Derek Coates: why I want Aurigny
Wednesday 8th September 2010, 1:00PM BST.
TOURISM has a rosy future and Derek Coates, pictured, wants to buy Aurigny to help develop it, the multi-millionaire entrepreneur said.
During an in-depth interview with the Guernsey Press, Mr Coates said no one had asked him why he wanted to buy Aurigny and merge it with Blue Islands.
He said it had nothing to do with the struggles of his own airline, which he admitted experiences similar losses to Aurigny’s £1.5m. per year that Aurigny, or a desire to ensure that visitors had easy access to his hotels in Guernsey and Alderney.
Mr Coates said his primary focus was on expanding the tourist industry and helping it reach its full potential. To do so, he said, the Channel Islands needed a strong airline that was focused on marketing the islands.
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Could it be to offer favourable Package Deals with his own Hotels subsidised by less favourable Deals to other hotels ?
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Derek is making out he’s a big public benefactor to the taxpayer by taking loss making Aurigny off our hands. Rubbish.
How can we believe anything he says after yesterday’s fiasco about going to prision if he sells the Gatwick slots? Either the GP misreported him or he has little grasp of corporate governance issues.
I suggest we need to take what Derek says with a pinch of salt and maybe make him a counter offer to buy BI for £1?
Not that it’s worth that much. Clapped out planes and a number which are merely leased. (check out the UK Government GINFO website for details if you don’t believe me)
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Three stories in the last few days about this.
Sounds like a worried man trying to salvage something from nothing using his admitted gift for selling. But no-one is buying it.
Sad to see the emperor looking for his clothes and finding none.
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An Airline’s job is to be an airline, there are other organisations that market tourism.
This is a thin viel I think, and is a red herring and is fishing for support.
Aurigny must stay States owned and belong to the Island.
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‘He said it had nothing to do with the struggles of his own airline, which he admitted experiences similar losses to Aurigny’s £1.5m. per year that Aurigny, or a desire to ensure that visitors had easy access to his hotels in Guernsey and Alderney’……
or, presumably, the fact that it will give him a total monopoly.
Really, it must be this altruistic selflessness that’s made this gentleman the incredibly wealthy person he is today….
the same selfless approach that Barclays are using to ‘improve’ Sark for ‘their own good’.
All these saintly CI based millionaires and their professed good deeds brings an obligatory cap doffing tear to my trusting and naive peasant eye….
or perhaps it’s just all their BS smokescreens making them water.
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Keep Aurigny owned by the States of Guernsey.
Tourism can be marketed without the need for Aurigny to change ownership.
This is just a red herring, another try at shaking a sweet bag at the States.
Sweets rot teeth and are bad for the body and soul, there is no exceptiopn here.
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Derek Coates says he wants to protect Guernsey, Aurigny and the Gatwick slots.
This reminds me of the comment of A and F when they bought Aurigny in May 2003
“However, commercial airlines cannot be expected to take into account the public good that air links provide. We have to work on the assumption that airlines will act in their commercial self interest. Therefore, as the pressure on slots increases so too does the vulnerability of Guernsey’s ‘lifeline’ into Gatwick”.
Words that are also so true in September 2010.
Mr Coates first duty is to his shareholders. We forget that at our peril.
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If Aurigny, an airline; is sold to a company called Blue Island, also an airline; then the Gatwick slots will be owned by the company called Blue Island.
The issue of a golden share seems to be just a foil to help the public accept that the deal is good for Guernsey.
The deal is certainly good for Blue Island and its main shareholder. It gets for a pound an airline, use of the Aurigny ATR aircraft and the Gatwick slots for nought. The taxpayer still will own the ATR’s and the debt associated with these aircraft.
As the transfer of slots is such a lucrative source of funds, with peak time slots sometimes fetching millions of pounds, I seems like Aurigny are sitting of an asset that could be many times more valuable than the £5 million paid in 2003 to the previous owners of Aurigny.
This begs the question as to why T and R haven’t asked Blue Island for £20, £30 million for the transfer of the Gatwick slots. Due diligence etc!!!
Of yes, the Golden share.
All the informed view is that this is a share of straw when it comes to protecting slots.
Or is the golden share a mere sleight of hand to allow such valuable slots to be handed to a private company for nought?
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What a shamles, what a farce. More like a pantomime. Except it aint funny.
Guernsey States bought Aurigny for very good reasons, which have not changed. But GS failed to ensure that Aurigny was run efficiently.
The best answer for the residents of Guernsey and Alderney is that GS brings in someone to operate Aurigny efficiently. But the obvious flaw in this is that GS seems to have no commercial nous, as every commercial opportunity they have falls flat.
However that would be better than selling to Blue Islands, which would be a disaster.
Is there no-one in GS with the commercial nous to define how Aurigny should be run, financially not operationally, and then to find the right people to do just that?
What an advert for an Island that promotes itself as a World Wide Financial Centre of Excellence.
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Rees Bryant
How do you know Aurigny is inefficient? Please explain what expertise in aviation you have and what experience, or is this the usual “I can run ,,,,,,,,, better than anyone else” We see and hear a lot of that, I am just as guilty I am sure but you should be aware that aviation is extremely complicated, extremely highly regulated, extremely expensive and extremely competitive. It is also subject to peaks and troughs of demand as is effecting virtually every airline in the world at present. Interestingly one of the reasons why Aurigny is losing money “AT PRESENT” is because political decisions were made to open up the inter-island links to competition the result being too many seats chasing too many posteriors – so both Aurigny and Blue Islands are suffering. If Aurigny and Blue Island are losing the same amount I would suggest that it is not Aurigny that is the inefficient one.
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Mr Coates complains that nobody has asked him why he ‘wants’ Aurigny.
Mr Coates, why don’t you ask the Alderney people why they don’t want YOU?
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Perhaps BI is in a bigger mess than we know,ole Coatee shouting for help with his last breath before being dragged under the next wave,should of taken the life belt,not waited for a passing cruise ship,i for one would have more faith in Lyndon running Island Coachways.
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Hugo.
In my considerable business experience a company with a large operating loss is not efficient in one of two ways – or both. Forecasts are too optimistic, or actual sales and/or costs are too low/high. The type of business is immaterial.
But the answer to the Aurigny problem is in your post. They allowed competition. Guernsey States worships at the altar of competion without first considering if the market can stand it. Aurigny couldn’t, nor could Guernsey Post. And the regulator has been an expensive failure.
The faults of the past are easier to see than what to do for the future. An efficiently run Aurigny is vital for the Bailwick. They now have a more limited market but that does not mean they cannot break even or make a small profit, providing they fully understand their limitations. But that needs some very clear direction, which appears to be missing.
Sorry I cannot be more positive, but this has been so badly handled so far it is hard to be otherwise.
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Rees
Yes – allowing competition on the inter-island route is a massive contributing factor. Commerce & Employment were insane not to see this (even with the benefit now of hindsight). They also insisted on competition on the Manchester route, which Flybe exploited and then pulled out ahead of the winter loss-making route, leaving Aurigny to carry the route through the winter.
Most of Aurigny’s losses can probsbly be directly attributed to Commerce & Employment’s policy on competition. Quite easy to fix it really!
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Flybe don’t “exploit” the Manchester route!! They fly it in the summer, and then leave it all to Aurigny in the winter, yet that still doesn’t help them make a profit! Aurigny’s losses can blamed at their stubborn vision that handing out newspapers, complimentary drinks, and not charging for bags (like nearly all other UK airlines do!) is a good thing. Sure, it’s nice for passengers, but not for running a business in a difficult climate. And how much have those full page adverts in this week’s Press cost?
Come on Blue Islands, this is your chance to prove yourselves and turn this limping ship around. Make it a success, but many locals will always hate the change and not be happy because Joey has gone and there isn’t a puffin painted on the tail!
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Aurigny continue to make a loss, why?
Is because of the competition from Blue Island?
If so, why not the larger company making a proportional lesser loss buy a small company with a greater proportional loss for £1?
Derek could then save himself a few million a year of losses and help the community he so wants to help!
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The objection is not about change, it is about ensuring to do the right thing for the Island long term, and that is to keep Aurigny States owned.
Look further down the line, say 30 years time, Mr Coates retires, his shareholders have some other owner, that new person sells the whole lot off, then where is Guernsey.
Staying States owned has the potential to protect the Island for generations to come.
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Big D
I think you will find that the summer months are the only profitable months on the Manchester route, or at least would be if there wasn’t competition on it! Aurigny are left flying half-empty planes throughout the winter.
Competition on most routes makes very little sense at all. There isn’t enough critical mass for both competing airlines on a route to make money. Gatwick only has enough critical mass because the demand is inflated due to the lack of a link to Heathrow
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Apparently, in business, competition is always ‘good’, as it means ‘progress’, which is always ‘good’ (and those who disagree, branded as short sighted and ignorant)….
unless, of course, those concepts are being blithely crowbarred into a market that’s too small to handle them, in which case (surprise!) they can actually impede/have a negative impact on the businesses concerned.
Really, let’s just bring in the OUR’s Ming the Merciless to finish the job, after all, that’s what he’s getting paid to do-!
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I see Aurigny have increased their loss this year by placing a full page colour advert in the GP!
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devils_advocate
As did Blue Islands with thier TV adverts
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Mike and Devil’s Advoocate
That’s precisely the problem. Two airlines wasting money competing in the media for market share in a market in which there is simply not enough room for competition. Utter madness!
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Rees
I agree with your second paragraph completely, but regret you are taking too simplistic a view of the mechanics of running an airline – load factor is crucial so if the aeroplane in full on every leg it should make a profit – but most of the year they are not, so in an ideal world airlines would use smaller aircraft when less busy – but these assets are expensive to buy and even more expensive to maintain and to operate – both functions heavily regulated by the way, and as an aside if Curran gets his little (and very expensive) empire involved even more costs will be added to the company. Most Airlines make there profit in the peak travelling times, here the peak summer, elsewhere at other times, so the big international boys can theoretically spread the burden, but at present I am not aware of any airline that is profitable year in and year out, the peaks and troughs are a fact of life in aviation and the smaller the airline the less able to deal with the troughs. This I suspect is why our Mr Coates wants to be given Aurigny, (that’s what the current proposal means) because Blue Islands is simply too small to absorb the costs of running a scheduled airline.
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Some underhand tactics now. Search Google for Aurigny and up pops a sponsored link for Blue Islands.
Anyway, no matter now, any odds on how long Blue Islands are going to stick around now that they are not going to get their hands on the taxpayer assets?
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Derek Coates: why I want Aurigny ?
He’s inspired by Roman Abramovich….
but I’m afraid more is needed (not only Aurigny @ placebo)
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@ chris. That is Google ad-words at work, the tangoed one uses his purchasing power to out bid any other firm that wants to use this for advertising. Every time you see that on the page (impression) or every time you click on any of his links it costs him money. Last time anyone checked he was max bidding about £4 per click so no chance for anyone else. Only good thing is trying to click on every one of his links to try and cost him money :-)
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Devil, Mike, David
The thing that gets me about these adverts from Aurigny in the GP is – who authorised them if it’s owned by the States/Taxpayer?.
Since when did the taxpaper ask for them to get involved in a PR war with Blue Islands? A full colour page day after day can’t be cheap.
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Blue
What you need to understand is that throughout all of this the Blue Island/Healthspan PR machine could comment or run things as it wanted whilst Aurigny could say nothing…i see nothing wrong in it keeping itself in the publics mind during what has been a traumatic waiting game for its staff.
Now is the time to move forward and look at ways the airline can become more efficient without the threat of the unknown hanging over it and the Islands vital links.
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mike – except the taxpayer does not pay for Blue Islands loss!!
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It is all quite simple really.
Most of us were taught at an early age that,”I want” doesn’t automaticaly get.
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Chris made a very valid point, BI is a smaller airline than Aurigny, has less potential value in its routes and less assets – yet it makes similar losses. Surely an offer of £1 from Aurigny would be more than generous? Come on Mr. Coates, just how strongly would you want a merger under those circumstances?
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Beanjar
It might well be that Coates will want out of the passenger aircraft business.
What does the future hold for Blue Island without that asets of Aurigny?
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Well for what it’s worth, I reckon those Aurigny ads in the paper were the best ads Aurigny have ever produced. Maybe it’s a new PR agency?, whatever, keep ‘em up Malcolm !
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