News / Drop in demand will not lead to higher prices, says airline
LOGANAIR has no intention of raising its prices in response to a drop in passenger numbers, according to its managing director.
Jonathan Hinkles told Wednesday’s meeting of Shetland’s external transport forum that passenger numbers to and from the isles between April and August were down by 5.2 per cent on the same period last year.
This was despite the average Shetland fare being 11.2 per cent lower than before, and seat capacity being up by 9.3 per cent.
Hinkles identified the completion of major projects like the new Anderson High School and Shetland Gas Plant as a main reason why the numbers were down.
News of the drop in numbers – which were most visible on the Aberdeen route – were met by worries on social media that Loganair might recoup lost income by increasing fares, which some said were already too high.
But the Loganair chief said the airline “does not intend to raise prices as a result of the recent drop in demand on Shetland routes”.
“The actions that we outlined at Wednesday’s external transport forum – flying the smaller 34-seat Saab 340 on the Aberdeen route in place of the 50-seat Saab 2000 and reducing the number of flights to Edinburgh from four to three per day – will align capacity more closely to current levels of demand,” he said.
“We were also clear that these moves could be reversed if and when demand picks up again.”
Loganair’s pricing structure – particularly for late bookings and ticket changes – was put under scrutiny at the external transport meeting by councillor George Smith.
But Hinkles said that Loganair’s average fares “remain at levels well below those during the latter days of Loganair operating under its previous franchise agreement thanks to our Pledges for Shetland introduced earlier this year”.
Among the pledges introduced in January after Flybe withdrew from the Shetland routes was a commitment to make at least 50 per cent of seats available on flights at the four lowest fares, and to add two new steps to the fare ladder.
Hinkles, however, admitted that the airline industry as a whole cannot rule out price increases if fuel costs and foreign currency rates continue to go the wrong way.
“We recognise that any material change in price will adversely impact on levels of demand. It’s particularly important for us to maintain competitive prices where Shetland’s external ferry services now have a form of RET – applicable to all customers – yet the Air Discount Scheme only applies to island residents on personal travel,” Hinkles said.
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