As one of the coldest winters in aviation comes to a close, unfortunately, another airline declared bankruptcy. This time, the winter of bankruptcies absorbed Flybmi. The regional carrier was based in the United Kingdom, Germany, Sweden and Belgium.
Over the weekend the airline declared that it could not continue running its operations and also make a profit. Thus, effective immediately, Flybmi is not going to run any flights and the company will file for administration.
Flybmi’s spokesperson cited the reason why the company ceased operations:
“The airline has faced several difficulties, including recent spikes in fuel and carbon costs, the latter arising from the EU’s recent decision to exclude UK airlines from full participation in the Emissions Trading Scheme.” The airline has also noted Brexit affected its profitability and future prospects: “Current trading and future prospects have also been seriously affected by the uncertainty created by the Brexit process, which has led to our inability to secure valuable flying contracts in Europe…”Flybmi Cancels Flights. Source: BBC
Although the United Kingdom is not leaving the European Union as of yet, the uncertainty of the decision is having a lot of impact on aviation. Airlines are struggling to secure an expansion of their operations, as they do not know whether they will be able to fly into the European Union at all. Various airlines around Europe, especially low-cost carriers, are creating subsidiaries to avoid the consequences of Brexit. For example, easyJet, which is based in the UK, has created a subsidiary in Austria called easyJet Europe.
Speaking about the short-term perspective, the rising fuel prices are having a lot of negative impact on the profitability of airlines. Last week, airlines on average had to pay $77 for a baller of fuel. According to IATA, compared to January, the price rose 4.1%. On the other hand, airlines that have survived the harsh winter will release a sigh of relief. Seeing that IATA predicts fuel prices in 2019 will have much less impact on airlines’ expenses compared to 2018.easyJet is preparing for Brexit
However, when talking about the long-term perspective, seems like the European regional market is currently experiencing very difficult times. And that will not end when spring will finally arrive, as the regional market itself is in a troubled spot. Independent regional airlines are being squeezed out of the skies by low-cost airlines and the subsidiaries of legacy carriers.
Simply put, low-cost airlines can undercut prices. Meanwhile, subsidiaries such as KLM Cityhopper, do not have to remain profitable – they need to feed passengers into the networks of the bigger airlines. To illustrate, KLM Cityhopper is a subsidiary of KLM, thus it transfers passengers from regional airports to long-haul flights of KLM.
That is why regional airlines are struggling. Notably, Flybe is still hopeful that a buyer will save the company from its dire financial situation.
Unfortunately for Flybmi, no messiah has come out the gate to save the airline. Flybmi joins the recently-bankrupt Germania that has ceased operations due to financial struggles.