BLUE ISLANDS INSIGHT
IN the end, weeks of deliberation and negotiation led to a hastily arranged meeting of the Council of Ministers on Friday afternoon, when Jersey’s cabinet agreed that enough was enough, and taxpayers were not going to agree to a request from Blue Islands for another bailout.
A smaller group of four or so key ministers had been party to earlier discussions over previous weeks – which had agreed to a lifeline payout, rumoured to be around £1.5m, being handed over earlier this month.
In parallel, civil servants were working with the struggling airline to come up with several rescue scenarios. The £1.5m was linked to one of those plans, but that plan came to nothing.
The details of those scenarios remain a secret but sources have told the JEP that very little – if anything – was off the table.
One can only hazard an educated guess that one of them would have been a full purchase of the airline. Or writing off the debt. Or, inter-island political ill will aside, even a merger with Aurigny – though the chief executive denies this was a recent prospect.
One might also hazard a guess that, given such discussions were advancing, there might have been cause for Blue Islands to feel reassured.
Whatever these solutions were, clearly, they were ultimately unpalatable to ministers and their advisers.
The JEP understands that around 4.30pm on Friday, following the emergency meeting, notice was formally given to Blue Islands that no further help would be provided beyond the following Friday, 21 November.
Ministers had no idea, leaving their Union Street office that evening as crowds gathered outside for the Christmas celebrations, that the lights were about to go out on Blue Islands.
Not long after, it was leaked to the media that 26-year-old Blue Islands – owned by a family trust set up by the late Guernsey businessman Derek Coates – was on the brink of collapse.
At 9.43pm, around the same time as the airline confirmed it would be suspending operations, all Blue Islands staff were told that they had lost their jobs in an email seen by the JEP from their CEO, a “shocked and saddened” Rob Veron.
“It was not an outcome that we had expected, nor could we possibly have seen that this afternoon’s events would result in matters deteriorating as quickly as they have… I am truly sorry that our airline which we have all worked so hard to build has, as of this evening, likely taken its final flight,” he said.
Indeed, the airline had until very recently been advertising new routes. The day before, a cheery Instagram message from “Jersey’s local airline” said they were looking to hire everyone from cabin crew to engineers and ATR captains.
Staff – some of whom are understood to have housing licences linked to their jobs and are now fearful of being forced to leave the Island – were understandably emotional, with many initially reacting with anger towards the airline, and likening their employer’s social media posting in the run-up to the announcement to the downfall of the Jersey Reds.
One group were spotted taking their emotions out in a karaoke bar on Saturday night, changing the lyrics to Cee Lo Green’s “F*** you” to “F*** Blue Islands”.
But, over the course of the weekend as tempers settled, attention began turning towards the handling of the matter by government. If the intention was not to support the airline, why wasn’t an orderly wind-down negotiated? Why cause such disruption for families and medical patients using the lifeline Southampton route so close to Christmas? And how and why did the leak, which some feel seemingly forced the hand of Blue Islands by irreparably shaking public trust, occur?
One source speculated to the JEP that the matter was perhaps less a “mess” than it was a “coup”.
It soon became clear that there was a contingency plan in place involving Loganair – a Scottish airline which had already announced plans in July to launch a daily service to Southampton from January.
It is understood that Ports of Jersey took the lead on negotiations, inviting the airline to expediate its launch date to pick up the slack. Loganair – with its bigger fleet and better reputation – was seen as a more solid partner to lean on.
As the clock struck midnight on Friday into Saturday, Loganair was already ramping up its schedule online, with flights to Bristol, Exeter, Guernsey and Southampton bookable on its website. In a similar vein to its contingency hire of DFDS vessels while there were fears about Condor’s future last year, the government is funding the contingency arrangement with Loganair, but the sum of that support is yet to be made public.
Many have been impressed by the swift actions of Loganair, with one Islander reporting on Facebook that he was astonished to see his pre-booked Blue Islands flights load up so seamlessly in the Loganair app.
Speaking to the JEP, Loganair’s chief executive denied having taken part in any longer-term contingency planning with government.
Returning to Blue Islands, although once perceived as a ‘Guernsey airline’ when Mr Coates was in charge, it was not just an airline that happened to have operated in and out of Jersey.
A key pivot came in July 2020, when the Jersey government loaned the airline £10m – £8.5m of which was used – to keep the carrier flying through the pandemic.
As part of the deal, Blue Islands agreed to move its main operating base to the Island, with an expectation that local career opportunities would be created.
That has happened, making Friday’s announcement all the more devasting for families across the Island.
One of the key messages coming out of Union Street is a belief that the Government did all is could to save the Island but it had to draw a line in the sand.
Also, the £10m covid loan was the price of keeping patients flying to and from Southampton, critical cargo dispatched and delivered, and families connected during those unpredictable days of the pandemic.
Insiders have also referred to that Sliding Doors moment – what if Jersey had continued to invest in Blue Islands? However, for an alternative model, we need look no further than Guernsey, where its government has owned Aurigny since 2003, when it bought the airline for £5m after it faced closure.
With Jersey-based, Guernsey family-owned and Alderney-registered Blue Islands seemingly on the verge of administration, those to the north-west might be feeling a little smug at their prescience.
However, sources in Jersey have questioned the level of investment that the States of Guernsey have made in their taxpayer-owned airline, which is rumoured to be more than £100m.
Aviation is not an easy industry. When asked how one can become a millionaire, Virgin owner Richard Branson famously quipped: “Start with a billion and launch a new airline.”
Jersey-founded airline Flybe was one of the first major casualties of the pandemic and, more recently, regional carrier Eastern Airways suddenly stopped flying.
And although they have not gone into administration, it is difficult to see Blue Islands coming back from this, unless a rich benefactor like Mr Branson step in.
If it does go the way of Flybe, it is unclear how much of the millions of pounds of taxpayer’s money will be clawed back by the Government. Airlines usually prefer to lease expensive assets like aircraft rather than buy them, and being registered in Alderney, Blue Islands will be subject to Ridunian rules should it go into administration.
It is understood that these are not as clear cut as Jersey’s when it comes to creditor priorities. However, perhaps Jersey can gain some comfort from the fact that its Treasury Minister was once Viscount, so knows a thing or two about reclaiming money for the taxpayers.
For such a tumultuous Friday evening for aviation in Jersey, the Airport was surprisingly calm on Saturday – traditionally its quietest weekend of the year for air travel.
Government insiders have said that ministers are, of course, sorry that it came to this and they have expressed empathy and support for Blue Islands’ passengers and staff, with the latter group invited to an emergency meeting to discuss support options at the government’s HQ on Monday.
However, they add that ministers are steadfast in their belief that the covid loan was the right thing to do, Friday’s decision to stand firm was correct, and the (hopefully) seamless transition to Loganair was proof that they had done their homework.
What Blue Island’s collapse says about the viability of running a business in a small high-cost economy like Jersey is another matter which will surely need to be addressed once the immediate dust has settled.
The more immediate questions are who knew what, and when? States Members did not receive a full briefing until 2pm on Saturday — long after key decisions had been taken.
Why the emergency payments and crisis planning escaped full scrutiny is a question ministers will now struggle to avoid. Public Accounts Committee Chair Inna Gardiner has told the JEP that it is something her panel will be pushing for answers on next week.
While Blue Islands’ planes may be grounded, the political fall-out is only just taking off.
- Additional reporting by Hannah Esnouf and Fiona Potigny.
