Page last updated at 12:15 GMT, Thursday, 25 March 2010

North-south Wales airline enters administration

Jetstream 31. Pic: Highland Airways
The north-south Wales route receives an £800,000 subsidy

Planes flying the north to south Wales air route have been grounded.

Highland Airways that operated the service has entered administration with Thursday morning's flight cancelled and no further bookings being taken.

Administrator Pricewaterhouse Coopers confirmed the company was "encountering trading difficulties."

Deputy First Minister Ieuan Wyn Jones said the route was a "huge success" and the Welsh Assembly Government would take action to restore it.

Highland Airways was awarded a three-year contract to run the north-south Wales route from May 2007.

The service had £800,000 a year funding from the assembly government.

Its financial problems came to light at the start of the year after the spell of severe wintry weather resulted in cancelled flights and a worsening debt situation.

Welsh Liberal Democrat transport spokesperson Jenny Randerson said it raised serious questions about the assembly government and Mr Jones.

The unfortunate position of Highland Air has nothing to do with the performance of this route
Ieuan Wyn Jones

"I am not surprised in the slightest. We have been warning for weeks that the Cardiff to Ynys Mon service was going to fall apart," she said.

"How many thousands of pounds of taxpayers money has been put at risk in that time?"

The Conservatives transport spokesperson David Melding AM said: "We were always sceptical about the worth of this service.

"While we are committed to improving transport links between north and south Wales this air service was not the answer.

"Investing in road and rail services between north and south Wales is a far better way to improve transport links for the many, not the few.

"A great deal of assembly government money has gone into the Cardiff-Anglesey air link.

"While public subsidies are occasionally justified, our top priority is to secure a link from Wales to North America with a major carrier."

Highland Airways' staff - numbering about 100 - were called in at 0700 GMT to be told about the decision.

The 0730 GMT flight to Anglesey was cancelled on Thursday, Cardiff Airport has confirmed.

Mr Jones said: "This service as been a huge success with almost 40,000 passengers using it since it started.

"It has far exceeded our expectations and we will now work tirelessly to minimise any break to flights.

Flights between Cardiff and Anglesey have been suspended

"The unfortunate position of Highland Air has nothing to do with the performance of this route and the company's problems are related to its wider business.

"We are determined to keep the link operating and ensure there is minimum disruption to passengers."

He said the assembly government would look for short-term tenders on Monday with the aim of restoring the service as soon as possible after the Easter holidays.

"Our long term objective is to appoint a new operator with a four-year contract. We will be doing this through a further tendering process at the European level, " he added.

Highland Airways also operates air services to the islands and Scotland fisheries protection air patrols.

Bruce Cartwright, joint administrator and head of business recovery services at PricewaterhouseCoopers in Scotland, said: "The company had encountered trading difficulties, including the loss of certain contracts."

He said they would be working with contracted customers to ensure an orderly handover of services to new operators wherever feasible.

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