Flybe’s Newquay link with Heathrow takes off courtesy of taxpayer PSO subsidy (£6.2m over 8 years)
Flybe’s Newquay link with Heathrow takes off courtesy of taxpayer
The airport is not particularly near anywhere.
It is handy for the renowned Fistral surfing beach and the beautiful Bedruthan Steps, as well as the fleshpot that Newquay turns itself into for a few short weeks in July and August.
Falmouth, however, Cornwall’s largest metropolis, is nearly an hour away on a good day.
The service will be Heathrow’s only subsidised service, run under a public service obligation (PSO).
PSOs are defined under European aviation regulations as “scheduled air services on routes which are vital for the economic development of the region they serve”.
Or in other words, it is for routes where the authorities are sad there is not enough demand to even half fill a small regional aircraft and that to attract a commercial operator to fly the route, the government has to stump up a financial incentive.
In this instance it is Flybe, the recently taken-private UK regional carrier, which over four years will be paid £3.4 million to fly its 80-seater turboprops on the one hour ten minute journey.
Given that Flybe expects 180,000 passenger journeys a year, that works out at about £5 per passenger per trip.
PSOs are relatively rare in Britain though they do exist, for instance, between London Stansted and City of Derry airport in Northern Ireland and Dundee in Scotland. EU data suggests that such subsidised travel is much more prevalent on the Continent, especially in France and Italy.
Flybe has been operating a similarly subsidised service to Newquay from Gatwick but the switch to Heathrow has been possible after British Airways was forced to give up take-off and landing slots at its main hub – Heathrow – as a result of its acquisition of British Midland.
Heathrow gives Flybe another angle. “It will have a similar passenger profile but there will be more connecting passengers,” Christine Ourmières-Widener, the airline’s chief executive, said of the ability of travellers from Cornwall to hop on to a plane bound for anywhere in the world and for in-bound tourists to come in search of pasties, clotted cream teas and unreliable weather.
Flybe is partly owned by Virgin Atlantic, which in turn is effectively controlled by Delta Air Lines of the US, which demonstrates the future opportunities.
Heathrow spent many years after its privatisation three decades ago unwinding commitments to fly to every bit of tarmac around the British Isles to the point today when only eight regional airports are connected to it.
The pendulum is swinging back to Heathrow, however. The cost of parliamentary support for its £14 billion third runway has led Heathrow to re-commit to the regions. Those eight domestic routes (Inverness, Aberdeen, Edinburgh, Glasgow, Newcastle, Leeds-Bradford, Manchester and Belfast) will grow to ten from next weekend with the addition of Newquay — the sole PSO route — and another new Flybe service to Guernsey.
“Improving domestic connectivity is a huge priority for the airport,” said a spokesman for Heathrow, which has set aside a £10 million fund to incentivise domestic airline route development. [That is only IF there is a 3rd runway – not unless. See details here ]
PSO subsidy or not, passengers between Heathrow and Newquay may not discern much change in their fares. As airlines do, Flybe has all sorts of add-ons, from baggage and seat reservations to executive lounge usage and time of flight.
What that means is that the swift-of-mouse may bag a £35.50 online ticket but others may be charged as much as £260 one way. And once in bucolic Cornwall, as there’s no train link there’s also the price of a cab . . .
DfT signs 2nd PSO to pay £2.5 million so Flybe can profitably maintain Newquay to Gatwick route
The Government will pay £2.5 million, and Cornwall Council will pay £300,000, in a 4-year funding deal to enable Flybe to profitably operate flights between Newquay and Gatwick. The DfT says the public service obligation (PSO) will continue a link. There will be 3 flights each way on weekdays and 2 at weekends. The aviation minister, Robert Goodwill, said keeping the region connected to London is a “vital part of our long-term economic plan” and Danny Alexander said the route ”is vital for Cornwall’s businesses, tourist industry and residents” and “with a return rate of nearly £3 for every £1 invested, it’s a great deal for the UK taxpayer, as well as for the south-west.” The DfT says Flybe will operate the flights with the timings providing a convenient schedule for a full working day [eh? holiday-makers?] at either destination.” EasyJet took over Flybe’s Gatwick slots when the service ended in March this year, but decided to drop the Newquay service. There were about 92,600 passengers flying between Gatwick and Newquay in 2013, so over 4 years the £2.8 million would be about £7.50 each. Could the fare not rise by that amount, to save having to subsidise?
Heathrow would spend £10 million to increase some domestic flights, only if granted a 3rd runway, to get backing from regions
Heathrow has increasingly cut the number of flights to UK regional airports, as it has become more uneconomic for the airlines to run them – and long haul international routes are more profitable. But Heathrow is aware that it needs to get the backing of regional airports, in order to lobby to be allowed a 3rd runway. Heathrow therefore suggested the setting up of a National Connectivity Task Force. In order to boost flights to the regions, Heathrow now says that – only IF it gets a new runway – it will spend £10 million on for the development of 5 new domestic routes, for 3 years. These would include Newquay, Humberside and Liverpool. That would be in addition to the 4 extra routes that easyJet has said it wants to operate if there is a Heathrow runway, to Inverness, Belfast International, the Isle of Man and Jersey. There are currently 6 domestic routes from Heathrow (Leeds Bradford, Belfast City, Manchester, Glasgow, Edinburgh, Aberdeen and Newcastle). Heathrow also said it would launch a review of its airport charges in the coming weeks to focus on making domestic flights more commercially attractive (cheaper) to airlines. The results of this consultation, which is not dependent upon getting a new runway, will be effective from January 2016.