The Channel Islands Competition & Regulatory Authorities said it has closed its current investigation into the franchising arrangements between Blue Islands and Flybe because it has to prioritise other work.
It said it has taken this decision following "a careful assessment of the meaningful benefit to Channel Islanders that CICRA can achieve" with the regulatory body taking into account costs, timescales and changed circumstances since the initial investigation was launched.
CICRA said the entry of Waves to the inter-island market in particular has had an impact on its decision.
In a statement it said "CICRA used first informal and then formal procedures to give the parties the fullest opportunity to explain their position and to provide CICRA with evidence. Following a period of informal engagement, CICRA opened a formal investigation into the franchising arrangements in December 2016.
"This focussed on whether the arrangements restricted competition between Blue Islands and Flybe, either in terms of the prices each charged or in terms of the routes on which Blue Islands was permitted to fly."
Michael Byrne, CICRA CEO, said: "CICRA has to prioritise projects that appear likely to have the greatest impact on consumer welfare. We have decided that, with a new operator now offering flights on the inter-Island route, we should step back from this review for the time being and monitor the impact of this increased competition. This will also allow us to focus our resources on other matters that have a higher priority at the present time.
"This decision does not amount to a statement as to whether any party to the franchise arrangements infringed competition law and no inference to that effect should be made."
Rob Veron, Blue Islands' CEO, said he welcomed the decision.
"Blue Islands are pleased that this extraordinarily long, unnecessary and expensive process for both the tax payer and Blue Islands has now been concluded," he said.
"It has taken CICRA almost two years of investigation to close this investigation. Blue Islands have consistently maintained that the franchise agreement does not infringe the Jersey Competition Law."
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