The original headline for this piece was “Positivity in a pandemic.” During a phone conversation, Flair chief executive Jim Scott was downright bullish on his airline’s present and its future. Flair was maintaining its full schedule, despite the turmoil in the airline business, and summer bookings were looking solid.
That was Monday. By Friday, it was a different story.
“No-shows are going up because people don’t want to fly,” said Scott in a phone interview Friday. Despite an uptick in passengers this week, he said next week the number of passengers will drop significantly and the medium-term trends are not good.
Essentially, people are getting home, and all indications are, that’s where they’ll stay.
“This month it’s going to be down 30%, you’re going to see April down 60%, May 50%, June 40%, and then July looks to be down 30%, and August is looking close to normal,” said Scott. That’s five months of depressed demand, and millions of dollars in lost revenue.
So what’s an ultra low-cost carrier to do? Well, there isn’t much leeway in an industry where fuel and staff are two of your major costs (along with aircraft leases). So Flair will join other North American airlines and reduce its flying.
“We’re going to cut 50% of our capacity,” said Scott. Flights scheduled to depart Tuesdays, Wednesdays, and Saturdays will be the first cut.
In all, he said roughly 65 people will be laid off, split almost equally between pilots and flight attendants, who recently signed a 10-year collective agreement with the company.
“We’re laying off 33 pilots and 35 flight attendants,” said Scott.
The effect is mitigated by low fuel prices. Scott also said Flair is renegotiating terms with vendors, including aircraft leases.
Ironically, one of Flair’s biggest blunders may have helped the airline avoid some of the turmoil in the market. After a misadventure last year offering service to the United States, one that resulted in the airline beating a hasty retreat and left a trail of unhappy customers, Flair focused instead this year on offering only domestic service.
As governments moved to close their borders and restrict travel, Flair continued its domestic services.
“We were very lucky we didn’t go into that southbound flying this year, so we don’t have to pull down that much capacity compared to Air Canada,” he said.
Scott said Flair has already applied for help from the federal government.
“One of the things that we’re getting from government is you have to be viable in order to get a bailout. Your business plan has to be viable prior to the pandemic and after the pandemic.”
As bad as it is now, Scott can see an upside for ULCCs once the pandemic subsides, if they can weather the storm.
“There may be more demand for a discount after the pandemic than there was before. So I think we’re well positioned, to tell you the truth,” he said.
“I think you’ll see us come out of this, from an airline point of view, a lot leaner and the ones that can get lean – even us, we’re getting leaner all the time – will be the ones that will initiate the recovery.”
Categories: Flair Airlines