Low-cost carrier Flybe says the tactic it embarked upon to target corporate travellers in 2002 is proving invaluable as the aviation industry reels in the face of the seemingly inexorable oil price rise.
Delegates at the IEA and Marketforce 3rd Annual Low Cost Air Transport Summit in London yesterday (11 June) heard chairman of aviation consultancy CTAIRA Chris Tarry propose that low cost airlines are certainly not safe in today”s climate.
”This industry tends to be on what I would call knife edge stability at the best of times ” but now it”s hugely unstable long-term,” said Tarry. ”Will the low-cost model ensure survival? Not necessarily ” if over-dependent on leisure traffic, that”s a problem [as discretionary spend will fall].”
And Flybe”s chief commercial officer Mike Rutter said that is exactly why his airline is doing well despite ” and partly even because of - the downturn which is savaging the industry.
”Growing the customer base and attracting the business flier is a key part of what we”ve achieved at Flybe,” said Rutter. ”In 2002, we deliberately chose to go after a sector that we believed had a higher propensity to continue to spend regardless of economic condition.”
Around 20% of the carrier”s domestic traffic is now corporate ” it also distributes via GDS - and in the last six years Rutter says Flybe has grown at a rate of 24% per annum in passenger numbers, turnover has grown 25% per annum and the route network has shot up from 41 to 180.
”We have the very beneficial position of picking up those who are downshifting from the majors on a price basis ” a lot from Lufthansa in Germany, and Air France, and the legacy carriers,” he says. ”We also get a lot up-shifting from ”hardcore” low-cost carriers because our prices aren”t that far away, but we provide a better product/service balance.
”We were the first to provide a segment product ” Flybe Economy Plus ” with flexible tickets, lounge access, payable extras and accelerated earnings on our frequent flier programme. The second part is having route frequency ” business passengers don”t want one flight a day, they want to fit [the journey] around meetings. Half of our network is deployed on routes [operating at] more than four times a day ” that”s what gives us resilience even in these interesting times.”
Finally Rutter points out that a direct relationship with the corporate market has been key ” ”We have contracts with the major banks, just about every major corporate in the UK. That underpins our business.”