Blue Islands (SI, Jersey) has entered liquidation with a GBP9.1 million pound (USD12 million) debt to the Jersey local government alone. Neighbouring Guernsey has impounded ATR72-500 G-ISLM (msn 762) and ATR72-600 G-ISLP (msn 1167), hoping to cover some of the debts of the collapsed airline.
Jersey's minister of treasury and resources, Elaine Millar, said the local government extended a GBP1.2 million (USD1.6 million) loan to the airline in September, and then another GBP500,000 (USD650,000) in October. This came on top of GBP7.4 million (USD9.7 million) left from the COVID-era loan, including interest. Millar said that the struggling airline had not made any payments on the loan for the last six months.
Millar also revealed that Blue Islands was seeking an investor for the last year, but was unable to find one with sufficient funding to put the airline on a sustainable footing. The States of Jersey contemplated acquiring the airline, but ultimately decided there were better options to secure the island's connectivity.
"Those discussions, and their outcomes, were not made public because doing so would have risked compromising confidence in the airline, exacerbating an already difficult situation. Very considerable thought was given before ministers took the decision not to provide further financing, subsidy, or to take ownership of Blue Islands. We felt this was not the best use of public funds, and that more sustainable, alternative options were available to ensure the continuation of our lifeline routes," Millar said.
The Jersey government will subsidise Loganair to the tune of GBP1.5 million (USD2 million) for its rapid launch of services from Jersey, less than 48 hours after Blue Islands ceased its flight operations on November 14.
Guernsey impounds aircraft, mulls route future
Meanwhile, the government of the neighbouring island of Guernsey is deliberating how to recover funds owed to it by the airline and ensure sustainable services on essential routes going forward.
"Naturally, I want to do everything possible to ensure Guernsey taxpayers receive the money owed to them. Therefore, on Saturday [November 15] we took the decision to detain the two Blue Islands' aircraft currently at Guernsey Airport. These are aircraft leased by Blue Islands, but under the relevant Guernsey law, which is similar to legislation elsewhere in this regard, such aircraft can be held by authorities in order to assist with recovery of monies owed," said Mark Helyar, the president of the States Trading Supervisory Board, a body which manages the airport.
The -500 is leased from Abelo Capital Aviation, and the -600 from Jetstream Aviation Capital, ch-aviation data shows.
Helyar did not disclose the amount owed by the airline, although sources told the Guernsey Press that the sum was in "tens or possibly thousands" of pounds.
Route adjustments
The States of Guernsey also announced that it would earmark the Guernsey-Jersey route as an essential air service starting on January 15, 2026. This will mean that only a designated airline will be able to serve the route, committing to minimum service levels.
The route connecting the two airports was recently served exclusively by Blue Islands. However, after its collapse, both Aurigny Air Services and Loganair stepped in and began operating the route. The Guernsey government confirmed that until mid-January, any carrier would be able to fly between the islands.
"The collapse [of Blue Islands] also caused significant uncertainty to Bailiwick and wider Channel Islands air services. The Committee met to consider how best to provide assurance to travellers, especially over Christmas and the New Year, and also to provide longer-term resilience from 2026 onwards," said Sasha Kazantseva-Miller, president of Guernsey's Committee for Economic Development.
Blue Islands operated three more ATR72-500s, which remain parked at Jersey airport.
The UK Civil Aviation Authority confirmed the airline voluntarily surrendered its charter and scheduled air transport licences on November 14.
