At this time Flybe has put themselves up for sale, following
years of struggling financially and little success in finding a winning formula. At this point 2 front runners have been
identified to take Flybe over, IAG and Virgin Atlantic. This
week I’ll be profiling what a takeover of Flybe could look like if the IAG were
to make a purchase of Flybe, before next week I’ll do the same with Virgin
Atlantic. This is all my personal opinion so there is no guarentee that any of this could end up happening.
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| Flybe Bombardier Dash8-Q400 |
A merger with BA city flyer
I would foresee that the Flybe brand would be killed off and
instead taken over by BA Cityflyer. The
two brands I believe would be reasonably compatible, with both airlines flying
Embraer E-jets and also only competing on one route from London City. Furthermore,
with Flybe’s bad brand image currently I feel that this would be the new start
that they need to lift off, flying under the brand image of a larger airline, who have already had success flying smaller aircraft.
In addition, I do not believe that IAG would want to have two competing regional
airlines on their portfolio, so would be forced to shut one down, which Flybe
would almost certainly be the most likely, as the newer airline in the IAG portfolio.
This would be a reverse of what happened in 2007, when Flybe purchased
most of BA connect, the former name of BA Cityflyer, which would make for an
interesting re-integration.
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| British Airways A319 |
A greater emphasis on European routes
With IAG’s control I would imagine that they would start
more routes to European airports from across the Flybe British network, which would have
higher load factors than the routes that Flybe currently flies and would
realistically turn a greater profit. Furthermore, it would decrease their
reliance on Heathrow and Gatwick airports, which would free up more capacity potentially at these two airports,
potentially allowing British Airways to focus more on more profitable long haul routes, rather
than carrying transfer traffic through Heathrow to the rest of the UK. However,
I would imagine that IAG would either shut down Flybe’s crew base in Dusseldorf
or transfer it across to Level as this really does not fit into British Airways’
business model. Of these two possibilities I feel the first is more likely, as I can not imagine that Level would be able to operate profitably out of the small Dusseldorf base Flybe has.
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| Flybe Dash8-Q400 |
More airlines competing on British Domestic routes
If British Airways were to take over Flybe, then this would
make them almost completely dominant on domestic flights within the UK. This I
feel could lead to more airlines competing on domestic routes, as British
Airways would probably end up hiking prices, opening up space for competition.
This gap I feel would be filled in part by EasyJet, however I feel the main
airlines to expand into this gap would be Loganair, BMI regional and Eastern, due
to their smaller aircraft sizes, which would allow them to operate on thinner
routes that Flybe currently flies, but would be likely dropped if IAG took over
due to their thin profit margins. I also think that it would be feasible for a
new regional airline to start operations in the UK within the next 5 years, partially filling some of the independant gap that Flybe left.
Check back next week to see what I think would happen if
Virgin Atlantic took over Flybe instead.
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