Why did Flybe collapse?
Posted on 7th March 2020
Flybe is a British airline based in Exeter, England and was considered the largest independent regional airline in Europe. It even provided more than half of the UK domestic flights outside of London. 1 It’s no question that the collapse of Flybe as a company is a major event that has many scratching their heads.
Why did Flybe collapse? Here are a few reasons to start…
4 Reasons Why Flybe Collapsed
Running a profitable airline company is no easy task. Just consider the cost of a single airplane, the maintenance, the cost of fuel, employees, and marketing to get more people to use your airline. Add to that four major issues such as the coronavirus, major tax bills, little diversification and a lack of executive communication and you have the equation to a failed company.
1. The Coronavirus
By now we’re all aware of the outbreak of the Coronavirus, aka Covid-19. The airline industry as a whole is now suffering major setbacks due to the worry of the coronavirus spreading. After all, how does the coronavirus get from China, to approximately 89 different countries? 2Yup, you guessed it, the airline industry.
Many countries have put travel bans on different regions, and even quarantined many areas keeping people from traveling even across town. As of this writing, there are currently 163 confirmed coronavirus cases in the UK, as confirmed by the government. 3This naturally affects local airlines like Flybe. Without a stable financial foundation, an outbreak like this may cause multiple companies to go under, not just Flybe. Coronavirus may just be the tipping point that caused Flybe to ultimately collapse.
2. Taxes
It seems taxes are everyone’s worst enemies, even large airline companies trying to stay afloat. In the UK, airlines have to pay an Air Passenger Duty tax for each passenger on a flight that takes off in the UK. Seeing that approximately 40% of it’s travel routes are within the UK; this added a major expense to the company which means less money available to spend on growing.4
3. Lack of geographical diversification
Flybe is limited to the destinations it flies to, and 40% of it’s travel routs are within the UK. Naturally there are already many obstacles an airline may face such as bad weather, major economic events such as Brexit, and travel demand from consumers. With the majority of its travel routes being in the UK, any major event affecting the entire UK economy can drastically affect the performance of Flybe as a company. 5
4. Lack of executive communication
A proper executive team is perhaps one of the most important key indicators of a growing successful company. They are what sets the tone, the culture and the enthusiasm of the organization. Without a strong executive team, a company has a slim to none chance of being around for the long run.
As stated by BBC, “Flybe has been rebranded twice, gone through four chief executives and neared collapse three times.”
6 They also said the company executives had very different mindsets and plans for the future of the company. Imagine a company being pulled in multiple directions due to the differing opinions of the executive team. Sooner or later it’s going to break!
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