Heathrow subsidy is costing island £28 per passenger
AURIGNY is offering the States better value for money than subsidising the Flybe Heathrow service, States’ Trading Supervisory Board president Peter Ferbrache has indicated, after it was revealed that nearly half the airline’s predicted losses for next year were due to open skies.
STSB has called for a review of Aurigny’s mandate in light of the quasi-open skies system, which could see the Gatwick service reduced.
Deputy Neil Inder challenged STSB to justify the States’ airline’s increasing losses, which ballooned from £3.6m. last year to a possible £9.6m. next year.
STSB’s response said that £3.7m. of next year’s loss was due to the net effect on revenue caused by the new quasi open skies system and increased competition caused by the new Heathrow service.
Deputy Ferbrache said Aurigny was providing 902,000 seats across its network next year, including Alderney.
‘The forecast operating loss of £8.6m. [which excludes a possible £1m. loss to dispose of the airline’s two Dorniers] in 2020 amounts to an average per seat of £9.53 per seat,’ he said.
‘By way of a benchmark, this compares to a direct subsidy by the States of Guernsey to Flybe of circa £28 for each seat it is providing on the Heathrow service.’
Deputy Ferbrache said the committee had asked for advice from Economic Development, which organised the Heathrow subsidy, but had not got a clear response.
He added that the airline’s hands were tied due to ED announcing the Heathrow service at such short notice, when Gatwick tickets had been on sale for months.
Aurigny has a mandate to maintain its existing Gatwick slots.
‘The substantial increase in capacity into the marketplace between the island and the south-east of England during 2019 as a result of the quasi-open skies policy and the introduction of a subsidised service to Heathrow means that the time is now right for the States to review this mandate,’ he said.
The board said the review should look at whether the Heathrow service would continue and whether Aurigny should continue with all or some of its Gatwick slots.
In terms of tackling losses, Deputy Ferbrache said Aurigny had found ways to mitigate its problems, but it would be wrong to disclose these to competitors.
