On the night from Friday to Saturday, British regional airline Flybe announced that it has ceased trading and stopped flying with immediate effect. It’s not the first time, you can read such news, the same announcement was already made in early March 2020. After 2 years, a new Flybe was launched which lived until last week.
On Monday morning, Norwegian low-cost airline Flyr woke up to its shares plummeting by 70%. It was a result of the airline failing to raise enough money to continue its operations. While the airline operated its flights on Monday, it cancelled all Tuesday flights.
Shortly after this article’s publishing, Flyr announced that there “are no alternatives for further operation”. They will not operate any flights and will file for bankruptcy on Wednesday morning. They encourage passengers to claim their money back via their credit card companies.
How Does it Affect the Passengers?
If you had a reservation with Flybe, you should not travel to the airport. We suggest checking out the following website of the Civil Aviation Authority (CAA) of the UK. It lists airlines that offer rescue fares, such as British Airways, easyJet and Ryanair. To get your money back, we recommend their other page which lists possible actions you could take. These include chargeback, negative response letter and insurance.
As Flyr went bankrupt, the airline encourages passengers to claim their money back via their credit card companies. In case of bankruptcies, passengers will not be rebooked and compensation for alternative transportation will depend on the size of the bankruptcy estate.
“Sad, but expected”
One thing you can hear from aviation analysts and other industry professionals about Flybe is that they feel sorry for the impacted staff, but these outcomes were predictable. Interestingly, the administrators blame the late deliveries caused by supply chain issues.
However, if an airline with an established network and minimal competition with the same brand has already failed days into the pandemic, why would a new venture with fewer planes, less customer trust and a smaller network cherish? Expanding is the most expensive part of an operation. As this analysis shows, the new Flybe had a head-to-head competition on a large majority of its routes. After the first Flybe went bust, smaller airlines like Loganair and Eastern Airways took over some of their networks. However, this will probably not cheer up the staff who have lost their job.
Flyr has a similar story: their founders expected Norwegian to collapse and wanted to benefit from the potential demand. However, the red nose airline survived the last of its many near-bankrupcies and came back even stronger. Recognizing the failure of long-haul low-cost transatlantic flights, they abandoned that strategy and strengthened their Nordic market. As the airline was based on customer and staff loyalty, people preferred them, leaving little market for Flyr.
The airline almost got excited again last summer, when SAS entered into Chapter 11 bankruptcy protection. Its excitement was short-lived as it turned out that the Star Alliance giant could just sell some nice planes, get some cash and continue as it did. In November, Flyr already alarmed the bells, looking to raise capital, but to no avail. While not all hopes are lost, there is little chance for the airline’s survival. Hopefully, the employees and passengers will get through it easily. Flyr has a big part in my favourite Christmas movie, Storm for Christmas, which I highly recommend to anyone interested in aviation.
Can Others Follow?
To learn about airline bankruptcies, we highly recommend watching this Wendover Productions video. While it was made before that pandemic, most of its message still applies. It outlines how harsh seasonality is in Europe (which affected Flyr) and how some business models are destined for failure. It also mentions Aigle Azur, Adria and XL Airways – airlines we previously covered.
When it comes to predictions, most industry professionals don’t like to start predicting, especially in public. We wouldn’t do that either, however, we recommend checking an airline’s news and brief financial status before booking. Make sure to pay with a credit card and check whether your insurance covers Scheduled Airline Failure Insurance (SAFI) or other bankruptcy protections. Here at Travel-Dealz, we always warn you when we feel like an airline’s future may not be certain. For example, you can read the first paragraph of our Norse deal which was written a few hours before the Flyr failure. We also have a warning for SAS deals as the airline is restructuring at the moment.
Cover Picture: © Miklós Budai / Travel-Dealz.eu