Loganair chief says business air market has 'changed for good'

Speaking yesterday to the Aviation Club, Mr Hinkles noted how the industry networking group was meeting via Zoom, citing this as evidence of the profound shift that has taken place during lockdown. While much of the public discussion so far has centred around when and how foreign holidays will resume, little has been said about business travel.

“What is noticeable by its absence is talk of the future size and shape of the business travel market – which is, of course, hugely important to so many airlines,” Mr Hinkles said. “Our view is that this will be changed for good.

“We recently completed Loganair’s annual financial audit without a single face-to-face meeting with our auditors, which would have been unthinkable in years past. But why-ever will such functions now revert to the way they were?

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"They won’t here in our own head office, giving us a lasting opportunity to make change for the better, as we’re sure every other business will also do.”

This will inevitably lead to a smaller business travel market than in the years before Covid, with greater reticence among customers about long trips away from home. Although Mr Hinkles believes that the need for frequency, connectivity and the ability for same-day returns will remain important, he urged caution to anyone seeking to “pile capacity into the UK regional market” in which Loganair operates.

“Of course, you can’t build a submarine from home, and industries like construction, healthcare and manufacturing must still depend on hands-on capability that will drive travel patterns,” he said.

“But for the likes of consultancy, audit and accountancy, IT, retail and insurance, a significant portion of business has shifted to online platforms and it’s going to stay there.”

Launched with one Piper Aztec plane in 1962, Loganair services were run for 24 years under franchise agreement, first with British Airways and then with Flybe, until the decision was made to go it alone in 2017.

Following the collapse of Flybe in March of last year, Loganair stepped in to take over 16 of its former partner’s routes from Loganair’s base airports in Aberdeen, Edinburgh, Glasgow, Inverness and Newcastle.

Throughout the crisis, Loganair has maintained its core lifeline services to the Highlands and Islands. Five of its 42 aircraft currently fly every day for Royal Mail, and another three operate full-time for oil and gas companies.

Mr Hinkles said yesterday that he “couldn’t begin to imagine what would have happened” had Loganair stuck with the franchise business model, as the subsequent investment in systems, networks and the Loganair identity is “proving invaluable to our survival right now”.

“We took a decision in late 2016 to move away from our franchise relationship with Flybe and plough our path as an independent airline once again, working with key partners including our long-standing relationship with British Airways,” he said. “With hindsight, we’re heartily glad we did what we did, when we did.”

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Looking further ahead, Mr Hinkles highlighted efforts to diversify the business as leaving Loganair well-placed for what will be a re-shaped aviation market. This includes moves to expand geographically, taking on more cargo and improving the mix between chartered and scheduled flights.

In doing this, the airline will remain focused on regional aircraft, with 70 seats likely to be the upper-most limit.

“We’re continuing to work to…simplify our fleet around ATRs and Embraer 145s as our larger aircraft, but firmly staying within a space which allows us to provide solid frequency of service in our chosen markets with the right size of aircraft, and also to serve the growing cargo market in which we see potential,” he said.

“We may occasionally end up – as Emirates has described it – ‘intelligently misusing’ aircraft in certain markets to drive fleet simplification and avoid undue complexity, yet the core principle will be recognisable.”