UK's largest domestic airline bankrupt; Flybe collapses with all flights cancelled - here's what you need to know

The largest domestic airline in the United Kingdom, Flybe, has ceased all operations, entering into the British equivalent of bankruptcy effective immediately. The Independent newspaper reports that the airline's more than 2,000 staff now face an uncertain future with all flights from Thursday March 5, 2020 and onwards cancelled, and the entire fleet of more than 60 aircraft grounded.

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The airline reportedly failed in a last minute attempt to secure emergency funding, seeking a $128 (£100) million loan from the U.K. Government which was rejected. A Flybe aircraft was also impounded at Glasgow (GLA) Airport late on Wednesday, due to non-payment of airport fees.

CEO Mark Anderson sent an email to employees that reads in part, "It’s with enormous sadness and a deep feeling of sorrow that I share the upsetting news that Flybe is shortly being put into Administration. Despite every effort, we now have no alternative – having failed to find a feasible solution to allow us to keep trading. I do appreciate how distressing this news is and the shock and numbness that you will be feeling."

Flybe becomes one of the first carriers to shutter its doors since the coronavirus emerged in China and has increasingly affected travel. Airlines across the world – and now the U.S. – have been slashing capacity to cope with reduced demand tied to the virus. While the coronavirus likely worsened financial conditions for the carrier, Flybe had faced headwinds even before the outbreak. The Independent notes that “while the coronavirus crisis will be blamed for hastening the demise of Flybe, its business plan has been derided by competitors.”

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Flybe's website has already been taken down.

Accountancy firm EY had been on standby for several months, with accountants and lawyers monitoring the airline's deteriorating financial situation, though the airline has operated as normal through the quieter northern winter period.

The collapse of Flybe follows the highly publicized collapse of Thomas Cook last year, which resulted in the largest peacetime repatriation effort since World War 2. While Flybe has a fleet of 67 aircraft it operates largely U.K.domestic routes, with major hubs in Manchester (MAN) and Birmingham (BHX) so the repatriation effort will be significantly easier, faster and cheaper than that of Thomas Cook. Flybe does not operate any long-haul routes.

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Flybe operates 40% of all domestic flights in the United Kingdom, providing vital links between regional areas, as well as major cities. For example, Flybe operates all commercial flights from Anglesea (VLY) Airport and 95% of all departures from Southampton Airport (SOU). Their large domestic network has struggled to compete on some of its routes with road and rail land-based alternatives. The Financial Times has suggested the reduced demand for global airline travel due to the ongoing COVID-19 coronavirus disease made 'a bad situation worse'.

The airline had planned to rebrand as Virgin Connect later this year, following investment by a consortium including Virgin Atlantic. Mark Anderson, CEO of the consortium, Connect Airways said at the time, “Virgin Connect will be passionately focused on becoming Europe’s most loved and successful regional airline. It will offer travel that is simple and convenient with the personal touch. Our customers will naturally expect the same exceptional travel experience as they do with other Virgin-related brands. As part of the Virgin family, we now have a tremendously re-energised team”. Flybe quickly burnt through the consortium's investment and had even sought a further $38 (£30) million investment from the consortium as part of a wider January 2020 government rescue package though this rescue did not proceed as Flybe did not meet certain government criteria.

What to do if you are affected

If you have an upcoming flight operated by Flybe and you purchased this by credit card, contact your credit card provider to inquire about a charge back for the cancelled airfare.

If you did not pay by credit card then check your travel insurance - if your policy covers insolvency of an airline (the exact wording may include "Scheduled Airline Failure Insurance (SAFI)" or "End Supplier Failure"), you should be covered.

You may wish to check with your travel insurance provider for peace of mind, especially if you are already travelling or are commencing your journey in the next few days.

If you booked an upcoming holiday package with Flybe directly or through a travel agent (i.e. Flybe operated flights and accommodation), then your holiday may be ATOL protected and you will be refunded the cost of your holiday by the ATOL fund, operated by the British Civil Aviation Authority. Check with your travel agent if you are ATOL protected - again, like with Thomas Cook they should be familiar with both the Flybe collapse and the ATOL benefit. If you are ATOL protected you should have received a certificate advising you of this protection when you booked your travel.

Flight only bookings made directly with Flybe will most likely not be ATOL protected. Codeshare flights operated by partner airlines (with Flybe flight numbers) should be operating as normal.

Other airlines such as British Airways and EasyJet may offer discounted 'rescue fares' to help those already travelling on Flybe return home. This may be even more likely as these airlines are experiencing reduced demand because of coronvirus fears so have plenty of capacity, and March is traditionally a quieter travel month anyway.

This is a developing story. Stay tuned to TPG for more information.

For more: Complete guide to traveling during the deadly coronavirus outbreak.

Additional reporting by Ben Mutzabaugh and Clint Henderson.