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New Airline Proposed Based LSI

Old 1st Apr 2001, 18:39
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Smile New Airline Proposed Based LSI

Courtesy of the Shetlandtoday.co.uk

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 Executive’s 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 SIC’s 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 Beer’s 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.

“We were sitting waiting for the meal and bemoaning the fact that a plane had been cancelled. I was saying ‘I could run an airline better than that’. After thinking more I thought I wouldn’t mind having a shot at it. I got to know some airline people, started talking, and found a genuine interest.”

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 company’s business plan. He strongly believes that islands should have some degree of control over their own air services.

“My view is that they have to have some interest, otherwise they are at the mercy of the commercial wishes of outside operators.”

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.

“These services are vitally important to the business interests of the islands.”

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.

“I think anything to do with running our external transport from our home base has to be looked at favourably,” 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 Shetland’s current provider.

“The more control we have over our links the better. This is a very exciting project.”

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.

“I 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.”

Mr Villa said it would be a “relatively small operation” to start with but he believed that would build up. It would be “an insurance policy” 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.

“The bread and butter has to come from routes that are not flown currently and we believe we have spotted a few.”

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 BRA’s 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.

“Customer 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.

“Another 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.”

Mr Beer said ideally passengers should also be able to fly both ways - to Aberdeen and back and vice versa - in the same day.

“That would also make a difference to the number of business travellers and help to hold prices down.”

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.

“The 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.

“What 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.”

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.

“In 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. “But that’s 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.”

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.

“A number of good quality jobs will come out of this,” 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).

“Sumburgh, I believe, could be a hive of activity given imaginative use,” Mr Beer said. “If 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.”

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.

“All 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.”

Mr Beer reiterated the point that people should not expect too much too early.

“We 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.

“It 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.”
Old 1st Apr 2001, 23:14
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Another April Fool?
Old 2nd Apr 2001, 11:48
  #3 (permalink)  
Desk Driver
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Was Peter Villa MD of Air UK then ?
I thought it was BIA ?

You fly em we'll fill em!

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