Guernsey Ports is consulting airlines and commercial port users on proposals to raise charges at the airport and harbours and eliminate the requirement for taxpayer funding.
It is also writing to its leisure marine customers, advising them of the planned increases to mooring fees over the next three years.
The revenue raising package involves above RPI increases on a whole range of current fees and charges, starting in 2024.
This will facilitate a much-needed increase in capital investment in the Ports’ ageing infrastructure, as well as helping to offset a fall in income post-Covid due to reduced passenger numbers at both the harbour and airport.
The increases are typically in the region of 20% to 30% above RPI, spread over two or three years. They include airport and harbour passenger charges, aircraft landing fees, cargo and bulk freight charges, hydrocarbon import, and marina fees.
Others will rise only by RPI, while a small number of targeted increases will see some relatively low user charges rise by up to 150% above RPI over that time.
While Guernsey Ports is setting out its three-year plan for full financial sustainability, the increases in years two and three are open to review closer to the time. Much will depend on the level of recovery in passenger numbers post-Covid.
Two thirds of Ports income is from commercial passenger, ship or aircraft charges and revenues have been heavily affected by the reduction in travel post-Covid. Although passenger numbers are recovering, they are expected to be 15% down on pre-pandemic levels this year.
As such, Ports is forecasting a loss of around £6 million this year. This will bring the total funding received from States of Guernsey general revenue since the pandemic to around £30 million.
As one of the States-owned trading operations, Guernsey Ports falls under the mandate of the States’ Trading Supervisory Board (STSB).
In an update to the Assembly last month, STSB President Deputy Peter Roffey advised States members that user charges at the harbours and airport would need to increase to reduce the burden on taxpayers.
It is anticipated the proposed increases would generate an extra £8 million a year by 2026, of which around 15% will come from leisure moorings.
Guernsey Ports managing director, Colin Le Ray, said although the financial transformation project had begun with a review of all current fees and charges, other initiatives would also contribute to the turnaround.
He explained: “Given the current pressure on States finances, it was felt important to make significant inroads in reducing Guernsey Ports’ reliance on general revenue from next year. The review has identified where there is scope for raising additional revenue now, and focussing on user charges means the greatest contribution in terms of income will be from those islanders who benefit most from the facilities we provide.
“We are also aiming to reduce our operating costs, and a full review of expenditure is underway to identify savings and efficiencies. Those will be key to improving our financial position, but may take more time to realise the full benefits. Cost savings alone will not be sufficient to return Guernsey Ports to a fully self-funding position.”
The increases proposed for 2024 will not deliver an operating surplus next year. However, with the additional rises in 2025 and 2026, Guernsey Ports will be able to meet all its operating costs and the majority of its capital investment programme. It would then only require financial support from the States for any major infrastructure development that could not reasonably be funded through fees and charges.
Mr Le Ray said phasing the increases will give customers time to adjust: “We are mindful of the potential impact of a sudden, sharp rise so we have looked to smooth the increases, so our customers have time to adjust to them. However, there is also a pressing need to reduce the reliance on general revenue funding. It was felt a three-year transition provided the right balance, and gives Guernsey Ports the opportunity to monitor any impacts and respond accordingly.”
Airlines and commercial port users are expected to provide feedback by the end of September, following which Guernsey Ports’ 2024 charges will be finalised.