Aviation: Newquay-Heathrow - how and why?

November 21, 2018

Details of a new route between Newquay and London Heathrow have emerged.  The link will operate four times per day starting in March 2019, replacing three daily runs to Gatwick that are supported by a Public Service Obligation (PSO) agreement funded by the UK government.  Arrivals into Heathrow at 0830, 1205, 1540 and 1955 are complemented by returns to Cornwall at 0915, 1245, 1620 and 2040 – a very tidy schedule and nice day’s work for the 78-seat Flybe Bombardier Q400 that will be deployed on it.

 

On the face of it and compared to everything else that is going on in the airline and airport world – not to mention the wider UK – this might seem to be trivial news, albeit very good for the people and industry in the southwest of England.  It’s not often that a completely new domestic route to Heathrow is announced, let alone one flown with a turboprop four times every day, so something significant must have occurred to enable it happen now.

 

Almost everyone involved appears to be claiming to have played a part.  Cornwall Airport Newquay’s Managing Director Al Titterington, said: “We have been working for many years to make sure that Cornwall Airport Newquay has direct access to Europe’s busiest hub, and with this new service it opens not just a connection to the UK’s leading gateway, but also the world.”

Titterington has previously gone on record as stating that if the route was transferred from Gatwick to Heathrow, traffic would increase by as much as 30%, primarily due to the better global connectivity on offer at the west London airport.  Connectivity is of course one of the cornerstones of Flybe’s attempts to revive its fortunes, as it is looking to sign up more code-share agreements with long-haul airlines.

John Holland Kaye, CEO of Heathrow Airport also added his seal approval: “We are delighted to secure a more regular service to Newquay, connecting exporters from Cornwall to global markets through Heathrow and making it easier for inward investors, tourists and students from all over the world to get there. Following the successful launch in 2016 of an Inverness service, the UK’s two furthest mainland airports will now be connected to the UK’s biggest port.”

Meanwhile, Transport Secretary Chris Grayling didn’t miss the opportunity to promote his department’s role in the switch, telling parliament that: “This new route between Cornwall Airport Newquay and Heathrow Airport, supported by the government, will provide passengers with hundreds of links to global destinations opening up new travel and business opportunities.”

Most ministers like to talk up their involvement in good news but when he said “supported by the government”, The Aviation Oracle assumes all he actually meant was that the PSO has been renewed – which it has.  It seems almost inconceivable that the government would intervene to move one domestic air service to Heathrow while not doing the same for others.

 

Good news then - but how?

So a win-win for all.  But a couple of questions come to The Aviation Oracle:  why now, and more significantly where have the Heathrow slots come from?  Plenty of airlines would give their eyeteeth to get four Heathrow slot pairs, so how did Flybe manage it – especially while it is facing financial challenges?  Did Heathrow or the government help, or were there other forces at work?

While mulling the matter, the settlement the EU applied to IAG (parent of British Airways) when it bought rival airline bmi from Lufthansa in 2012 came to mind.  Looking up the specifics of the case revealed that: “Where a New Air Services Provider has operated Competitive Air Service on two or more Identified City Pairs using Slots in accordance with these Commitments for at least two (2) consecutive IATA seasons, it shall be entitled to apply for any Slots still available… to operate Frequencies on any European Short-haul City Pair…”

Basically this bit means that if a new airline has been flying between Heathrow and Edinburgh (EDI) and Aberdeen (ABZ) for at least one summer and one winter it can request slots – which IAG has to relinquish – to fly additional routes.  It just happens that Flybe has been operating between Heathrow and those two Scottish airports for a little more than a year now.  There were originally twelve slot-pairs released by IAG as remedy for it being allowed to acquire bmi, of which eight are already allocated to Flybe’s EDI and ABZ services.  That leaves four.  Begin to see a potential connection now?

But there’s more.  Not only did Flybe get four slot pairs for the new route, but they are at remarkably convenient times.  Any airline executive knows that getting a Heathrow slot is difficult, but it is marginally easier than getting one at the right time.  However, the EU decision includes some further language that might be revealing: “…IAG undertakes to make available Slots within the Time Window [+/-20 minutes] if it has such Slots.   In the event IAG does not have any Slots within the Time Window, it shall offer to release Slots closest in time to the Prospective Entrant’s request.”

So in effect, if an airline that has been operating remedy routes from Heathrow to Scotland for at least a year comes along and wants to start a new European route, IAG has to give up slots within 20 minutes of the times requested.  And no large payments – as is typically the case when Heathrow slots are exchanged – are involved.

It’s starting to come together now.  Flybe moves its government PSO-supported Newquay-London route to Heathrow.  As it’s been serving Heathrow for a year it gets the slots it needs to make the new service viable.   The airline increases connectivity for Cornwall and for itself, which grows the traffic.  Meanwhile, there will also be three vacant slots at Gatwick allocated to Flybe that come up for grabs.

 

These transactions take time to arrange, so no doubt the idea of moving the Newquay service Heathrow was under evaluation well before Flybe’s recent troubles emerged.  But Flybe has been struggling – off and on – for a while now.  Last week it sold one of its hangars at Exeter Airport for £5m, and immediately leased it back again.  This week it has arranged a similar transaction involving one of the Dash-8 aircraft it previously owned.  Is it perhaps now also attempting to obtain extra working capital by disposing of its last few Gatwick slots?

 

Selling more of the family silver?  The Aviation Oracle can’t say for sure and doesn't really want to keep harping on about Flybe.  The firm needs to pull through because the UK and its airline industry needs Flybe – or more particularly the routes it operates including the revised route to Cornwall.  Let’s hope the changes have a positive impact and the future is brighter.  For the Newquay route, that seems to be almost a dead-cert.

 

Text © The Aviation Oracle

 

 

 

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