Tax and costs blamed as Flybe departs Gatwick

Tax and costs blamed as Flybe departs Gatwick

Flybe this morning confirmed the sale of Gatwick take-off and landing slots to easyJet for £20 million in a bid by the regional carrier to return to profitability.

The transfer of the 25 slots pairs will result in Flybe withdrawing from Gatwick from March 2014.

The airline will continue to operate its seven Gatwick routes - to Belfast City, Guernsey, Inverness, the Isle of Man, Jersey, Newcastle and Newquay - until then.

The airline blamed Air Passenger Duty on domestic flights and high landing fees for squeezing it out of high frequency routes from Gatwick.

Flybe is also delaying the delivery of 16 new Embraer E175 aircraft by three years to between 2017 and 2019, resulting in a cut in pre-delivery costs of £20 million in winter 2013-14.

The airline plans to deliver improved costs savings of £30 million in the 2013-14 financial year against a target of £25 million as part of a turnaround plan.

Flybe has achieved £16 million in cost savings through 290 redundancies with a further 300 staff leaving as part of an outsourcing plan. Pilots have also agreed a 5% pay cut in return for extra time off.

Chairman and chief executive Jim French said: "No business can swallow cost increases of more than 100% over five years and Flybe simply cannot bear such punitive rises.

“We have therefore taken the very difficult decision to withdraw our services from London Gatwick from 29 March 2014, because of the airport's policy of year-on-year above-inflation rises in landing fees for operators of smaller regional aircraft.

"When you add to these cost increases the government's policy of charging APD on both legs of a domestic flight, I'm afraid it's inevitable that high frequency services from the UK's regions will be squeezed out of Gatwick, as they have been from Heathrow.”

He added: "Flybe will carry on offering more than 150 routes on our extensive regional network. The connectivity we provide for our seven million passengers through major international airports like Manchester, Southampton, Birmingham, Glasgow, Edinburgh, Amsterdam and Paris also mean that that hundreds of international connections will still be available.

"Gatwick airport may not want those connecting passengers, but others do. We will work with our airports to ensure the UK's regional passengers don't get left in the cold. I reiterate that no other services from any of the seven airports will be affected and the funds generated by the sale of our Gatwick slots will be reinvested in the remaining 159 Flybe routes."

French said: "Flybe has exceeded its target of taking out £25 million from its cost base during 2013-14 and will deliver £30 million in savings in this current financial year.  I am therefore confident that we will deliver the additional initiatives we have announced today.

"In the last few months we have streamlined the business, reducing headcount by more than 20%. We have also made major progress in reducing the cost of our supplier base.

"I am particularly pleased that we are delivering these plans without recourse to shareholders, as a result of raising funds for restructuring through well timed and managed asset disposals and aircraft delivery deferrals.

"With Flybe's future cost base improved and with the reshaping of our network announced today, the business will now move to reclaim its position as Europe's leading and most profitable regional airline."

EasyJet said: "The slots will transfer from summer 2014 and will allow easyJet to provide additional frequencies on popular existing routes from Gatwick as well as add new destinations across the UK and Europe."


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