Ministers aware in June about Blue Islands trouble

The Minister for Treasury and Resources has said ministers were aware in June that the airline Blue Islands was likely to cease trading and had negotiated with replacement airlines.

The airline announced it had suspended trading and cancelled flights on 14 November before entering liquidation three days later, owing the government £9.1m.

Deputy Elaine Millar told the States they had known of the airline's position and had discussed with both Loganair and Aurigny about offering a replacement service, but opted for the former because of its size.

Deputy Millar said "while the loss of of Blue Islands is regrettable", the government "acted decisively to protect the island's transport links".

The Deputy faced questions about the taxpayers' money that was lent to the company before it ceased trading.

She said she believed the government would be able to get back some of the funds loaned to the company.

Blue Islands currently owed The States £7m from an existing loan, along with another £1.7m from payments over recent months and interest which came to £9.1m.

The Minister said the council of ministers agreed that the government should not pursue the options that would require them to provide further financial support for Blue Islands.

"We were not prepared to continue using taxpayer money in this way, given the alternative available to us."

Deputy Millar said the airline could have folded in the summer without the extra payments.

Millar said it was not the role of the government "to sustain a private business facing financial difficulties however, it is their job to ensure that essential air connectivity is maintained and "that has been at the forefront of our minds throughout this time".

She added that there was an agreement that if the Blue Islands directors concluded that the company had to cease operations they would speak with Loganair to protect air connectivity.

Deputy Elaine Millar would have hope her long speech explaining the government's decisions in the lead up to the collapse of Blue Islands would have provided some clarity and answers for back bench politicians.

However, those hopes were quickly dashed as she faced a wide range of questions on why the government gave Blue Islands £1.7m weeks before it collapsed, when it still owed the government £7 million from the loan they borrowed during the pandemic.

Deputy Inna Gardiner, who reviews how the government spends public money, told me she didn't understand why the government had allowed things to get to this point when Blue Islands had been having cash flow issues since 2024.

Others questioned whether the move to Loganair really would be a smooth transition especially as it still hadn't been given the licence for the Guernsey to Southampton route.

Deputy Montfort Tadier told me that he thought it was doubtful whether Loganair would get a licence to operate the inter-island route and the Guernsey to Southampton route.

He said in a year in which inter-island sea links had been disrupted, it now seemed that inter-island air links were in question.

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