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

March 05, 2020
6 min read
UK's largest domestic airline bankrupt; Flybe collapses with all flights cancelled - here's what you need to know
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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.

Featured image by AFP/Getty Images

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Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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Why We Chose It

If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more