Blue Islands' CEO airs his concerns over open skies

Saturday 07 July 2018

The Chief Executive Officer of Blue Islands has echoed some of the concerns raised by his boss, in an open letter to all of Guernsey's deputies over the proposals to change the way air routes are licensed.

Rob Veron (pictured above) has issued his letter publicly having "exhausted all avenues available to us to prevent what would be, in Blue Islands’ view, a potentially disastrous change in policy."

Mr Veron said he was writing to all deputies "in the hope that our perspective may assist the States of Deliberation in their appraisal of the Review."

Last month, the owner of Blue Islands; Derek Coates, also wrote an open letter to Guernsey's politicians. He urged the States of Guernsey against changing air route licensing, writing that "as a long term, philanthropic, supporter of our local economy, I entirely share the Committee for Economic Development’s (the Committee’s) aspiration to drive and deliver sustainable economic development, growth and diversification. I feel compelled however to urge reconsideration of the proposals detailed in the above referenced paper of 11 June 2018 in respect of air route licensing."

He said that the proposed changes would be "both highly perilous and destructive to Guernsey's future airlinks and their sustainability."

Pictured: Derek Coates, who owns Blue Islands. He has invested £45m of his own money into the airline and has offered his experience to deputies ahead of a debate on air licensing

Now, the CEO of the same airline has issued a similarly concerning statement, urging against an open skies policy.

In his conclusion, Mr Veron wrote that:

"In the absence of any tangible evidence in support of the approach and without consideration for sustainability or the unintended consequences we have raised, I urge all Deputies to consider whether the Committee’s proposal has been sufficiently appraised. At the very least, further impact analysis of the various outcomes of this policy should be made available to Deputies in order that a reasoned decision can be made."

In his letter, Mr Veron explains his reasons for disagreeing with proposals to set up and open skies system in Guernsey. He gives eight reasons in a conclusion as he urges Guernsey's deputies to think carefully before the debate.

Mr Veron said before that, he would ask all deputies to please consider the following questions when appraising the Committee’s proposals:

• What evidence does the Committee have to suggest that making the majority of routes exempt from the requirement to hold a licence will encourage development and innovation?
• Which routes from Guernsey would remain financially viable and could sustain the financial damage caused by predatory ‘cherry-picking’ in an open skies environment?
• What assessment of the risks posed to the continuation of existing services has been undertaken by the Committee?
• What is the evidence that the current licensing regime discourages or prevents competition? Blue Islands competed with Flybe on Southampton and Aurigny on Jersey for several years under the existing regime. Competition and moderated appropriate safeguards through licensing are not mutually exclusive.
• If competition on a route was introduced, how long would the operators sustain losses and what would prevent them from cherry-picking seasonal peaks, without any commitment to operate year-round services?
• Does the Committee’s proposal recognise the benefit of having locally based operators with locally based aircraft and crew? 
• If Jersey is, as stated by Deputy Dudley-Owen in the Guernsey Press (22 June) not “critical” for Guernsey in the same way as Gatwick, why is this route under as much scrutiny, if not more, than Gatwick? Why would the Committee underwrite a ferry operator for the summer season? Furthermore, why would the Committee need to underwrite a ferry operation, mode of transport aside, if the market did not meet the criteria given in the Review for a lifeline route (i.e. requiring government intervention).
• What evidence does the Committee have to show that the current services are the limiting factors that are suppressing demand?

Mr Veron also warned that Blue Islands would be less keen to invest in airlines to and from Guernsey if the island adopts an open skies policy.

He, and Mr Coates both pointed out the number of routes the airline has  launched which have not been financially viable. Mr Veron said:

"An example of a recent experience is work on a proposal with my team at Blue Islands to invest in an additional aircraft and crew to bring a new clutch of year-round routes to Guernsey, namely London City, Dublin and Luton. Ultimately, this opportunity was declined by the Committee, as is their right.

"We made a request for financial support given that the clutch of routes was unlikely to self-sustain in the short term. Our risk sharing proposal / funding request was refused. I assure you, our appetite for this opportunity would not have been so great in an open skies scenario where there would be nothing to stop a seasonal, predatory competitor demolishing any prospect of the route development breaking even."

Pictured: One of Blue Islands fleet of planes which link Guernsey with other destinations

Mr Veron also wrote that he sees "no evidence to suggest that the current policy is prohibitive to point-to-point travel or interlining opportunities," and he adds that "this appears to be supported by the findings of Frontier Economics (see the full letter below). Both of these may however be undermined by the proposals as discussed elsewhere."

He hopes Guernsey's deputies will consider his views ahead of the scheduled meeting on air transport licensing, which is due for debate at the next States meeting from Wednesday 18 July.

Mr Veron's letter can be read in full here:

Rob Veron open letter to Deputies