Cut-throat competition in the airline industry is about to claim another victim. As ever, it is the workers who will bear the brunt of this race to the bottom.
It’s been a turbulent time for the aviation industry recently. And now another airline looks unlikely to weather the storm.
Flybe is up for sale, with the regional air carrier calling in accountants from KPMG in an attempt to save itself from collapse. Half-year profits have plunged and the company’s auditor, PwC, warned of “significant doubt” over its future.
KPMG’s involvement should have instantly set alarm bells ringing, as they were also the administrator of Monarch Airlines last year.
For flight and cabin crew, as well as all the office staff and engineering support in Exeter, this will put a serious dampener on the coming festive period.
So what is going on?
When you speak to people working for Flybe, it soon becomes clear that there have been some serious management blunders over the years.
First there was the instance of a failed IT systems upgrade, which resulted in Flybe losing millions. Then in September 2017, Flybe decided to take on Scottish airline Loganair, with key links to the Northern and Western Isles. But by the time Flybe realised the pointlessness of this venture, both airlines had lost millions.
Their recruitment policy has also been inadequate, to say the least. And to top it all off, their investment in expensive Embraer jets has been a bit of a disaster.
None of these factors, however, are fundamental in the demise of Flybe. The regional market is a tough one, and economies of scale play a role.
On its European routes Flybe is competing for passengers with Europe’s two low-cost giants, easyJet and Ryanair. Once Flybe has built up a link to a sizeable scale, then a bigger airline with lower costs tends to move in and take all the market.
This is what happened to routes such as Glasgow or Edinburgh to Bristol, which have now been taken over by easyJet. Flybe is then left with secondary or tertiary routes, many of which are barely viable in this cut-throat environment.
Faster than rail or road?
Flybe’s former slogan of “faster than rail or road” is also questionable.
Most airports in the UK are awful places. By the time you’ve reached the airport, parked a mile away, waited for a bus in the cold and rain to take you to the terminal, been shouted at in a security queue, and negotiated your way through a noisy shopping centre, you could have already driven halfway to where to you want to be.
Even if the plane is faster than train or car, it is rarely better as an overall experience. And that is a big problem for the likes of Flybe on its domestic routes.
Socialists are not Luddites; we are not against air travel. (The present author regularly flies 70 ton aircraft all over Europe.) But one has to ask: what are we doing as a society that it is now often cheaper to fly than to go by train?
Stobart Air, using the Flybe franchise, even flies to Manchester from Southend, three times a day, often with just a dozen passengers per flight. A rationally planned society wouldn’t tolerate such environmental waste.
Any regular commuter in today’s Tory Britain will be able to tell you what a shambles the transport infrastructure in the UK really is. Train ticket prices have spiralled out of control. The market is unable to provide adequate transport links throughout the country.
With a socialist plan – involving nationalisation of the railways, airlines, and other transport – we could invest in airplane technologies (such as hybrid carbon-neutral jet propulsion) and provide free public transport and efficient rail travel.
The uncertainty about Flybe’s fate affects a lot of people. It also places a question mark next to certain essential routes. Flybe has been providing crucial links to and from the islands. For example, the Isle of Man government is heavily dependent on the daily flights to Liverpool for patients.
Incidentally, just a few months ago the flight and cabin crew of Stobart Air in the Isle of Man, who have been providing this service so far as a subcontractor to Flybe, were effectively told they would be out of a job soon as Flybe will take this route back in-house next March. What will happen to these crucial medical transfers if Flybe folds?
At the time of Monarch’s collapse, people were speculating that the airline was going to be bought for airport slots. Instead, competitor airlines let it fail by itself, and then bought what they wanted from the administrators without the associated headache of a needless acquisition.
With KPMG now going in, as they did with Monarch, history may well repeat itself – although it can’t be excluded that the Stobart Group may take a gamble and buy Flybe outright.
The most likely scenario, however, remains Flybe being carved up and the vultures picking the premium slots on core profitable routes. In other words: asset stripping.
This is meant to be a ‘Golden Age’ for the aviation industry. Indeed, for flight crew at least, these last years have seen a small relative upswing compared to the days of the 2008 crash.
The tide, however, has started to turn. The writing is now truly on the wall. Monarch went bust last year, as did Primera Air a few months ago. The feeling amongst insiders is that “we are due a big one”.
Dark clouds are gathering on the horizon – and Flybe may well end up in them.