Public Service Obligations: How Regional Air Routes Are Protected

You’d be forgiven for thinking that air travel is a highly lucrative business, and generally, you’d be right. Indeed, European airlines like Easyjet and Ryanair have experienced significant growth over the past few decades, making it easier than ever to travel around Europe as a quicker alternative to road or rail.

But on certain routes throughout Europe, there’s little or no money to be had, and can even be loss-making. These routes tend to serve remote locations, acting as a vital lifeline both socially and economically.

That’s why the European Union’s (EU) Public Service Obligation (PSO) exists, to keep these routes running. Similar to the Essential Air Service (EAS) in the US, it makes rural routes viable to operate through tendered grants which pick up the monetary shortfall.

How do PSOs work?

PSO routes exists because they’re financially unviable for airlines to operate. In this case, it’s then the Government’s responsibility to restrict operating rights on a particular route to one airline, and compensate the carrier’s losses through the PSO.

The airline which gets to operate any given route is decided by a tender process at a community level.

In the UK, PSO routes are served by Flybe, Loganair, Directflight, Hebridean Air Services, and Eastern Airways.

What does the PSO mean for Europe?

Most regions served by PSOs are remote and hard to access, economically deprived, or all of the above. In short, it’s designed to keep otherwise isolated communities connected to larger conurbations and capital cities.

Countries that benefit include:

  •         Estonia
  •         Croatia
  •         Cyprus
  •         Finland
  •         Ireland
  •         Spain
  •         Sweden
  •         Italy
  •         The UK
  •         Portugal
  •         Greece
  •         France

So without it, could you argue that many regions in Europe would struggle economically?

Well, yes.

I’m based in a fairly remote part of the UK, where you’d struggle to get to London in under five hours by road or rail. But thanks to the PSO, Flybe operates three scheduled flights a day from Newquay to London Gatwick. I take this route on a regular basis for work, it’s relatively easy and gets me into the capital at a reasonable time.

If you consider that you can reach remote airports across the continent simply by changing aircraft at a hub airport, it makes doing business in these areas much more attractive.

And it’s now one of the many reasons people and businesses are relocating from major cities out to more rural locations.

Is it sustainable?

In theory it should be. The funding comes from the EU’s mobility and transport budget, which every member state contributes as part of Europe’s social and economic development.

Without it, many regions would struggle to maintain adequate transport links with cities and more populated areas.

The Brexit effect

But this got me thinking about the UK specifically. What will happen not just after Brexit, but also once large infrastructure projects like the high speed rail connection (HS2) between London and northern England are completed?

PSOs are a vital lifeline for many regions across the UK, so in theory, it’s likely the Government will match the funding with its own contributions. After all, it’s in the country’s interest.

However, it may also be the case that the Government puts these routes out to tender. Which means there could be an overhaul in the airlines we see flying these routes, and increased competition.

But the truth is, we don’t really know.

Likewise, when HS2 is completed and the building of HS3 is underway, we can assume that the UK’s population will have grown as projected, and therefore, the demand on public transport will have increased as well.

So if rural regions see significant economic development over the coming years, and if projected passenger growth numbers are anything to go by, we may even see a decline in the number of PSOs needed as airlines will start returning profits.

PSOs: vital support for rural air routes

PSOs are a vital lifeline for many areas of Europe where access, population size, and the local economy are all issues which would otherwise have a negative impact on the region if PSO didn’t exist.

And while airlines that operate PSO routes can sometimes turn a profit, very few PSO routes would survive without this vital funding.

Featured Image: Aero Pixels