Darwin Airline (Lugano) is set to lose its Sicilian Public Service Obligation (PSO) contract after the Italian civil aviation authority (L'Ente Nazionale per l'Aviazione Civile - ENAC) forbade the Etihad Airways (EY, Abu Dhabi International) affiliate from bidding.

Though the airline currently operates flights between Sicily and the islands of Lampedusa and Pantelleria, Austrian Aviation Net reports that as of the tender's closing last week, only one other "unknown" operator had applied for the contract.

According to the tender's details, the PSO contract is for flights from Lampedusa to Catania and Palermo International as well as from Pantelleria to Palermo and Trapani effective from July 1, 2014 to June 30, 2015.

ENAC was last year forced to cancel another PSO contract already awarded to the Swiss operator - Aosta to Rome Fiumicino - on the grounds that as a Swiss company headquartered in Lugano, it was therefore ineligible to tender for European Union contracts.

With the backing of airlines such as Lufthansa (LH, Frankfurt International), the European Commission recently launched an investigation into Etihad's policy of acquiring stakes in other airlines to ascertain whether or not it conforms to strict EC regulations governing foreign ownership.