Turbulent times for Flybe highlight lack of cargo capacity for exporters
Head of Consumer Research | ParcelHero
Some creative Government accountancy may have found Flybe calmer skies; but ParcelHero’s Head of Consumer Research, David Jinks MILT, says its narrow escape highlights the precarious state of UK aviation. He warns that with Heathrow's expansion plan seemingly in an eternal holding pattern, UK PLC is missing out on up to £14 billion a year in lost trade.
It’s good news for Flybe’s staff and customers that a deal has been cooked up between the Government and its investors to rescue the airline. In spite of the complaints from rivals that its rescue breached state rules, there is little doubt the consequences of potentially losing this key regional UK airline would have been severe not just for passengers, but also international couriers and exporters is general.
Even though Flybe lives to fly again, continuing delays to the return of Boeing's new workhorse, the 737 Max, and the possible cancellation of Heathrow’s expansion by a new Prime Minister who once vowed to lie down in front of the bulldozers to stop its third runway, could still rock the overseas parcels industry. UK businesses are already missing out on up to £14 billion a year in lost trade due to poor connections.
Looking at the major problems facing the UK’s international aviation services, it is obvious that issues are mounting both in the short and the long term. It looks as if it took some creative and controversial Government accountancy, a re-write of the passenger tax rules and shareholders belatedly putting their hands into their pockets again, to save Flybe.
The loss of its cargo capacity would have had a severe impact on international courier services. Goods and parcels are not only flown in specially designed cargo aircraft; many passenger flights also carry freight. In fact, passenger airlines make up to 10% of their revenue from freight carried in the cargo hold of passenger jets. Back in 2012 Frontier Economics reported continued problems with UK aviation connectivity would cost British business £14 billion a year, and its prediction this could rise to £26 billion by 2030 looks even more likely given the current parlous state of UK aviation.
Flybe provides vital connectivity, linking domestic flights and international services. As just one example, a few years ago Flybe Cargo teamed with a Nordic courier to provide door-to-door same day delivery services between the UK, the Netherlands and Germany. If an operation the size of Flybe had failed, there would have been significant delays on thousands of packages to and from the UK to Europe.
Flybe’s bumpy ride is not the only problem facing international couriers. Heathrow’s long-delayed third runway could have its take off aborted by Boris Johnson’s election as Prime Minister. Famously, the PM once said he would lie down in front of the bulldozers to stop Heathrow’s third runway from being built, and instead proposed an alternative island runway on the Thames estuary. Heathrow is the most significant airport for freight in the UK – in fact it carries more freight each year than all other UK airports put together. Yet constraints at Heathrow – which is running at over 98% capacity – mean that it is unable to meet demand. Heathrow is currently permitted 480,000 flights a year. All of Heathrow’s competitor European hub airports – Paris, Frankfurt, Madrid and Amsterdam – each have enough runway capacity to serve around 700,000 flights per year.
Another continuing concern is that the long-term grounding of the 737 Max can only escalate cargo capacity shortages. The 737 Max is urgently needed to replace older aircraft and expand services; it must not become a reason to lose yet more cargo capacity. Nearly 5,000 Boeing 737 Max aircraft have already been ordered but are standing idle or unbuilt. To put this into context, that’s significantly more than the current combined fleets of BA, Easyjet and Ryanair. The 737 Max 8 can accommodate between 2,500-5,000lb of freight and parcels in addition to passengers’ baggage. Typically, narrow-body aircraft like the 737 Max 8 can carry up to 2,200 packages, including mail, express parcels and smaller freight and e-commerce items.
Flybe seems to have had a safe landing for now. If we had lost Europe's largest regional operator the impact would have been significant on all the businesses who used its cargo services. But we are still concerned about unforeseen reductions in cargo capacity, and fear Heathrow will cease to be a competitive hub and instead becomes a spur from other European countries. If this happens, the UK will continue to lose trade and the cost of international parcels and airfreight to and from the UK will inevitably rise.
For all the very latest advice and updates on shipping overseas see ParcelHero’s updated guide: https://www.parcelhero.com/en-gb/international-courier-services
Posted on: January 15th 2020