UK-based carrier Flybe entered administration today (5 March 2020).
All flights have been grounded and the business has ceased trading with immediate effect.
While CEO Mark Anderson said coronavirus was a factor in the collapse, by reducing demand, it is clear the real reason was a failure to find further sources of funding.
The airline’s network connected many parts of the UK, avoiding most major hubs, so the grounding will have a disruptive effect at smaller airports. Southampton has now lost most of its scheduled services, and Newquay has lost half.
Also affected are services flown by sister company Stobart Air on Flybe’s behalf, although code share partners Blue Islands and Eastern Airways will continue to operate their own services.
Competitive pricing made air travel from the regions a viable alternative to expensive and unreliable rail travel but the business model was eventually unsustainable.
Previous financial trouble led to its acquisition last year by Connect Air, a consortium that included Virgin Atlantic, and, in January, a bailout was organised that included access to loans and the possibility to defer the carrier’s £100 million Air Passenger Duty (APD) bill. This led to a complaint to the EU by British Airways.
A UK government spokesperson said staff will be on hand at all affected UK airports to help passengers and it has asked bus and train operators to accept Flybe tickets and other airlines to offer reduced rescue fares to ensure passengers can make their journeys as smoothly as possibly.
With 2,000 direct jobs at risk, they added that the Jobcentre Plus Rapid Response Service stands ready to help them find a new job as soon as possible.
However, the trade union GMB pointed out that in addition to the loss of 2,000 direct jobs, a further 1,400 jobs in the supply chain were at risk, such as GMB members working for Swissport to provide ground services for Flybe at Liverpool, East Midlands, Edinburgh and Jersey airports.
The government is working closely with industry to minimise any disruption to routes operated by Flybe, including by looking urgently at how routes not already covered by other airlines can be re-established by the industry.
It also made the point that Flybe’s financial difficulties were longstanding and well documented and pre-date the outbreak of coronavirus.
The airline was the world’s largest operator of the Dash 8-400, with over 50 aircraft in the fleet. With a sudden glut in the market, it is likely that residual values will plummet, especially as there is little demand in Europe for the aircraft.
Also affected is Flybe Aviation Services, the company’s MRO facility in Exeter, which had a number of third party contracts.