1

Guern abroad

Truely hope that this is dead in the water.
I do not support any of the reasons as to why this idea was even put forard in the first place.

Keeping the Gatwick link control has never changed.

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3

Roy

Tut Tut – Got it wrong GP

Let us see what comes out of the Due Diligence process – not that anyone outside T&R will see anything!

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5

coyote

Every cloud and all that…. at least the Aurigny pilots know how to fly their aircraft competently so sigh of relief.

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7

FlyingScot

Explain to me again why Blue Islands is the better run airline when it reportedly loses as much money as Aurigny on a much smaller business? And operates five types of Aircraft vs Aurigny’s two?

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9

WATM

If this story IS true, it makes me wonder what involvement Flybe may had in it, especially after their threat of legal action against the States, and their comment that they would pay ‘millions’ for Aurigny…..

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11

sinbad

What a shower.

We need an Executive government that knows what it is doing.

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13

coco

Could you tell me IF Flybe maybe took over Aurigny would Aurigny then start developing technical problems !

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15

Dave Jones

Derek Coates is undoubtedly a talented and wealthy man who has dabbled in an airline and has lost a great deal of money; we know that is true because Deputy Charles Parkinson has told us both airlines are loosing money. Where has Mr Coates experience of running an airline come from? He is of course currently running his own but it is as we know at a significant loss.
It is not difficult to see what is going on here Blue Islands needs the profitable parts of Aurigny to prop up the loss making free flights for Healthspan hotels in Alderney and Guernsey. I believe that Mr Coates knows that if he continues on his own, Blue Islands is unlikely to survive without more and more money being poured into it, which he may or may not have. He has to have the free flights as a hook to get people into his hotels. If he doesn’t, not only is his airline threatened but it will also have a real negative effect on his hotel business as all his guests would have to pay like everyone else on Aurigny. One other thing, I don’t understand how Blue islands can guarantee Alderney’s routes, if the new airline gets into serious financial trouble, then the guarantees like all companies who fail will not be worth anything. At least with the States of Guernsey holding the reins, we have a better chance of looking after Alderney’s interests, and who do you suppose will pay for the free flights given to Healthspan hotel guests? I suspect it will be every other passenger who uses the airline. Now Mr Coats is a very successful entrepreneur he will also have to be very courageous because if this merger goes ahead and the much loved Aurigny name and airline is lost and the new airline fails then the reputational damage done to whoever is holding the parcel when the music stops will be absolutely enormous.
Aurigny, according to a recent report that some have seen, has been extremely well run, considering it has gone through the biggest airline global meltdown the world has ever seen. I think it is extremely unfair for T&R to take a snapshot of Aurigny at this time given the turbulent period that all airlines have been through over the last few years. It is also unfair in my view for T&R to keep referring to all of the subsidy as “losses” I believe that much of the 1 ½ million that has been listed as losses in 2009 is actually investment in the new UK routes, they need desks, staff, uniforms, equipment, training and insurance, all that costs a lot of money. As well as the other contributing factors that Aurigny have had to deal with.

The volcanic ash cloud that cost Aurigny £200.000 at a stroke.

An airport fire-fighters strike that also cost tens of thousands of pounds in lost revenue.

Add into that, the fact that Aurigny’s fuel costs have nearly doubled over recent years.

Terrorism which has added thousands to airline insurance premiums.

CAA updates for Airlines.

My last question is this, Why did T&R allow Aurigny to buy new planes if they knew they were going to give the company away for a pound.

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17

Eh

Dave Jones

I think you should make yourself aware that your painfully long posts put a lot of people off starting to read them, let alone finish. Any chance of being a bit more concise please? (Not an attack, just constructive criticism)

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19

Stephen John

WATM and Eh.

Be grateful that you have a Policy Council member willing to give detail about the proposed give away of Aurigny.

It’s no wonder Mr Coates is so keen to receive the philanthopic gesture made by T and R but paid by the Guernsey taxpayer.

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21

Mark

WATM – Your name should be WTF RU talking about? Aurigny prices are nowhere near as ridiculous as FlyBE. Dave Jones – Ignore this person, and keep up your work in preventing this from happening.

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23

FlyingScot

Dave Jones – agree entirely. Derek Coates is undoubtedly a successful Vitamin salesman – but is far from proven a successful Airline manager. I also agree that Aurigny has done well in the current airline environment. Given The States poor record in selling off the family silver (Telecom, for example), I would hold onto Aurigny until there is a MUCH sounder plan. Given that Mr Coates thinks its smart to dump the 40 year old brand in favour of the 3 year old one, this is not that plan. Kill the deal.

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25

Nick

WATM

Aurigny doesn’t fly from Southampton to Guernsey. They do however operate from Southampton to Alderney. Their flights to Guernsey will be more expensive than Flybe as you are in effect buying two tickets, one from Southampton to Alderney and then another from Alderney to Guernsey. There is no question of a plane being filled with 50 passengers as the aircraft operating the service is a Trislander with a max capacity of 16. Incidentally the cheapest Blue Islands fare on the same route is over £110 so don’t expect cheap fares if the Blue Islands takeover comes about.

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27

TL

simon – why do you say that they cannot?

It would be a simple matter for the States to include as part of the deal a provision that says that future licences are dependent upon maintaining certain routes. This would prevent the airline cutting those routes.

Remember that the States will still be able to exert some control via the granting of licences.

There is some logic in making two loss making airlines into one that breaks even. There is a lot of sense in saving the taxpayer the cost of maintaining an airline as long as we can be reasonably satisfied that the business plan stacks up, that key routes are protected and that the necessary services can be provided.

There is no point simply saying “No, never” at this point as we do not know whether the deal does stack up. It is possible that it will and possible that it won’t.

But if the States want to sell Aurigny (and they clearly do as this is not the first attempt) then I would prefer it went to a local operator which maintains the duopoly, than to Flybe which effectively creates a monopoly and possibly means that we lose Blue Islands as well.

Interesting that the reaction from people in Alderney who went to the meeting was seemingly overwhelmingly in favour (based on the coverage by BBC Guernsey). They could see the rationale and have not leapt to the knee-jerk rejection that we often see.

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29

Dave Jones

To me this is all about our own small island security, as I have said repeatedly, nobody out there is looking after our interests and in the future we might have to do a lot more to protect ourselves.
For instance it might be better if we had our own fuel supply company instead of allowing an ever diminishing number of fuel suppliers to keep putting prices up to their captive audience. We can deliver it in our own tankers so why not store it and distribute it. If we ever got down to just one, then they could charge pretty much what they wanted.

I know this is slightly off topic but hanging on to our own airline is just as important, we simply can no longer trust these vital services to anyone else. I have no doubt Mr Coates has deep pockets but as soon as it goes out of our control we immediately loose that security and thewell being, only we can ensure. The protection we can give our people by maintaining control outweighs all other considerations in my view.

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31

GCI27

Gilthead
Go and take a quick look at the rest of the aviation world and you will see that virtually no airline in the world is making a profit right now, or has done for the past 2 years.
So by your arguement then Richard Branson or Willie Walsh can’t run an airline either.
It’s not the management it’s the trading conditions.

Also the trislanders are not in immediate need of replacment. Although it would be nice to have more modern aircraft type but there is nothing out there that can do the same job at the same or less cost.

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33

Stephen John

Gilthead makes the point “trouble is we can’t run an airline – that’s why it loses money hand over fist”

Reality is that Aurigny is managed by so called professionals. The States picked up the tab when Aurigny went on its frontal challenge a few yaers ago when it expanded into routes that would not produce profit. Result was as ignificant loss.

Who were the management? The then Chairman was an ex banker and the management airline professionals.

Much of the losses over the taers of State ownership can be placed on circumstances such as Icelandic ash and the losses incurred in the abortive and daft, expansion of a few years ago.

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35

M Dunning

Why are T&R giving a gagging order to the MD of Aurigny? The States are only shareholders of the company and should keep out of the day to day running of Aurigny as would happen in any other company. If they don’t like the way the MD runs it they can always vote him out.

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37

David

Stephen John
Aurigny was forced to expand into UK route because of C and E’s decision to allow competition in the inter island routes. Whatever the outcome of this whole matter, competition on those routes has to go because the inter island routes cannot support more than one operator and be profitable.

It begs the big question as to why we seem to insist on having so much competition on air routes, utilities etc. Surely its better to allow a monopoly but on the sole condition that the monopoly is operated under strict conditions. The objective of allowing competition is surely because its deemed to be in the best interests of the consumer. So why can’t a monopoly with conditions attached not also be structured to protect the consumer? It then all comes down to negotiating and drafting contracts. Not the States’ strongest suit but absolutely vital.

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39

Stephen John

David

A very well informed post that asks basic questions.

The questions you ask re competition deserve serious consideration.

I would heve liked to have seen the State owned utilities retaain their monopolies for the simple reason their markets were not big enough to feed more than one. I think you are generally of that mind as well.

I would have liked these monopolies to have been controlled by a DIY OUR function run by the States. In this way Guernsey Post, Telecoms etc would be given service and price targets etc that would have been applied, if competition existed.

These controls could be easily adjusted to suit island needs and could be run by the States instaed of the expensive OUR.

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41

David

Stephen John

100% agreed.

What Guernsey needs is an OUR which is designed, in the first place, specifically to meet Guernsey’s requirements, not an OUR which merely imports regulations, restrictions and formulae which were designed for a somewhere completely different to Guernsey. When will we stop blindly importing UK “best practice” and start putting in place what we ACTUALLY need ?

The Bailiwick is a population of circa 65,000 people. That size of market is simply not big enough to accommodate multiple competitors in many areas. It’s not rocket science.

I would go as far as saying that instead of protecting the Guernsey consumer, the OUR as it stands actually results in more risk for the consumer, because if all players in the various markets regulated by the OUR lose money then they could all pull out, and where does that leave the Guernsey consumer ? Very simply, worse off than if there was no consumer.

All we need is a regulator who can ensure that the Guernsey consumer gets a fair deal and is not ripped off if a monopoly does happen to exist. That’s all about licencing and conditions. Why can our politicians not see the wood for the trees ?

Our electricity board and post office are in a mess because of the OUR. Our airlines are in a mess due to C&E insisting on allowing competition on air routes. The telecoms companies are under great pressure because of allowing in too many competitors into such a small market.

The solution is very simple – disband Guernsey’s OUR and create a new one which is fit for purpose – which means being specifically designed to meet the needs of a 65,000 population.

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43

Dave Jones

Peter Norman
Peter Norman

I think that even posting rumors is distasteful, Charles and I may differ over this issue but I can tell you this he is a very talented individual and a man I have enormous respect for. Charles is also a very honest and decent man, who does not, nor ever would accept hospitality from anyone for any political reason. You may say there is no smoke without fire but on this occasion you are wrong. I met with Derek Coates on Thursday where a very full and frank exchange of views took place and I asked him to his face if there was any truth in this rumor doing the rounds, he confirmed unequivocally that no such liaison has ever taken place and Deputy Parkinson is absolutely innocent of these scurrilous allegations, so unless you can substantiate the rumor I suggest you ask the moderator to remove the post. Your words will go around the world and Deputy Parkinson has a first class reputation as a Barrister and financial expert, do the honorable thing and remove the post.

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45

Matt Fallaize

David,

The points you make about competition are absolutely vital.

It was ridiculous to have allowed, and in some cases encouraged, competition in markets which cannot sustain competition without significant economic, social and environmental risk to the island. The inter-island air routes are a good example, so too are areas of the postal, electricity and telecoms sectors.

Particuarly in a small community, well-regulated monopolies can be preferable to unsustainable competition. This is why Deputy Jones and I worked together on a requete proposing a review of the model of regulation in Guernsey, the results of which we await with interest.

When the States purchased Aurigny, it had been profitable. For many years it had operated a monopoly on several routes. Since then, government, apparently dazzled by the dogma of the free market, has been busy handing out licences to other operators to compete on routes which cannot sustain competition. Today there are two Bailiwick airlines, one owned by the States and one owned privately, both making losses according to the T&R Minister.

In my view, the need to reform the licensing policies of the States in respect of air routes seems almost as pressing, if not more pressing, than the need to resolve issues surrounding the ownership of Aurigny. And at the moment, I am inclined to the view that doing the latter without the former would be unwise.

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47

David

Matt
I totally agree with you. Its critical that the requete led by Dave Jones and yourself gets through. The OUR and open skies policy needs to be scrapped entirely.

With the savings made by scrapping the OUR we could afford a very effective Licensing Authority, well-staffed with appropriate personnel to impose suitable conditions on all licences and to police the compliance with those conditions.

A Guernsey-driven solution to meet Guernsey’s exact needs, not the importation of an inappropriate UK-style regulatory system which cannot seem to understand the basic economics of what a population of 65,000 actually needs.

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49

Matt Fallaize

Jack,

Do you not think that the primary role of a politician is to try and influence policy development in accordance with a) the manifesto on which he was elected, and b) his judgement of what is in the best interests of the island?

There are a few tools available to help in this task: asking questions, writing papers, sitting on Boards and Committees, making speeches, moving amendments, requetes, sursis etc.

I appreciate that you would have rather I not been elected in 2008. But having been, what else did you expect but for me to use these tools to try and represent the people who elected me?

I am not always right, of course, but I am not going to apologise for trying to do too much.

I have no idea where Mr Steele is or what he is doing.

In respect of the requete which Deputy Jones and I put together, it was very much in line with views I expressed in my manifesto at the time of the election. I think I met Mr Steele once many months ago, but frankly the requete had nothing to do with him.

David,

The requete was approved, unanimously if I recall correctly. Commerce & Employment are now carrying out a thorough review of the regulatory model.

C&E proposed ‘open skies’ a few months ago, but it was rejected by the States, wisely in my view. I agree with the essence of your point though: the policies for air route licencing need to be revised.

I am inclined to agree fully with paras two and three of your 7.13 post.

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51

David

Jack
What are you talking about ?

Peter Green
We will have to agree to disagree.

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53

David

Jack
Its some way towards an “open skies” policy on some routes.
- Permitting Blue Islands to compete with Aurigny on the inter-island routes
- Permitting Flybe to compete with Aurigny on the Manchester route, only for Flybe to opt out of the loss-making winter route.
- Granting Blue Islands a licence to fly to Paris and then granting Flybe a licence to compete with them, which immediately caused Blue Islands to withdraw.
- Allowing Blue Islands to compete with Flybe on the Southampton route.

It may not technically be “open skies”, but it merely serves to guarantee that neither operator can make the route profitable, which in the long run benefits absolutely nobody. A monopoly on a route, subject to strict service level agreements, a commitment to run the route year-round (less frequently perhaps in the winter) and an agreement on fare levels in return for the non-competition assurance makes far more sense.

The Gatwick route is worthy of different treatment, following the loss of Heathrow. The finance industry would be at serious risk if we somehow lost the Gatwick route. The Flybe/Aurigny arrangement seems to work (only because of the high demand on the route) and a monopoly on that route would be very dangerous unless the slot ownership situation can be 100% nailed.

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55

Stephen John

Jack makes the excellent point of asking how you stop someone operating on an air route wwhen it is licenced to do so?

The answer seems you can’t and can only hope one of the holders will cease to operate the route.

The proposals of T and R seem to be for the taxppayers company to make way for the comooany of a private individual, who would also get the Gatwick slots and use of the ATR’s, maybe even ownership of the ATR’s, with the taxpayer still acting as guarantor.

A more acceptable solution is for Mr Coates and his company to give way to Aurigny.

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