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 said while business travel, which makes up 45 per cent 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 adding a three-pound fuel surcharge per passenger to combat soaring fuel costs and was considering selling off aircraft to keep prices down.
Flybe, which flies from airports including Birmingham, Bristol, Cardiff, Doncaster, Edinburgh and East Midlands, saw shares dive nearly 20 per cent following the update, despite confirming its full-year profit expectations of £22 million.
Flybe 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 officer 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 per cent to 2.6 million in the quarter to March 31, while revenue per seat rose 2.2 per cent to £46.14.
The airline, which will report its full-year results in June, suffered from the disruption caused by the Icelandic volcano in April and May last year and severe weather in December.
The carrier said forward ticket sales for this summer were up 5.4 per cent year-on-year.
The Flybe brand is eight years old, but 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 today and easyJet will issue its half-year results next week.
Holidaying Britons battling to beat the Germans to the best spots on the beach might have more chance now.
For the number of Germans taking beach holidays is falling, according to a survey out yesterday.
Germans are taking their trips, and their towels, away from seaside resorts and more towards cities and cruises, the poll for the ITB Berlin travel trade show found.
In 1998, as many as 64.5 per cent of holidays taken by Germans were beach trips but now this figure has fallen to 58.5 per cent.
In contrast, the German cruise market has risen 95 per cent since 2002 and the number of Germans travelling on city breaks has risen 53 per cent since 2000.
Martin Buck of ITB Berlin said today: “More and more Germans want to experience something new when they are away and would like to get to know a country and its people.”