The ferry contract to Inis Mór in the Aran Islands will come to an end today after talks between the State and the current ferry operator failed.
The Department of Arts, Heritage and the Gaeltacht said it had advertised for expressions of interest to run the ferry service on the E-tenders system with a closing date of December 21st but it had received no tenders.
In a statement, it said it had then entered into discussions with the current operator, Island Ferries Teo, "with a view to renewing the current contract on the same terms which have been in place to date".
"Those talks failed, as the Department was not in a position to sanction a considerable increase of a subsidy for a service which is profitable as it stands," the department said. "Therefore, there will be no contract in operation after the 31 January 2013."
It said it clearly understood from the ferry operator that he was in a position - without a State grant - to continue with providing the same service to the island off the coast of Co Galway following the discontinuation of the contract. This would include the bus service, as it is commercially viable.
"He also clearly indicated that he intends to do this," the department added. A spokesman said department officials met community representatives from the islands last Friday to explain the matter to them."
A new contract has been agreed between the department and Aran Ferries Teo to provide a passenger ferry service between Inis Meáin/Inis Oírr and the mainland for the period November 1st, 2012 to October 31st ,2017. This was agreed following a tender process.
The department said an effort was made at that time to incorporate the three islands, but this was also unsuccessful. It said it could not agree to the "considerable increase" of over 300 per cent associated with that part of the service which relates to Árainn alone.
Separately, and also as a result of a tendering process, a new contract has been agreed between the Department and the Lasta Mara company to provide a cargo service between Oileáin Árann and the mainland for the period January 1st, 2013 and December 31st, 2017.
The State will spend over €2.8 million this year on subventions to ferry and air transport providers serving the Aran Islands. The air service and airstrip management services contract, which accounts for some €1.35 million (47.5 per cent) of that amount, is due to end on August 31st.
Residents of the three islands have become increasingly worried about the future of the air route.
But Minister of State for the Gaeltacht Dinny McGinley said in November the Government had not yet made a decision on the future of the service.