Lower fares option to longer runway
A STATES-FUNDED reduction in air fares could be introduced rather than a runway extension, but it could cost around £8m. a year.
Alastair Ford, of States’ Trading Assets, said it was one of the options that the States could look at to address concerns around air links.
Mr Ford was speaking after Guernsey Investment Fund Association chairman Paul Smith said that a radical overhaul of Aurigny’s operational model was required to make it fit for purpose.
‘We cannot continue to allow the interests of this one airline to dictate whether we extend the runway or not,’ said Mr Smith.
‘But if that is to be the case, then maybe the money saved by not extending the runway should be allocated to slashing Aurigny’s fares for the next 12 months or more in order to increase passenger traffic and re-energise our economy.’
He added that it was imperative that the investigation into the viability of a runway extension was undertaken as soon as possible.
Mr Ford said that Policy & Resources’ forthcoming policy letter would explore an array of matters relating to a potential extension.
But it does not suggest Aurigny’s interests should dictate whether or not the runway was extended.
‘What the policy letter does do is look at the different types of approach that can be taken to address concerns around air links, which fall into two broad categories,’ he said.
The first, infrastructure options, include runway extensions of different lengths and investment in landing systems.
The second, market-based options, do not involve large upfront capital expenditure.
They include route development and support offering incentives to both existing and future operators to improve connectivity, as well as the use of public service obligation structures.
‘That could conceivably include States funding to reduce fares on any service, not just those offered by Aurigny,’ Mr Ford said.
‘With over 800,000 passenger movements through Guernsey Airport last year, a £10 reduction could cost in the region of £8m. per annum, depending on how passenger numbers respond.’
However, he said that it cannot be assumed that money not spent on, for instance, a runway extension, can be classed as money saved to be applied to another.
‘There are many demands on capital financing across the States portfolio in general and at the ports in particular,’ he said.
‘Each investment requires a case to be made as to the merits and returns of that capital spend.
‘For this reason, and to promote growth, the Ports Board has not increased landing or security charges in 2019 and there is a more general effort to increase revenue from non-aeronautical sources to supplement the funding of the airport operation this year.’
He added that this, along with support for new routes in 2019, was putting into place an opportunity to increase passenger traffic through the airport, based on the current runway length.