The full story ...
The Shetland Times Ltd.
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Thursday 29th March
NEW AIRLINE TAKING OFF
By Jim Tait
A NEW airline company, which intends to centre its operations at Sumburgh
Airport, was set up yesterday.
Shetland Airlines Limited will initially look at linking the North of Scotland
with European destinations, mainly Scandinavian, having targeted the charter
and holiday trade as a first concern.
But being based here the route between Sumburgh and the UK mainland would seem
an obvious capture. British Airways has regained the running of the service
from its franchise company, British Regional Airlines (BRA), and doubts remain
about how much priority will be given to it.
A separate factor could be the Scottish ExecutiveUs recent decision to invite
Shetland Islands Council to put its case for running Sumburgh Airport, as the
council has the potential to be a major investor in the airline.
The SICUs development trust recently bought shares worth over #4 million in the
Faroese shipping company Smyril Line, and senior councillors and officials have
stressed the need to strengthen links to North Atlantic destinations.
The new company currently has three directors and shareholders, businessman Ken
Beer, who has assumed the position of chairman, local councillor Drew Ratter
and chartered accountant Peter Villa, an aviation expert and former managing
director of Air UK Ltd.
Mr BeerUs company Kildrummy Technologies Ltd is a multi-national concern,
selling project control solutions - people and knowledge - as well as supplying
computer software.
Having subsidiaries, offices or close working partnerships in many countries
has not only meant building up a formidable network of business contacts, it
has given him a daily insight into the problems of travel and transport all
over the globe.
He said the idea of starting an airline originally transpired 18 months ago,
during dinner with his accountant at Burrastow House.
RWe were sitting waiting for the meal and bemoaning the fact that a plane had
been cancelled. I was saying TI could run an airline better than thatU. After
thinking more I thought I wouldnUt mind having a shot at it. I got to know some
airline people, started talking, and found a genuine interest.S
Mr Villa, with more than 20 years experience as a senior manager in the airline
industry, became a key player in the concept, and is producing the companyUs
business plan. He strongly believes that islands should have some degree of
control over their own air services.
RMy view is that they have to have some interest, otherwise they are at the
mercy of the commercial wishes of outside operators.S
He referred to Jersey and Guernsey as an example. Both islands had recently
lost their Heathrow link and had been pushed down to Gatwick. And he believed
the same could soon happen to the Isle of Man.
RThese services are vitally important to the business interests of the
islands.S
Both SIC convener Tom Stove and chief executive Morgan Goodlad highlighted the
Faroese airline Atlantic Airways, an island-run company which provided an
excellent service to its population.
RI think anything to do with running our external transport from our home base
has to be looked at favourably,S Mr Goodlad said.
Mr Stove said he had only limited knowledge of the new company but agreed it
would be a great advantage having an airline based at Sumburgh.
He told how he once flew with Atlantic Airways in difficult conditions and they
pulled out the stops to get to Faroe because they were based there. He did not
believe that would have happened with ShetlandUs current provider.
RThe more control we have over our links the better. This is a very exciting
project.S
Shetland Airlines Ltd intends to initially lease three aircraft, with the
probability of that number rising to five in due course. It is estimated that
somewhere between #10 and #20 million will be required and Mr Beer is confident
that will be secured.
On the timescale he said it would likely be towards the end of 2002 before the
planes were in the air.
RI would be surprised if we could lay our hands on an aircraft inside a year.
You are probably talking about 18 months before we are operational. You have
got to be able to show you can run your service without passengers for six
months.S
Mr Villa said it would be a Rrelatively small operationS to start with but he
believed that would build up. It would be Ran insurance policyS if the Aberdeen
service was jeopardised in any way.
Mr Beer was unwilling to be drawn on any plans his company may have for the
Sumburgh-Scottish mainland route, although its headquarters will be here.
RThe bread and butter has to come from routes that are not flown currently and
we believe we have spotted a few.S
A recent study concluded that Shetland alone does not generate enough traffic
to support a viable airline based here. It would be necessary to supplement the
operation with other routes. Those identified, all from Aberdeen, included
London City, Oslo, Paris and potentially Amsterdam.
The study also believed Shetland could accommodate significant increases in
tourism, even in peak months, but it was difficult for authorities here to
influence BRAUs fare structure at present.
There was also no reason why a new operation could not compete for oil company
charter contracts between Aberdeen and Scatsta, the study concluded.
Although Mr Beer does not believe it is an option to compete with British
Airways he has specific ideas on what would benefit the Shetland service.
RCustomer service is particularly necessary when you are flying to islands.
People can get marooned, either on the island or trying to get to it. It is how
you look after your customers.
RAnother thing I think that would help is a different kind of aircraft. If you
halve the size of the aircraft and double the frequency of flights you provide
a better service. You encourage more people to fly. If you have large aircraft
with 12 people in them you are going to have a dwindling spiral. It is much
easier with smaller aircraft.S
Mr Beer said ideally passengers should also be able to fly both ways - to
Aberdeen and back and vice versa - in the same day.
RThat would also make a difference to the number of business travellers and
help to hold prices down.S
A recent telephone survey conducted by Shetland Islands Council concluded that
the average price thought to be fair for flying to Aberdeen from Sumburgh was
#75.
Mr Beer said he thought it was unlikely that would be realistic due to the high
extras involved, including landing charges and tax. But he agreed that offering
a cheaper fare was important.
RThe only way to bring the price down is through volume. [But] I think many
people would say they could live with the current costs if the service was
better.
RWhat is vitally important is to provide a service that makes people want to
fly. That is true on any route. That is the reason why a concentration on
customer service makes smaller airlines viable.S
Mr Beer said it was important to stress the likelihood of an employment boost
in the isles if and when the airline became operational. There could be a
seasonal element if charters were being operated, but the actual running of the
airline would be done from here.
Along with five or six big London investors putting in a couple of million
pounds each there would also be investment opportunities locally, both for
individuals and organisations, he said. It would have a major effect on the
local economy. And special rates could be offered for shareholders.
RIn an ideal world I think the community should own a chunk of every major
service and utility which affects our lives - a sufficiently large chunk to
have a say in the determination of policy. RBut thatUs a political stance, not
a business stance. As a businessman I simply want to raise money to run the
airline, and then I want to run the airline well enough to make a good profit
for the investors.S
Mr Beer said he also wanted to serve Shetland and believed the airline would do
so by creating both work and opportunities for business people.
RA number of good quality jobs will come out of this,S he added.
Aircraft which the company could be looking at include the Fairchild Dornier
328, a 32-seater American turbo-prop, which also has a jet version, or the
Brazilian-built Embraer, which can carry 30-40 passengers and upwards.
The Dornier 328, its manufacturers claim, represents a new generation of
regional airliners. The jet and turbo-prop versions both have the same cabin
dimensions, seating arrangements and passenger amenities. Both can also take
off and land on relatively short runways.
The turbo-prop is claimed to be the fastest, quietest and most efficient
aircraft in its class and offering, at 385 miles per hour, almost jet-like
speed. Even with a maximum load it can land on runways of less than 1000
metres.
However, the 328 jet can travel farther - roughly 1000 nautical miles - and has
a maximum take-off weight of 2650 pounds greater than its counterpart.
For many years there has been a formidable body of opinion that turbo-props
were superior to jets in short-haul markets and that jets were better-suited
for long-haul, with the crossover anywhere between 200 and 500 miles.
Distances from Sumburgh to airports on the UK mainland include: Aberdeen (211
miles); Edinburgh (298); and London (598). Foreign destinations include: Bergen
(225); Torshavn (228); Oslo (406); Copenhagen (578); Stockholm (665); Brussels
(680); Reykjavik (702); and Paris (787).
RSumburgh, I believe, could be a hive of activity given imaginative use,S Mr
Beer said. RIf you centre the service in Shetland you are no longer the
peripheral, you become the centre. The question of peripherality no longer
comes into it.S
The airline would also be looking at the needs of other island groups, both in
Europe and the UK, which were very similar to and experienced similar problems
to Shetland, Mr Beer said.
Mr Ratter said Shetland would need to try and broaden its economic base. There
should be diversification. He believed it was important to be involved in
interests other than just the primary sector.
There also used to be a myth that the majority of people travelled south for
business reasons. The recent survey had proved that more folk travelled for
domestic purposes.
RAll the work that has been done through the council has indicated very
strongly that people want more choice. I would like to praise the survey. That
certainly helped to convince me that looking at this area was a good idea.S
Mr Beer reiterated the point that people should not expect too much too early.
RWe are all three of us innovative thinkers, and all three of us are open to
ideas from any source. All we ask is that the community bears in mind the
timescale.
RIt will take 12-18 months to get a plane off the ground, and several months
more to get our core business in sufficient order to give us a chance of making
a profit. It is only at that point that we can look at extending our operations
in new and unusual ways.S
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