Minister of State for the Gaeltacht Joe McHugh has cancelled the tender procedure which could have awarded the Aran Island air service to a helicopter company from October.
McHugh's decision was announced on Friday night just five days before the last scheduled fixed wing flights by Aer Arann Islands.
The company employing up to 40 staff was recently told it had lost the contract after providing the link for over 40 years.
In a brief statement, Mr McHugh said that it was "intended to advise the European Commission of the position as soon as possible and to commence a fresh tender process for the air service".
He said that the Department of Arts, Heritage and the Gaeltacht would "enter discussions with the existing service provider for the provision of an interim service with a view to enabling the re-tender to take place, while ensuring that there is no disruption in service".
Aran islanders were due to stage a protest outside the Dáil early next week over the controversial decision to award the tender to Executive Helicopters of Woodford, Co Galway.
High Court proceedings opened this week in a case taken by Aer Arann Islands which challenged the State's decision to award the contract to a rival service.
The court heard that a four-year contract until 2019 between the State and Executive Helicopters, which was due to start its services on October 1st, had not yet been signed.
In its legal action against the Minister, the Office of Government Procurement which operated the tender process, and Executive Helicopters, Aer Arann Islands alleged that the decision to award the contract to Executive Helicopter was made without any proper tender process.
The company also sought an order prohibiting the Department of the Gaeltacht to conclude any contract with the helicopter company, pending the legal proceedings, or to vary the terms of the tender by changing the commencement date and the contract duration.
Executive Helicopters planned to fly in and out of Galway airport at Carnmore, some 52 km from Rossaveal, instead of Inverin, which is just 8 km from the ferry port.
Proximity between the Inverin air strip and Rossaveal allows for flexibility when planes cannot fly in bad weather.
Neither Galway city nor county council, joint owners of Galway airport, had been advised of the decision, and the airport’s aviation license is due to expire in December.
A feasibility plan commissioned by the two local authorities and published earlier this outlined the site’s potential as a film industry campus.
Aer Arann was recently asked by the department to extend its service until February, but said it was taking legal advice.
The air transport company would have to operate at a loss in low season if it was to accept the offer from the department on existing terms and conditions.
Inis Oírr co-op manager Paddy Crowe said that islanders welcomed the decision, but it begged many questions in relation to the handling of the issue by the department.
“This is a huge relief to the islanders - we need now to be part of the new procedure, and this should never happen again to any community,” Mr Crowe said.
