Comment: Flybe blame-game goes beyond Gatwick

THERE have been many disputes between airlines and airports over fees, but rarely have they hit the sort of heights that led Flybe to pull out of Gatwick.

Terry Murden. Picture: TSPL

The airline claims regional operators are being discriminated against and that the hike in landing fees has become intolerable. Its decision to sell 25 slots at the London airport to EasyJet shows the extent of its anger.

The dispute has raised questions about the future of Flybe’s 19 weekly flights connecting Inverness with London. There is no guarantee that EasyJet will take up the routes as it already flies to the city, though it has a high load factor, so there is a likelihood that it could add additional flights. On the face of it, Flybe’s claims are understandable, given the doubling of airport landing charges at Gatwick. This is on top of the UK government’s controversial air passenger duty, which the airline industry believes is counter-productive because the damaging impact on growth outweighs the revenues earned for the Treasury.

But Gatwick’s fees are a third of those at Heathrow and in line with Stansted. Sceptics wonder if the action taken by Flybe has anything to do with reviving its own balance sheet.

It recently warned of higher losses and, in a separate update on strategy yesterday, it listed the sale of the slots as part of the turnaround plan that would avoid the need to tap shareholders for more money.

Such is the scarcity of slots at hub airports that they can command a good price, all the more so when capacity is being squeezed. None of Flybe’s seven services to Gatwick made a profit and, given that it was in need of capital, it must have been very tempting when someone offered £20 million.

Market dip a reminder of economic reality

what goes up, must come down. And just 24 hours after expectations that the FTSE 100 would breach the 7,000 barrier, it suddenly went into reverse.

The soaring markets have cast doubts on the old adage “Sell in May, go away, don’t come back till St Leger Day” in September. Yesterday’s steep fall may have been coincidental, but a correction of sorts has been coming.
The reason for the downturn was more fundamental than lyrical, a combination of warnings from the United States and China about the strength of any recovery and, in particular, the threat by the US Federal Reserve to stop printing money.

Actions taken by numerous governments to inject more liquidity into their economies has fuelled the rise in stock markets, together with a switch into equities by investors looking for better returns than can be provided on deposit or in property.

Whether or not yesterday’s reversal signals a new trend, the wall of cash that supported the rise is still there.