Flybe reports continued profits despite recession and hopes to increase routes
Specialist regional airline Flybe has reported £5.7m ($8.9m) annual profits for
the year ending March 2010.
The results mean that the UK firm stayed in profit throughout the recession,
having just broken even with £0.1m the previous year.
However, underlying profits – which ignore exceptional gains and losses – fell
from £12.8m to £6.8m, despite passenger numbers remaining unchanged.
The privately-owned Exeter-based firm is the UK’s biggest domestic carrier.
Flybe’s chairman, Jim French, claimed that it was “one of only three major European
airlines that have reported profits throughout the recession”.
The company specialises in short-hop flights, lasting one hour or less, and using
smaller aircraft than its rivals.
Having acquired British Airways’ UK internal flights subsidiary – BA Connect
– in 2007, the company is now seeking to roll out its “regional” business model
across the rest of Europe.
Flybe has agreed a code-sharing (see below) deal with Air France and a regional
operations agreement with Olympic Air of Greece.
The company is also in talks with Finnair about regional services in the Nordic
Flybe is expanding throughout Europe but is concerned about the future for UK
Flybe, the UK’s biggest domestic carrier, warned that a proposed change to aviation tax could cripple regional air services, adding pressure to Heathrow and Gatwick
and undermining the government’s pledge to boost local airports.
The coalition government is considering scrapping the tax on individual passengers
in favour of a per aircraft levy, designed to penalise carriers that take off
with half-empty aircraft and cut carbon emissions. An announcement could be included in the October spending review.
But Jim French, chief executive of Flybe, warned this would contradict the government’s
aim of allowing regional airports to soak up airport growth, as recommended by
the government’s advisory body on climate change. [That is not quite what the CCC said .....] The government recently blocked the development of a third runway at Heathrow,
as well as expansions at Stansted and Gatwick.
Regional airlines carry smaller numbers of passengers more frequently and would
be disproportionately affected by a per aircraft tax, Mr French said.
"This would have a detrimental effect on the development of regional services,
which flies in the face of government policy to take pressure off demand for new
runway capacity out of London."
Airlines are already braced for a sharp rise in air taxes in five weeks, adding
to pressure on revenues, which fell during the recession.
Flybe said business travel was recovering in the quarter to March and domestic
travel was strong, but the international leisure market – which counts for 5-8%
of revenue – remained weak amid the economic uncertainty.
Pre-tax profit for the year to March 31 fell 47% to £6.8m ($10.6m), with sales
little changed at £570.5m and passenger numbers maintained at about 7.2m.
The Exeter-based airline is in talks over two further purchases as it continues
to expand throughout Europe.
The Treasury said: "Aviation tax ensures the activity of flying contributes its
fair share towards the public finances, and plays a part in deficit reduction."
Flybe is 69 % owned by the family trust of Jack Walker, the late Blackburn Rovers
Football Club owner.
Flybe aims to increase direct links to Europe
Take-off: Privately-owned regional airline Flybe defied the prevailing market
conditions to post a pre-tax profit of £5.7m
Regional airline Flybe is planning to boost the number of direct flights it offers
from Scotland to continental Europe, which could include a Glasgow to Paris route
from as early as next summer.
The privately-owned carrier posted a pre-tax profit of £5.7m for the year to
March 31, up from £100,000 in 2009, and was one of very few airlines not to sink
into the red during the downturn. Turnover ticked down from £572.4m to £570.5m.
Flybe has grabbed market share in Scotland as rivals in the UK domestic market
gave up routes during the recession.
After announcing last month it has ordered up to 140 new planes in a deal worth
up to £3.3bn, Flybe said yesterday it is seeking to put some of them to work expanding
its network from Scottish airports.
Chief commercial officer Mike Rutter told The Herald: "One of the reasons we
bought 140 planes … was because we wanted to, first of all, grow generally and
a lot of that will be in continental Europe. But we also wanted planes that are
slightly longer but economic so that we could bring many more continental European
routes directly to places like Edinburgh and Glasgow, Aberdeen and Inverness.
"So we are currently in discussions about providing more direct services mainly
to the major European business and Nordic business locations and two or three
of those focus on Glasgow. That may be direct services from places like Glasgow
to Paris. It may be about increasing capacity from Glasgow to Scandinavian and
"Glasgow is very much in an expansion phase."
Flybe expects to announce details of the routes in December or January and have
them operating from some time between the end of summer and early winter of 2011.
The first of the 88-seater planes ordered by Flybe will be delivered next September,
with further deliveries until March 2017.
Mr Rutter said the number of business travellers, who account for 42% of Flybe’s
passengers, is up 40% year-on-year having fallen 35% in 2009.
He said: "It is now back to or slightly ahead of levels it was in the depths
of the recession."
However, the airline has not yet seen leisure passengers return in the same numbers.
Mr Rutter said the health of that part of the market depends on how the October
spending review affects consumer confidence. But he added: "Aberdeen has remained
"Inverness has also been a good performer during this downturn. We introduced
new frequency routes. The Manchester to Inverness route is one of the star performers
in the network."
He added: "We have won market share in Glasgow and Edinburgh which has more than
compensated for any of the other effects (from the financial crisis)."
Flybe said its franchise deal with Loganair, which has just completed its first
full financial year, has been "enormously beneficial" by expanding its customer
base. It means that it has more than 50 routes in Scotland and carries more than
Mr Rutter said Flybe is "working closely" with Loganair to help it extend its
services into new destinations, notably south of the border and in France.
Meanwhile, Loganair yesterday said that passengers are now able to get real-time
departure and arrival information from its relaunched website.
link to article
Code sharing or codeshare is an aviation business term for the practice of multiple airlines selling space on the same
flights, where a seat can be purchased on one airline but is actually operated
by a cooperating airline under a different flight number or code. The term “code”
refers to the identifier used in flight schedule, generally the 2-character IATA airline designator code and flight number. Thus, XX123, flight 123 operated
by the airline XX, might also be sold by airline YY as YY456 and by ZZ as ZZ9876.
It allows greater access to cities through a given airline’s network without having
to offer extra flights, and makes connections simpler by allowing single bookings
across multiple planes. Most major airlines today have code sharing partnerships with other airlines and code sharing is
a key feature of the major airline alliances.
Under a code sharing agreement, the airline that actually operates the flight
(the one providing the plane, the crew and the ground handling services) is called the operating carrier. The company or companies that sell tickets for that flight but do not actually
operate it are called marketing carriers or validating carriers.