Blue Islands is to apply for a variation to its licence on the inter-island flights service.
It follows the Guernsey Transport Licensing Authority’s decision to grant Waves a Guernsey-Jersey route licence, without conditions.
Rob Veron, Blue Islands CEO, said: “As a local airline, Blue Islands continues to be totally committed to serving our business, leisure and sporting communities with vital inter-island services. We remain of the view there was already ample competition on the route between Blue Islands and Flybe. The oversupply into the market was already vast, with Blue Islands’ services running, on average, half full – meaning 67,000 seats were unfilled.
Pictured: Rob Veron
“Following previous price wars between operators on the route offering below-cost fares, large losses were incurred by both Aurigny and Blue Islands. Those market conditions were unsustainable. In recent years, the market size has also been going through a period of contraction. This is the result of reduced corporate travel budgets, pan-island office consolidation and the increasing use of video conferencing."
Currently, Blue Islands provides up to 10 peak and off peak inter-island flights per day. The airline said that it also provides flexibility with Mr Veron adding that it "operates at times when fewer people have demonstrated a desire to travel and where those flights lose money."
Blue Islands said that prior to the recent judicial review and the Transport Licensing Authority’s subsequent agreement that Waves required a licence to sell individual seats, "Waves was operating illegally and the impact this had on market share was clear with no market growth" adding that while Blue Islands supports competition, the wrong decision has been made given the "sub-scale of the market."
Mr Veron continued, explaining that "because of the disappointing decision of the Transport Licensing Authority to award an unrestricted licence and introduce a third competitor into an over supplied market, Blue Islands is now applying to have its own licence stipulations removed.”
Blue Islands warns that if Waves takes on 10% of the inter-island market it will affect Blue Islands business by almost £650,000 a year. To adjust for that share loss, Blue islands said it must remove some of its loss-making flights at certain times of the day.
“Assuming a level playing field, Blue Islands will be able to adjust its schedule to serve the market at times of true demand and reduce uneconomical services that Blue Islands cannot be reasonably expected to sustain over the long term. A third competitor on the route gives rise to new market realities and renders the current Blue Islands licence restrictions unsupportable. Our belief remains that current demand will simply be spread over three operators, placing further pressure on already tight margins" said Mr Veron.
“Blue Islands will adjust its model, to maintain the supply of seats to the market; it will not however allow the creation of further over supply. In this way Blue islands will remain able to continue serving the market in the best possible way and secure its own long term viability.”
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