guern123, GR was started in March 1968 with the sole purpose of keeping inter-island services going from ACI to GCI. If the States merely wanted to continue the LGW route in 2003, they were very welcome to start their own standalone independent airline. But they chose to buy GR, and with it came the obligation to maintain ACI services.
Aurigny will not drop Alderney services; it will borrow money for the upgrade in the same way as it borrowed money for the ATR 72-500s. Made a nice Guernsey Press headline, though.