SHOULD the States sell Aurigny?

It’s hard to disagree with Treasury and Resources that it’s no part of a government’s core business to own an airline. I suspect that philosophical stance would have carried far less weight had Aurigny still been in profit – several years of deficits were bound to make the arguments in favour of privatisation look more compelling.

On the other side of the coin there’s the reason why the States first bought the airline.

The retention of slots at London’s hub airports is so vital to Guernsey’s economy that it dwarfs the £5m. purchase price and the recent operating losses.

Guernsey had already lost its Heathrow link and with the withdrawal of BA from the Guernsey-Gatwick route, we would have been down to just one operator on that service.

There were two fears.

Firstly that Flybe could also pull out, sell the slots, or use them on a different route, leaving Guernsey with no connections to the prime London airports. Unthinkable for a finance centre.

The second was that a sole operator from Guernsey to Gatwick could milk the arrangement through high fares.

T&R now says they have found a way to guarantee the Gatwick slots owned by Aurigny after privatisation.

I’ve no doubt it’s possible to draw up a legal document preventing Blue Islands from just selling them on or discontinuing the service for operational reasons. The question is whether that is really fire-proof in extreme circumstances like the collapse of Blue Islands, its sale, or the transfer of its assets [including those slots] to creditors.

Even in less dramatic circumstances, for how long would it be deemed reasonable to insist a private airline operates five pairs of Guernsey-Gatwick slots if that was jeopardising the company’s future?

In those circumstances, legal challenges would really test the robustness of any agreement. Even if it proved copper-bottomed if Blue Islands went kaput, there would be no airline to operate the route. Maybe the slots would revert to the States but then they would need a new airline.

I’ve no reason to suspect the financial robustness of Blue Islands, but when planning for the long-term protection of a vital strategic asset, you have to consider all possibilities. Aurigny wasn’t bought out of a desire to own an airline but as an insurance policy. We mustn’t give up that insurance cover without being 100% sure that the risk no longer exists.

There’s a half-way house.

The savage competition between Blue Islands and Aurigny inter-island must be badly damaging both operators.

They should just stop it and reach a sensible modus operandi.

Co-operation could go further, involving shared check-in arrangements and ground staff. After all, British Airways is about to enter a confederation with two other international airlines to reduce costs and rationalise routes.

Finally, it may not be a proper business consideration, but many islanders really appreciate Aurigny’s Gatwick service. Transparent pricing, free luggage, a cuppa, and most importantly not cancelling delayed services but getting you away/home eventually.

States members mustn’t be afraid of change but with huge strategic issues at stake, they must take great care.‘