Public Service Obligation (PSO) routes are a very European thing. These are routes that are viewed as being necessary to provide transportation links to outlying or rural communities, but which are unlikely to be profitable on a commercial basis.
To ensure the connectivity is maintained, governments or local authorities fund the routes, to offset any losses made by the airline operating them. We recently heard that British Airways is being paid £125,000 ($162,000) a month to fly to Newquay in the UK, but is this the most lucrative PSO route? Not by half.
Flying from Corsica is gold plated
Some of the most lucrative routes on PSO contracts we’ve spotted are flying between the French island of Corsica and the mainland. Routes from the towns of Ajaccio, Figari, Bastia and Calvi to both Marseille and Nice all attract over €4 million ($4.7m) of funding each year for services from all four towns to one of the mainland destinations.
All are flown by Air Corsica, on multiple frequencies a week. These range from daily between Figari and Calvi to Nice up to 19 times a week from the larger towns of Bastia and Ajaccio to Marseille. All achieved over 80% load factors, apart from Calvi to Nice, which only registered a 40.7% load factor.
While these sound like a good deal, they’re not the most lucrative PSO routes from the island. Flying from any two of the four Corsican towns to Paris (Orly) will net the operator almost €9 million in funding. Ajaccio and Figari to Paris were funded €8.9 million ($10.5m) in 2018, while Bastia and Calvi to Paris achieved €8.6 million ($10.1m).
These incredibly lucrative routes are operated by a combination of Air Corsica and Air France HOP, achieving load factors of around 90% from Bastia and Calvi but over 100% on Ajaccio and Figari. We assume a load factor in excess of 100% means people bought tickets but didn’t fly, and those seats were subsequently re-filled… if anyone knows differently, please do fill us in.
Italian islands are good earners too
Flying from the two islands of Lampedusa and Pantelleria has seen Danish Air Transport snagging a total of €38.6 million ($45m) over the past three years. The routes, which fly to Catania, Palmero and Trapani average out at being worth around €12.8 million ($15m) each.
However, the crown of the PSO routes has to go to those flying out of Sardinia and back to the mainland. From Sardinia’s capital of Cagliari to Rome has secured Alitalia an amazing €12.6 million ($14.8m) a year, running between 49 and 63 services a week with a load factor of 82%.
But the very most expensive PSO route in all of Europe is that from Cagliari to the city of Milan. Flying into Milan Linate, Alitalia operates from 35 – 52 services a week and achieves a load factor of 76%. In return for this, the route attracts funding of a staggering €14.1 million ($16.6m).
Honorable mentions
Split to Zagreb in Croatia, an all-year route offering a minimum of 22 weekly frequencies, attracted €4.24 million ($5m) in compensation during 2018. Flown by Croatia Airlines, it offered 279,000 seats on the PSO route in 2018, flying with a load factor of 67.8%.
We’ve talked before about the PSO route between Lithuania and London City. Operated by LOT Polish Airlines in 2018, it brought in €4.9 million ($5.8m) for six weekly frequencies using an Embraer E190.
Sweden, too, has some expensive PSO routes. Flying into Stockholm Arlanda from any of Arvidsjaur, Gällivare, Lycksele or Vilhelmina is worth more than €2 million ($2.4m) a year. Flying the Stockholm to Hemavan route beings in €3.4 million ($4m).
Some of the UK domestic routes are relatively lucrative too, with Cardiff to Anglesey bringing in an average of just over €2 million a year, and routes from Glasgow to Barra, Campbelltown and Tiree all worth from €1.3 to €1.8 million each. However, Ireland does better, with the routes from Dublin to Donegal and Kerry bringing in €3.9 million and €3.3 million, respectively.
The best per passenger route
While some of these numbers are almost eyewatering in nature, it’s difficult to compare these total amounts as the distances and frequencies flown can be very varied. A better measure of the most profitable PSO route is to consider how much funding is provided per passenger. Taking this into consideration, the top 10 are as follows:
| Route | Airline | Funding per pax (€) |
|---|---|---|
| Thessaloniki – Skyros | Sky Express | 3532.8 |
| Rhodes-Kos, Kalymnos, Leros, Astypalaia | Sky Express | 2566.33 |
| Kerkyra (Corfu) – Aktion, Kefalonia, Zakinthos | Sky Express | 2204.52 |
| Akito – Sitia | Sky Express | 1493.32 |
| Tingwall – Fair Isle, Foula, Out Skerries, Papa Stour | Airtask | 1056.51 |
| Rhodes – Karpathos, Kasos | Sky Express | 1003.01 |
| Oban – Coll, Colonsay, Tiree | Hebridean Air Services | 989.44 |
| Alexandroupoli – Sitia | Sky Express | 640.66 |
| Thessaloniki – Kerkyra (Corfu) | Sky Express | 625.87 |
| Pajala – Lulea (Sweden) | Jonair | 439.8 |
So, although the total amounts raked in from operating routes around the Greek islands is small in comparison to some of the other routes we’ve explored here, on a per passenger basis, they’re pretty lucrative. Funding of over €3,500 ($4,000) per passenger is insane!
Did you know PSO routes were so heavily funded? Let us know what you think in the comments.
