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Flybe feels the impact of leisure trip slump

Regional airline Flybe yesterday warned demand for leisure travel has slumped as the consumer spending squeeze moves in on the airline industry.

The Exeter-based carrier - which flies from George Best Belfast City Airport - said while business travel, which makes up 45% of its passengers, was resilient, the number of passengers flying on holiday or to visit friends and family dropped in February and March.

The airline, which joined the stock market in December, added it was introducing a £3 fuel surcharge per passenger to combat soaring fuel costs and was considering selling off aircraft to keep prices down.

Flybe, which also flies from airports including Birmingham, Bristol, Cardiff, Doncaster, Edinburgh and East Midlands, saw shares dive nearly 20% following the update, despite confirming its full-year profit expectations of £22.

It is the first carrier to warn that the clamp on spending - most notably felt by the retail sector in recent months - is starting to hit the airline industry.

Consumer spending power suffered its first fall in 30 years in the final quarter of 2010, as wages failed to keep up with inflation.

Real disposable incomes are likely to be put under further pressure as the rate of inflation continues to surge, wage growth remains muted and the Government's tough austerity measures start to bite.

Flybe chief executive and chairman Jim French said the airline had performed strongly against the challenging economic backdrop.

Despite the impact on leisure travel, Flybe said total seats increased by 4.5% to 2.6 million in the quarter to March 31, while revenue per seat rose 2.2% to £46.14.

The airline, which will report its full-year results in June, suffered from the disruption caused by the Icelandic volcano ash in April and May last year and severe weather in December.

The carrier said forward ticket sales for this summer were up 5.4% year-on-year.

The Flybe brand is eight years old, but the airline has traded under various names, starting out as Jersey European Airways in 1979.

It later became British European Airways as it expanded with the backing of Sir Jack Walker, the steel tycoon who owned Blackburn Rovers Football Club.

British Airways' parent company IAG Group releases first-quarter figures tomorrow and easyJet will issue its half-year results next week.


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