Regional air links will continue to be run by Aer Arann Express following a Government decision to award it a temporary eight-month contract worth almost £11 million (€14 million).
However, the air routes will be put out to tender again for a new three-year contract starting next July, the Minister for Public Enterprise, Mrs O'Rourke, said yesterday. It is expected that several airlines will bid for the new contract.
The new temporary contract has been welcomed by Aer Arann, which had informed the Minister last month that it could not guarantee services between Dublin and Knock, Donegal, Kerry, Sligo and Galway after November 5th. The company was receiving £8.75 million to serve the routes, but cited rising costs and a "changed aviation landscape" as the main reason for the difficulties.
The Minister said yesterday that losses incurred in operating the network of routes "proved to be higher than that originally estimated by Aer Arann Express" when it was awarded the contract last December.
"Given the importance of these air services for the regions, my Department consulted with the European Commission on the matter and a new formal tender process will now be conducted, seeking air carriers to operate these routes for a three-year period," Mrs O'Rourke said.
The Minister said Aer Arann was the only carrier, among six companies invited to bid, which submitted a quotation for a temporary contract. She said the maximum level of compensation payable to the company would be £10.916 million.
Aer Arann's latest annual return, made in September 1999, provides no information on profits and losses. Its difficulties were influenced by a decision to switch from Shorts 360 aircraft to more expensive ATR 42 planes.
In mid-August, it issued redundancy to 14 pilots trained to fly the Shorts aircraft. The IMPACT union, criticised the redundancies as "arbitrary".
The company has refused to recognise the union, and regards the matter as closed, as redundancy payments have now been made. A delegation led by IMPACT met the Minister on Thursday and it is understood that Mrs O'Rourke has asked the company to meet with the union on the issue.
A company spokesman said yesterday no date had been set for a meeting.
