to shareholders from its €403 million net cash.
In an interview with The Irish Times, published today, Mr O’Leary said he had written to Mr Mueller indicating that he wants Aer Lingus to distribute a majority of its net cash to shareholders in the absence of any plan to grow the airline. He also expressed his concerns about Aer Lingus’s cost base.
“I’ve written to Mueller on a number of issues that I’m not happy with. If there’s no more capex required and they don’t need the spare cash, they should return cash to shareholders.”
Mr O’Leary said a sum above €200 million should be returned to investors. With Ryanair holding a 29.8 per cent stake in Aer Lingus, this would net the company a minimum of €59.6 million.
His call comes in the week that Ryanair approved a €500 million special dividend from its surplus cash – the first cash payout to shareholders since the company listed on the stock market.
Aer Lingus is likely to resist the calls for a dividend payout. The airline is still loss-making and is seeking to fund a major rationalisation.
No comment was available from Aer Lingus.
