Dundee City Council will pay half the cost of operating Dundee Aiport’s new stand-in service to Stansted, The Courier understands.
The local authority will split the tab for the stopgap replacement of the existing London City service with government agency Transport Scotland until a new operator can take over later this year.
The new Loganair service was announced on Wednesday.
A spokesman said the council could not detail the funding arrangements behind the temporary measure “due to commercial confidentiality” but he did not deny that it expects to cover around half the cost until a new permanent operator can be attracted to the site.
It remains unclear for how long the council and Transport Scotland will be forced to underwrite the service.
Tender documents for a new contract, which will be supported by a public service obligation, are expected to be issued in the coming weeks.
The special designation puts the service in the same category as lifeline flights linking the Western Isles with the mainland and allows additional subsidies to be paid under European state aid rules.
The council spokesman did not offer a likely timescale for the tender’s completion, however, and an industry source said it could be late summer or early autumn before the new PSO contract can begin.
That leaves Scotland’s fourth-largest city facing a potentially hefty bill to ensure the continuity of its air connection to the UK capital, just days after the council revealed more than £7 million would have to be cut from its budget.
A Scottish Government scoping report, published just before Christmas, warned the Riverside facility could be mothballed unless the link to London could be retained.
That prompted city development director Mike Galloway to stress that keeping the airport open was “absolutely vital” to the city’s hopes as it undergoes a £1bn Waterfront regeneration.
Dundee Airport received around £2.9m in operating subsidies from the Scottish Government last year, while the HIAL group picked up a total of £17.9m in revenue support.
The airport remains one of the busiest in the group in terms of aircraft movements, hosting a flying school and engineering workshop as well as proving a popular base for private aircraft.