Civil servant George Sauvage, left, and director of regulation at the OUR Michael Byrne at yesterday’s press conference. (Picture by Adrian Miller, 0784514)
COMMERCE and Employment wants to hand its responsibility for air route licensing to the Office of Utility Regulation and a ‘hands off’ approach to be adopted to encourage competition.
Feedback from the airlines is mixed, with some fearing for their future in the marketplace they suspect the move might create.
‘To avoid any actual or perceived conflict of interest with the States ownership of Aurigny, responsibility for licensing should be transferred to the director-general of Utility Regulation, who is an independent statutory official and who is also best placed to investigate and take action on any matters related to anticompetitive behaviour,’ said minister Carla McNulty Bauer.
‘They have the staff available, so rather than us set up a separate statutory body why not fit that into the OUR mandate?’
She said that Aurigny had always been treated as a separate private business by the States and that the promotional part of C&E and the regulatory part had worked separately in order to reduce bias, but that some people still perceived it.
The OUR’s report said it would not be in the island’s best interest to introduce a totally liberalised approach, which is what Flybe had wished for.
It recommended retaining licensing but with a ‘lighter touch’ to be as liberalised as possible while still addressing concerns over the lack of a competition law and reducing obstacles to new entrants.
The OUR report said the aim was a transparent process through which generic licences would be automatically granted to airlines that fulfilled safety, competence and financial requirements and which did not act anticompetitively.
That should remove unnecessary disincentives to route development and help build the island’s links, according to OUR director of regulation Michael Byrne.
‘I think that what you will see is more competition between the operators and it will be healthy. The flexibility a different environment will give will help operators try things they might not otherwise try.’
In January 2008, a C&E paper said the ‘cumbersome and unpredictable’ route licensing regime was doing the opposite.
Airlines then faced turbulent economic times and fluctuating fuel prices and C&E said shortcomings in the licensing process were revealed.
It commissioned the OUR to review the system in November 2008 and circulated the findings, for consultation, in early 2009.
Among the perceived problems with the current system the OUR report lists are the lack of clarity about the process, the time decisions take, the perceived lack of independence of C&E as the licensing authority, the risk of legal challenge and the fact it does not meet States objectives.
The OUR also compared Guernsey’s system with that of Jersey and the Isle of Man. The latter introduced its open skies policy more than 15 years ago.
Jersey has been operating such a policy since 2003, but kept air route licensing legislation in place until March 2008. It reported that having the ability to operate in a free market was attracting new airline business.
One of some airlines’ main concerns was that a fully liberalised regime would produce a single dominant carrier that could exploit its dominance through high fares.
The States will be asked to approve the changeover at the end of the month.
Billet d’Etat Pages 20 & 21
Article posted on 5th June, 2009 - 1.00pm
Most Commented: