Having started in 1979 as Jersey European, then later as British European, flybe (The ‘be’ in its name derives from British European) is now Europe’s largest regional airline. The carrier ranks fourth in the UK with 4% of the country’s weekly seats behind BA, easyJet, and Ryanair. It also has other subsidiaries, including flybe Nordic.
A classic regional
flybe operates a classic non-US regional model: it overwhelmingly operates high frequency, short services primarily for business travellers. While it offers some online connections and has six code-share partners, it’s primarily an O&D airline.
With 61% of its services within the UK, it serves 28 UK destinations in its own right. (A number of UK destinations are added through its franchise with Scotland’s Loganair.)
93% of all flybe’s markets are within 90 minutes’ flying time, and it utilises 64 aircraft: 41 Dash-8-400s; 11 Embraer 175s; and 12 Embraer 195s. Almost all of its aircraft have fewer than 90 seats.
Beyond domestic services, it also serves a variety of European markets from regional UK airports, with relevance to both business travellers and, especially, leisure. France, in particular, is crucial as it is its most-served international country: it serves 12 French cities on a seasonal basis and four year-round.
All is not rosy
Yet flybe has suffered significantly in recent years. Since 2007, it has barely broken even – despite its group revenues doubling. As a whole between 2007 and 2013, period it made a small loss, with £30m combined in 2012/2013 alone.
Load factors have steadily declined while the overall number of passengers was the same in 2013 as 2008 (7.5m).
And it has a very significant cost disadvantage, partly because of its network structure but also because of the accumulation of inefficiencies, compliances, and fat.
It’s no wonder that major transformations are being undertaken. These include cutting 30 loss-making routes; cutting its workforce by 450; closing six UK bases (airports at which aircraft and crew are based); streamlining senior management; and its plan to remove virtually all its Embraer 195s.
Crucially, it will also significantly increase the productivity of its workforce: its pilots presently fly an average 374 hours a year compared to the legal maximum of 900, with the UK average 571.
Its aircraft utilisation will increase from the present 5.3 hours a day, which is clearly partly because of its short stage lengths.
How we look is how we feel
Like virtually every other airline that suffers from poor financial performance and needs to change, flybe has changed its livery.
My initial reaction to this was as it usually is: a shaking of the head. What a waste of money! But if you think about it, it does make sense – because it’s more about what it means.
While flybe has clearly been making significant strides in terms of cost and productivity improvements, and seemingly rationalising appropriately, it is beginning to redefine itself by product and brand (and wider marketing). This is through its new development: Purple World.
A part of this, flybe says, is to ensure a “vibrant, dynamic modern look and feel, and a touch of fun”.
More importantly, it is about thoroughly focusing more than ever on its core segment – business travellers – and really promoting and emphasising core requirements: convenience, time-saving, and punctuality. Clearly, this should drive yields, and help reduce the inevitable substitution effect.
To this end, it has launched its “60:60 On-Time Guarantee”: if your flight is 60 minutes late, you’ll get a £60 voucher to use against other flight. And its new slogan: the “Fastest Way from A to flybe.”
If flybe didn’t refocus as they saw fit to better align themselves with their core segment, and then redefining and reemphasising their product and brand, it’d clearly undermine their other fundamental efforts.
But will these changes be meaningless or at least greatly undermined if their cost, productivity, and rationalisation aren’t sufficiently achieved? For flybe, is the future bright – and purple?
About the Guest Author:
James Pearson is a lecturer in air transport at Buckinghamshire New University, the largest provider of aviation-based undergraduate degrees in Europe. He is currently undertaking a PhD in the airline competitive responses of Asian network airlines within short-haul markets at Loughborough University.