Hebridean Air Services (HBR, Cumbernauld) has reached an agreement in principal with Argyll and Bute Council in western Scotland over a new three year Public Service Obligation (PSO) contract covering flights from Oban to the islands of Coll Island, Colonsay, and Tiree.
In February this year, council requested interested parties to submit their proposals ahead of the expiration of the current PSO contract on Friday, May 15. However, while numerous parties had come forth, only incumbent operator Hebridean Air Services (HAS) submitted a proposal which was found to be far more than the GBP707,000 (USD1,060,000) per annum (or GBP2.121 million (USD3.18 million) for the full three years) the council had previously allocated.
Though HAS justified the increase citing rising costs, Council claimed its margins were 'well above the industry norm for similar PSO services throughout Scotland.'
Following council's rejection of HAS' proposal and its subsequent decision to retender the contract, the carrier then said it would end flights on Saturday, May 16. As such, after intense negotiations, the two parties last week reached an agreement in principal awarding HAS the new three-year PSO contract.
In order to allow the necessary legal and technical checks on the new contract to be completed, council and HASL have agreed to extend the current contract by one month, ensuring continuity of service.
HAS operates the routes several times weekly using its fleet of two Britten-Norman BN-2s.
