Blue Islands debt 'simply a cost of the pandemic'

Millions in taxpayers' money loaned to Blue Islands might have to be written off as a 'cost of Covid', Jersey's Treasury Minister has told Channel 103.

The airline collapsed last week owing Jersey's government £9.1 million in unpaid loan repayments and interest.

That includes £7.4m of a £8.5m loan granted during the Covid-19 pandemic.

Of that, Deputy Elaine Millar said:

""Of the amount that's outstanding, I don't think it's unfair to consider that as a cost of COVID."

"Government did invest other sums of money in the community, in the economy, basically to keep businesses alive, to help individuals during the COVID period, and I think we may have to view some of that as simply a cost of the pandemic."

The government loaned Blue Islands a further £1.2m in September, and £500,000 the week before it folded.

Deputy Millar says that was to avoid the possibility of Jersey being left for a month without vital airlinks, including Southampton.

"People do rely on them, and we couldn't have them just go, with no alternative.

"Although discussions had been going on with Loganair, we initially thought that for them to stand up some kind of service was going to take over a month, possibly even no longer, so we would have had a month with no links to Southampton.

"...We were then aware that Loganair could start much more quickly than we thought, and it really was a case of 'we can't keep putting money in [to Blue Islands]  

"Government doesn't exist to keep businesses alive that are not sustainable in the long-term.... We decided this was the time to say 'no more'."

Liquidators have now been appointed to wind up Blue Islands, looking at its assets and creditors.

It emerged yesterday that the failed airline also owed £3.2 million to Ports of Jersey in deferred landing fees.

Deputy Millar told Channel 103 says the government 'does have security over certain assets'.

"To the extent that we are owed money, we certainly will put claims to the liquidation and try to recover whatever money we can."

Two ATR aircraft have been on the tarmac at Jersey Airport since Blue Islands stopped trading on Friday (14 November), while a further two of its leased aircraft are being held in Guernsey over unpaid debts Guernsey's States has not specified how much money is owed.

Loganair, which stepped in to run Jersey's lifeline Southampton services as well as inter-island flights to Guernsey, and service to Bristol and Exeter after the collapse of Blue Islands, has been promised up to £1.5m from Jersey's government towards its set-up costs.

Deputy Millar says the Scottish carrier will be investing more of its own money, and expanding to add more UK destinations 'soon'.

"They are hoping that they will gradually expand the service, and that we will have, over the winter, a service that will be very, very similar to what the Blue Island winter service was.

"We will be getting a reliable service from Loganair going forward, that's certainly what we're all hoping for."

Deputy Millar also welcomed Guernsey's States-owned airline Aurigny returning to Jersey operations, and said Ministers are 'keen to sit down' with Guernsey's senior politicians to work out how to provide inter-islands connectivity 'in a way that suits everyone's needs.

Guernsey has said operators of the Jersey route will need a licence from mid-January . Loganair bosses were there yesterday for talks.

This Friday from 9am Channel 103 will be joined by Jersey's Minister for Sustainable Economic Development Kirsten Morel live for a one-hour special where he'll answer your questions around the collapse of Blue Islands. Ask your question here.