DISCUSSIONS over the financial difficulties facing Blue Islands and contingency arrangements to maintain Jersey’s connectivity reached a point where it was better to establish a partnership with a new provider than lend more money to the troubled airline, a senior civil servant in the Economy Department has said.
Officials from the department were alongside Economic Development Minister Kirsten Morel for a public Scrutiny hearing dominated by questions over the period before Blue Islands went into liquidation as Loganair began operating several key routes.
Chief officer for the Economy Richard Corrigan told the Economic and International Affairs Panel that while a decision had been made in early November to provide a £1.5 million loan to Blue Islands payable in three equal tranches, the situation changed between the first payment and the point where the second was due.
He said: “Bearing in mind how much money had gone to Blue Islands since the pandemic, between the [initial Covid] loan, the £1.5m [November loan] to landing fees, social security contributions and so on, there comes a point where you have to say: ‘can this business turn around or not’?
“In the background, government was working on contingency [plans] to secure these air routes, and what fundamentally changed in the final few days before the Treasury Minister communicated to Blue Islands that no more public funding would be available is that… we got to a crossover point where it was a better investment to secure contingency [arrangements] and have [Loganair] flights running within 36 hours than to continue funding Blue Islands.”
Questions were put to the minister about easyJet starting to operate flights on the route between Jersey and Birmingham, with panel chair Deputy Montfort Tadier saying that his panel had been told this move had had an adverse impact on Blue Islands estimated at £1.5m per year.
Deputy Morel said he did not believe there had been any discussions with easyJet around providing subsidies for this route, emphasising that competition of this type was a feature of Jersey’s “open skies” policy. However, he admitted that there might have to be a different approach should a rival airline start operating on the Southampton route, which provides a vital link for Islanders travelling for medical appointments, if this threatened to make Loganair’s operations on this route unviable
Panel members also sought to extract information around whether it was possible that Ports of Jersey might be able to impound the three Blue Islands aircraft left at the airport following the final day of operation on 14 November, in order to attempt to recoup an estimated £3.2m debt in unpaid landing fees.
Deputy Morel said he was unsure of the legal position on this matter, suggesting that questions should be asked of Ports of Jersey or Treasury Minister Elaine Millar, while Deputy Tadier said the panel had written to Deputy Millar last week but had yet to receive a reply.
Deputy Morel conceded that it was appropriate that the matter of this debt was raised, and Mr Corrigan confirmed that Ports of Jersey was likely to maintain its obligation to its shareholders by pursuing the matter through the appropriate channels.
