Government’s Flybe rescue package not tackling underlying issues, says GlobalData

Following the announcement of a rescue plan for Flybe;

Ralph Hollister, Travel & Tourism Analyst at GlobalData, offers his view on the situation:

“The rescue package may provide short-term relief for Flybe, but deeper underlying issues are the root cause of the airline’s woes. A key component of the rescue deal is the deferral of Flybe’s Air Passenger Duty (APD) payments. While it is true that Flybe’s focus on domestic travel has meant that an increase in APD payments has had a greater impact in comparison to rival airlines, a range of deeper-lying issues has contributed more significantly to Flybe’s downward trajectory.

“A key problem for Flybe is that it does not have an airport hub. Its destinations are made up of an extremely disintegrated network of infrequently flown routes. Flybe’s main competitors – easyJet and Ryanair – both have hub airports at London Gatwick and Stanstead, respectively, offering greater connectivity and flexibility.

“Possessing hub airports means that these competitors can increase flight frequency to more destinations. Serving a wide range of travelers on a mass scale allows the cost per seat to be brought down, making it difficult for Flybe to attract and retain customers in a market which is hyper sensitive to changes in price.”

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