Tough times for Flybe as sales fall

Regional airline operator Flybe, which operates flights out of Norwich International Airport, reported an 8pc fall in domestic flight sales today amid a continuing deterioration in the air travel market.

The Exeter based airline said the third quarter drop in UK domestic market compared to a 6pc drop in the previous half-year, with December being 'particularly disappointing'.

To add to the gloom, the group, which also flies from Birmingham, Bristol, Cardiff, Doncaster, Edinburgh and East Midlands, said the conditions are expected remain 'challenging' throughout its financial year to the end of March.

The news triggered a profits warning for the compnay and a 20pc fall in Flybe's share price after it said revenues in the final three months of 2011 would be significantly lower than it had hoped, fuelling fears in the City for a full-year loss.

And although the airline grew its market share by keeping its sales and passenger numbers flat on the same period a year ago, it has been forced to scrap planned increases in margins, suggesting that profits will also be hit.

Jim French, chairman and chief executive, said: 'The UK domestic market is clearly challenging. Under such circumstances, notwithstanding the shortfall against our revenue expectations, I believe that maintaining volumes and growing market share at the expense of planned yield increases was the correct decision to protect the long term potential of Flybe.'

He insisted Flybe, which has cut the number of UK flights by 6pc over the winter in response to falling demand, has 'a strong future in the medium and long term' and said its move into Europe following the acquisition of a Finnish airline was progressing well.