Should Aurigny be breaking even, and at what cost?

According to Frontier Economics, in a report to the States of Guernsey pre-Covid, Aurigny was able to overcharge Guernsey-Gatwick flyers by nearly £20m. per year more than the equivalent Jersey-Gatwick airfares. This is because our government policy is to give a monopoly flying concession to Aurigny on the Gatwick route and then allow it to charge whatever it wants to try and ‘break even’.

Aurigny also charges the States £2m. per year to fly to Alderney when other carriers offered to do it for nothing and we’re also paying Aurigny £800k to fly to Paris so that Guernsey residents can have cheap French holidays and attend the Olympics.

All this when independent aviation specialists commissioned by the States assess the huge cost of our excess airfares to our economy, estimated as high as £40m. per annum of GDP. The result is that we are killing our tourist industry and adversely affecting our finance industry.

Why hasn’t the Guernsey Regulatory and Competition Authority been allowed to review Aurigny. Wasn’t it set up to protect islanders from just this gross overcharging?

When are we going to wake up and have an independent expert review and analysis of the Bailiwick of Guernsey Aviation policy and sort out this nonsense of Aurigny ‘breaking even’?

PETER BACHMANN

Deputy Charles Parkinson, vice-president of the States’ Trading Supervisory Board, responds:

The Committee for Economic Development has commissioned an Air Connectivity Performance study which will examine how Guernsey’s air connectivity has evolved over time. It will provide an analysis of air connectivity focusing on three important metrics – affordability, connectivity, and reliability. The intention is that the study will provide an objective, up-to-date analysis, rather than relying on an old report, which at best would be described as historic. The suggestion that Guernsey travellers were being overcharged by nearly £20m. per year is somewhat questionable, as that would be not too far shy of Aurigny’s entire revenues on that route.

Since 2019, Aurigny’s fares have increased by less than the prevailing rate of inflation. They start from £49.99 and, in the first half of this year, two-thirds of seats across its UK network cost less than £100. A more recent comparison by the airline of fares between Guernsey and London showed that, over a two-week period this summer, British Airways’ services from Jersey were between 12% and 49% more expensive than Aurigny at 31 of 42 different checkpoints.

The Frontier report referred to pre-dates by some years the Air Policy Framework agreed by the States in 2021, which set clear objectives for both the island’s air connectivity and for Aurigny. It was supported by a new business plan from Aurigny, which focuses on supporting the States’ objectives and driving improved efficiency throughout the business. Breaking-even over a five-year period was one of those objectives and Aurigny is delivering on that. Providing security on essential routes was another, and here too Aurigny is delivering.

To clarify, Aurigny was awarded its contract for the Alderney lifeline services only after two rounds of tendering failed to identify any other established airline with proven capability to mount a viable and sustainable operation.

In respect of Paris, a third objective of the framework was establishing a link to a non-UK international hub. Paris had been identified as among the top new route opportunities for Guernsey and, whilst route development support has been agreed to help get that service established, demand forecasts indicated that should be more than offset by additional direct visitor spend in the local economy.

The actual level of financial support will depend on passenger numbers, so it is encouraging to see that demand so far has exceeded expectations and budgets. Early analysis of the route’s booking data also shows a shift towards sales originating in Paris, as French visitors respond to VisitGuernsey’s marketing there and awareness of the route grows.

Provided it breaks even, Aurigny’s mandate is to trim fares as much as possible to stimulate demand, to offer affordable travel options for islanders, support business, and promote incoming tourism.