Flybe: everything you need to know about the ailing airline

Flybe put itself up for sale this week amid softening demand and higher oil prices

Simon Calder: Flybe up for sale as airline struggles with high oil prices

Seven thousand pounds an hour: that, I calculate, is the money Flybe is expecting to lose between now and April.

Europe’s biggest regional airline has put itself up for sale, and is talking to possible buyers as it struggles to limit its losses. Flybe also says it’s also reviewing other “strategic options” to turn around its fortunes.

The chief executive, Christine Ourmières-Widener, said: “There has been a recent softening in growth in the short-haul market, as well as continued headwinds from higher fuel and currency costs.

“We are responding to this by reviewing every aspect of our business.”

For staff at the Exeter-based airline, these are difficult and very stressful times. But what about the implications for passengers, present and future? Many travellers have contacted The Independent about Flybe, and these are the key questions.

What has gone wrong for Flybe?

How long have you got? There have been some serious management blunders over the years. In September 2017, Flybe decided to take on the Scottish airline, Loganair, on key links to the Northern and Western Isles. By the time Flybe threw in the towel in February 2018, both airlines had lost millions. Before that, a failed IT systems upgrade cost Flybe millions more.

The carrier is also suffering from Brexit uncertainty, which is damaging consumer and business confidence and weakening the pound. Flybe earns revenue mainly in sterling.

Flybe, though, has two fundamental problems. First, it is competing for passengers with Europe’s two budget giants, easyJet and Ryanair. Once Flybe has built up a link to a sizeable scale, then a bigger airline with lower costs moves in and takes all the market.

So routes which should be a natural for a regional airline like Flybe, such as Glasgow or Edinburgh to Bristol, have now been taken over by easyJet.

The other curse is Air Passenger Duty, which damages Flybe more than any other airline because it is levied on both legs of a domestic round trip. A far higher proportion of Flybe travellers are on such journeys. On an Aberdeen-Southampton flight costing £64 return, two-fifths goes straight to the chancellor in tax. That doesn’t leave much for aircraft leases, fuel and crew. And on routes such as Manchester-Glasgow, even with fares as low as £37, rail tickets are cheaper.

So who might be in the market for an airline like Flybe?

IAG, the holding company of British Airways, Aer Lingus and Iberia, is acquisitive. Even though BA got rid of all its regional flights, ironically to Flybe, in 2006, it may regard Flybe’s portfolio of airport slots at airports such as Heathrow, London City and perhaps Edinburgh as attractive, as well as the opportunity to feed hubs, notably Dublin.

Stobart Aviation, which runs its own little airline in Flybe colours, may be a buyer at the right price. It has a lot to lose if Flybe were to close down, because it relies on the airline’s booking system.

It is very unlikely, though not impossible, that either easyJet or Ryanair is looking at Flybe as a way of acquiring a busy route network (and removing a competitor), with plans to stem losses by integrating Flybe into its wider operations.

There could be a European suitor, though uncertainty about airline ownership rules after Brexit makes it unlikely.

But whoever buys it will need to pump in many tens of millions of pounds to prop up the airline.

If a sale goes through – what will it mean for travellers?

Initially there will be no changes – Flybe stresses that operations continue as normal. You will still be able to fly to and from Aberdeen, Edinburgh, Glasgow, Belfast City, Manchester, East Midlands, Birmingham, Bristol, Southampton and Exeter, as well as many other UK destinations.

The chief executive, Christine Ourmières-Widener, said: “We remain confident in the vital role that Flybe plays in UK connectivity.”

The network of Channel Islands and near-Continent destinations will also continue: links such as Southampton-Amsterdam and Birmingham-Paris are crucial feeder flights for KLM and Air France respectively.

But airports such as Cardiff and Norwich, which are heavily dependent on Flybe but are outside its central core, must be concerned. They have intense competition from nearby airports, Bristol and Stansted respectively.

Longer term, some links to London City and Heathrow might be at risk because of the value of slots; within three years Flybe is likely to be able to dispose of some slot holdings at Heathrow awarded to it for competitive reasons.

But I imagine any buyer will be keen to preserve the profitable core of north-south routes. Glasgow to Exeter in 90 minutes is always going to be attractive to anyone in a hurry to reach Devon – the rail journey takes eight hours.

I have a Flybe booking for next summer. Is it safe?

I would be surprised if every Flybe flight that is currently on sale for the summer of 2019 actually takes off. I think it unlikely that the airline will cease to exist – the fact that several potential suitors are talking indicates it has value – but the current route network is an odd shape.

The central core of routes is likely to endure, because it is an efficient and coherent network. The Channel Islands services should mostly also look the same. But a route such as Doncaster-Sheffield to Alicante, operating three days a week, looks an outlier.

That wouldn’t stop me booking a ticket, as using a credit card ensures there will be no financial loss. But using flights from those airports I would be cautious about committing to other travel purchases, such as car rental or accommodation, until nearer the time.

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If no buyer is found – can Flybe survive?

The airline says finding a buyer is only one of its options; cutting costs and continuing to shrink the fleet, and creative ways of generating cash are also on the menu.

The airline stresses there’s no threat to flights that have already been bought, though not everyone in the airline industry agrees.

Ironically in its half-year results on 14 November, Flybe’s auditors said increased demands from credit-card acquirers for upfront cash could lead to the airline ceasing was a going concern.

A footnote in the account says that since the end of September, the airline has paid £9.4m to a credit-card acquirer “as security to cover their risk for unflown flight refunds”.

But at present it is business as usual for Flybe, its staff and passengers.

I don’t want to take a risk; will I be able to claim a refund of the fare I’ve paid on travel insurance or my credit card and book with someone else?

No. Neither travel insurers nor credit card firms pay out on what may happen in future. You have a confirmed booking, and unless or until there is some signal that the flight might not go ahead, you have no right to cancel without penalty.

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