A DECISION to allow competition on the Guernsey-Alderney route could cost Aurigny up to £240,000 per year. Managing director Malcolm Hart said that the States-owned airline accepted the Commerce and Employment Department’s decision to grant a route licence to competitor Rockhopper.

‘However, we are very disappointed and extremely concerned by the continual erosion of our core businesses through the licensing of competition on routes that are unable to support multiple operators.’

He estimated the decision would cost Aurigny between £120,000 and £240,000 a year. That should be considered alongside the £560,000 loss of revenue the airline had incurred on the Guernsey-Jersey route since the introduction of competition.

Local air travel was a very competitive market, said Mr Hart yesterday, and every action generated a corresponding reaction.

‘Financial realities are such that Aurigny must now look very closely at which routes are likely to remain commercially viable. Indeed, this review process is already under way.’

Mr Hart believed Commerce and Employment was a fully independent review panel that had arrived at a reasoned and objective conclusion. While on this occasion it had not found in Aurigny’s favour, the airline had no qualms about how the decision had been reached.

It should now also be quite apparent that Rockhopper’s policy was to cherry-pick the Channel Islands’ most profitable routes, he said. This was no surprise as it was a commercial enterprise.

‘However, as a consequence Aurigny must now question whether an obligation exists for it to provide off-peak services.’

The introduction of Rockhopper on the Guernsey-Jersey route had not stimulated the market at all. It had in fact fallen by four per cent, he said.

Commerce and Employment deputy minister Carla McNulty Bauer said that the States’ ownership of Aurigny had left her department in a lose-lose situation.

‘We had to take into account that the States is the owner of the airline but also that it’s a monopoly situation at the moment,’ she said.

The decision had been made with the best interests of the Guernsey people in mind, she said.

‘We need to look at competition and monopoly situations, and what we have come up with will give the consumer choice and different cost options.

‘There has been a problem with undercapacity at peak times and Rockhopper will add flights at key times which will also benefit the consumer.’

Deputy McNulty Bauer said each licence application was judged on its merits in order to safeguard the interests of users and operators of island services and that of the residents.

Commerce and Employment still had the right to refuse an application.