Airlines turbulence blamed as Hop scotches launch

Published on Sunday 4 July 2004 00:08

TURMOIL in the budget airline sector has been blamed by the UK’s newest operator for its failure to raise £5m and launch its first flights this month.

Hop announced its plans in January, promising to sell 10 tickets for flights from regional airports throughout the UK.

The company was set up by Kit Malthouse, the deputy leader of Westminster council, and Tony Camacho, the former Buzz airline chief executive.

Malthouse said a string of bad news stories about budget airlines had made it difficult to raise the 5m it needed for its take-off.

Since January, Duo, which flew from Edinburgh to six destinations in Europe, has collapsed with debts of 20m after failing to find enough passengers. The rival budget carriers Now, based in Luton, and Air Planet, at Leeds/Bradford, have also failed in the past six months.

Ray Webster, the chief executive of easyJet, warned that "unprofitable and unrealistic pricing" by no-frills carriers would hit its profits this year - the company has seen 800m knocked off its market value since January. Ryanair chief executive Michael O’Leary has warned of a "bloodbath" among European airlines faced with stiff price competition.

Malthouse said: "We are still trying to put something together, but Duo going bust and Ryanair and easyJet profits warnings have not made our life easy."

Malthouse insisted that he would persevere with Hop, but declined to say when the airline - which has no aircraft yet - would start flying.

Cambridge-based Hop was launched in January with the promise of 10 standard fares for an ultra-basic service similar to the US Greyhound bus network. Timetables for up to 20 routes were due to be published by May but have yet to appear.

Malthouse and Camacho planned to fly 70-seat aircraft on routes which had not been served before, such as Edinburgh to Cambridge, and to use unfashionable airports such as Dundee and Norwich. The pair said they would be able to offer check-in times of 20 minutes and operate 20% more efficiently than established low-cost carriers.

Malthouse, a Conservative politician, used Hop’s pre-launch publicity to criticise Scotland’s "rubbish" transport links. Camacho said building an airline had become easier since the attacks on the US in September 2001 because larger airlines were in trouble. More than 50 new airlines have been launched worldwide in the past three years.

One industry analyst said the budget airline sector suffered from "dilettantism", with too many inexperienced operators chasing a limited number of passengers.

Despite the sector’s problems, Flyglobespan, the Edinburgh-based low-cost operator, is expanding its route network. Last week it revealed plans to fly from Glasgow and Edinburgh to Geneva, replacing one of the routes abandoned by Duo.

Tom Dalrymple, the airline’s chairman, said demand for the flights from Scottish skiers had been "exceptional".