Come clean on air sale rationale
Saturday 17th July 2010, 2:29PM BST.
WITH so authoritative a figure as former chief minister Mike Torode coming out of retirement to rubbish a key element of the ‘kiss and sell’ Aurigny-Blue Islands sale proposal – the golden share arrangement to preserve the life-line Gatwick slots – it is clear that the deal is in trouble.
Leaving aside peripherals, such as whether it makes commercial sense to dump a brand of 40 years in favour of a lesser one of just three, the single question to be answered is whether this sale is in the island’s best long-term interests.
At the moment, all we have is Treasury and Resources’ word that it is, unless the beneficiary of the acquisition, the CEO of The Healthspan Group, is also regarded as an impartial observer.
What makes this more puzzling is that T&R and its advisers will have known before going public on the in-principle arrangement that they were wide open to criticism for not seeking expressions of interest in the sale. And they could guarantee that Flybe would mount a hostile challenge to any closed sale.
Beyond that, anything that looked like a sweetheart deal was going to be questioned.
So the T&R minister must be confident not only that Blue Islands taking over Aurigny and leaving the taxpayer with its accrued debts and two multi-million pound aircraft is not only overwhelmingly the best deal possible but also that he can demonstrate it.
If so, the time has now come for him to put his cards on the table.
Many islanders, and this newspaper as well, would have no difficulty in accepting the boss of Healthspan as the boss of Aurigny-Blue Islands if that is the best fit having looked at all possible options.
As it is, there is no evidence to support the case and Blue Islands’ credentials as a Bailiwick carrier are based on it having a wealthy backer with an interest in getting people to his other hotel business interests.
Islanders will also remember that it was the death of the wealthy owner of Jersey European Airways that forced it to become Flybe or close.
If T&R’s deal is to go through, the minister has to show why it should.
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‘Dumping a brand of 40 years’ might be ‘peripheral’ if it was not symptomatic (and the most obvious public manifestation) of so much else that is wrong with this deal. Any take over based on scrapping the stronger brand in favour of the new owner’s toy should raise very serious concerns about the long-term viability of the project. And how are the new ‘Blue Islands’ to rationalise their fleet? From Aurigny’s two types of aircraft, to their five? Yes, we need Aurigny run professionally and profitably. But Le Cocq’s/Rock Hopper/Blue Islands does not immediately commend itself…
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Surely, the elephant in the room is the survival of Low Value Consignment Relief which gives Healthspan’s products a 17.5 % advantage over their competitors. With VAT going up to 20% in the new year, the pressure to abolish this concession, I think, can only increase.
If LVCR was to be withdrawn, the impact on Healthspan would be severe. They may have deep pockets and be able to ‘sub’ a loss making Blue Islands at the moment, but that may not always be so….
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Industry & Commerce were responsible for giving routes to Blue Islands. It is now clear that by doing so they are also responsible for the losses being incurred by Aurigny on the inter-island routes.Most airlines are currently losing money and 2 million a year is a tiny price for the taxpayer to pay to retain Aurigny and its routes and slots. If Blue Islands can’t take the heat then they should get out of the kitchen!
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