Monday 12 June 2017
The Policy & Resources Committee has published the recommendations that it has made following the review of Aurigny's objectives.
It has also published the two reports submitted by the review panel which have informed those recommendations. The Vice-President of the Policy & Resources Committee, Deputy Lyndon Trott, chaired a review of Aurigny's shareholder objectives, and the Committee discussed the review panel's findings and recommendations at its meeting on 16 May.
The President of the Policy & Resources Committee has written to the President of the States Trading Supervisory Board and the President of the Committee for Economic Development setting out the recommendations. The three committees met to discuss these in detail on 9 June and officers are now preparing a series of options that respond to the recommendations.
Publication of the recommendations does not imply acceptance of the recommendations, and it is only once the responses have been considered that the Committees will adopt a position on how to move forward.
Deputy Gavin St Pier, President of the Policy & Resources Committee, said:
'Two reports have been submitted to the Policy & Resources Committee by the panel, and although there are some differences in a small number of areas, the two reports also have significant points of agreement across a wide range of points covered by the terms of reference. These points of agreement have formed the basis of the recommendations that we have made to the shareholder, through Deputy Parkinson, as President of the States Trading Supervisory Board, and also to the Committee for Economic Development. The three Committees are now working together to respond to those recommendations.
'In addition the recommendations have already been shared with the Policy & Finance Committee of the States of Alderney, ensuring that they have adequate time to consider them, and I have received their views formally from their Chairman, James Dent, who was also a member of the panel. It is acknowledged by the Policy & Resources Committee that the Alderney routes need to continue to be supported, and further discussions will take place through the Alderney Liaison Group.
'I have written to the members of the review panel thanking them for their considerable time and input, which was greatly appreciated.'
Deputy Lyndon Trott, chair of the review, said:
'It is no secret that the review panel has, in a number of areas, been unable to reach a consensus. However there are many more areas, all of them significant, where agreement has been reached. I am pleased, and I am sure the review panel will be too, that these areas of agreement have been supported by the Policy & Resources Committee.
'Taken together, these recommendations provide a platform for significant and positive change, and it is believed provide a basis for Aurigny as a business to reduce their losses and provide a service that supports our community and our economy.
'It will, of course, take time for a detailed response to the recommendations to be agreed. However this will have no impact on the ongoing certainty of our existing air links, and I am pleased that these are being positively and actively supported by Aurigny's marketing work.
'I would like to thank the members of the review panel for their involvement, and also the many individuals and organisations who shared their views on Aurigny and our air links.'
Deputy Charles Parkinson, President, States' Trading Supervisory Board, said:
'These recommendations are the first step in helping to provide proper clarity around what the States expects from Aurigny and the role that it plays for the Bailiwick. The uncertainty around these areas over the past year or so has created some difficulty for Aurigny in planning effectively for the future and the STSB is now working with the airline to support it in developing its forward plans.
'We feel it is very important to consider the recommendations with Aurigny, and we will be working on this as an absolute priority with them in order to ensure that there is a full understanding of the implications of the recommendations now being made.'
In its submissions to the review panel last year, the States Trading Supervisory Board made clear its view that the outcomes should:
- Allow the States to agree a clear mandate for Aurigny and establish clear shareholder objectives for the airline that fully support that mandate;
- Recognising that there can sometimes be tension between individual objectives, ensure that there is agreement on the balance that should be struck between them; and
- Acknowledge that changes in the airline's objectives can have either positive or negative impacts on its funding requirements and ensure that clear arrangements are in place to consider these.
The three Committees will be meeting regularly to take forward their response to the recommendations.
Deputy Peter Ferbrache, President of the Committee for Economic Affairs said:
'The Committee for Economic Development welcomes the cross-government approach to taking this issue forward. As we progress this work, ensuring connectivity and the growth of the economy are central to our approach to these questions.'
Recommendations made by the Policy & Resources Committee - May 2017
The Policy & Resources Committee has made the following recommendations, drawing on the work undertaken by the review panel:
1. Aurigny [the company] to remain in States ownership for the foreseeable future given the importance of retaining the Gatwick Airport slots
2. The company is to retain its Air Operating Certificate
3. The company is to be considered and treated as an economic enabler for the Bailiwick through focusing on essential economic enablement routes
4. The local air licensing regime should be changed to reflect, for the time being, that competition should be for the right to service a route rather than for the right to compete within a route. Competition within a route will only be considered once the Committee for Economic Development believe that a greater degree of economic benefit will be derived through such competition
5. The current shareholder objectives for the company are not fit-for-purpose and should be revised by the States Trading and Supervisory Board [STSB] to reflect these recommendations focusing particularly on increasing passenger numbers visiting the Bailiwick
6. As an essential economic enablement route, the Guernsey-London Gatwick route should be underpinned by a service level agreement [SLA] between the shareholder on behalf of the States of Guernsey and the company
7. The Committee for Economic Development should provide the political leadership for deciding upon the application of transparent public service agreements [PSAs] for essential economic enablement routes, in line with their mandate for "the promotion, provision and regulation of air and sea links to and from the Bailiwick including liaison with other jurisdictions."
The Committee for Economic Development should:
- Seek competitive tenders for single provider rights on economic enablement routes which will receive financial support by the States of Guernsey through PSAs as they see appropriate and helpful, to support Guernsey's economy
- Seek competitive tenders for the Alderney-Guernsey/Alderney-Southampton which will receive financial support by the States of Guernsey and/or the States of Alderney through a PSA where it is understood that the company will remain the operator of last resort for these routes should the private provider fail to fulfil the terms of their PSA. It is also understood that the company may not tender for those routes if that is the view of the board and executive of the company
- Seek competitive tenders for the Guernsey-London City route
8. The States Trading Supervisory Board should:
- Set terms of reference and undertake an unconstrained review of the company's fleet
- Instruct the company to complete an IATA Operational Safety Audit (IOSA) and to explore options for code sharing and interlining as a matter of priority
- Instruct the company to join the Amadeus GDS (or a similar GDS) to gain wider access to markets
- Instruct the company to introduce a simpler pricing structure with the objective of stimulating the Bailiwick economy through increased passenger numbers
- Actively monitor and analyse the opportunities for the application of new landing system technologies to improve the ability to land in adverse weather conditions
- Carry out an in-depth analysis of all the financing and other costs in order to reduce the landing fees charged to all airport users that contribute towards the economic prosperity of the Bailiwick
- Consider operational improvements that might enhance the experience of the travelling public and consider, amongst other things whether:
- The airports should remain open for longer on certain days and particularly at peak holiday times
- Flights might be spread more evenly across the day
- The airport should take charge, in-house, of flight arrival and departure information
- At Guernsey Airport the payment for parking could be made easier with modern technology
- At Guernsey Airport a business lounge could be introduced air side
- Review shareholder objectives on an ongoing basis to ensure they remain fit-for-purpose. The next review should be after a decision is made on whether or not to extend the runway at Guernsey Airport
9. The Policy & Resources Committee should commission independent external expertise to analyse the potential benefits and disbenefits of extending the runway at Guernsey Airport, as part of the business case progression on air and sea links in the Capital Portfolio 2017-20