Genius or daft? The 2 regional airlines expanding their route networks despite the pandemic
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The past 12 months have been a turbulent ride.
Much of the world has suffered under the grip of the coronavirus pandemic. The loss of life is heartbreaking, and when compounded with the loss of jobs and livelihood for many, it’s been nothing short of devastating.
So, when two relatively small regional airlines not only survive but seemingly thrive, despite the circumstances, there’s intrigue. In the U.K., both Eastern Airways and Loganair have been announcing new routes — both domestically and to some international destinations. But how, and why now? Are we witnessing a plan of genius or daft? Let’s take a look.
2020 was a big year for Eastern Airways, despite the pandemic. Before the pandemic gripped the world, Eastern announced in January that it had ambitious expansion plans focusing on Teesside Airport (MME) as a new hub.
The move was made to create a “network of Flybe franchise routes linking Teesside International Airport with the length and breadth of the U.K. and Ireland, including London and Dublin,” according to the airline.
Then, as the pandemic hit, Flybe collapsed, and with it, Eastern’s plans for mass expansion at Teesside were temporarily put on hold.
A few months into 2020, Eastern announced the launch of a new summer route, also from Teesside (MME). However, the plans to fly to Alicante (ALC), which would be the airline’s first entry into the international leisure market, didn’t come to fruition. Again, with the pandemic as the cause.
Despite the pandemic, Eastern successfully launched two routes to London from Teesside: to London City in the summer and to Heathrow later in the year. Some of the routes, including LHR-MME, have since been suspended.
Southampton Airport (SOU), a former Flybe hub airport, became a second new hub focus for Eastern. Announcements of new routes were made, including service to Belfast (BHD), Nantes (NTE) and Rennes (RNS) in France and, most recently, nonstop flights to Gibraltar. Eastern will also operate a second route to Gibraltar from Birmingham (BHX).
As part of its hub operations, Eastern also detailed plans to ramp up its inter-regional connectivity. This included domestic summer services from Leeds Bradford (LBA), Teesside (MME) and Manchester (NCL) to Newquay (NQY) as well as Cardiff (CWL) to Belfast (BHD). The latter of which is the only nonstop service between Wales and Northern Ireland.
Loganair also had ambitious route network expansion plans for 2020. In early March, Loganair announced a new codeshare agreement with KLM. Along with its six other codeshare partners — British Airways, Emirates, Qatar Airways, Turkish Airlines, United Airlines and Widerøe — passengers across the U.K. can opt to start their journey with Loganair from their local airport and connect through larger U.K. airports of Heathrow (LHR), Edinburgh (EDI), Glasgow (GLA) or Manchester (MAN) and onwards to the rest of the world.
It wasn’t long after the pandemic was in full swing that Loganair suffered its first setback of the year. It ceased operations at Carlisle Airport (CAX), a destination that the airline had only recently added to its network, bringing commercial life back to the tiny Cumbrian airfield.
Later in June 2020, Loganair announced it would be joining forces with regional Channel Islands airline, Blue Islands. The partnership was created to strengthen regional connections across the U.K. A further new route was announced that was to reconnect the cities of Glasgow (GLA) and Cardiff (CWL). This route never got off the ground due to COVID-19.
In a similar way to Eastern, Heathrow was an obvious target for Loganair. The airline launched a route between the Isle of Man (IOM) and Heathrow, heralding the first time Loganair would ever land at the U.K.’s largest international gateway. More recently, Loganair announced a second route to Heathrow, this time from Teesside — joining Eastern as the second airline in the year to connect Heathrow and Teesside. While Eastern isn’t operating the route as of time of publication, Loganair’s inaugural is still planned to go ahead on 8 March.
What Eastern and Loganair are trying to do during the pandemic is bold — especially given that the majority of other airlines around the world are doing the complete opposite.
“It’s definitely counterintuitive when there are airlines retreating into their shells, reducing networks to primary or most important hubs and the spokes that are most critical,” aviation analyst and expert Henry Harteveldt told TPG.
However, decisions to operate in such a way despite the circumstances will not have been made lightly. This would suggest that despite the pandemic and its effects on passenger demand, both Eastern and Loganair have taken calculated business risks with their route expansions both domestically and internationally.
“There’s nothing wrong with an airline saying it is willing to take a chance, as long as it has done the necessary analysis to make sure they’ve minimised the risks involved,” Harteveldt said.
The two see a set of opportunities that lie ahead with expansion, but what are they? And what are the challenges that come with taking these risks?
The opportunities for both
Both airlines set about launching their first-ever routes to London Heathrow in the past year.
“Heathrow is the holy grail as far as U.K. airports go,” Harteveldt said. “Under normal circumstances, it has some of the densest concentration of long-haul flying of any major international gateway.”
However, it’s not just having slots at London’s Heathrow which will go in an airline’s favour. The focus has been — and Harteveldt suggest should continue to be — on growing in London as a whole, including to London’s centrally located City Airport.
“For someone who is travelling to London, especially the financial district, the ability to fly through London City can be far more convenient than having to deal with Heathrow,” he said.
And, there’s an opportunity for growth in the London market — and beyond — because of the collapse of Flybe and the gap in domestic coverage that it caused. By Eastern and Loganair operating Flybe’s former routes, the airlines are building a solid foundation for services that had demand in the past and would seem a safe bet for expansion.
It’s not just the routes that are a safe bet, but it’s the timing as well. Expanding route networks at a time when U.K. domestic market competitors like British Airways, EasyJet and Ryanair are shrinking theirs, it puts both Eastern and Loganair in a good position for when travel starts to open up again. Not only that, but it will help them to get ahead if a version of Flybe does eventually re-enter the market.
However, Eastern and Loganair aren’t the only ones to announce new domestic U.K. routes. Despite significantly decreasing its route network in summer 2020 by closing three of its bases, EasyJet recently announced new routes to Newquay (NQY) from Glasgow (GLA) and Manchester (MAN).
Even with EasyJet’s summer foray into domestic operations, it is still a low-cost carrier. Eastern and Loganair both include 15 kg of checked luggage in their lowest fare categories. As an added bonus, in pre-COVID-19 times, both airlines offered passengers a drink and snack on flights. EasyJet and other low-cost carriers that offer domestic routes, such as Ryanair, don’t offer that. Even British Airways’ lowest fare doesn’t include checked luggage.
“[There is] tangible financial value for someone who is planning on checking a bag,” Harteveldt said, though the same can’t be said for the drink and snack. “As for the value of the snack and drink, a lot depends on what’s on offer. It may sway a few people, but I’m not sure if it will sway enough.”
The challenges for both
Simply put, the lack of demand as a result of the pandemic may catch up with both Eastern and Loganair.
“I don’t believe demand will be enough to support both airlines, at least initially,” Harteveldt said, noting specific routes like Teesside to London Heathrow, which both airlines launched over the course of the past year.
Additionally, as both carriers continue to add routes that are point-to-point without a real base and rather than hub and spoke, it could prove challenging.
“The challenge of point-to-point domestic flying if you do not have a major hub at one end of the route, it’s definitely a risky venture,” Harteveldt said. “I presume there are financial incentives involved to attract the airline and help mitigate any potential losses during the start-up period.”
Speaking more specifically about Eastern’s upcoming point-to-point routes from Birmingham (BHX) and Southampton (SOU) to Gibraltar, Harteveldt said, “It is random, but presumably [Eastern] believes that there will be enough demand to make the route profitable.”
At the end of the day, for both airlines, their biggest challenge will be the existing flag carrier’s presence around the domestic market — British Airways. Some potential customers or travel agents from other countries around may not have heard of Eastern and Loganair — a challenge that may be difficult to overcome when attracting new customers.
“BA is probably able to leverage more convenient schedules and it has its global route network and Avios,” he said. “Loganair and Eastern won’t offer that same benefit. The challenge for these airlines is to create great value. If BA is £30 one-way, it’s really tough to say we’re an additional £25 each way — you are almost doubling the least-expensive BA fare.”
Take, for example, a potential customer who lives closer to Teesside (MME) than Newcastle (NCL). Would that passenger be tempted by British Airways’ lowest fares at around £35 one-way from the farther-away Newcastle, rather than paying around £20 more with Eastern or Loganair but with the convenience of flying from Teesside? It’s hard to say for certain, but in some cases, the answer would be a firm no.
“On short domestic flights, except for business travellers, I don’t think a lot of people will be willing to pay that premium unless they are living very close to Teesside in comparison to Newcastle,” Harteveldt said.
While domestic travel in the U.K. remains off-limits, given the lockdown restrictions on non-essential travel, it’s hard to say how Eastern and Loganair will fare with their new routes and network expansion plans.
“Somewhere between six months and a year from now, we will see if these airlines are either brilliant or daft,” Harteveldt said.
Whatever happens, I, for one, am excited by both airlines’ growth both domestically and internationally and will be following closely to see what their futures hold.
Featured image by Andrew Holt/Getty Images.
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