Buying three new aircraft ‘right move for Aurigny’

Deputy Peter Ferbrache was speaking after his board published a policy letter, which asks the States to guarantee a $60m. loan for the replacement of the airline’s three ATR aircraft.

When asked whether his board was unanimous in its decision to support the replacement of the aircraft, he said it was not.

Deputy Jan Kuttelwascher thought the airline should wait another ‘five years or so’.

However, Deputy Ferbrache was certain following independent advice from consultant PA Nyras that buying the aircraft now was the right decision.

‘We were given a business case and a significant part of that was the cost,’ he said.

‘We took independent advice. They told us it was a good deal.

‘After much thought and after meetings with Aurigny we decided it was the best option.’

Aurigny’s current ATR fleet is nine years old.

While they were perfectly safe and well maintained, maintenance costs would spike in five years’ time, Deputy Ferbrache said.

PA Nyras said leasing agreements were not favourable and were unlikely to be in the future.

‘Leasing gives less flexibility and it is very difficult to get out of a lease,’ he added.

‘But if you own a plane you can always sell it.

‘The economic circle is what it is. They (ATR) are offering a very good deal. The price is unlikely to be the same in the future.’

He added that there was also the uncertainty over Flybe’s future in the island to consider and protecting the island’s air links.

A second option of buying just two new ATR aircraft was also discussed.

This three-aircraft model, including the jet, as opposed to the four-aircraft option would generate more profit for the airline, the States report said.

‘From a financial perspective, the three-aircraft model indicated better performance, anticipating that Aurigny should make profits of between £1m. and £2m. per annum, whereas the four-aircraft model indicated a more modest position.

‘In this scenario, it should still be able to reach a break-even position, albeit with profits from its London operations cross-subsidising its other regional services.’

But the three-aircraft model would result in the withdrawal of Aurigny’s regional services to Manchester, Leeds/Bradford, Bristol, East Midlands, Norwich (seasonal) and Grenoble (seasonal winter-ski).

‘Only the services to Gatwick and Stansted would be maintained. Compared to the four-aircraft model, this would have resulted in an annual reduction in seats offered to the Guernsey market by Aurigny of 180,000 and a forecast reduction in the number of passengers carried by the airline of 115,000 per annum.’

Deputy Ferbrache said his board considered the three-aircraft model, particularly after one of the board members said they supported it. ‘We, as in myself, Deputy Gavin St Pier as Policy & Resources president and Deputy Charles Parkinson as Economic Development president, met with Mark Darby of Aurigny to discuss this. They [the airline] produced a business case which justified the third ATR.’

The policy letter said the new 72-seater aircraft would improve reliability, reduce passenger disruption and save the airline more than £4.1m. over 10 years, net of purchase costs.

However, it will have to pay £2.2m. to P&R for it to guarantee the loan, if the States approves the policy letter, due to an established policy.