Galway Airport was reeling last night (Wednesday ) from the announcement that Government subsidies (PSOs ) on flights to and from Dublin will be withdrawn in July.
The subsidies were in place to aid the development of transport links between the capital and key airports in rural parts of the country. The subsidies were a major element of the income received by the airlines who were granted them, so the continuation of the routes will be placed in jeopardy as a result of the cutback.
In news breaking at time of going to press, it emerged that Transport Minister Noel Dempsey said improved rail and road services meant they were withdrawing the so-called public service obligation (PSO ) contracts on the four routes in July.
The Government is acting on the recommendations of a value-for-money review on the use of state funding for regional airports.
"Having considered the conclusions and recommendations of the review, the Government has agreed to support the continuation of a PSO route between Donegal and Dublin and between Kerry and Dublin," he said.
"In line with the review, the Government has also agreed to cease requiring PSO routes between Dublin and Sligo, Knock, Galway and Derry from July 2011, recognising, inter alia, the improvements in alternative transport modes which have taken place."
While the airports were expecting that there would be some adjustment to the PSOs as announced in the Government, the confirmation last night that they are to be scrapped places them under major financial strain.