This Is Guernsey

By Thom Ogier

AURIGNY boss Malcolm Hart has explained what has gone wrong in 2008 and is certain things will get better.

The 47-year-old chief executive of the airline (pictured) said fuel prices and the economic downturn were largely to blame for an unsuccessful year so far and the States ownership of the group was definitely best for the island.

‘We took two big hits - the first when fuel prices went ballistic,’ he said.

The airline was not doing too badly at the start of the year. ‘We were ahead of budget after the first three months. Then in the period of April to June fuel shot up to $147 per barrel, which hit airlines hard.’

Fuel accounts for about 12% of the company’s cost base, he said.

But that was only the start of problems because the economic downturn meant a big reduction in the ‘wet lease’ business - the part of the company that leases out its third plane.

‘The fuel situation started to balance out - it’s about $60 per barrel now - but then around August the world just fell apart,’ he said.

‘Airlines responded to the economy by cutting back, stopping routes and tightening their belts. The result of that was disastrous for our third aeroplane.’

He said there had been more than three contractors considering leasing the plane for various purposes but in August they all disappeared, leaving Aurigny high and dry.

Things were now looking up for wet lease, though, he said.

‘We have the plane on a five-week contract for Royal Mail over the Christmas build-up, which is good, and we have been flying an ice hockey team too, but that doesn’t happen often,’ he said.

And fuel prices have dropped again.

‘Fuel is down, yes, but sadly for us so is the pound against the dollar.’

However, good planning on Aurigny’s behalf should save a few million pounds when it takes ownership of two new aircraft next year, he said.

‘Basically, when the States gave the go ahead for us to buy the 500 Series planes, we invested - by buying $38m. to pay for them when the time comes - just in case the exchange rate were to change, which it has.’

He said the dollars had cost around £18m. then and today they would cost £25m., so the move saved around £7m.

‘That’s a lot of added value that people don’t know about,’ he said.

The new aircraft would also help finances in a big way, he explained.

‘They don’t cost any more to operate and they are new, so maintenance should be minimal, plus they have six extra seats per plane which will bring in capital,’ he said.

‘We get six extra people on the flight for nothing - which is relevant only if you fill planes, which we do. Plus the new machines offer better service - they’re faster with more powerful engines, but also quieter.’

Aurigny was still good value for money for islanders, he said, though as a businessman he felt disappointed by the hard year.

‘It is sad to have hit a difficult period in our 40th year, but we made good money for the last two years before this and we are working hard to make sure of future success,’ he said.

‘We are not sitting here thinking it’s an easy life because we are States-backed. Nothing is further from the truth. We are fighting to make a profit and we run Aurigny like a private company.’

He said factors to take into account when considering what the airline contributes should also include the competition it creates and the links it runs.

‘It helps keep prices as low as possible and punctuality as high as possible across all the airlines, otherwise others could charge whatever they wanted - that adds significant worth to the Bailiwick as a whole.’

Southampton was an example he gave of a port where this had happened in the past.

‘It was underserviced and grossly overpriced - that’s what we could have seen here,’ he said.

‘Plus we have secured four slots per day at Gatwick Airport from now till forever, thanks to Aurigny - imagine what it would be like without competition on that route.’

Aurigny will always be as local as possible, he said, from the services it offers onboard, such as handing out the Guernsey Press and offering complimentary drinks, to not adding charges automatically on its website.

‘And if somebody is in desperate need in Alderney, for example, we will give up an aircraft to assist them, even if people have to wait - I don’t think you get many airlines like that.’togier@guernsey-press.com

Article posted on 22nd November, 2008 - 9.23am