Chamber has welcomed news that Aurigny’s new management board is aiming to break even within three years and has already started reducing the costly complexity of the fleet. As the island’s largest business organisation, Chamber surveyed its members on their main ‘wants’ last year and better physical transport connections was one of the top three demands.
Chamber President Elaine Gray said the operational review by management, coupled with their transparent approach to engaging, was a positive basis for frank discussions. The organisation has applauded the commercial focus of the new team of Nico Bezuidenhout and Kevin George.
The Aurigny announcement states:
“Aurigny expects to return to break-even from 2023 under a new plan to reduce costs and grow passenger numbers by providing better travel options, helping to boost tourism and potentially offer cheaper fares.
The new plan follows a comprehensive, root and branch review of the airline by new chief executive, Nico Bezuidenhout, who was appointed last year. The plan is premised on addressing the airline’s debt accumulated through historic losses, and more recently the impact of the Covid pandemic, rather than being a capital call to fund future losses. It includes reducing the complexity of the airline’s fleet, which has added considerably to its operating costs in recent years and contributed to the past losses.
The plan will also see Aurigny work with the local tourism industry, to help develop value-based options that will appeal to visitors. Attracting more travellers could then lead to cheaper fares.
Aurigny Chief Executive, Nico Bezuidenhout, said: “Ideally, Aurigny wishes to reduce the average cost of air travel and make its service more accessible, and more affordable, to more travellers to and from the Bailiwick. This will improve our own competitive position and enable us to be more effective as a social and economic enabler. An overall, price-competitive offering for Guernsey as a destination will however require collaboration throughout the tourism value chain, and in this regard Aurigny is looking forward to working with all stakeholders.”
Mr Bezuidenhout also wants to provide more options for local travellers, noting that Guernsey already has more daily flights, and available seats, per working age resident than any other Crown Dependency. Efforts in this regard includes expanding Aurigny’s current network, with regular direct services to new destinations, such as Dublin, and more seasonal ad-hoc leisure destinations to provide Islanders with greater choice. Aurigny is also looking to sign agreements with other airlines to enable easier, through ticketing connections to numerous other business and leisure destinations, and more announcements in this regard will follow.
“The purpose is to increase overall air connectivity for Guernsey. The partnership approach will complement Aurigny’s own route initiatives, which includes the addition of the Birmingham and Exeter routes in 2021 and Dublin in 2022. We are aiming to strike the appropriate balance between the high-frequency London-focused schedule needs of Guernsey’s Finance Sector, the medical travel needs of Islanders and the desire for varied travel destinations of outbound leisure travellers.”
An independent review in 2019 concluded that while Aurigny was efficiently managed, the complexity of its fleet of aircraft was “a barrier to profitability”. Mr Bezuidenhout said that the quality of Aurigny’s maintenance output is of a very high standard, however, fleet complexity “inevitably leads to maintenance cost inefficiencies”.
“In 2019, maintenance costs constituted 19.5% of Aurigny’s total costs, which is more than double the average for IATA carriers.”
Since 2019, Aurigny has reduced the number of different aircraft types that it operates from 6 to 3, and over the course of the pandemic reduced headcount by c. 18%, resulting in tangible cost-savings without compromising the destinations or frequency of flights. Its fleet now comprises three ATR 72-600s, the Embraer jet, and two Dornier aircraft which operate the Alderney services. This could reduce further still. The potential of additional slots being available at Gatwick Airport could enable more flights per day using the ATR aircraft, to provide the same number of seats on the route without the need for the larger jet aircraft.
Mr Bezuidenhout said: “The overarching strategy is about doing more with less, through simplification and leverage. With a simplified fleet not only is cost reduced, reliability and dependability are improved. Aurigny has a hard-earned reputation for ‘bringing you home’ – the airline has continued doing so throughout the Covid pandemic and our emphasis going forward continues to be on delivering a dependable and punctual service, supported by one of the youngest fleets in global aviation.” Aurigny will fully introduce the ClearVision navigational aid technology on its ATR fleet during 2022, aiming to reduce weather-related delays caused by poor visibility, once pilots have built up sufficient training hours with the system. For the first half of 2021 Aurigny’s on-time performance averaged close to 90%, and Guernsey’s punctuality was on-par with other Crown dependencies, based on UK Civil Aviation Authority statistics.
Preparations are currently being made for a major refurbishment of the runway at Alderney Airport, which is part of a schedule runway maintenance programme. It includes consideration of extending the runway to enable the larger ATR aircraft to operate there. If an acceptable business case can be made, this could potentially allow Aurigny to withdraw the Dornier aircraft, providing further savings in fleet management expenditure and thereby reducing the cost of the PSO contract to taxpayers, increasing seat supply to and from Alderney and improving the overall integrity of Alderney’s air transport services.
Aurigny Chairman, Kevin George commented” We fully recognise that air connectivity forms a critical part of the Bailiwick’s process of recovering from the effects of the Covid pandemic, and in general is a requirement for economic prosperity and social cohesion. Aurigny is a key social and economic enabler to the Bailiwick, through its direct economic contribution as one of the larger on-island employers, the funds expended on its supply chain with local businesses and through enabling travel for tourism, business, or other social/medical reasons. With a set of clear objectives from a supportive shareholder, and a comprehensive and achievable strategy, Aurigny is on a path to financial sustainability”.