sustaining air services to peripheral regions dr. george williams centre for air transport in...

Sustaining air servicesto peripheral regions

Dr. George WilliamsCentre for Air Transport

in Remoter Regions

Contents

• PSO rules• PSO application by country

• Examples of innovative ideas:

Knock airportNorth Cape airportDay trip adventures

The PSO system

• EU Member States have the legal authority to impose a PSO in respect to scheduled air services on routes serving peripheral or development regions within their jurisdiction.

• PSOs can also be imposed on cross-border routes.

Reasons for imposing a PSO

• To link small or remote communities, and/or islands to economic and administrative centres

• To connect small or remote communities, and/or islands to the TEN-T Networks and hub airports

• To reduce peripherality and maintain social and/or political cohesion and integration

Reasons for imposing a PSO

• To sustain and develop economic activity and promote inward investment to development regions

• To promote tourism and develop domestic as well as international transport

Restrictions on imposing a PSO

• A PSO can not apply to routes ‘where other forms of transport can ensure an adequate and uninterrupted service when the air service capacity exceeds 30,000 seats per year’.

• However, the capacity on many PSO routes with good surface transport greatly exceeds this figure.

Technical rules

• Member states in preparing PSOs are required to issue a public invitation to tender which is published in the Official Journal of the European Communities.

• The invitation to tender is open to all air carriers registered in the EEA and can be made in relation to a single route (or group of routes in the case of Norway).

• The deadline for submitting tenders is one month after the day of publication.

PSO tender usually covers:

The minimum service levels in terms of capacity, frequency and scheduling which an air carrier would need to satisfy

Any limits on the level of fares or specific fare types and rules, which must be adhered to

Rules concerning any amendments, in particular termination of a contract as a result of unforeseeable changes in costs and demand

Tendering Process

• Initial tendering on the basis of no subsidy

• If no carrier is willing to provide the level of service and fares without subsidy, then the tender is reissued

• This time offering subsidy and limiting access to one carrier for a period of three years

Tendering Process

• Selection of the carrier takes into consideration the adequacy of the services being offered, the fares to be charged to passengers and the level of subsidy required, if any.

• Selection must be made two months after submission of the proposal, so that other Member States have sufficient time to submit comments.

Growing Number of PSOs

0

50

100

150

200

250

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Source: Use and Reform of the Public Service Obligation, Corin Minshall, MSc thesis, 2004, Cranfield University

Number of PSO Routes by Country in 2003

France 49

Germany 5

Iceland 1

Ireland 6

Italy 6

Norway 61

Portugal 10

Scotland 12

Spain 13

Sweden 11

PSO application in Norway – Southern routes

Tender groups 11-15

PSO application in Norway – Central routes

Tender groups 4-10

PSO application in Norway – Northern routes

Tender groups 1-4

Norwegian PSO Routes 2003-2006

Route area Tendering carriers Winning tender

1 Widerøe, Arctic Air Widerøe


3 Norwegian, Widerøe, Kato Norwegian*

4 Norwegian, Widerøe, Kato Norwegian*

5 Widerøe Widerøe

6 Widerøe Widerøe

7 Kato, Arctic Air, Widerøe Kato

Source: Ministry of Transport and Communications, Norway *Now operated by Widerøe

Norwegian PSO Routes 2003-2006

Route area Tendering carriers Winning tender

8 Kato, Arctic Air, Widerøe Kato

9 Widerøe, Kato, Coast Air Widerøe


11 Danish AT, Widerøe, Coast Air Danish AT

12 Widerøe, Coast Air Widerøe

13 Widerøe, Coast Air Widerøe

14 Coast Air, Danish AT, European Executive Express, Arctic Air

Coast Air

15 Widerøe, Coast Air, Danish AT, European Executive Express, Kato

Widerøe

Widerøe Dash 8-100

Kato Dornier 228

Annual Subvention levels on Norwegian PSOs

1997-2000 31.8 million euros



PSO application in Sweden

Swedish PSO Routes in 2003

Arlanda to: Carrier Aircraft Subsidy per passenger (euros)

Hagfors Swedline Beech 1900 137

Torsby Swedline Beech 1900 137

Hemavan Swedline Saab 2000 224

Gallivare Swedline Saab 2000 81

Storuman Skyways Fokker 50 92

Umea to:

Ostersund Nordic Saab 340 120

Lulea to:

Pajala European Exec Exp

Jetstream 510

Swedline Saab 2000

PSO application in Scotland

Scottish PSO traffic, subsidy and operating data

Route(s) Airline Aircraft Subsidy per passenger (euros)

Glasgow Loganair Twin Otter 80.4

Benbecula -Stornoway

Highland Jetstream 32.2

Orkney Inter-island

Loganair Islander 34.4

Shetland Inter-island

Loganair Islander 71.2

Data refers to year 2000

PSO application in Ireland

Irish PSO tendering round 2002-2005

Dublin to: Previous operator

Successful tender

Current operator

Derry Loganair Loganair Loganair

Donegal Aer Arann Euroceltic* Aer Arann

Galway Aer Arann Aer Arann Aer Arann

Kerry Aer Arann Aer Arann Aer Arann

Knock Aer Arann Aer Arann Aer Arann

Sligo Aer Arann Euroceltic* Aer Arann

* Euroceltic ceased trading during winter 2002

Aer Arann ATR 42

Loganair Saab 340

Subvention levels (000 euros) on Irish PSOs

Dublin to Donegal Galway Kerry Sligo

1997 454 444 698 603

1999 1011 1364 956 874

2001 1802 3999 3441 2725

2003 2100 5105 4479 2700

Source: Department of Transport, Ireland

PSO routes as a % of domestic seat capacity

0%

5%

10%

15%

20%

25%

30%

35%

40%

Irela

nd

Norway

France

Sweden

UK *

Source: Use and Reform of the Public Service Obligation, Corin Minshall, MSc thesis, 2004, Cranfield University

Imaginative ways to develop air traffic

• Knock Airport

• North Cape Airport

• Day trips

Knock knock what’s there?

• An international airport on a foggy, boggy hill

• Opened in 1986 serving a town with 400 people

• Catholic shrine at Knock where Mary appeared to a group of children in 1879.

• Only Marian shrine in Europe without a local airport

• After Pope’s visit in 1979, local parish priest James Horan began a campaign for an airport at Knock to enable pilgrims to have easy access to the shrine

Deemed a ‘Miracle of the 1980s’

• In 1981 Charles Haughey, the then Taoiseach and a Mayo man, promised a grant of 8 million punts for the airport following an extended lunch

• Critics said it was the most expensive lunch Charlie had ever had!

• He gave another 3 million punts when back in power a few years later. (In between, the Fine Gael Government had refused to provide funding for the airport.)

• Monsignor Horan raised 4 million punts through raffles and dances (and collections in the US)

Knock International Airport

• 2300 metres runway

• In 2001, 198,700 passengers




Knock Scheduled Services

Destination Airline Frequency

Dublin Aer Arann Daily

Birmingham MyTravelLite Daily

bmibaby Daily

Liverpool Aer Arann Daily

London Gatwick Ryanair Daily

easyJet Daily

London Stansted Ryanair Daily

Manchester bmibaby Daily

Knock Summer Season Charter Destinations

(2004 Charter traffic 58,700)

Alicante

Faro

Lanzarote

Malaga

Palma

Rome

Knock Airport – key facts

• 1.5 million pilgrims annually visit the Knock shrine

• Knock village has a population of 1,400

• £50m Airport Business Park established in 2001

which was expected to create 2,000 jobs

• 140 staff of Dept of Community, Rural and Gaeltacht

Affairs relocated to Knock in 2004

• Minister Eamonn O’Cuiv views Knock Airport as a

centre of development for all of Connachct region

Knock Airport – Economic Impact

• 100 full-time and 29 part-time jobs at the airport (373,000 pax in 2004)

• Additional 56 jobs created supplying goods and services to the airport (32 indirect and 24 induced). The multiplier is therefore 1.56

• Airport’s contribution to GDP estimated at €6.5mn

• 52% of passengers are inbound tourists staying an average of 6 days (VFR 26%, Business 12%)

Knock Airport – Economic Impact

• Total spend of inbound tourists using Knock airport is estimated at €37mn

• Tourism spend by Knock airport passengers is estimated to support 584 jobs (482 direct, 102 induced) in the wider economy, of which at least 212 are in the catchment area of the airport

• Knock airport was expected to return a profit of €437,500 in 2004

Source: Goodbody Economic Consultants, Dublin, 2004

North Cape Airport, Banak (Lakselv)




• PSO services to Tromsø, Kirkenes, and Alta

• Charter flights

• Freight flights

North Cape Airport Attractions

• Northern most part of Europe’s mainland

• Midnight Sun – 24 hour golf

• Hurtigruta

• Sami Culture

• Fishing

Orca Safari Day Trips

Orca Safari Day Trips

• From 11 UK airports to Harstad/Evenes

• Departures at 05.00 throughout the autumn

• Day trip for £289 (420 euros)

• Also, weekend whale watching trips for £890

Why flying might be a more attractive option!

But then again on a good day ….

sustaining air services to peripheral regions dr. george williams centre for air transport in...

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