Aurigny losses could reach £10million next year

Tuesday 08 October 2019

There's a warning Aurigny could lose £9.6million of public money next year, in Guernsey's 2020 Budget which is out today.

The Budget also suggests a review of the airline, which could lead to a framework being drawn up on the island's airlinks.

Policy & Resources will be spearheading this new initiative to try and tackle the "extremely concerning" levels of loss the States-owned airline has now reached by asking the States to approve the development of a co-ordinated and coherent government framework on its air links strategy.

To date, the Committee said, the States' has not had a sufficiently joined up approach, which has contributed to Aurigny's losses. 

This year, for example, Aurigny is expected to lose £7.6m., an amount it has partly blamed on a new route to Heathrow being run by its competitor, Flybe, with the backing of the States. 

The government framework would allow the States to be more coordinated and coherent on matters such as this, and would consider all aspects of air route operation and support that is under the control or influence of the government.

Ideally, the framework would prevent conflicts of interest arising surrounding Aurigny, like the £825,000 subsidy paid to Flybe which runs the Heathrow route. 

Pictured: Economic Development President Deputy Charles Parkinson, and States Trading and Supervisory Board President, Deputy Peter Ferbrache. A new framework would be developed with the two bodies to allow a more coherent approach to air links.  

The £9.6m. of losses Aurigny is now forecasted to lose in 2020 comprise of an £8.6m. operating loss, and a further £1m. loss on the disposal of two of the old Dornier aircraft.

In the Budget, the explanations for the operating losses increases were: 

• £3.7m because of the new quasi open skies policy and competition on Guernsey to Heathrow.
• £2.4m in increasing other costs like fuel, crew and the value of the pound.
• £1.1m on the new ATRS.

Pictured: Aurigny is expected to lose £9.6m in 2020.

While plans for the framework are developed, the States have already written a £7m. provision into the 2020 Budget to allow for the airline's losses. It only budgeted for a £4m. provision in 2019, but that is now expected to reach almost £8m. already. 

"We are beginning to see the financial consequences of a disjointed approach to air links," Deputy Gavin St Pier, the President of P&R, has said.

"The island has benefitted in some ways with more destinations to fly from, including a daily Heathrow service, but a lack of coordination has arguably resulted, at least in part, to significant losses for Aurigny, which the tax payer has to cover.

"This is not sustainable and we need to bring together all areas of government with responsibility for various aspects of our air links strategy so we are working as one." 

Pictured top: Aurigny have been racking up more losses each year for some time now.