News / Prices will have to rise, says Loganair boss
AIRLINE Loganair is to introduce direct flights between Sumburgh and Manchester for the first time next summer – but its management has made clear that fares will rise again after Flybe’s challenge to its monopoly proved to be short-lived.
Following three months of poor sales and disappointing reliability, Loganair’s former partners announced last week that it was pulling out of the routes it had been running between Shetland and Aberdeen, Edinburgh and Glasgow.
In a wide-ranging presentation to Shetland’s external transport forum on Monday afternoon, managing director Jonathan Hinkles offered a “heartfelt thank you” from Loganair’s 655 staff for the “tremendous level of support” the islands has shown in the past three months.
During that time around seven in 10 customers had opted for Loganair over its challenger since 1 September.
“I recognise it is now our job to repay that trust by continuing to maintain air services that are reliable, affordable and economically sustainable,” Hinkles said.
But – while the company is still working on its precise plans post-January – talk of “very significant” losses over the past three months left those present under no illusion that the era of readily available £100 return fares will prove decidedly short.
The new Manchester link will operate for two months or so covering the summer holiday period from 23 June until 1 September, departing Sumburgh at 10.40am and arriving in Manchester at 12.15pm, then returning from the north of England at 12.50pm and arriving in Sumburgh at 2.25pm.
Hinkles said it would be a boon for Shetland folk going on holiday and a “real benefit for incoming tourism” too. While it is a trial that has never been attempted before, for both of those reasons Loganair is “very confident it would work”.
“Announcing a direct transport link to England from Shetland is a historic milestone and something we’re incredibly proud to unveil,” he said. “We are also recommencing the Bergen service following on from the success of last year.”
It is clear that Loganair will come under significant public pressure to avoid fares returning to the level they were at prior to September.
Hinkles acknowledged customers often asked why Loganair did not make empty seats available for cheap fares at the last minute.
But the experience of November – when around 24,000 seats were unfilled at around £50 for a single – proved the Flybe challenge had been a “very costly way of demonstrating” that “no matter how low you drop the price, you cannot fill the seats later on”.
On the three routes where there has been competition, in November around 13,700 people travelled compared to around 10,000 for the same month in 2016.
But that still left around two unoccupied seats for every one that was filled between the two airlines: “it was an unsustainable position, I think that much is clear,” Hinkles said.
“In the month of November [Flybe] could have flown all its customers and ours together and still had 6,000 extra seats. That’s a tremendous level of capacity that has gone into the market, which hasn’t responded.”
Had Flybe ended up being the only service in town, which was “one of the possible outcomes of the competition we’ve been in”, Hinkles felt it could have had “long-lasting effects” on the frequency of service – particularly for routes like Edinburgh.
Each flight has an allocation of seats at cheaper fares, but when they are not filling up it means the higher fares for the last few seats are “not coming into effect”.
“It’s an example that airline economists will look at for several years to come in terms of what happens,” Hinkles said.
Incidentally, Flybe had been due to attend the external transport forum meeting but instead sent its apologies, which forum chairman Ryan Thomson said attendees “may or may not be surprised” about.
Only a fortnight ago the company’s representatives were publicly attempting to defend their sales figures and reliability, despite its competitor producing figures showing flight reliability languishing at around two-thirds.
Hinkles pointed to figures showing 84 per cent of Loganair flights in September and October and 80 per cent in November were “on time” (defined across the industry as within 15 minutes of schedule).
He described that as a “reasonable level” and said the airline was “heading in the right direction” in terms of factors it can control, though the weather this autumn and early winter had been significantly worse than in 2016.
Jimmy Smith of the Sumburgh Airport consultative committee was keen to see Loganair and Flybe “kissing and making up” in order to develop a codeshare to allow islanders to enjoy the latter’s extensive and “brilliant” internal service within the UK.
Hinkles said discussions were continuing on that matter “albeit we have been [talking] for some time”.
He said the ability to book a single journey would reduce the risk of difficulties in the event of delay and save money in air passenger duty, but the two airlines needed to find a way to get over some constraints on Flybe’s booking system.
Hinkles also said that Loganair would cease absorbing the price difference caused by higher charges to use Edinburgh Airport over Glasgow – meaning flying to the capital will cost around £3 per passenger extra from January.
It will absorb Flybe’s bookings from 7 January, when it officially pulls out of Shetland, onwards. That will mean scheduling extra flights to cope with the late January influx for Lerwick’s Up Helly Aa.
He said the capacity required between Sumburgh and Edinburgh and Glasgow would have to be evaluated but it has not had sufficient time to draw up a “definitive plan” since Thursday’s Flybe announcement.
Hinkles said passenger numbers on Saturdays in the winter were “absolutely dire” – just 199 a day compared to an average of 456 on a Sunday and 540 on a weekday – so it can be taken as read that extra Saturday flights will not be introduced.
Loganair’s service to Bergen, on Wednesdays and Saturdays, will resume between 26 May and 18 August next summer, while there will be two connections to the Norwegian city in the winter too.
There will also be an increase in the number of non-stop flights from Fair Isle to Kirkwall next summer. It will run from 25 May until 1 October, with the total of 39 flights a substantial rise on the 11 run this summer.
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