There are several Highlands and Islands air routes which would not be commercially viable without support, so Transport Scotland help to make these routes successful. We use public service obligations (PSOs), which are obligations imposed on a carrier to provide a set level of service on a particular route in order to ensure that the service satisfies fixed standards of continuity, regularity, capacity and pricing.
Subsidy has been paid by the Scottish Government on the Glasgow-Tiree and Glasgow-Barra route since the mid-1970s. Under European regulations PSOs were imposed in the mid 1990s to enable subsidy to continue being paid on these routes and on the Glasgow-Campbeltown route.
The Scottish Government's contract with Loganair for these three routes runs until 24 October 2019.
PSOs have also been imposed on routes within Shetland, Orkney, Comhairle nan Eilean Siar and Argyll and Bute Council, all of which are subsidised by the local authorities.
The subsidy ensures that these isolated communities have air links with a main centre. Under the terms of the European Regulation, it is necessary to seek competitive bids on an EU-wide basis to allow subsidy to be paid.
This Regulation (No 1008/2008) sets out the economic framework for air transport in the Community and consolidates and updates the set of liberalisation measures known as the "Third Package" adopted in 1992. It provides for the maintenance of lifeline air services. This means that socially necessary air services can by subsidised to ensure continued operation.