Why has Flybe got into trouble?
The Exeter-based airline has rarely looked secure since its 2010 stock market listing, as investors rapidly lost confidence. Successive restructuring plans failed to convince analysts that the regional airline’s model really worked, with unfilled planes on too many routes. Brexit affected demand and confidence and a weak pound helped to drive fuel costs higher.
What does the airline need to survive?
In terms of financing, it is unclear. Since delisting last February, Flybe’s accounts have not been published. The scale of its losses were running at around £20m a year before the Virgin-led Connect consortium took over, promising to invest £100m. Virgin saw a chance to deliver connecting passengers to its long-haul operations at Heathrow, once the third runway was built. However, recent news that the airport will not have the extra slots until 2028-29 make’s Virgin’s investment look an even worse bet.
One potential way the government could help Flybe – without singling out the company for direct financial assistance – would be to alter the rules on air passenger duty (APD), or cut the rates for domestic flights. The suggestion has already been criticised by environmentalists.
Air passenger duty, or APD, is a British tax on aviation, introduced in 1994. It is charged on each passenger on flights departing from the UK, and set according to the distance of their final destination and the class of travel.
It is intended to incentivise passengers to seek alternative arrangements from flying, which is the most carbon-intensive form of transport. By reducing demand for flights, it seeks to decrease carbon emissions from the air industry.
Destinations are grouped into two bands, above and below 2,000 miles from London, and charged at three rates – effectively for economy class, premium economy and business/first-class seats. All short-haul flights to Europe, including domestic, are charged in the same band, rising from £13 in economy to £78 in first class. A long-haul first-class flight now attracts APD of £528.
Airlines have long lobbied against the tax, particularly after the rates were doubled in 2007.
Flybe has argued that it is especially hard hit as the tax only applies to UK departures, and is therefore applied to each leg of a domestic return flight. That means, for example, that a return flight from Cardiff to Manchester is taxed at £26, while an international return flight from the UK to Moscow pays £13 in APD.
Long-haul flights from Northern Ireland are exempt from APD, as well as departures from remote parts of Scotland.
What is air passenger duty?
Air passenger duty, or APD, is a British tax on aviation, charged since 1994 per passenger on flights taking off in the UK. The charge – from £13 in short-haul economy to £528 for a long-haul first-class flight – has long been opposed by airlines.
Flybe has argued it is especially hard-hit as the tax only applies to UK departures, and is applied to each leg of a domestic return flight. That means, for example, that a return flight from Cardiff to Manchester is taxed at £26, while an international return flight from the UK to Moscow costs just £13 in APD.
What if I have a flight booked with Flybe?
For now, as ministers stress, the airline is a going concern, and passengers should expect to travel as normal. However, given the ongoing talks and speculation over its future, it might be prudent to consider alternative arrangements for crucial trips – and to pay with a credit card for any new bookings.
How easy is it to do the same journeys by rail?
The train can be a viable, cheaper alternative on some routes – but often takes longer and can be particularly costly for travel at peak times. For example, at time of writing, Exeter to London from Monday to Tuesday next week can be as little as £80 return, a 2h 14min journey on the train.
However, arriving in Paddington before 9am and leaving London between 5-7pm puts the fares up to £216 (currently available advance price) or as much as £273 for a fully flexible ticket. A Flybe return fare – for a 1hr 10 min flight from Exeter Airport to London City - currently costs £144 at peak times (rising to £302 for a flexible ticket).
A similar trip from Southampton to Manchester on 17-18 February can now cost £98 on Flybe for a one-hour hop – or £122 for four hours on the train. Other journeys – most obviously from Northern Ireland to the mainland – are impossible solely by rail.
Would someone take over Flybe’s routes?
Possibly. Other carriers might well eye some lucrative routes should Flybe fail. Newquay-London is a route operated under a public service obligation and so would definitely continue. But given the wider network appears unprofitable, some passengers will likely need to seek new connections.
