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Economist predicts room for only one airline

| Written by Chris Cope

Flybe will go head to head with Loganair from 1 September - but is there room for two airlines? Flybe will go head to head with Loganair from 1 September - but is there room for two airlines? FLIGHTS to and from Shetland could revert back to being run by a single operator in a matter of months because there will not be enough demand for the increased number of seats, a Scottish economist has predicted.

Tony Mckay told BBC Radio Scotland that he feels either Flybe or Loganair will be forced to pull out of routes connecting Shetland and the Scottish mainland even before the two airlines actually go head to head from 1 September onwards.

In response, Loganair managing director Jonathan Hinkles said Flybe re-entering the market will be "damaging to all carriers" - including the NorthLink ferry to Aberdeen.

Flybe chief revenue officer Vincent Hodder argued that there was room for two airlines on the routes and added that more flights will "stimulate business and leisure links". 

Last year it was confirmed that Loganair and Flybe would end its franchise after nearly a decade together, with the former announcing plans to operate flights in the north, including to and from Kirkwall and Stornoway, in its own right.

It was revealed recently that Flybe will offer flights from the Scottish mainland in direct competition with Loganair, with up to three a day alone from Aberdeen as well as daily trips from Edinburgh and Glasgow.

This will see the number of flights going through Sumburgh Airport increase sharply, leading to hopes that there will be cheaper fares.

While it is believed that the cost of travelling to Aberdeen - the most covered route - will initially be less, there are worries over the long-term viability of having two operators.

Economist Tony Mackay believes that one of the airlines will ultimately admit defeat because there will be too many empty seats.

"I think what we'll find is that one of them will pull out. I suspect they will pull out before they actually start," he said.

"Even if they go head to head on the routes, I think that one of them will stop because they'll be losing money.

"I don't see there being enough people to justify competition on these routes for more than a few months."

Hinkles believes Flybe adding more flights to the Shetland routes will not work financially.

"The number of air seats between Shetland and the mainland will double from 1 September," he said said.

"Although there will be some growth in passenger numbers, the resulting level of air capacity would be sufficient to enable every single Shetland resident to fly back and forth once every three weeks – even before taking the capacity of Serco Northlink's ferries into account.

"It's clearly unsustainable, and it will be damaging to all carriers."

At Wednesday's meeting of Shetland's external transport forum in Lerwick, Hinkles denied claims from Flybe that it will offer cheaper fares and more connectivity.

Hodder, however, said that Flybe providing a service on the routes will bring "healthy competition" on a service which has long been monopolised.

He said: "Flybe has been serving Scotland for over 20 years and remains fully committed to continuing to provide customers with the widest possible choice of affordable travel options in an environment of healthy competition.

"With the added choice available, we certainly believe that this will stimulate business and leisure links and that there is room for two operators on these particular routes."

Sumburgh Airport operator HIAL meanwhile said it is in discussions with Loganair and Flybe with regards to its new proposed timetable.

Shetland MSP Tavish Scott told the external transport forum that he was worried about Flybe's plans to have one flight land five minutes after the airport opens, with the last plane leaving five minutes before it closes each day.

A HIAL spokesperson said it will continue dialogue with the operators in the coming weeks.

"The HIAL team have been in discussion with both airlines to ensure that the customer experience does not suffer as a result of the proposed schedules," they said.

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