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“Cross-subsidy” between Harbours and the Airport criticised and defended

“Cross-subsidy” between Harbours and the Airport criticised and defended

Tuesday 26 September 2023

“Cross-subsidy” between Harbours and the Airport criticised and defended

Tuesday 26 September 2023

Guernsey Harbours and the boatowners who use its services shouldn’t be penalised for the operating deficit of the airport, according to the Guernsey Marine Traders Association.

The GMTA has published a letter it sent to the Guernsey Ports department following the announcement earlier this year of severe mooring fee increases.

However, Guernsey Ports has argued that future investment in harbour infrastructure will far outweigh any investment in the airport.

Increases of up to 150% plus RPI will be implemented across the next three years as Guernsey Ports attempts to eliminate the need for taxpayer funding. 

Guernsey Ports said it is feeling the pinch after several years of covid disruption, however the President of the GMTA said the situation is far more complicated and Guernsey Harbours should be treated independently of Guernsey Airport. 

“In normal pre covid years the leisure moorings were returning a surplus over expenses of £1.2million - from an analysis of published States accounts we have calculated that over the 27 year period from 1996 to 2022 the Harbours made an operating surplus of £31.1million, whereas the Airport made an operating deficit of £40.7million,” said David Norman in an open letter to Guernsey Ports. 

Again from analysing States published accounts we have calculated that over the same 27 year period the Harbours net contribution to the Ports Holding Account was the sum of £31.7million, whereas in this period the Airport withdrew from the PHA the sum of £53.4million."

“The underlying picture is crystal clear – the Harbours have made a substantial surplus which would have been available to fund future capital projects at the Harbours had it not been consistently spent at the Airport.” 

In response to Mr Norman's calculations, the Managing Director of Guernsey Ports said future investment will swing back towards the Harbours.

“While the historic contributions to and drawings from the PHA are a matter of public record, there remains a significant requirement for capital investment at the Harbours. That will total circa £75m over the next five years, compared to £35m at the Airport, and includes around £10m that relates specifically to leisure marine facilities. Whatever the historic split has been the future investment is set to move back toward harbour users.

“Ring-fencing incomes and costs separately between the Harbours and Airport - and then within each functional area of the port - might in principle be possible, but the practical reality is that the operations of both ports are intrinsically interlinked. They have been since the formation of the Ports Holding Account in 1962.

“The States recognised then that both Ports exist for the common purpose of facilitating entry and exit of goods and passengers for the benefit of islanders, and from time to time would require expenditure which, taken in isolation, would be uneconomic. The formation of a single, pooled Ports Holding Account recognised that the demand for facilities between one port and another would vary and may be unpredictable."


Mr Norman said if boatowners are to accept the new changes which comprise a ‘user pays’ policy, the Airports should be split from the Harbours and run independently. 

In the full letter Mr Norman once again reiterates the concerns the boating community has, including a large tranche of current boatowners being forced to give up boating, the boating economy slowing down with people losing livelihoods and businesses tied to the industry, and further deterioration in local marina facilities. 

What does Guernsey Ports have to say?

Mr Le Ray said Guernsey Ports fully understands the possible impact of the proposed changes:

“Given feedback from various leisure industry bodies on this possibility, the STSB has invited feedback from all existing mooring holders," he said.

"This gives them an opportunity to indicate if they may be inclined to sell their vessels, which will provide us with some greater insight. However the risk of existing volumes of business being adversely impacted by the proposed changes in rates across all of the Ports business, not just the leisure marine services, is well understood.

"It is one of the primary reasons why the proposals for price increases have been spread over 2-3 years, in order that any change in volumes can be well understood before the next phase of increases is introduced."


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