Aurigny’s losses set to reach £6.3m. in 2017

AURIGNY is predicted to make a loss of £6.3m. this year with a decrease in passenger revenues cited as one of the reasons.

dornier

The States-owned airline already lost £2.3m. at the end of 2016, which is combined with the £3.9m. loss expected this year.

Addressing States members yesterday, Policy & Resources president Gavin St Pier said there had been a decrease in passenger revenues as a result of both flat market conditions and the poor weather conditions experienced at the beginning of the year.

Other reasons for the loss, Deputy St Pier said were:

n Extra maintenance costs in both the ATR and Dornier fleets

n Higher than anticipated crew costs in the transition from the Trislander fleet

n Additional compliance and handling costs

n Exchange rate movements and increased fuel costs.

Comments for: "Aurigny’s losses set to reach £6.3m. in 2017"

Jonathan

Time for a drastic re-think?

Dickturpin

I think we have all seen quite enough!

Aurigney WAS an Alderney Company until States of Guernsey bought it about 10 years ago. The clear reason for that was simply to protect the Guernsey/Gatwick route, at the behest of the local Business Community.

Since that time, we have seen ridiculously cheap fares on the Guernsey/Gatwick route whilst all other fares have risen to eye watering levels!

It easily possible to fill pages with examples of Aurigny's ridiculous fare structures and unfair practices regarding seat pricing and sales.

We combine that with the purchase/lease of unsuitable aircraft and shortage of trained aircrew and the all to obvious explanation of the deficit is apparent.

Governments have never been able to run successful enterprises and Aurigny is a classic example!

An AI Forever

Another guernsey shambles

Paul

£2.3/3.9/6.3 doesn't look good for the management team does it! How far down does it have to go before radical changes are made?

markB

Aurigny needs a management shake up.

Get rid of the current lot who know they are on to a good thing having the States as their paymaster.

wallygator

I have already written to the press letters on this and am discussed that this is the tax payers money paying for this.

If it was a private business it would have gone to the wall.

If the cost of travel was not so high especially now there is no competition people would travel more. The Blue island flybe joining help to kill this off.

Sea travel to the island is expensive and untrustworthy and air line charges are ridiculous so time to sell Aurigny and let in private companies and open the competition up.

More vistors would come and more locals would fly out.

Aurigny and flybe will say there is lower cost flights, but these are mid week when us poor middle class high tax paying GSP down trodden people are working.

wallygator

I have already written to the press letters on this and am discussed that this is the tax payers money paying for this.

If it was a private business it would have gone to the wall.

If the cost of travel was not so high especially now there is no competition people would travel more. The Blue island flybe joining help to kill this off.

Sea travel to the island is expensive and untrustworthy and air line charges are ridiculous so time to sell Aurigny and let in private companies and open the competition up.

More visitors would come and more locals would fly out.

Aurigny and flybe will say there is lower cost flights, but these are mid week when us poor middle class high tax paying GSP down trodden people are working.

gypoppy

D idn't we get told a few years back that if we (the taxpayer) would guarantee a very large loan to enable Aurigny to buy a jet then they would be able to return the company to profit within 2 years?

I believe this never happenned.

Then we were told, if we just payed off their loan for them, then they would be able to return to profit.

I beleive they got our money, but never stuck to their part of the bargain and never even broke even.

Then we were told, give us a few more millions, to buy Dorniers, and we will be able to break even.

Guess what, they got our money and then continued to lose even more.

The question I have is why no-one has been held accountable for these millions of pounds losses and been fired for their inability to do the job properly?

And then to add to their debts, they have recently employed another fat cat manager to swell the management team.

Me thinks there are far too many incompetantt chiefs and probably not enuff Indians.

markB

gypoppy --------yes you are correct, Aurigny's financial director or whatever he is called said exactly that, no doubt he is still on the pay roll.

MLP

What's all the fuss about. The bus service costs the taxpayer £3m+ a year. It's less essential than the airlink to Gatwick. At least you can walk from Torteval to Town - try walking from Guernsey to Gatwick! Maybe they should have a flat fee on Aurigny like they do on the bus - £50 each way should do it.

Beanjar

The States and Aurigny's deplorable management have managed to make me ashamed of ever wanting the airline to be brought under public ownership. In mitigation, who could have believed that anybody could possibly cock things up quite so thoroughly?

They have been given new planes, had their debts written off, been allowed a monopoly on most flights, allowed to double or treble the fares, nobody takes them to task when fantasies appear in their advertising or performance statistics. And still they manage to lose ever-increasing £millions every year. Axe them now! Somebody will surely fill the gap, surely they couldn't do much worse?

Mars

The airline can never provide a competitive price compared to other destinations when the landing fees in Guernsey are so high, roughly 50% of what I recently paid for tickets.

If the States scrapped these fees we would get much more travellers, both local and tourists. Aurigny would then reduce its losses, maybe even make a profit. The States wouldn't need to cover the loss and could net the difference against the loss of landing fees. There would also be the other benefits to the Island to consider.

guern abroad

In 2014 there were 577,000 passengers who flew with Aurigny. Let's say half of those were inbound flights, 288,500 passengers. Assuming 2018 landing fees looking at the Airport charges PDF (if I am reading that right) that makes nearly £4M. I am all for boosting passenger numbers but it is not a free ride if we also cover Guernsey landing charges.

guern abroad

Though I should add I would far rather pay Aurigny's landing fees to booster passenger numbers then pay some other Airline who takes all money off Island.

Common sense

GSPs loan coming home to roost, his promise of aurighny being able to turn a profit proved empty and now the tax payer has to pay off the £6,000,000 plus for this year alone and the £40,000,000 loan the company was given under GSP watch plus the millions in interest.

markB

Common sense... you are so right, maybe this is why GSP took out such a massive bond.. to cover aurignys, his and Lyndons business options backsides .. so to speak.

WineNot

Can someone explain this statement from Gavin St Pier. If Aurigny are running at a loss each year, how can they pay this o/d back, or am I being a bit stupid..

"Therefore, the Policy & Resources Committee has agreed, that it will make available to the Aurigny Group a temporary overdraft facility in 2017 of £6million in order to meet its cash-flow requirements."

Tony Webber

The problems need to be addressed.

The main one is the ridiculous ticket charging policy.

We need to change to a more standard level fare basis where people know where they are.

There are numerous empty seats because Aurigny refuse to have sensible fare levels.

There are numerous people who want to travel but don't, because of the price.

If Aurigny changes its pricing policy ( and this is one they have been very stubborn about for years), then we will will have mainly full planes and our community will be better served.

Everyone will benefit, business community, visitor economy, students, family, friends and more.

Aurigny will probably always need a subsidy, but then it is the Island's lifeline.

However, a better ticketing policy, an end to these ridiculous low offers as if we are some bucket holiday destination, and then having the rest of the tickets beyond the reach of most people.

If Aurigny change their policy, the result will be that the other airlines will have to effectively reduce their prices, as even Condor will have to also.

Tim for Aurigny to wake up, but remember Aurigny have a Board of Directors who should shoulder the blame, and ultimately the policy comes from the States of Guernsey and it is our senior politicians who should make sure the policy is changed.

Cher Eugene

Solution:-

1. Sack the top four members of the management team and replace them with two;

2. Sack the Independent Directors and replace them with three, one of whom must be a politician, to make, with 1 above a Board of five;

3, In three years time sack the politicians responsible for Aurigny over the past five years (if not sacked last year);

4. Do a deal with the new board to contribute an effective waiver of airport fees - a la Easyjet - so that the Company makes a small profit;

5. Report monthly revenue, expenses and profit/loss figures to the States for all to see.

For starters.

Rupert Walthumstow

And cancel some of the utterly pointless routes they insist on running.

Leeds, East Midlands and Norwich for starters. All trival to get to from other routes. One could even consider Stansted or London City (both have pros/cons).

Sort out the Alderney route as I seem to remember from last year that lost an inordinate amount of money on every single leg regardless of whether it was full or not. If it's full, it shouldn't be losing money.

wallygator

I have to agree it is the cost of the tickets that has caused all of this.

As I travel regularly to Gatwick I have compared 3 flight cost that I have taken in the last 3 years with the cost if I was to book them again now to travel on the same days as last time i.e. if it was the first Monday of the month I have done the same.

October 2013 the flight cost for 4 adults to Gatwick Friday 11th 7.00am flight until Sunday 13th 18.00pm was £356 but now this would be £591.92.

June 2014 the flight cost for 2 adults to Gatwick Wednesday 3rd 18.00pm until Friday 12th 11.50am was £190 now would be £295.96

September 2015 the flight cost for 4 adults to Gatwick Tuesday 1st 18.00pm until Wednesday 9th 18.00pm was £432 and now would be £551.92

As you can clearly see there is a great rise in these.

Beanjar

I have just carried out the same exercise, comparing flights we took exactly two years ago on the same days and times. Was £230 for two people return, now £380. A rise of 65% in just two years, and yet the passenger numbers are down so much Aurigny still manages to have less revenue! Apart from the clowns at the States and Aurigny, who believe the public will just keep forking out, who is surprised? We flew in from Gatwick a few days ago, as usual the jet was half empty so that is £26 million largely down the drain.

Devil's Advocate

Are you both looking to book the same distance ahead as you did when you bought your tickets?

guern abroad

That was my thought, unless booking date is comparable with flying date it is not like for like.

wallygator

Yes mine was within a few week and seats etc included

jjlehto

wallygator

I have never understood why people pre-book seats?

Also I can't work out how you could look at three flights booked in the past over a stretch of close to 2 years and try and replicate them on one day. It doesn't seem possible (unless you booked all of those trips in the month of May....so Oct 2013 was booked May 2013, June 2014 was booked May 2014 and September 2015 was booked May 2015....which seems unlikely?)

wallygator

Sorry jjlehto I have only just spotted your reply.

Yes I do book all my flights in May when I can as this is when I have the cash.

As for the June flight this was for a last minute deal so had no choice but to pay the Aurigny fare for a month or so in advance.

A for booking seats, some people do not like sitting away from the people they are traveling with so booking a seat confirms this cannot happen. Aurigny are not as bad as Flybe for this.

I travelled back from Southampton on a Flybe flight of 25 passengers and was refused the right to sit next to my wife.

Rupert Walthumstow

I've never been on a flight where passengers from the same booking have been separated without being asked. And this isn't just with kids (actually none with children).

Most of the time even if you're not on the same booking you can ask at check in and they'll sit you next to one another.

Total waste of money paying for seats as far as I'm concerned.

jjlehto

Fair enough, wallygator, thanks for the reply. I have never had an issue with Aurigny and sitting with my kids. I try and avoid Flybe altogether!

jjlehto

I am a bit intrigued by these comparisons, but unfortunately I can only find a flight I booked in early June 2016 for comparison. Last year it cost 578 to travel on August Bank holiday weekend (for 4 people) and same flight times and days this year comes to 692. Close to 20% increase, and no free refreshments this year!

wallygator

Jlehto 20% rise shows the rip off. I have not worked out what percentage mine was.

As for the seating flybe are very poor. Yes my wife was on a different booking than myself and my daughter as ours was a uk hospital trip. However the airline had no idea. of her age and sat us apart even though i asked at the check in desk if we could sit together. The girl on the desk in Southampton seemed to take pleasure in saying we could not. This has happened many times.

Alvin

Let's look at some of those reasons for the anticipated losses...

1 - Decrease in passenger revenues ( due mainly to a decrease in passenger numbers : maybe due, as many have observed, on the questionable flight pricing strategies implemented; and also due, maybe, to the delays of opening sales of flights in 2016 and 2017.

2 - Dornier & ATR maintenance costs : the decision to start with second hand Dorniers turned out to be costly. Then one wonders why acquire a very old ATR, ( G-HUET ), specifically for the LCY route when, anyway, the two newer ones, ) G-VZON and G-COBO ), are often used on that route.

3 - Transitional crew costs ( Trislander - Dornier ) : Not surprising because new ( and costly ) training had to be given with the new Dornier as the systems on board are completely different from the old Dorniers which, quite frankly, should not have been purchased.

4 - Exchange rate movements & fuel increases : International fuel prices, set in U S dollars, have been reasonably stable since the past two years - but the decline of Sterling makes fuel more expensive for British airlines, on the other hand, declines in Sterling should boost business for Britain as a destination, ( from home and abroad ), and passenger numbers should increase. Furthermore, Aurigny has actually increased its standard fares, on average, these past two years, by more than the increase in costs due to the decline of Sterling. And why does Aurigny charge for flights originating in France, ( Dinard and Grenoble ), in Sterling when every other airline in the world would charge in Euros ??

But what about the operation of the routes themselves ? We are told countless times that the Alderney flights are losing money - but no actual evidence of that claim has ever been provided. Alderney fares have been sometimes higher than the Gatwick fares ! What about the other routes ? How much is LCY losing ? Dinard ? Norwich ? Barcelona ?

Aurigny has expanded its network. But surely the LCY route has taken business away from Gatwick and Stansted. Surely Norwich has taken business away from Stansted. Surely Leeds - Bradford has taken business away from Manchester and East Midlands.

Serious mistakes have been made, that is clear. The States should be looking closer at Aurigny and how it can cost effectively help improve transportation links to the island : for islanders and also for the finance and tourism industries. Hence the Aurigny Review : but that keeps getting further delayed whilst Aurigny plods on losing more money. Eight months ago a public consultation was held - with a lot of us submitting opinions and ideas - and still no results ??

However, even if Aurigny can be turned around and flight connections to and from the island are improved and made more affordable, and the airline can only break even or, worst case scenario, lose 3 million quid a year, ( same as the subsidy for the bus service ), it will contribute more to the island's economy directly than that through the payment of airport fees, local salaries and insurance contributions, payment to the various suppliers etc. But there must be an improvement in those flight connections, they must be made more affordable and passenger numbers must be increased !

Devil's Advocate

Decrease in passengers - you forgot the £100k a day when it's foggy, and we've had more of that than usual this year.

The whole Trislander->Dornier migration has been an absolute debacle. It's been tremendously costly and has upset the Ridunians no end. Once that's finally dealt with and they're running a fleet of 'new' Dorniers they should be in a much better place.

Cannibalisation - we'd need the passenger numbers to see, if more passengers are being carried on a pair of cannibalistic routes (eg. Manchester & Leeds) than could be carried on one, and the profit is higher then it's OK. Perhaps a better solution would be to alternate between cannibalistic destinations i.e. East Midlands 4 days a week and Leeds on the other 3? Anyone having to fly 'daily' can probably put up with using the 'other' airport.

London - Would LGW and STN have coped with the load when Flybe pulled out without LCY? Even though my family can be flexible with our flights to take the cheap ones our Gatwick flights are always well-filled. Like you, I fail to understand the obsession with Gatwick - anyone wishing to visit London is almost certainly better off flying into City if the price is close.

Fall of the pound - I don't think enough business generated by staycations can compensate for the extra costs. It's noticeable that Easyjet have lost £212 million in the past 6 months - it's not like Aurigny are unique in losing money.

Alvin

I would love to see statistics over the past ten years on how many days the airport has been out of action due to weather conditions. I agree it does seem to be extra-ordinarily high these past two years.

Before buying the Embraer I would have looked at operating 3 -

4 Gatwick rotations with ATRs, 1 or 2 to Stansted and 2 to LCY. And allowing Easyjet in.

As they got the jet, then I would have concentrated on just Gatwick and Stansted. I agree that LCY is a very easy and convenient airport, especially when travelling with no luggage, but Gatwick does have excellent rail connections : to the south, to most parts of central and south London, to Luton and by bus to Heathrow. LCY does have the better flight connections to other business centres of Europe, but does suffer much more from the weather than Gatwick. Aurigny loses out not having an agreement with BA, maybe Flybe, as they are building up there, would be a better option for the LCY route.

As for staycations, that is just part of the picture. Last year saw large increases in traffic to the UK from the EU, ( 11 % more air passengers ), with some countries rising by 24 %. Only Belgium saw a decline and we know why.

Interesting news about Easyjet. I wonder how long the Jersey routes will be maintained. Furthermore, Easyjet have changed their latest Airbus orders to the A321 instead of the A320 and, over the years, will be moving over to the larger plane. That will threaten the Jersey and Gibralter routes as their runways will not be long enough !! :-)

Puts to bed the dreams of some on Guernsey who think that, by extending the runway to the same as Jersey, Easyjet will come aflying in !! :-)

jjlehto

The efforts Aurigny go to when we have fog is pretty epic. And when you are stuck in the UK it's always appreciated, but is it really needed?

GM

Jjlehto

It is obligatory for all journeys originating in the EU, under EU law, even if flying outside of the EU (ie to Guernsey). Applies to ferries as well. Doesn't apply in the opposite direction though.

If you are delayed overnight in the U.K. then Aurigny is obliged to find and pay for a hotel, transport to/from the airport, arrange alternative transport home for you, pay compensation etc. The total impact of this on Aurigny is huge - a figure of £100k/night has been quoted for a day of no flights from the U.K.

jjlehto

Thanks GM, I didn't realise those rules applied when the delay was completely out of the airlines hands. Crazy rule!

Magoo

What are the independent non exec directors thoughts on this? Probably don't care as long as they get paid

Wrangler

With an anticipated loss of £6.3M, and if they carry the same number of passengers as last year (551,736), they'd be better off simply giving all their passengers a tenner to travel of other airlines. They'd lose less!

Beanjar

If we have to waste money on one badly run form of transport or another, I would go for Aurigny rather than the pathetic, partial, bus service. £Millions being peed away is similar.