Flybe: Leading Europe's Largest Regional Airline | In Practise

Flybe: Leading Europe's Largest Regional Airline

Former CEO at Flybe and Member of Board of Governors at IATA

Learning outcomes

  • Potential impact of COVID-19 on European travel demand and consumer behavior
  • Operational challenges for Flybe and regional airlines
  • Emotional and psychological challenges leading through a crisis
  • How to be resilient as a leader during challenging periods
  • Core lessons from leading Flybe through a crisis
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Executive Bio

Christine Ourmières-Widener

Former CEO at Flybe and Member of Board of Governors at IATA

Christine was the CEO of Flybe, which was Europe’s largest regional airline, from 2017-19 and has over 30 years experience in the airline industry. She started her in 1988 at Air France before joining Amadeus inu 1992 as Director of Sales and Marketing in Europe for 4 years. In 1998, Christine rejoined Air France as VP, Sales before making her way to General Manager of Air France KLM for UK and then CEO of CityJet, the regional airline subsidiary of Air France KLM. Christine is also on the Board of Governors at the International Air Transport Association. Read more

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Christine, how do you think Covid will impact European demand for travel, for both the leisure and the business traveler?

I think, already, the impact has been very important, if not quite challenging, for all the players. All the forecasts today are showing that it will not end soon and the recovery will be very slow. You’ve seen, in the news, that for most of the European airlines, not only is the capacity of some of them down to zero, but they are also starting some plans to cut jobs. This means that they think it will be a middle-term impact that will be quite significant. Remember, just before the crisis, we were talking about pilot shortages for the industry. Now airlines are cutting jobs and laying off crews, including pilots. It’s a big change in the way the industry is looking at, not only what is going on now, but what the industry will look like in the next years. It will take years for the industry to recover to the same level we were in 2019.

Do you expect the regional travel in the UK and Europe, to bounce back quicker and then the long-haul to follow up years later?

Common sense would definitely make us say that domestic traffic will be starting sooner. This is what we can already see in China, where domestic traffic has started again. The reason is because, today, there is not the vision of a global recovery of the traffic, because when a flight is flying from one country to another, you need the agreement of the two markets to open the sky. It’s obvious to say that domestic traffic is easier to start again and the confidence will also be stronger, because people will stay in their country and they will not be concerned about what will happen if I get sick, in another country? What will be the support if there is a different language spoken? This lack of confidence will not be at the same level, domestically. You have perception confidence of the travelers and also, the logistics and the traffic rights which will be easier for domestic traffic.

It’s a logical step for a slow recovery but what is the challenge about that is that most of the airlines make much more money and their profits come from intercontinental or long-hauls flights, more than domestic flights, where the margins are very, very small.

How do you think those larger flag carriers will adapt their price, to manage that change in profitability between the long and short haul?

You’ve seen all the bail-out measures from governments and, for all of them, that will be quite vital support for the next months and years. You have also the other players in the industry that have been asking for support on the equity market. There are a lot of companies that are preparing themselves to manage the next year or two.

I think that when the traffic recovers, there will be a difficult choice to make. If you cannot afford to fly, because it’s too expensive, then the traffic will not start again. There will be a balance between margin but also, fueling the trust of the appetite for travelers, to fly again. That will be a challenge for all of them. They have very smart teams, with revenue management and pricing teams that will have to be as professional as they already are, to make sure that they can position the price at the right level.

How do you expect prices to change for short haul, in Europe?

I’m not sure that it will change. Players like Ryanair and Wizz Air will always be very strong players and very successful low-cost carriers, so the pressure on competition, on some routes, will definitely still be there. It will be more for routes that have a different competition profile, if you have less actors on the route. But I think the competition game will not change and, again, you need to make sure that people can afford to fly, so it’s just at the right balance. I’m sure that everybody is concerned about prices, but if the prices are too high, people will not fly, so it’s not a good solution for the airline industry.

What is your view on human nature and consumer behavior and when and if that can potentially change? People all say that they’re not going to travel or it’s going to change and it’s changed forever. Then humans, typically, go and do what they used to do. What’s your view on how that could change, post-Covid?

I think that the industry is trying to find a solution to restore confidence. It doesn’t mean that a solution will provide 100% trust, in that there will not be any risk, because it’s impossible to have that when travelling. But that was the case even before the pandemic. When you travel, you take a risk, because you’re not home, you’re in a different country. It’s not only about Covid; it’s about anything that could happen because you are out of your comfort zone. I think people that travel accept that they are taking a risk; it’s something that has always been the case.

Then it’s more about the process or the logistics. How do you get to the airport? How do you go through security? Maybe, making sure that all the players will put measures in place that give more trust and confidence. I think it will be very difficult, for instance, to keep social distancing during flights. I don’t see that as a sustainable measure. But if everybody is wearing masks, then maybe it’s even safer than social distancing. If the masks are the good ones, they will protect everybody, if everybody is wearing them. I think there are some potential solutions that will work and will restore confidence to travelers. They will have to accept – and they already do – that there is always a risk in travelling.

How did you see consumer behavior and demand change, post-2008, post-9/11 and other crises before?

These past crises were very different, because you had an event that was – 9/11 for example – that was a terrorist attack, it was very focused on one city and then it was a really huge crisis, but very limited in time. People were very sad and didn’t really understand what was going on and it was a huge drama, worldwide. But the traffic started again, quite quickly, because the people were looking at a very difficult event, but it was very isolated in one city. The recovery was quite quick.

Here we are now, facing a different situation, where everybody knows somebody who had to face the virus. It’s becoming very personal and that was not exactly the same situation with past crises. When people see that it is something that could really happen in your house, it’s very different.

So a much longer recovery with many more variables to consider?

Also, if you feel a little bit more comfortable travelling again, or maybe you are a bit concerned about if you come back home and you could have the virus with you and that impacts your family. When people think about it, it’s not always about themselves, but also the impact on their loved ones, on their parents, for instance. What could be the effect on your family and friends?

Christine, can we take a step back and talk about the industry structure. Over the last 20 years or so, how have you seen the airline industry evolve, specifically in Europe, between the LCCs, the flag carriers and the regional players coming up?

I think the structure has been moving in the same direction, which is consolidation. Why? Because of the pressure that you have. When you are an airline, the external factors are very challenging, not only on the competition side, but also on your cost structure. The market that has seen the fastest consolidation has been the US market, with quite a limited number of players that are also controlling, in a way, the regional carriers, to feed their own hubs. The regional carriers, in the US, are flying another brand of the flag carriers, so it’s a very consolidated structure market, compared to what you can see in other regions of the world.

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Audio

Flybe: Leading Europe's Largest Regional Airline

May 6, 2020

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