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A Deputies' drastic plan to try and put an end to Aurigny's "astronomical" annual losses has been dismissed by STSB's Vice-President.
Deputy Lester Queripel asked the States' Trading Supervisory Board - which has government responsibility for Aurigny - if it agreed with him that a States management team should be put in place at the airline, and it should be forced off of all of its non-lifeline routes.
He explained in his questions that: "As an elected representative of St Peter Port North, and consequently therefore, a representative of the taxpayers of the Bailiwick and guardian of ‘the public purse’, I am extremely concerned about the total lack of concern displayed by the States, to address the astronomical and completely unacceptable, annual losses of Aurigny.
"Being a member of the States Assembly, I am of the view that drastic and proactive action needs to be taken in an attempt to resolve these astronomical and completely unacceptable annual losses."
He suggested five measures be taken by the STSB:
Pictured: Mark Darby, Aurigny's CEO. Deputy Queripel said the States should put its own management team for the airline in place.
While STSB acknowledged that steps do need to be taken to address the losses, which are fast approaching a forecast £10million, it said Deputy Queripel had to be cautious of basing ideas on "ill informed and inaccurate commentary".
In his response for STSB, Deputy Jeremy Smithies said people had to remember that Aurigny employed hundreds of people, not just its board and management team, and also that Aurigny operated within a policy framework set by the States.
"Within [that] context, both the STSB and the Board of Aurigny absolutely agree that steps need to be taken to address the losses. However, determining which steps and measures would be the most effective must be based on a proper assessment of the facts to ensure that they are effective. They must also be assessed within the context of the aforementioned government framework that the States has committed to developing and the role that Aurigny is expected to play within it.
"As such, the STSB does not agree that the measures set out in the question should be pursued at this time."
Pictured: STSB said it did not agree with the measures at this time.
Deputy Smithies backed this up by pointing to both the recent review of Aurigny, which found it was "generally well managed", and the fact Aurigny only lost £3.6million in 2018.
"We know that the main drivers of the increased operating losses are: net reductions in revenues arising from open skies and competition subsidised by the States on the Heathrow route (£3.7m); movements in oil prices and exchange rates (£1m); and, increased salary and wages costs associated with pay awards, skills retention pressures and additional training costs arising from staff turnover (£1.1m).
"The facts as we know them do not support the adoption of the specific measures referred to in these questions. The States can and already does exercise control over Aurigny through an agreed system of governance."
Finally, in his questions, Deputy Queripel asked what the STSB would be doing if it did not agree with his suggested measures.
Deputy Smithies response referred to the ongoing PSO process being carried out by Economic Development and said that needed to be expedited. "The STSB firmly believes that this process is essential in determining once and for all what an appropriate level of service is for those routes and what level of financial support should be provided for them. Importantly, it will mean that any losses that are incurred in operating them in future will no longer fall to Aurigny’s profit and loss account, resulting in a substantial and immediate improvement in its performance."
Pictured: Deputy Queripel said Aurigny should lease aircraft, as many airlines do, rather than buy them, but the States only recently gave approval for its airline to buy three brand-new ATRs. Deputy Smithies said Aurigny had demonstrated it was cheaper to buy them, a fact he said was independently verified.
Further to that, Deputy Smithies said now was the right time to review the traditional mandate of having six flights to Gatwick a day, because of all of the new flights going to the south of England.
"Aurigny has identified a number of potential mitigations that could be put in place and these could involve a reconfiguration of its existing fleet and/or route structure. However, they are each dependent on whether the States continues to expect Aurigny to maintain existing levels of both security and capacity at Gatwick and, if not, what those requirements will be in future.
"Finally, both Aurigny and the STSB are committed to starting work on addressing the recommendations from the Efficiency & Benchmarking Review which highlighted a number of opportunities that could be investigated to reduce the airline’s costs, to improve its revenues and continue developing and enhancing its customer service proposition."
Pictured top: Deputy Lester Queripel.
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