The last few months of 1998 have been a busy time for ambitious UK low-fare airline Debonair. First came the regional frequent flier initiative, followed by approval from above for an extensive air-bridge operation for pilgrims travelling to the religious sanctuary of Lourdes from 10 European cities.
Then came the announcement that half of its British Aerospace 146 jet fleet would operate on behalf of Lufthansa CityLine from Munich, followed by a similar agreement with Swissair and Air One. The latter involves one aircraft operating between Zürich and Venice and Bologna.
So is this opportunism or part of a wider strategy, however confusing the different strands might appear? Debonair's chairman and founder, Franco Mancassola, says he is following a clear path towards a more solid future.
Diversification, without abandoning the principle of a quality low-fare product, remains his goal. "We have worked hard to create a product, so we can sit with the majors and be treated as equal," Mancassola says. "But our core business remains as a low-fare, pan-European airline with a high value-for-money product."
What the arrangements with Lufthansa and Swissair provide is a fixed income of several million dollars, "while we expand the product", he adds, It is likely that other such deals could be struck when the opportunity arises. At the same time, Mancassola is careful to avoid, what he calls the dangers of codeshares, which would take the airline away from its core low-fare business.
There is scope to expand, however, through the acquisition or equity involvement in a similarly placed niche airline, provided it has a like philosophy and complementary route network, Mancassola says. He emphasises that a diligent search is on, but declines to identify likely candidates.
As to the Europe-wide regional frequent flier programme (FFP), progress is slower than hoped. A steering committee of six, representing 15 airlines is discussing ways to move the process formal. But it appears that there is a faction that views such a product as a headless chicken, believing that a link up with an established FFP of a major airline is necessary to achieve the common objective.
Growing price wars among Europe's low-fare airlines has forced Mancassola to respond with a re-evaluation of the fleet, especially on the longer routes, where the BAe 146 is less cost-effective than the larger equipment operated by the competition. As a result, a Boeing 737-300 has been leased for the Barcelona route, with a second to follow. The fleet also includes 12 146-200s.
Mancassola still views the Boeing 717 as the ideal aircraft for Debonair's route system and is awaiting a Boeing decision on the preliminary agreement on price, delivery and financing of 10 aircraft which Debonair reached with McDonnell Douglas before its merger with Boeing. He rejected an earlier Boeing offer and is looking for something close to that agreement.
The recent order by Irish leasing company Pembroke Capital for exactly that number of 717s may not be a coincidence. Mancassola says that no discussions have taken place with the Dublin-based company, but that if the price comes close, he will consider acquiring the aircraft on lease. While there are still doubts among industry observers about the future of this aircraft, Pembroke Capital's Brian Goulding is convinced of Boeing's commitment and sees a large DC-9 replacement market, with the USA, Europe and China being the prime targets. Debonair could give the aircraft the boost needed to remain aloft.
For the moment, the Luton-based airline remains firmly committed to its unique niche between the no-frills and full-service sector, but is rubbing shoulders with the latter. If and when the next recession comes and the scramble begins for survival, Mancassola's Debonair is possible better placed than most to weather the storm.
Source: Airline Business
