The Public Service Obligation (PSO) route connecting Scotland's Dundee Airport, above, and London Heathrow has been renewed for a further two years amid UK PSO policy reforms.
The UK has reformed its policy on Public Service Obligation (PSO) routes to include services that operate to and from different regions of the country, rather than just into London.
The government says the move aims to protect qualifying domestic routes “that are in danger of being lost,” thereby ensuring minimum levels of air service on routes that are socially and economically vital for a region.
The change in criteria follows responses to the UK Department for Transport’s (DfT) "Aviation 2050" consultation alongside the 2021 "Union Connectivity Review," which set out recommendations that aim to improve transport connectivity across the UK.
The UK’s existing PSO system supports routes that might not otherwise be commercially viable, with airlines given exclusive access to the route to encourage a service to restart, as well as the potential to receive a subsidy to cover operating losses. PSOs are also exempt from air passenger duty.
However, under previous policy, while the devolved administrations of Scotland, Wales and Northern Ireland had the ability to support PSO routes that were contained wholly within their nation, the UK government did not provide support for routes that do not operate to or from London. The Union Connectivity Review argued this limited “their extent, consumer choice and competition.”
At present, UK PSO routes are therefore used to connect the likes of Derry, Northern Ireland, Dundee, Scotland, and Newquay, England, with London. The Scottish government also provides support for air services between various islands and Glasgow, while the Welsh government previously subsidized an Anglesey-Cardiff route before the pandemic.
The latest policy update means that the DfT will now allow PSOs on routes that connect UK regions, without a requirement that the service operates to or from London. “As an island nation, air connectivity remains a vital part of the UK’s domestic transport system and is sometimes the only viable option,” the DfT’s policy guidance says.
However, it adds that PSOs will be used “only where absolutely necessary, with potential routes only eligible where no viable alternatives exist by any transport mode.” The DfT will consider contributing up to 50% of the total subsidy on routes into London and may offer “partial funding” on routes between regions, but says it will require “strong evidence” as to why the funding cannot be provided locally.
To be considered for a PSO, airlines, airports or regional bodies must demonstrate that the proposed route satisfies several criteria, including its significance for economic and social development. Other considerations include an absence of existing flights between airports serving the same urban areas; no alternative air routes within an hour of the origin and destination airports; a lack of efficient public transport with a journey time of less than 3 hr.; and the route not meeting acceptable standards based solely on commercial interests.
The DfT says it will use additional data sources to conduct its own analysis of the commercial viability of the route and assess the likely level of service the route would achieve on purely commercial terms.
In late November, the DfT gave the green light for a PSO route between Dundee Airport and London Heathrow Airport to continue for a further two years. The service, operated by Loganair, is backed by funding from the UK government, Scottish government and Dundee City Council.
The DfT has allocated half of the PSO funding with the specific aim of enabling residents in Dundee to make roundtrips to London in a single day. “This investment will further stimulate growth and enhance the connectivity between Scotland and England,” UK Aviation Minister Anthony Browne says.
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