Flybe Enters Into Administration

UK regional airline Flybe, owned by the Connect Airways consortium, has collapsed.

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Flybe Aircraft, London City Airport
Flybe Aircraft, London City Airport (Image Credit: London City Airport)

Flybe has suspended all operations and has formally entered into administration.

The airline which was acquired by the Connect Airways consortium, comprising Cyrus Capital Partners, Stobart Air and Virgin Atlantic, has collapsed.

Flights operated by Flybe franchise partners Blue Islands and Eastern Airways are not affected and continue to operate. These airlines have now set up their won booking engines

The professional services firm EY has been appointed as administrator, as per a notice on the Flybe website. It formally announced its appointment in the early hours of Thursday morning once the last remaining Flybe flights had landed.

This has followed weeks of press reports that Flybe was in talks with the UK Government to secure state support by deferring payments of Air Passenger Duty and a loan on “commercial terms”.

According to reports the Government was unable to offer loan as Flybe was unable to offer any assets to be secured against a loan. There have also been claims that Flybe owes significant sums of money in unpaid fees to suppliers.

Flybe’s deteriorating financial position had been exacerbated by the Coronavirus (COVID-19) outbreak which has caused a substantial fall in passenger numbers and forward bookings for all airlines.

The Collapse Of Flybe

Flybe was acquired by the Connect Airways consortium for £2.8m.

At the time of the acquisition, it announced an intention to invest a total of £100m in Flybe by providing a bridging loan of £20m and investing a further £80m in the airline. This was to include a rebrand of the airline as “Virgin Connect”.

For Flybe, which was founded in 1979, this marks the end of an airline that once had an ambition to a major pan-European regional airline. A little under ten years ago it floated on the stock exchange, with a closing share price on its first day of trading of 341¼p, valuing the airline at £249m.

The reasons for its downfall are many. In part, it was due to an over-ambitious order for Embraer regional jets, which it had since sought to shed. It did not have the best reputation for operational reliability. Arguably, it had a confused strategy doing many things. This included operating point-to-point regional routes and feeding long-haul airlines at London Heathrow, neither of which are financially rewarding.

Questions will now be asked about the sale of Flybe to the consortium, which had ample time to do due diligence on an airline with well publicised financial difficulties. The sale was also controversial due to the fact that it was effected by a sale of Flybe’s assets, rather than the whole group, in order to circumvent the need for shareholder approval.

The closure of Flybe does have a significant impact on many UK regional airports such as Exeter and Southampton where Flybe is by far the most dominant airline.

It also represents, after the closure of Virgin Little Red, a second failed attempt by Virgin Atlantic to create a short-haul feeder operation at London Heathrow.

In London, it does leave BA even more dominant at London City airport. There is also the question of the bmi remedy slots at Heathrow which Flybe had acquired from BA. Whilst Flybe had certain grandfathering rights in respect of these slots, these should revert back to BA.

Codeshare Partners

Flybe codeshares with a number of airlines, notably with Virgin Atlantic and other long-haul airlines such as Emirates and Etihad on its routes to London Heathrow.

If you are due to fly with Flybe as part of a codeshare booked through another airline, you will need to contact the airline with whom you made your booking in order to be re-routed. Virgin Atlantic has specific guidance on its website.

Franchise Operations

Flights operated by Flybe’s franchise partners are not affected by the administration process.

Flybe franchise partners include Blue Islands which operates routes such as London City – Jersey and Eastern Airways. These will continue. However, their guidance for passengers is being continually updated.

Blue Islands has, as of Saturday 7 March, set up its own booking engine. This does not fave full functionality, such as dynamic pricing and payment collection. Due to Flybe’s credit card acquirers withholding funds, Blue Islands is not able to honour bookings for travel from Tuesday 10 March. Affected passengers should contact their credit card companies to secure a refund.

Eastern Airways has also now set up its own booking engine.

Rescue Fares

It is standard practice for rival airlines to offer “rescue fares” in the event of an airline failure to passengers who are either stranded away from home or were due to travel shortly.

These are at the discretion of individual airlines and the scope of these will vary by airline. Airlines offering rescue fares include British Airways and easyJet.

Note that you will be asked provide proof of your original booking and any consequential costs such as ground transportation will be at your own expense.

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