Challenge by Ryanair over service to Knock is dismissed

A CHALLENGE by Ryanair to a Government decision awarding Aer Arann a public contract to provide a scheduled service between Dublin and Knock airports was dismissed on all grounds at the Commercial Court yesterday.

The contract for the Dublin-Knock service was originally awarded to CityJet following a tendering process in which only Cityjet and Aer Arann tendered. CityJet later withdrew from the contract last July.

The Department of Transport then entered into talks with Aer Arann, which ended with Aer Arann being awarded the contract for a service beginning on October 1st last and running to July 2011.

The contract was offered to Aer Arann on the basis of its combined tender of €12.9 million for services from Dublin to Knock and Dublin to Derry over the next three years.

Ryanair, who had not originally tendered for the Dublin-Knock route but expressed interest in doing so after CityJet withdrew, challenged the Minister’s decision on several grounds, including that the Minister was not entitled to make an additional compensation payment to Aer Arann for October 2008 arising from the short notice for the start of the service.

Ryanair also sought orders requiring the Minister to instigate a new tendering process.

All grounds of the challenge were rejected yesterday in a reserved judgment by Ms Justice Mary Finlay Geoghegan.

The judge said it was permissible for the Minister, in the circumstances in which he found himself in the summer of 2008, to have discussions with Aer Arann as the next preferred tenderer.

She noted the service had been due to commence in July 2008, the contract was awarded to Aer Arann on September 2nd, 2008, and it was required to commence the service on October 1st, 2008.

In those circumstances, the judge ruled the Minister was entitled to agree to award the contract with an additional potential payment to Aer Arann for October 2008 over the maximum compensation claimed in Aer Arann’s tender.

She said the Minister was entitled to treat the late withdrawal of CityJet and the need to fix a new date for the start of the Dublin-Knock service as unforeseen changes in operating conditions due to factors outside Aer Arann’s control. The Minister’s agreement to meet any shortfall below Aer Arann’s targeted revenue of €71,000 for October 2008 was not a material amendment which required a new tender process.