September 9, 2008

Flybe Takes Off As It Beats Twin Scourges of Air Travel

By Scott Reid Deputy

FLYBE, the fast-growing regional airline, has reinforced its commitment to the Scottish market after shrugging off sky-high fuel costs and a consumer slowdown to book record annual profits.

The Exeter-based carrier, poised to become the second-largest airline in Scotland when its franchise deal with Loganair kicks in next month, said much of its attention would be on growing traffic out of Aberdeen and Inverness.

Chief commercial officer Mike Rutter told the Scotsman: "There will be further organic growth in Edinburgh and Glasgow as we put in new European business city routes and we further increase frequency to the regional and domestic points.

"But our big new route expansion focus in Scotland will continue to be in Aberdeen and Inverness."

In January, Flybe was named as Loganair's new franchise partner for its 23 Highlands and Islands services. It is set to replace British Airways as the public face of the network on 26 October - 18 months after Flybe took over BA cross-Border regional routes.

Rutter added: "Loganair are a well-run business. But they haven't had the marketing horsepower, particularly outside of Scotland, to bring in the business. We are well used to serving networks and bases that are absolutely dependent for air travel as a life line."

He said the group, which is headed by Scots-born chairman and chief executive Jim French, had already been able to offer another 58 connections for passengers on the Loganair network.

Despite the twin headwinds of the credit crunch and soaring fuel costs, Flybe managed to carve out a profit of GBP 35.4 million in the year to 31 March.

The result was 131 per cent ahead of a year earlier and followed the successful integration of BA Connect, the loss-making regional arm of British Airways bought by Flybe in March 2007.

Pre-tax profits in the first three months of the current financial year rose by 14 per cent to GBP 12.2m.

The airline said it had performed strongly as its fuel-efficient fleet and lower dependency on leisure travel had helped to insulate the business from surging oil prices.

"We are not as exposed to fuel costs on two fronts," noted Rutter. "First, because of the aircraft we have chosen to buy over the last five to six years, which has led to lower 'fuel burn per seat', and because our passenger profile is very different to, say, Ryanair.

"We have a higher mix of business passengers and people visiting friends and relatives. Those sectors have been a bit more immune to the economic downturn than the leisure sector."

Although Flybe has been touted as a possible stock market flotation, Rutter said such a move was currently "off the agenda".

Originally published by Scott Reid Deputy Business Editor.

(c) 2008 Scotsman, The. Provided by ProQuest LLC. All rights Reserved.