Administrators blame late aircraft deliveries

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Sometimes you have to let go. And that also applies to airlines that fail to find their footing in the market they want to serve. Yesterday January 27, the British regional carrier Flybe announced that it would cease all operations after being placed under conservatorship. This is the second time that Flybe has grounded all of its planes and closed the business, the first time on the eve of the COVID-19 pandemic. Let’s investigate further the causes of Flybe’s final demise.

SIMPLEFLYING VIDEO OF THE DAY A recap of the Flybe case

An airline going out of business is never good news. In addition to the ensuing loss of jobs for employees, there is also the disruption to passengers to consider. This is especially true when the airline is the only one offering flights between two areas, as is often the case with regional carriers like Flybe.

This morning all Flybe planes were grounded and administrators advised potential passengers not to travel to the airport as there will be no rescheduling of flights. Two trustees were appointed to run Flybe during its final days, David Pike and Mike Pink of Interpath Advisory. They said they aimed to preserve critical elements of the carrier’s operating system to keep a rescue operation possible.

Photo: Peter Krocka/Shutterstock

The Flybe which has been placed into administration is the regional carrier’s second attempt to position itself as a leading regional carrier in the UK and European market after the original Flybe went out of business in March 2020 when the coronavirus pandemic COVID-19 was poised to disrupt the global aviation industry. However, in October 2020, Thyme Opco, a company linked to one of the previous stakeholders, Cyrus Capital, reached an agreement with the administrators to buy the Flybe brand, thus being able to revive the carrier. On April 13, 2022, the new Flybe operated the first flight, connecting Birmingham, where the airline is headquartered, to Belfast, another major base.

What led to Flybe’s second disappearance?

Have you ever heard the expression, “you can tell how something is going to happen by how it starts”? It may just be a saying, but in the case of the new Flybe, it also reflected the real facts.

David Pike explained how the causes of the carrier’s demise date back to its early days in April 2022. The most significant setback for the revived regional carrier was the impact of COVID-19 on supply chains, which had a considerable impact on the delivery of new aircraft. Indeed, Flybe suffered a delay in the delivery of 17 aircraft, which the carrier needed to operate its new program.

An airline’s capacity ultimately depends on its fleet and schedules. Fleets and schedules need to be aligned, i.e. the airline needs the right fleet, both in terms of size and type of aircraft, to operate the routes for which demand exists. Poor fleet and network management has a negative impact on an airline’s capacity and, therefore, on its competitiveness.

Photo: Bradley Caslin/Shutterstock

In terms of schedule and network, Flybe was doing well. Before its first demise in 2020, the airline carried around 10 million passengers. When it restarted operations last April, the airline aimed to restore full capacity, focusing on the gradual development of connectivity in the UK regional market and cooperating with other carriers to provide better access to European and American markets. For this purpose, however, the airline needed to expand its fleet, which was prevented by the delay in delivering the ordered aircraft.

According to ch-aviation, the new Flybe began operations with eight De Havilland Canada (DHC)-8-Q400s, which can accommodate 90 passengers. The lack of capacity due to the shortage of planes first materialized last July, when Flybe had to reduce its frequencies during the busy and profitable summer season. Notably, the carrier had to suspend three routes from its base at George Best Belfast City Airport (BHD), suspending services to Aberdeen, Inverness and Newcastle. Some essential air links, such as that between London Heathrow (LHR) and Belfast City (BHD) and the Isle of Man (IOM), have never been operated.

Photo: Olaf Schulz/Shutterstock

Despite the lack of capacity, Flybe was optimistic about its future, with the airline announcing increased frequencies for its summer 2023 schedule and the addition of new destinations. Notably, the carrier had announced the introduction of air service between its main base in the United Kingdom, Birmingham (BHX) and Bergerac (EGC) in France. In addition, from the beginning of July, Flybe was to launch a new route from Birmingham to Aberdeen (ABZ). With a current schedule of 21 routes to 17 destinations and the plan to increase frequencies and add new routes, the fleet was becoming increasingly unsuited to the upcoming schedule.

bad timing

Flybe 2.0 wasn’t the only airline launched or relaunched in the aftermath of the COVID-19 pandemic. Whenever the aviation industry suffers a significant crisis, the trend of new carrier launches is usually on the rise, as there is ample availability of aircraft and interest rates are usually lower.

However, another truth about the aviation industry is that it is never black or white. Each airline operates in its macro-environment, characterized by n-variables that force each airline to be considered as a unique entity in its own “habitat”. In the case of Flybe, the carrier has had to deal with the inability of new investors or owners interested in investing in the airline, the main reason being that the aviation industry is still adjusting to a new normal. , whose dynamics and logic are the consequences of the covid19 pandemic. If the economic context had been different, Flybe could have found new entities interested in injecting money into the carrier, thus making its survival and, who knows, its success possible.

Photo: Rob Wade/Shutterstock

How do you think Flybe could have handled the lack of capacity? Let us know by hitting the comment button below!

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