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Statement by the Vice-President of the Policy & Resources Committee

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Wednesday 12 December 2018

The review of air and sea links infrastructure

Sir, Guernsey's air and sea links, and the infrastructure that provides them, are critical.

They are critical to our community wellbeing.

Critical to our visitor economy.

Critical to our finance sector - the engine of our economy.

Critical to everyone in the Assembly today - because our job is to protect the interests of those who elect us.

It does not matter which Committee we sit on, what that mandate may be, or which parish we represent. Air and sea connectivity is a States-wide matter, recognised as such in the overall government business plans approved by the States in both 2016 and 2017.

We have a States-owned airline which owns slots at Gatwick Airport, and which meets and exceeds the targets that its shareholder gives it.

We have a commercial ferry operator, Condor, which is meeting end exceeding the targets in its service level agreements.

What we have is good. But to remain competitive, and to remain connected, we know that our community wants better. That is why we, the States, made it a priority.

Back in 2016, the-then new Committee for Economic Development told us it would be bold and brave. But there was little progress on air and sea links.

By the summer of 2017, the Policy & Resources Committee was concerned that progress had been painfully slow. This was for a variety of reasons, but primarily the absence of a clear vision for what was needed.

That was why the President of the Policy & Resources Committee and I submitted an amendment to take forward a review of air and sea links infrastructure, which was wholeheartedly supported and agreed by the Assembly.

The objective was to provide some momentum and some structure to taking forward the work on air and sea connectivity and infrastructure.

During late 2016 and into 2017 the Policy & Resources Committee had undertaken a strategic review of Aurigny. That review came up with a single set of recommendations, including focusing Aurigny towards economic enablement and reduced losses.

Although there were two reports that were part of the review, they were almost identical, with one notable exception - some of the reviewers wanted to build a longer runway; others felt that was not part of the scope of the review.

So it was clear that it was important to look at the pros and cons of extending the runway.

But it was also important to recognise that the future strength of our community's air and sea connectivity could not be reduced to how long our airport runway is. Such an assumption then, was as foolish as such an assumption would be today.

With that in mind, in spring 2018 PwC was commissioned to carry out initial reports on two things: the factors that we need to consider in order to strengthen our air links infrastructure; and the contingency plan that should be considered given the impending sale of Condor Ferries Limited by its owner.

Let us be clear: we asked independent experts to give us their views on the issues, the options for resolving those issues, and what - if the States was minded - it might do next.

We did not ask them to do a survey of islanders' or business' views. The business bodies in Guernsey have undertaken surveys already, and we note their findings. Ultimately, of course, if you ask people if they want better air and sea links they will say yes. We asked PwC to look beyond that, which they have.

Having had the reports back from PwC, in the autumn, we have now shared them with the Committee for Economic Development, the States Trading Supervisory Board and the Committee for the Environment & Infrastructure.

In the first quarter of 2019 Policy & Resources Committee will submit a policy letter for debate and decision by the States meeting. It will set out the recommendations of the Policy & Resources Committee following the completion of the work undertaken by PwC.

Included in the comments and recommendations that will be part of that policy letter will be the following, in relation to the runway.

The Policy & Resources Committee has reached the conclusion that the option of extending the airport runway will not be a game changer in respect of our connectivity.

The truth of the matter is that if were to extend the runway to the length that PwC indicate that it would be a game changer, we would need a huge and complex planning inquiry, probably to bulldoze part of St Peters, and enormous investment on which there may never be a return.

The Policy & Resources Committee does not believe that the community nor the political body has the appetite for that. Therefore spending hundreds of thousands of pounds of tax payers' money on listing the pros and cons of a set of runway extensions that are unlikely to be built in our lifetime will not be a worthwhile exercise

Of course, this is a government decision, not just a Policy & Resources Committee decision. So in the first part of 2019 the States will be asked to agree the proposition to do no further

work, and spend no further taxpayers' money, on investigating the permanent extension of the runway.

We should also remember that he States' Trading Supervisory Board is looking at extending the RESA, as directed by the States, and is reporting back in the first quarter of 2019, and the requerants have said that this might be the solution needed.

So if the States does not agree with P&R's recommendation, if States Members believe that their parishioners want us to spend upwards of half a million pounds investigating the runways further, then they will have the opportunity to direct the Policy & Resources Committee otherwise.

On such a matter as this, agreed by the States as one of its highest priorities, it is right to ask for and accept the decision of the States. The Policy & Resources Committee will publish the PwC report on air links infrastructure as an appendix to that policy letter, so that all States Members have the opportunity to see the evidence - and indeed, all in our community do too.

As I said, the future of our air links cannot be reduced to a discussion of runway extensions.

The States' Trading Supervisory Board has supported in Aurigny in the purchase of a new fleet of ATRs. We will debate that policy letter at this meeting.

It may be that combining these two work streams will give us greater resilience, and also provide the opportunity for new operators to come in. We will wait to hear more from Deputy Ferbrache in due course.

The Committeefor Economic Development asked the States to approve a move to quasi-open skies in July, which was agreed despite some doubts, and we wait to see the benefits of that in terms of new routes.

That may be assisted through the airport overhauling its landing charges structure for new routes, supporting the use of the Future Guernsey Economic Fund - established by the Policy & Resources Committee - which can support route development where there is an economic business case.

So catalysed through the review process, steps are being taken that could lead to enhanced air connectivity according to those Committees who have taken those steps.

Let me be clear then, on the Policy & Resources Committee's position as it concludes its review:

· What islanders consistently tell us is that they want frequency; what a longer runway offers is potentially less frequency as larger aeroplanes rotate routes less frequently.

· What Economic Development wants is choice; a longer runway does not guarantee choice - airlines could start flying in on the current runway if they see a business case.

· What our island wants is an island airline with the right fleet and a commitment to the island - not a procession of so-called brand airlines cherry picking routes every summer.

Sir, the Policy & Resources committee does not believe a case has been made to extend the runway, so we do not propose undertaking further work.

If the States believes that is wrong the decision, it will have the opportunity to reverse that decision in February and we will of course be bound by that decision in a few weeks' time.

Of paramount importance is the preservation of our sea links.

We have a commercial operator that we rely on for our passenger, vehicle and freight services, but one over which we have no control.

There is no operating agreement in place with this provider.

This provider also serves an additional, bigger market in Jersey which - perfectly reasonably for commercial reasons - it chooses to give preference to its services.

Reasonable for its own business reasons - but increasingly unacceptable to our community.

Moreover it is up for sale.

And it is suffering under the burden of an impaired reputation following the purchase of a flagship vessel which is not universally admired in our community.

In short - we are vulnerable, exposed, at risk when it comes to our sea links.

This is how we bring in our freight, how many of our teams travel to sports events, how many of our children go on educational and cultural trips, how we go to see our families and friends off-island.

This truly is a lifeline service. But it is operated as a business by a business which cannot share all of our aspirations for this service because it needs to provide a return to its investors. It is not a charity.

Compounded by Condor's sales process, when it comes to our sea links we are vulnerable, we are exposed, we are at risk.

It is right, of course, that the Committee for Economic Development continues to do what it can to engage with Jersey and the provider to see what service improvements can be secured - both with the business and, potentially, with a new owner, potentially in the first half of next year.

But frankly, P&R strongly believe that our community will not accept that success is more of the same.

In fact, it will, potentially see that as failure and as a missed opportunity.

And, of course we cannot be sure of the plans of any new owner of the provider.

So while it is the role of Economic Development to continue to engage with Condor, it is the role of the Policy & Resources Committee to contingency plan - to prepare for the worst, should a plan B be needed.

The PwC work on sea links looked at four contingency options, and the view of the Policy & Resources Committee is that two of them merit further urgent detailed work.

So in our Policy Letter in February, we will be recommending further independent expert work is undertaken during the first quarter of 2019 to look at the contingency option of a setting up a Guernsey-only, Guernsey-owned passenger, vehicle and freight service, should one be needed; and the contingency option of finding a new operator should the new owner of the current provider decide that they do not want to maintain and improve the services to Guernsey.

We will be commissioning experts to provide further details on investment required, financial modelling, technical considerations and commercial considerations.

These are contingency options. This is contingency planning. Just as we planned and are planning for Brexit, and planned for the referendum, and plan for many other things, so we are planning for our sea links. This is what government must do, and it is the role of the Policy & Resources Committee to provide this leadership. The policy letter will set out what we are going to do and how much it will cost.

But, again, we will be asking the States to agree that work, as this is a decision of importance to the whole of the States and the whole of our community.

In addition, we will work with the Committee for Economic Development to take forward the ramps legislation agreed by the States in 2015, following the approval of a States Report entitled "Strategic Roll on Roll off Ferry Services" which set out the need and justification for establishing a licensing regime for RoRo ferry services.

Given the work that we will be doing, we need to be careful not to undermine any commercial position that we could need to adopt in the future. However, as a government we have a duty to be as open and transparent as possible. No one, regardless of their stake would or should expect anything less.

This means we will provide information on the PwC findings in the policy letter. We will endeavour to provide Members of the Assembly with as much information as we are able to.

Sir, to conclude, many positive steps have been taken on our and air and sea links:

· The strategic review of Aurigny

· A new agreement on supporting new commercial routes through the airport and Economic Development, with a move to quasi-open skies

· Work on the extension of the RESA

· The potential purchase of a new fleet of ATRs

· Progress on contingency planning for sea links

The Policy & Resources Committee has considered these, will now set out clear next steps on the air and sea links structure review.

But it will ensure that the States Assembly - which chose to prioritise air and sea links in 2016 and 2017 - makes the critical decisions on next steps.

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