Flybe Collapse Has Major Implications
The announcement on 5 March that regional airline Flybe is to enter administration has major implications for the airline industry. The Flybe collapse came as no major shock, especially considering the airline almost folded in January, but the timing for the airline industry could hardly be worse.
The airline’s CEO Mark Anderson broke the news of the Flybe collapse on 5 March, “It’s with enormous sadness and a deep feeling of sorrow that I share the upsetting news that Flybe is shortly being put into Administration,” he said. “Despite every effort, we now have no alternative – having failed to find a feasible solution to allow us to keep trading.”
Although Anderson said that the coronavirus COVID-19 had “impacted” on the airline, he also admitted that the deadly virus had merely “put additional pressure on an already difficult situation”.
It is not the role of government to prop them up
Flybe passengers have been instructed not to travel to the airport unless they have already arranged an alternative flight with another airline.
UK transport minister Kelly Tolhurst told Parliament on 5 March that, “in a competitive market, companies do fail, and it is not the role of government to prop them up.”
She added that the government will support other regional airlines affected by Flybe’s collapse as well as expressing “sincere sympathy to those who have lost their jobs”.
Flybe was unable to secure a government loan of £100 million to rescue the airline. The airline’s demise is expected to cause more than two thousand job losses.
Flybe collapse bad for a failing industry
News of the airline’s fall was another blow to an industry suffering from declining numbers due to the spread of the Coronovirus COVID-19 throughout Europe and especially in Italy, where schools and universities have been closed, the Venice Carnival cancelled, and major sporting events either cancelled or played behind closed doors. Many have questioned whether it is safe to travel to Italy?
Experts predicted that Flybe would not be the only airline to fall this year.
“It is clear that the industry is going to take a savage hit in the coming weeks and months,” Michael Mulligan, insolvency partner at law firm Shakespeare Martineau, told the Guardian.
The collapse of Flybe was the fourth “significant UK airline failure” since 2017, he added.
James Goodall, an analyst at Redburn specialising in transport, predicted that, “further airline bankruptcies should be expected in the coming months.”
Mulligan suggested that Alitalia might be the next to fall. Southwest airline announced the same day that the coronavirus COVID-19 has sliced $200 to $300 million off its operating revenue.
The airline industry has also come under attack in recent years from the No Fly movement or Flygskam (Flight shaming), with a decline in real numbers of people flying in both Germany and Sweden reported even before the coronavirus COVID-19 struck Europe.
Flybe: a special case
Supporters of the proposed rescue package for Flybe had made out that the airline was a special case, as it provided much needed connectivity for parts of the UK.
Belfast, Newquay and the Isle of Man are just three locations in the UK where Flybe flights provided a much needed lifeline.
In the Isle of Man, for instance, the UK Government had a contract with the airline to fly patients to the mainland for treatment that could not be provided on the island, reported the BBC.
The age of the train?
The collapse of Flybe not only begs the question as to who will replace these vital services, but also as to the future of regional air travel in the UK.
The recent ruling that the third runway at Heathrow was unlawful due to climate change, the government’s support of high speed railway HS2, and now the collapse of Flybe suggest there is some momentum against plane travel within the UK. Could the UK follow France’s lead in considering a ban on internal flights where suitable rail replacement exists?
However, such speculation is for the future, the questions for now are what will happen to the existing Flybe routes, what will be the Flybe refunds, and which airline will be the next to fall to go bust?