Air Freight News

Cities cut off and airports at risk: What happens if Flybe folds

U.K. airline Flybe Group Plc is on the brink of collapse, with Prime Minister Boris Johnson considering whether to offer state help to a carrier that serves more British towns and cities than any other.

Owner Connect Airways, comprising Virgin Atlantic Airways Ltd., private-equity firm Cyrus Capital and airport firm Stobart Group, appears ready to let the company go if the government eschews a rescue. That would disrupt travel, jeopardize thousands of jobs and further isolate far-flung communities.

Here’s a rundown of the likely consequences of a Flybe failure—both for customers and the destinations it serves:

What happens to passengers?

Unlike Thomas Cook Group Plc, which folded in September, Flybe’s customer base is weighted toward business and independent leisure travelers. So if the company goes bust there won’t be the same issue of thousands of families stranded in Mediterranean resorts.

At the same time, the carrier isn’t covered by the ATOL protection scheme that applies to tour operators, so the U.K. Civil Aviation Authority will have no obligation to repatriate passengers, unless the government chooses to step in.

Most people will be covered by travel insurance or bookings made via a credit card, though some may not. And on routes where Flybe was the only operator the trip home may be a tortuous one, involving a journey to another airport or an extended route by train and even sea.

And the company’s assets and staff?

Flybe holds a batch of valuable takeoff and landing positions at London Heathrow airport, which spurred the takeover by a Virgin Atlantic eager to feed passengers onto long-haul services. Slots at other airports such as Manchester could also find a new home, but positions at small bases have zero value.

The airline is among the world’s largest operators of Q400 turboprop planes, with a smaller fleet of Embraer regional jets. But many of those aircraft are owned by leasing firms and wouldn’t realize any value in the event of a collapse. A flood of Q400s onto the market could be bad news for De Havilland Aircraft of Canada Ltd., which took over manufacturing of the model from Bombardier Inc. The Flybe fleet is equivalent to about two years of production.

Flybe employs about 2,400 people. Of those, 600 are pilots and might reasonably expect to find employment elsewhere relatively quickly. More than 400 staff are based at the company’s head office in Exeter and could struggle to find local employment at management level, while others are spread across often isolated locations where even menial jobs can be hard to come by.

Won’t somebody else step in to fill the gap?

In some cases, yes. Virgin could seek to retain feeder flights and Flybe partners such as Loganair might carry on with operations. But major network or low-cost carriers such as British Airways and EasyJet Plc would be reluctant to take on routes with such marginal economics, according to industry consultant John Strickland, and most have aircraft too large to operate from many airports the regional specialist serves.

In a worst-case scenario, it’s possible that some airports might struggle to survive without Flybe operations and many would need to trim costs and headcount. Even at a base like Southampton, less than 80 miles from London and with a quick rail link direct to the capital, the airline’s liquidation would cast a cloud over the future, with Flybe accounting for about 95% of the 2 million annual passenger count.

A collapse could be devastating for communities lacking both alternative carriers and adequate links to Britain’s inter-city rail network. The British Airline Pilots’ Association said that if Flybe didn’t exist, “it would have to be invented,” while a succession of lawmakers warned Tuesday of dire economic consequences in an emergency debate in Parliament.

Rachel Reeves said Flybe provides connections from her Leeds seat to locations including Exeter, Inverness, Newquay and Southampton that are “a nightmare to reach by train.” Alan Brown, Scottish National Party transport spokesman, said the North Sea oil industry could be hurt by reduced flights to Aberdeen.

Chris Williamson, an economist at IHS Markit, said the loss of Flybe combined with the limitations of Britain’s ground infrastructure would make it tougher for the government to deliver on pledges to spur growth in Britain’s provinces.

“Every mode of transport that’s taken away from us just makes life harder and deters more business from relocating out regionally,” he said.

Bloomberg
Bloomberg

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© Bloomberg
The author’s opinion are not necessarily the opinions of the American Journal of Transportation (AJOT).

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