Airline Code [BEE]
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The industry is facing a triple whammy of record fuel prices (aviation jet fuel has increased 100% in price in 9 months), decreasing consumer demand for discretionary leisure travel and increasing government taxation.
Whilst these challenges are crucial in the short term, the biggest test for all airlines in the medium to long term is about how relevant they are in this fast-changing world.
So why are we at Flybe so confident that we’ll be able to, forgive the pun, ride out the current economic turbulence?
Well to start with, scale is crucial. As Europe’s largest regional carrier - we will carry 8 million passengers in 2008 - we have been preparing for these challenges for five years.
Though no-one could’ve have predicted just how large the increase in the oil price would be, we were clear it was going up.
Unlike many others, this airline doesn’t gamble with fuel purchasing.
To help manage our fuel supply, we have a rigorous fuel hedging policy; that is, we buy our fuel in advance. On top of this, our £1bn, low fuel burn aircraft fleet is really proving its worth.
Just last week, Ryanair announced reported that 50% of its budget is now spent on fuel; compare that to the 24% Flybe currently spends.
We were also clear a couple of years ago that consumer appetite for visiting places they’d never heard of would wane, dented by a weakening economy and a consumer backlash to the low-grade service attitude of some of the hard-core low cost airlines.
As a result we have developed an extensive route network to city-centre destinations, of which over 80% are on a frequency of two or more a day, whereas many of our competitors have the opposite.
A network where the majority of routes are on a frequency of one a day or less is hugely vulnerable to the consumer slowdown.
Business passengers travelling to London and other European capitals from the UK regions like Southampton, Belfast, Inverness and Manchester need a regular, value-for-money service on an environmentally efficient aeroplane.
They do not want to fight their way through a scrum simply to get on board and they definitely do not want to be deposited 60 miles from the city they are visiting.
We also took the view years ago that green issues would dominate the agenda and this is where relevance to the consumer particularly hits home.
Airlines that have invested in the right sized aircraft for their network, haven’t had to artificially the stimulate market by giving away GBP1 flights in order to fill planes.
As well investing in new aircraft, we launched the world’s first aviation Ecolabel in 2007 to give consumers with informed data on our fleet versus those flown by other airlines.
(c) Centre for Asia Pacific Aviation. Date posted: 08-Aug-08
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Flybe Chief Commercial Officer sets record straight on industry challenges 
