Feature
News analysis
title here
Independence vote
Loganair is ending its longstanding franchise agreement with Flybe, opting instead
to go it alone. Martin Rivers looks at the possible options while a new business
strategy is being finalised
L
oganairs decision to end its franchise
Loganair will part ways with
Flybe in September agreement with Flybe amounts to a dramatic
(all photos: Loganair) vote for independence by the Scottish carrier,
returning commercial decision-making to Glasgow
after 24 years as a white-label operator.
The airline has promised to create a bold new
corporate identity when it parts ways with Flybe in
September, most noticeably by phasing in a Scottish
livery with an eye-catching red and black tartan design.
An in-house reservations system should be live by
March [2017], enabling the company to take direct
bookings through its website.
Independence will further allow Loganair to take
back control of its product and pricing strategy, amid
accusations of poor service standards and exorbitant
inter-island fares under Flybes watch.
Customer complaints peaked in 2015, when
a Facebook campaign was launched to pressure
management over return fares of more than 150 on
the 85-mile hop between the Orkney and Shetland
Isles dubbed mile-for-mile Europes most expensive
flight by campaigners. The high charges came despite
the Scottish governments publicly funded Air Discount
10 / Low Cost & Regional Airline Business
Scheme, which gives locals discounts of up to 50%
on eligible routes.
On the product front, Managing Director Jonathan
Hinkles has already promised to retain complimentary
checked luggage for all customers a policy which
was causing friction with Flybes own strategy of
unbundling fares.
His team will also look to build on progress in turning
around the carriers chequered punctuality rating, which
led locals to dub the franchise operation Flymaybe in
recent years. On-time performance rates reflecting
arrivals within 15 minutes of their scheduled time rose
from about 75% in 2015 to 89% last October, buoyed by
a recruitment drive for engineers.
Loganair currently deploys a fleet of 28 aircraft, ranging
in size from the eight-seat Britten-Norman Islander to the
50-seat Saab 2000. The airline flies between 20 airports
in Scotland, including mainland cities such as Edinburgh,
Glasgow and Aberdeen, and smaller island gateways in
the Hebrides, Orkney and Shetland archipelagos. Some of
its thinner intra-Scottish routes are operated under public
service obligation (PSO) contracts, providing a lifeline to
remote communities. f
www.lowcostandregional.com / April 2017
Feature
News analysis
title here
One of those PSO routes between the Orkney
Islands of Westray and Papa Westray is reputed to be
the worlds shortest scheduled commercial flight, lasting
less than one minute in ideal wind conditions. Another
point in the network, Barra in the Hebrides, boasts the
worlds only beach runway for scheduled flights. That
service from Glasgow is marketed with the caveat times
subject to tide.
Outside of its Scottish heartland, Loganair flies on
behalf of Flybe to four airports in England (London
Stansted, Manchester, Leeds Bradford and Norwich),
Dublin in Ireland, Bergen in Norway, Vgar in the Faroe
Islands, and the British Crown dependency of Jersey
in the Channel Islands. Two of its routes are operated
outside of Scotland entirely: Manchester-Norwich and
Norwich-Jersey.
Loganair also operates contract flights for oil and
gas companies, as well as flying on behalf of Royal
Mail. Its existing franchise agreement dates back to
2007 and involves the vast majority of aircraft being
sub-contracted out to Flybe, whose Exeter-based
management team takes full commercial control of
network planning and strategy.
Prior to the agreement, Loganair operated for 14
years as a franchise partner of British Airways (BA), with
whom it still has a codeshare agreement. Planespotters
will also note that the airlines proposed new livery
bears a striking resemblance to the Benyhone tartan
design that BA used on several aircraft including those
operated by Loganair during its ill-fated experiment
with ethnic liveries in the 1990s.
Although the Scottish carrier has yet to flesh out
a long-term vision, Hinkles describes its forthcoming
summer schedule as a statement of intent. The schedule
features a 20% increase in seat capacity from Glasgow,
as well as higher frequencies on routes to Manchester,
plus new links to Bergen and Vgar. Frequencies from
Edinburgh have meanwhile been reduced in protest at
the gateways early morning congestion charge. Beyond
tweaking capacity it appears to be business as usual,
however, with management promising to continue
lifeline services for remote communities.
Fleet renewal is not considered a priority for the
rest of the decade, despite the carriers relatively high
average aircraft age of 24 years. Loganair is instead
spending 3.5 million on new interiors for its Saab 340s,
gradually carrying out the work during pre-scheduled
heavy maintenance checks.
Cargo will, meanwhile, remain an important part of
the business, with Tby Air Maintenance agreeing to
convert another two of the Saab 340s into freighters
doubling Loganairs existing cargo fleet.
As soon as the IT and branding upgrades are
completed, attention will inevitably turn to Hinkles
wider vision for the domestic marketplace.
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The airline boss has said he wants to maintain cordial
ties with Flybe perhaps an invitation for code sharing
but his estranged partners willingness to cede market
share cannot be taken for granted.
Hinkles wants to maintain cordial ties with Flybe
While intra-Scottish routes are probably too thin
for Flybes fleet of Embraer jets and Bombardier Dash
8 Q400 turboprops, flights to the rest of the UK and
some European destinations are fair game. The carrier
already flies from four Scottish airports with its own
metal, serving eight UK cities and three European cities
from Edinburgh; six UK cities from Glasgow; four from
Aberdeen; and two from Inverness in the Highlands.
Until now, these routes have presumably been
selected and scheduled in a complementary fashion
to Loganairs operation; though they could soon be
reorganised as direct competition.
Importantly, Flybe will be operating more than 40
scheduled flights a week from London Heathrow to
Edinburgh and Aberdeen in March [2017], securing the
slots for free under competition rules intended to dilute
BAs domestic monopoly at the hub. Having signed
up Virgin Atlantic Airways as a codeshare partner on
the routes promising Scottish feed for its long haul
network Flybe may see little incentive to prop up
BA-partner Loganair in the market.
Further complicating matters is the fact that
Loganairs parent company, Airline Investments Limited,
also happens to own BMI Regional, another direct
competitor of Flybes.
Just as the 2014 Scottish independence referendum
had political ramifications for the entire UK, Loganairs
decision to go it alone will be felt across the length and
breadth of Britains aviation market. Time will tell how far
its ambition for an independent future stretches.
www.lowcostandregional.com / April 2017