Blue Islands to cut inter-island routes

Thursday 05 April 2018

Blue Islands is to apply for a variation to its licence on the inter-island flights service, warning that competitor Waves' entry to the market could cause losses of up to £650,000 per year.

The airline said that they could lose the six-figure sum yearly if Waves takes on 10% of the inter-island market following the Guernsey Transport Licensing Authority's decision to grant it a Guernsey-Jersey route licence without conditions, and that it must remove some of its loss-making flights at certain times of the day to adjust for that loss.

Rob Veron, Blue Islands CEO, commented: “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.

“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.”

Pictured: Rob Veron, Blue Islands CEO.

In December, Blue Islands appealed to Guernsey's Transport Licensing Authority for a judicial review of Waves' air taxi licence, arguing that it was similar to a scheduled service as it sets the departure and arrival airports for the passenger, it sells individual seats, and it markets seats on flights with no passengers already booked.

Last week, the Transport Licensing Authority eventually granted the necessary Air Transport Licence to Waves, allowing them to return to business as usual. Now Blue Islands wants to have its own licence stipulations removed from its air operator's certificate (AOC) in order to cut its inter-island schedules.

Mr Veron 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: Waves, which was recently granted a licence by the GTLA.

“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."

Blue Islands currently provides up to 10 peak and off-peak inter-island flights per day. The airline said that it also provides flexibility, with Mr Veron stating that it "operates at times when fewer people have demonstrated a desire to travel and where those flights lose money."