Belfast Telegraph

Impact on Northern Ireland of Flybe deal may merit closer scrutiny

Flybe has a major presence at City airport
Flybe has a major presence at City airport
John Simpson

By John Simpson

For Northern Ireland businesses and most individuals, travel by short-haul air routes can be a necessity, and not just pleasure and leisure. Business connections, student travel, and holiday plans often lead to travel from one of our three airports to, or through, Great Britain. In addition, a range of airlines offer specific direct flights to holiday destinations.

For the non-holiday travel market, such are the economics of travel by air that Northern Ireland is served by a limited number of airlines operating scheduled services.

The constraints on scheduled airline services also mean that the viability of City of Derry Airport is marginal.

When it comes to the number of passengers carried, the local market for domestic services is largely in the hands of British Airways (BA), Aer Lingus (now part of the same group as BA), Flybe and easyJet.

Airline business is not devolved to Stormont, or to Edinburgh or Cardiff. Any special arrangements in Scotland for the Highlands and Islands - such as variations in the applications of air passenger duty - have come from Westminster.

Formal arrangements for involvement and support for airports is devolved. As an example, City of Derry Airport attracts modest support from the local authorities on each side of the border.

Physical infrastructure investment in any of the three larger local airports is, of course, subject to the application of the devolved planning laws. Stormont has taken a legitimate interest in legislation constraining airport noise levels and operating hours, but has not demonstrated any wish to become involved in major financial support of the airports.

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The local airports are expected to operate as financially independent companies.

In recent years, both Belfast City and Belfast International have found new owners and both are being tested by their owners and any prospective new owners as long-term investments, where there may be not only a trading profit but also a capital gain. This logically leads to a continuing interest in any proposals to extend their business activities, such as possible hotel development at Belfast City and recurring references to long-term development, within the boundary, at Belfast International.

In the files of the owners of Belfast International there are proposals for the attraction of businesses which might do major servicing and refurbishment of aircraft and, separately, operating as an international freight exchange and warehouses. Essentially, the operations of the airlines and airports in Northern Ireland are evolving as a response to market forces. That statement also applies particularly to the availability of a diversity of routes.

At present, the number of routes and the carrying capacity of the type of aircraft available strikes a balance between customer usage and airline provision.

From a Northern Ireland perspective there is now a potential change for which a wider public interest is merited.

The ownership of Flybe has become central to decisions either to sell the business to new owners or to sell the trading part of the business. Five years ago, shares in Flybe were trading at 120p. Today, as a consequence of poor trading results and a pessimistic outlook, the shares have been valued at less than 4p.

Flybe has a fleet of 76 aircraft and serves a wide range of domestic routes around the UK, including a major presence from Belfast City. A deal to sell the trading company is reported to be completed on February 22.

The new owners are a consortium including Virgin Atlantic, Stobart and Cyrus.

From a Northern Ireland perspective, this sale of the trading arm of Flybe seems worrying.

To date there has been no statement on the survival or development of the Northern Ireland routes.

This takeover has not been made subject to review by the Competition and Markets Authority.

Since potentially any adverse decision on closing routes could be an important part of Northern Ireland's connectivity, is there scope for a CMA review?

Company report: 352 Medical Group Ltd

There are a small number of companies providing private sector acute healthcare services across Northern Ireland.  352 Medical Group is a large organisation which provides a range of acute services at the Kingsbridge Private Hospital and also provides other medical services through subsidiary companies, including medical screening, dental services, eye and ear clinics and GP services. It also owns the Kingsbridge Private Hospital in Sligo. 

Part of the changing results for ‘352’ is a result of year to year changes in Government NHS contracting with external suppliers partly to ease pressure on waiting lists.  ‘352’ reports that the vagaries of public sector contracting have had a detrimental impact. 

The group has made progress in a change in its strategic direction by rebalancing its business by focusing on developing private health care with less reliance on the public sector.  Private sector activity now accounts for almost 80% of their business.   This rebalancing has led to a return to profitability in the six months after the end of the last financial year.  Financial management has been an important feature of the last years. In the year to March 2017 new working capital loans were introduced by the shareholders. These loans have a repayment commitment longer than five years and, in the most recent balance sheet, amounted to £1.88m.  Further support for the operations has been from the sale of the larger part of the equity in the property on the Lisburn Road to a group of Kingsbridge trustees. 

The balance sheet reflects the impact of the trading losses and the injection of new working capital.  The fixed assets of the Group were stated at £8.6m in March 2018, a reduction of nearly £0.7m compared to a year ago.  Shareholders’ equity has been reduced to £1.2m in March 2018, nearly £1m lower than in March 2017.

Employment in the group reached 321 people in 2016-17.  More recently it had reduced to 305 people.

Belfast Telegraph