Economy

Government-subsidised services can be turbulent on land, sea and air

From the Aran Islands flights to the national broadband plan, economic incentives can trip up State interests

The Aran Islands from an Aer Arann flight. Photograph: Andrew Downes

Tue Feb 13 2018 - 07:00

The saga of flights to the Aran Islands highlights yet again the tricky territory of getting private operators to provide a service which is part-subsidised by the State. Flights to the islands have been operated by Aer Arann Islands for more than 45 years, but the airline nearly lost the gig in 2015, when a Government tendering process awarded it to Executive Helicopters, based in Galway.

A big row followed, with locals complaining that the new service would operate from just outside Galway, rather than close to the ferry connection in Connemara. Amid legal threats and political ructions, the Government backed down and a new tender was run. And the winners? The contract to operate so-called Public Service Obligation (PSO) flights – subsidised by the exchequer – was back in the hands of what was formerly Aer Arann but is now 100 per cent owned by UK company Stobart Air ,which is promising significant investment.

One is left to reflect on the costs and delays inherent in running two tenders and the apparent failure to bottom out the airport factor in the original tender.

Of course we are also seeing how tricky this State tendering for private operations on a wider scale can be in the national broadband tender. This involves a complex web of economic incentives and State interests. Central to this complexity is that much of the vital infrastructure is owned by Eir, which has just withdrawn from the process leaving one bidder, eNet.

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The best option for the Government is open to debate. Minister Denis Naughten’s comment that the presence of only one bidder could mean the delivery of broadband even more quickly is laughable, in the wake of a process that has dragged on for years. The Fianna Fáil call for a quick review has some merit. It brings to mind the words of the man asked for directions on a quiet country road,: “ If I was you, I wouldn’t start from here.”

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