UK carrier Flybe has returned to the black for the first time in five years after restructuring into a low-cost regional airline.
The carrier made a £14 million ($26.8 million) operating profit for the half-year to September. Chief executive Jim French will not be drawn on estimates for the full financial year, but says he is "cautiously optimistic". French has been striving to turn round Flybe since he took over the helm in June 2001, stepping up from deputy chief executive. A year later, with a change in fortune proving elusive, French decided to launch the transformation, rebranding the carrier from British European into Flybe.
French has defied conventional low-cost wisdom by building his fleet largely around the Bombardier Dash 8 Q400 turboprop, benefiting from lower trip costs, particularly given the spike infuel prices. "I do not believe there isa low-cost rule book," he says. "The key is to find a product the customer wants and is willing to pay for."
The carrier has kept some of the "frills" usually associated with full service carriers including allocated seating and a frequent flyer programme. It still pays commission to travel agents, albeit at the rate of just 1%.
Flybe's traffic is split roughly evenly between leisure and business. The carrier looks for routes which have what French describes as a "long product cycle", with multiple visits by both business travellers and a relatively high proportion of visiting friends and family traffic. This has seen the carrier buck the trend of declining yields, with net revenue per seat up by 8%, mainly thanks to a change in the route mix.
On the fleet front, the carrier is to lease two Boeing 737-300s for its operation at Birmingham from the summer, and may add one at Exeter, as its BAe 146s jets are proving uneconomic on some of the longer-range sectors to southern Spain. The carrier is also likely to take up at least half of its 20 options for Dash 8 Q400s as it seeks to expand into the eastern UK. "This aircraft is the right size and has very high customer appeal. And the fuel burn is exceptional," he says. The carrier's focus is increasingly on the UK, although it flies to France and Spain.
The long-term aim is for the family-owned carrier to be sold in two-to-three years' time. French says it is too early to tell whether this will involve a trade sale, initial public offering, or something else. He has said previously that he would establish a track record of profitability for Flybe before any sale.
UK carrier Flybe has returned to the black for the first time in five years after restructuring into a low-cost regional airline.
The carrier made a £14 million ($26.8 million) operating profit for the half-year to September. Chief executive Jim French will not be drawn on estimates for the full financial year, but says he is "cautiously optimistic". French has been striving to turn round Flybe since he took over the helm in June 2001, stepping up from deputy chief executive. A year later, with a change in fortune proving elusive, French decided to launch the transformation, rebranding the carrier from British European into Flybe.
French has defied conventional low-cost wisdom by building his fleet largely around the Bombardier Dash 8 Q400 turboprop, benefiting from lower trip costs, particularly given the spike infuel prices. "I do not believe there isa low-cost rule book," he says. "The key is to find a product the customer wants and is willing to pay for."
The carrier has kept some of the "frills" usually associated with full service carriers including allocated seating and a frequent flyer programme. It still pays commission to travel agents, albeit at the rate of just 1%.
Flybe's traffic is split roughly evenly between leisure and business. The carrier looks for routes which have what French describes as a "long product cycle", with multiple visits by both business travellers and a relatively high proportion of visiting friends and family traffic. This has seen the carrier buck the trend of declining yields, with net revenue per seat up by 8%, mainly thanks to a change in the route mix.
On the fleet front, the carrier is to lease two Boeing 737-300s for its operation at Birmingham from the summer, and may add one at Exeter, as its BAe 146s jets are proving uneconomic on some of the longer-range sectors to southern Spain. The carrier is also likely to take up at least half of its 20 options for Dash 8 Q400s as it seeks to expand into the eastern UK. "This aircraft is the right size and has very high customer appeal. And the fuel burn is exceptional," he says. The carrier's focus is increasingly on the UK, although it flies to France and Spain.
The long-term aim is for the family-owned carrier to be sold in two-to-three years' time. French says it is too early to tell whether this will involve a trade sale, initial public offering, or something else. He has said previously that he would establish a track record of profitability for Flybe before any sale.
COLIN BAKER LONDON
Source: Airline Business
