Aurigny counts cost of competition

But for Aurigny, and those with an eye on ensuring good use of public money, the question has fast become at what cost?

The States-owned airline released its annual report for 2018 earlier this week, and, while there was an improvement in the financial position, it is still running at a £4.4m. loss. It must be feared that worse is to come.

Aurigny now faces increased competition, primarily from the heavily subsidised Heathrow route which has begun to eat away the profitable Gatwick operation.

This is an airline that the States has just supported in buying three new ATRs but is now openly talking about the possibility of cutting back on the Gatwick rotations should Heathrow continue to take its toll.

There are hidden costs in all these new routes – it has not simply been a case of enacting an open skies policy and airlines jumping in.

While the £825,000 payment to Flybe from Economic Development to subsidise Heathrow is well known, what has not been spelt out is the financial support being given by the airport itself in terms of discounted fees.

It might be that when all those costs are worked out, and the calculations made about the economic and community benefit of having the Heathrow link, it adds up to a service that Guernsey is willing to pay for.

But for Aurigny it has been de-stabilising, and comes at the same time as the public service obligation for the Alderney route is still unsettled, with its bid rejected and the process re-opened.

Economic Development is in charge of the PSO process too – it is clear the committee is not willing to cut the airline any slack as it looks to keep the market competitive and encourage new routes.

Even as it warns about the impact of competition, Aurigny clearly wants more of the market itself, it has entered Jersey and Southampton and wants a chance to bid for Heathrow too.

There is a careful balance that needs to be struck from all sides if a sustainable market is to develop in the long term.