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Loganair: ‘Profits up, turnover up, reliability down’

Loganair has posted an increase in profits amid a tumble in the reliability of its service.

LOGANAIR has posted a 25 per cent rise in profits for the 2014/15 financial year amid a major drop in public confidence over the troubled airline’s substandard performance.

In the 2015 calendar year Loganair was plagued by frequent technical delays, largely caused by problems in its engineering department, with nearly one in four flights suffering a delay of 15 minutes or more.

Now the airline has revealed that, thanks in part to a 13 per cent rise in passenger numbers, in the year to 31 March 2015 its turnover rose from £87.3 million to £93.6 million.

That resulted in the company – which operates 31 routes across the Highlands and Islands and elsewhere in the UK – boosting its profits from £5.8 million to £7.2 million. It is unclear what impact the decline in reliability will have on Loganair’s profitability in the 2015/16 financial year.

The campaign group Islanders for Fair Air Fares, which has over 15,000 Facebook followers, called on the airline to invest some of its profits in improving its service in the wake of some “catastrophic failings” in recent years.

“Whilst it is great news for the owners of Loganair to have gained an additional £1.4 million in profit, the Islanders for Fair Air Fares would be delighted to her that the airline will now be investing some of these profits in a vastly improved island service,” said campaigner Scott Preston.

Campaigner Scott Preston (right) is calling on Loganair not to raise its already "punishingly high" air fares.

“As the monopoly airline there is a duty to ensure their service is reliable, sustainable and, most importantly, safe.

“If Loganair wish to see a similar improvement in goodwill they need to confirm that they will not increase passenger fares this year beyond the current punishingly high levels.

“If they cannot commit to this, they need to clearly and concisely explain why to the thousands of islanders and their families who have consistently supported and sustained the airline in recent years amidst catastrophic failings in reliability and service standards.”

Loganair chairman David Harrison said the company had “significantly increased” its annual investment programme to £15 million.

That package includes: spending £4 million on the purchase of two 50-seater Saab 2000 aircraft, a previously announced £6 million investment in a new spares hub at Glasgow Airport “allowing far faster and more efficient servicing and repairs” and £3.5 million to begin a three-year programme of “major passenger upgrades for the workhorse of its fleet, the Saab 340, significantly improving journey comfort and convenience”.

“2015 was a challenging year but we have a very robust and comprehensive plan to further improve our fleet and enhance the comfort of our passengers,” Harrison said.

Shetland MSP Tavish Scott: "Profits up, turnover up, passenger numbers up yet reliability is down."

“It is our number one priority and from April 2015 to April 2016 we have committed more spend than we have ever done to achieve those ambitions.”

The airline has “invested heavily” in its engineering operation and now employs 146 engineers, “more than at any time in its history, and almost twice as many as in 2007”.

Shetland MSP Tavish Scott responded: “Profits up, turnover up, passenger numbers up yet reliability is down. The everyday experience of many Shetlanders travelling south has been disrupted by engineering problems and technical issues.

“I want Loganair to invest any money they make in sorting reliability. Islanders must have confidence that the service will fly and fly on time. That has not been the case for too many months.

“Loganair’s decision to invest in engineers, a new spares facility, plus refurbishing the Saab 340s is good but long overdue. The sooner this gets underway the better for everyone who uses Shetland’s lifeline air services.”

Loganair chief executive Stewart Adams said that its “unique route mix” meant it had five different aircraft models from four different manufacturers.

He said that “significantly increases the demands on our engineering department and when engineers move on or retire, it has traditionally had a major impact on operations”.

Loganair chief executive Stewart Adams.

Nearly one in four Loganair flights faces a delay of 15 minutes or more. Its current punctuality of 77 per cent falls below the 85 per cent target it has set for 2016, but Adams claimed it remains “higher than the UK industry average”.

That appears to refer to figures for August 2015, the most recent month for which comparative statistics are available on the Flight On Time website. However, the same website also ranks Loganair 33rd out of 35 airlines for the first six months of last year.

Dividends totalling £7.67 million were paid to parent group Airline Investments Ltd (AIL) to enable it to fully repay loans taken on to finance its purchase of Loganair in 2012.

Harrison added that Loganair started the new financial year “in a position of strength”.

“As well as the acquisition of another Saab 2000 and the new expanded spares hub, having two dedicated spare aircraft based at Glasgow and Aberdeen enables us to improve back-up capability across the network,” he said.

“These investments are all designed to significantly improve operational performance and we are confident they will each have a positive effect on service levels.”

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