05 Mar 2020
Posted in Coronavirus
Flybe administration result of confused business model, desultory investment and competitive pressures
Coronavirus is being cited as a main cause for Flybe falling into administration, but the writing has been on the wall for the airline since its profit warning in 2017. Ralph Hollister, Analyst, Travel & Tourism at GlobalData, a leading data and analytics company, offers his view:
“Flybe blamed a number of external factors for its prolonged demise such as maintenance costs, the weaker pound and rising fuel costs. However, its competitors had to deal with these issues too. The main difference is that Ryanair and British Airways possess focused business models. Flybe was caught between the two, offering short-haul flights for prices that were not necessarily low cost.
“The impact of coronavirus may have also provided the perfect opportunity for a Virgin Atlantic led consortium to stop injecting money into a business that seemed to be some way away from achieving profitability.
“Attempts by major European carriers to dominate the market have led to an ongoing price war, which has resulted in a growing list of airline casualties. One of the first was UK airline Monarch, which went into administration in 2017. This incident should have set alarm bells ringing for Flybe. Unprofitable routes should have been scaled back much sooner than they were.
“Coronavirus could determine the fate of other struggling airlines on a global scale as world-wide demand for travel plummets. Larger airlines are also not immune from the impacts of the virus. Virgin itself announced emergency measures, including cutting executive pay, and urging other staff to take unpaid leave.”