The response of the Guernsey Aviation Action Group is ‘wholly inadequate’

Central to much of their paper on Tuesday 18 October was their clear early claim that: ‘No business case has been made’. Section 5 of the P&R/STSB paper Alderney Airport Rehabilitation is, however, headed ‘Cost-Benefit Analysis’ and a clear business case in financial terms is set out.

Also, contrary to later claims in their article that ‘there is no information on the likely increases in operating expenses expected’, the analyses of each option summarised on Table 6 of Section 5 include a line item clearly labelled ‘Operating Expenses’.

GAAG is, nonetheless, right when they say the outline business case makes no reference to the impact on Alderney’s economy. And they make numerous references to the absence in the paper of the 2016 conclusions by York Consultants.

The first omission is of course a shame. If the economic benefits to the Alderney economy had been included, the case for Option C+ would have been even stronger. References to the York report, particularly if proper recognition had been given to context, would also have been useful. But two things have changed since the York report.

Let me now remind GAAG of those two big things. The first: the desire of Aurigny to rationalise its fleet. The second: the desire of the States of Guernsey to make investments aimed at minimising, or removing, its now agreed long-term commitment for financial support for Alderney lifelines. If York, in 2016, had had the opportunity, then, to incorporate these, it would have caused the economic case for the extension to become overwhelming.

But back to the York Report. Let me quote:

The conditions under which extending the runway might deliver a return of 4.4% over 20 years [note to readers: this was the return deemed necessary for viability] would be if:

n it can be delivered at the lowest realistic cost (less than c.£13 million [note to readers: these are 2017 costs and the reference is to the cost of the extension, not to the basic rehabilitation];

n there is no consequential expenditure required to upgrade the terminal and security infrastructure to enable larger aircraft to be handled (or the costs are included within the capital cost ceiling above); and

n assuming that the an increase in population of c.140 additional permanent residents over 10 years, and an increase in annual tourist visitors of c.1,100 over the same time period can be directly and solely attributable to the provision of a longer runway, i.e. without additional expenditure on such as high speed broadband, the electricity supply or improved tourist facilities [note to readers – other combinations of these figures would, of course, have had the same impact].

Four years ago, I thought an average of 14 new residents per year over 10 years and an average year-on-year increase in visitor numbers of 110 for 10 years were quite modest expectations. York, however, thought differently, though perhaps it would be more accurate to say they were disinclined to incorporate these (or any) development benefits into their analyses because they could see no way to prove direct causal links. But having said this and, now, with the added benefits from the removal or minimisation of the PSO subsidy, the incorporation of these ‘developmental’ benefits into the analysis would, almost certainly, be unnecessary.

GAAG should also note that four years ago, the only economic benefit that Guernsey would accept as part of an outline business case was the impact on direct taxation. This shocked me. If the UK had adopted a similar stand to developmental benefits then no motorway would ever have been built. And if the World Bank, or any other development agency that I have, over the years, worked for, had taken such a stand very few highly beneficial projects would have got off the ground.

Four years ago there was, additionally, much controversy over the infrastructure costing methods used by York. They seemed to centre on an ‘Alderney-UK multiplier’ derived from housing. Whether these could, or would, be applicable to a major project such as this was unclear.

And finally, with interest rates at 5% and inflation at 10%, everyone in their right mind (and particularly Guernsey with its current tiny public debt) should be borrowing as much as they can. In real terms, all repayments will be declining at 5% per year. There has never been a better time to invest in infrastructure.

I rest my case.

James Dent MSc

(Transportation planning) CMILT, MIHT, and former chairman of the Policy and Finance Committee

Alderney