Flights of fancy?

Saturday 14th August 2010, 10:00AM BST.

SOME people have recurring dreams involving watching car crashes in slow motion without being able to do anything to stop them. Sometimes States-watching can be a bit like that, too. Particularly when a committee is working furiously on a proposal that seems destined to be comprehensively defeated on the floor of the House but which – like a starving cur with a bone – it just won’t let go of.

There can be several reasons for such apparently illogical behaviour.

It can be a point of principle. The department concerned is so convinced that it is right and the rest of the assembly is wrong that it won’t concede defeat without pressing the matter to a vote in the States. The members of that department know they are going to take a hiding but at least it will then be their colleagues making a perverse – in their opinion – decision and the department will not be a party to it.

Conversely, at other times committees press ahead towards certain defeat because they don’t see it coming. They simply don’t have the political antennae to realise that they are batting on a sticky wicket.

States departments are often described as ‘silos’ but at times ‘bubbles’ is just as apt a description. Things just seem different inside the boardroom than they do in the world outside. I suppose such blissful ignorance must be less common now that deputies send seemingly endless emails to each other on almost every subject.

Then there are those committees whose self-perception is so distorted by hubris that they can’t even conceive of not being able to persuade the rest of the States to their point of view.

‘They’re all against it now, but once we explain it to them properly then they’ll come around.’

Who knows which of these categories Treasury and Resources falls into with its determination to ask the States to sell Aurigny to Blue Islands for a quid at the October States meeting. Maybe none of them. Perhaps it’s me who’s got it wrong and there is a real chance the States will rubber-stamp the deal.

However, at the moment that looks about as likely as pigs flying on the inter-island routes.

Of course, the added element to this political saga is that in taking the apparently doomed proposal forward, T&R must be incurring considerable costs in carrying out the due diligence process.

Assuming the Aurigny sale does end up on the October States agenda, then both possible outcomes will bring with them a level of uncertainty.

If the States approves the deal, then that uncertainty will perhaps relate more to the medium term. Undoubtedly at first all will go as promised and the fears that have been expressed so stridently by some will seem to have been over the top.

The problem is that political cliche: ‘Events, dear boy, events.’ The future is always uncertain and the futures of privately-owned airlines are more uncertain than most. The States may have a buy-back clause, but that would be scant comfort if what was left to repurchase was a total basket case.

On the other hand, if the States says no, what will happen? Will Aurigny and Blue Islands continue to bash seven bells out of each other on the inter-island routes? Or will they start to cooperate despite Blue Islands’ owner ‘no longer trusting’ Aurigny’s managing director?

Will one company eventually triumph and push the other off the route? Blue Islands seems to be gaining more and more market share between Guernsey and Jersey, but it appears to be ‘buying’ that trade by loss-leading. How long can that go on? Will their fares stay as competitive if Aurigny withdraws and focuses solely on its UK routes? It seems unlikely.

Then there is the question of whether Derek Coates will be willing to continue to operate his whole Blue Islands network at a hefty loss much longer anyway. Surely that would be the realistic prospect facing the Healthspan millionaire if the States pledges its long-term support for Aurigny? Is his attempt to buy Aurigny the last desperate throw of the dice or just another staging post in the long-term growth of a local airline?

Only he can know that. Constant cross subsidy of a loss-making operation – without the same strategic imperatives as the States has with Aurigny – seems like a bit of a bonkers business strategy.

Then again, it’s his money.

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