Flybe’s Rise to the Top – but for how Long?

Flybe will operate to 36 destinations in the UK this summer (more than any other carrier) and remains focused on serving high-frequency routes in the UK domestic and European business markets.

Mike Rutter, Flybe’s chief commercial officer told Routes News: “Flybe is the biggest airline measured by ATMs at 10 UK airports, including Manchester, Birmingham, Belfast City, Southampton and Exeter.”

“Our strategy is clear and simple: to become Europe’s largest and most profitable regional airline, serving domestic and intra-European markets and we will add capacity in markets that help us reach that goal,” he adds.

Flybe’s regional focus dates back to 1979 when it began commercial operations as Jersey European Airways, eventually adopting some elements of the low-cost model in 2002 under the Flybe brand. The carrier has built its reputation as a hybrid operator, mixing elements of both the legacy and low-cost models and today has 14 bases around the UK stretching as far north as Inverness and as far south as Jersey.

UK Domestic Network

Flybe six largest airport operations are listed in the table below. It is the largest (domestic) operator at all except London Gatwick in terms of scheduled seat capacity. (Source: Flightbase June 1-7, 2010):

Latest statistics from Flightbase (June 1-7, 2010) illustrate Flybe’s leading position in the UK domestic market (according to number of destinations served and weekly seat capacity) with a 31% share of the market, overtaking BA, easyJet and Ryanair.

The following table illustrates how current UK domestic capacity is filled:

Source: Flightbase June 1-7, 2010

In fact, Flybe has grown its market share by 15% and serves 16 more destinations than it did five years ago, highlighted in the following table, from Flightbase data taken in 2005 (June 1-7, 2005).

Flybe’s rise and BA’s decline in the UK marketcan be partly attributed to the regional carrier’s purchase of BA Connect in 2006, which in turn gave Flybe access to extra markets. BA now serves just nine domestic destinations. Plus, Flybe’s franchise arrangement with Loganair picked up where BA left off and Logan Air continues to serve its Scottish routes.

Niche Strategy

The carrier appears to continuing to select airports with no scheduled services, enabling it to serve a city pair exclusively. Flybe has announced that it will serve Edinburgh from Kent International daily between May 27 to October 30. This is the airport’s first scheduled route since EUjet collapsed in 2005. It will also be the first schedule carrier to fly between Humberside and Belfast City airport.

Plus, Flybe is the only scheduled carrier operating at the following UK airports: Barra, Campbeltown, Islay Airport, Isles of Scilly, Kirkwall and Sumburgh.

Specialised Fleet

Flybe has a fleet of 72 aircraft, made up of 58 Bombardier Q400s and 14 Embraer 195s, with the ability to add more frequency to accommodate business traffic.

Its fleet has been a key part of its success, particularly in the smaller served markets as it can serve niche, thinner markets that easyJet and Ryanair, with their larger B737-800 and A319/A320 aircraft would struggle to do. Typically, Flybe’s seat capacities range from 80 to 110 seats.

The Dash 8 aircraft that Flybe operates are also more cost-effective per ASK than the Bae 146-200 aircraft.

Rutter says: “We have spent over $2 billion on new aircraft over the last two years that suit our business model. They are the right size aircraft for the markets we serve and unlike our competitors, we don’t have to artificially stimulate a market simply in order to fill 150-seat gas guzzlers.”

“Delivering low-cost, high-frequency services helps underpin our success where we compete against BA, Lufthansa, easyJet and Ryanair,” he adds.

Shifting Capacity

Since Flybe integrated BA Connect into its operations, it has seen growth from its major regional operations at Birmingham and Manchester.

However, the majority of growth has been seen at Gatwick. Since 2007, Flybe has almost doubled its weekly seat capacity at the London gateway. At Birmingham and Manchester there has been small increases in capacity during the same period.

Flybe has also significantly scaled down capacity in France, which was one of its niche markets during the property boom years. Pulling back from this market could be a result of the strength of the Euro and the decline in property values in the UK, which has allowed Flybe to put some of this capacity into the UK domestic market.

LCC Competition

Flybe operates the majority of flights in other UK markets such as Cardiff where the low-cost operators and BA do not operate. It has also been able to attract business traffic through its selective timing of flights and a frequent flyer programme, which is not available on rival easyJet.

However, recently easyJet seems to be making inroads on some domestic markets that are Flybe dominated, such as Doncaster and the Isle of Man. The low-cost carrier has recently announced service from Liverpool to Isle of Man, a Flybe stronghold, although this is only served once daily. Might this soon change?

EasyJet’s recent base opening in Doncaster could signal a wider move of attack in the UK regional markets. For example, it could link dots in its network by serving Belfast City from Doncaster – a Flybe route that is operated on a six-times weekly basis.

It will be interesting to see how the larger low-cost operators react to Flybe’s continued growth in the UK domestic markets.

In the meantime, Flybe has recently announced codeshare agreements with Etihad, something relatively unique to the low-cost market, which will feed passengers to the Middle East from UK regional airports.

“Our focus is on serving domestic and European business cities with high-frequency services which larger aircraft cannot do that job effectively,” Rutter says.