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Flybe has 'long-term' commitment to islands

| Written by Neil Riddell

Eastern Airways' Mathew Herzberg with Flybe's chief executive Christine Ourmieres-Widener and chief revenue officer Vincent Hodder. Photo: Shetland News/Neil Riddell. Eastern Airways' Mathew Herzberg with Flybe's chief executive Christine Ourmieres-Widener and chief revenue officer Vincent Hodder. Photo: Shetland News/Neil Riddell. FLYBE has insisted it is committed to serving air passengers travelling to and from Shetland in the long term – and claimed it has set fares for its Sumburgh flights at a “sustainable” level.

Senior management figures from the struggling regional airline were in the islands for a somewhat sparsely attended public meeting in Shetland Museum and Archives in Lerwick on Monday lunchtime.

It is six weeks until Flybe, following an acrimonious fallout with franchise partners Loganair, begins operating three daily flights to Aberdeen and one each to Edinburgh and Glasgow under a joint enterprise with Eastern Airways.

The Exeter-based airline’s plans have been met with considerable scepticism locally given the routes - in effect heavily subsidised for isles residents under the Air Discount Scheme (ADS) - are viewed as marginal for a single airline, let alone two competing for the same limited number of customers.

Loganair managing director Jonathan Hinkles earlier this month accused Flybe of making a series of inaccurate claims about its offering to passengers.

Flybe chose not to respond directly to Hinkles’ robust challenge, with its chief executive Christine Ourmieres-Widener and chief revenue officer Vincent Hodder instead saying they wanted to focus on the “positive offer” they can make to islanders.

Hodder said that if it was a short-term venture, Flybe would be “taking advantage of the summer season demand” rather than beginning on 1 September.

Scottish economist Tony Mackay has suggested one of the two may even be forced to pull out of the routes prior to that date.

“The underlying basis on which we price is that we want to bring genuine competition into a market,” Hodder said. “But we want to make sure the prices we put into the market are sustainable long term fares.

“We understand that the key issue is not so much who has got the lowest price, but the sustainability, the regularity, and the continuation of lifeline services for the islands.

Sumburgh Airport. Photo: Mark Berry. Sumburgh Airport. Photo: Mark Berry.

“I’m not engaged in a price war. I’m not saying we’re always going to be cheapest.”

Although the school holidays distort any comparison of Loganair’s fares in August compared to September when Flybe’s flights begin, Hodder said it already appeared that fares would come down overall.

He said that would offer “growth and prosperity for the communities that we serve” in the form of more people staying in hotels, eating in restaurants and visiting tourist attractions such as the museum.

Hodder said Flybe’s primary objective was to get “bums on seats” as its pricing structure – with items such as baggage and food additional to the basic fare – giving it an incentive to sell lots of seats at lower prices rather than a few seats at a higher rate.

“We don’t like to see aircraft flying with 40-50 per cent load factor with very high prices. We want 70-80 per cent with low prices,” he explained.

He did concede that for the last remaining seats on busy flights, the highest price amongst between six to ten different “fare buckets” for a single flight will be “probably somewhere around £220”.

Ourmieres began Monday’s meeting – attended by around 25 members of the public – by setting out how Flybe operated more domestic UK flights than any other airline and was highly rated for its punctuality.

Hodder said its partnership with Eastern Airways showed it was “committed to Scotland”, and said the five return flights each day would enable islanders to benefit from a network of global codeshare and “interline” arrangements with most of the world’s major airlines.

It will fly Embraer E-170 jets on its Sumburgh flights – larger, faster planes that are viewed as offering greater comfort than the Saab 340 and Saab 2000 aircraft currently used by Loganair.

Several audience members questioned how there could be room for two airlines. The fear is that, after a short period of lower air fares, one of the operators will throw in the towel – leaving the other free to put prices back up.

“What you’re aiming to do is damage Loganair so they pull out, then we’ll be back to the same old prices, almost the most expensive anywhere in Europe,” one member of the public suggested.

According to Shetland MSP Tavish Scott, Ourmieres told him in a conference call that Flybe’s commitment to the islands was initially for one year.

She disputed that, suggesting it “may have been my French accent”, and insisted her airline – which is in the midst of a major overhaul after posting a £20 million loss in the last financial year – saw “an opportunity for more than one player” in the Scottish islands. 

Loganair managing director Jonathan Hinkles. Photo: Shetland News/Hans J. Marter. Loganair managing director Jonathan Hinkles. Photo: Shetland News/Hans J. Marter.

“We don’t have in mind any timescale,” she said.

Jim Smith of the Sumburgh Airport consultative committee suggested Flybe was “cherrypicking” the most profitable routes.

Ourmieres-Widener said it would have been “difficult to fly all routes” and the more limited timetable was “the best way for us to start and to see the reaction of the market – it does not mean we will not grow our frequency and structure”.

She said it was “difficult to answer” the question of whether there would be one or two airlines still operating by 2019, while Hodder said he “would certainly hope that in two years’ time you have two airlines serving Sumburgh”.

Flybe management were clearly eager to avoid getting into a war of words with Loganair. Asked to specify what they felt was inaccurate in Hinkles’ previous statements, Hodder said the airline “identified inaccuracies” but decided to “focus on the really positive messages that we have”.

“[We want to] sell the positive benefits rather than get into a fight with somebody else who wants to fight us,” he said.

Hinkles said later on Monday that Flybe “haven’t come up with anything new” and suggested they would have to pay a hefty bill to airport operator HIAL in order to operate jets in and out of Sumburgh.

He said Flybe was effectively doubling capacity on Shetland’s air routes but “even in 10 years it’s unrealistic to expect that the market size will double, let alone 10 weeks”.

Hinkles said the move was likely to draw some people away from travelling on NorthLink but “it’s not going to be a patch on what is required to fill the massive number of seats”.

But he is relatively content with the number of people still booking with Loganair for flights beyond 1 September.

“Booking-wise we’re just slightly below where we were at this time last year,” he said, “but overall, considering what’s going on, we’re actually pretty encouraged. We’re grateful to the community for all the support they’re showing us, and long may it continue.”

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