Flybe was recently put up for sale following poor financial performance. This action came following a profit warning issued by the airline in October. While the airline’s shares dropped following the profit warning, they have now begun to rise again following news that both Virgin Atlantic and British Airways were interested in purchasing the failing regional airline. Interestingly, depending on who purchases Flybe, the effects the British aviation industry could differ substantially.
Virgin Vs British Airways
Both airlines currently operate a fairly poor domestic service. British Airways offers domestic flights from big airports such as Manchester and Glasgow. Virgin, on the other hand, currently utilises its sister company for these routes, in addition to offering codeshare flights with Flybe. As such, Flybe flights already show up when searching on the Virgin website, meaning it would be the perfect addition for the airline. In fact, take for example Manchester to New York. While direct flights are avaliable, a quick search on the Virgin website suggests you should firstly take a Flybe flight to Edinburgh. Next, the airline suggests taking another Flybe flight to Heathrow. Finally, once at Heathrow, you can change onto the flight to the big apple. These flights are offered on the same ticket, meaning baggage can be checked through to the destination.
British Airways currently commands a 54% share of all of Heathrow’s in demand slots. While this means they need to operate ghost flights, it could also be a bad sign for a Flybe acquisition. This is partly due to the Monopoly which the airline currently enjoys. Should the airline purchase Flybe, it would likely direct Flybe flights towards its main hub at Heathrow. At the same time, British Airways has been cutting the services offered aboard its flights. The program, known as “enhancements” by frequent fliers has seen a range of changes. While these have included a reduction in food given out, the airline has reportedly begun to charge groups to sit together. This move is supposed to help the airline to compete against low-cost carriers.
Were Virgin to acquire Flybe, the airline would finally have a short-haul regional carrier under its wing. The airline previously attempted to break into the short-haul market with a failed airline called Little Red. What makes Flybe different is that it is already established. In 2017, Flybe had a bigger share of the UK aviation market than Virgin Atlantic. If Virgin were to purchase Flybe, they would likely focus on strengthening their reach from all airports, not just Heathrow.Flybe’s fleet of smaller, turboprop aircraft could make shuttling to hubs an attractive prospect for these big operators.
Virgin Atlantic previously confirmed their interest in Flybe, saying: “Virgin Atlantic has a trading and codeshare relationship and confirms that it is reviewing its options in respect of Flybe, which range from enhanced commercial arrangements to a possible offer for Flybe. Virgin Atlantic emphasises that there can be no certainty that an offer will be made nor as to the terms of any offer.” On the other hand, British Airways refused to comment on rumours.
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