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Flybaboo: on an expansion course in a niche market
By Patrick Hoeveler
Julian Cook plans to almost quadruple the size of his fleet in the near future. In formulating this goal, the founder and managing director of Flybaboo is pursuing a concept which has already proved the undoing of several airlines. Based in Geneva, his airline offers a combination of low ticket prices and appealing onboard service. “Nowadays it is a given fact that any airline operating in Europe has to offer low fares. But we want to differentiate ourselves. A lot of what we are doing in this respect costs us nothing.” This is possible thanks to partnerships and reciprocal business, for example, with fashion and food companies. However, Cook's top priority remains the friendliness of the cabin staff, which is intended to create an informal atmosphere.
It is this “human touch” which, in his words, has completely vanished from the airline business. Flybaboo is diametrically opposed to this way of travel and stands for family values. Whether on account of its name, which comes from the Indian word for “head of family”– “baboo” – and the turban in the logo ( – Cook's mother comes from India) or Cook's dog Tofu, which is the official mascot, the airline simply wants to be different.
With some passengers, this approach seems to be working. “On the route Geneva-Nice we are flying head to head with easyJet, but we are capturing the higher yield customers.” Cook is not impressed by give-away fares. In a straightforward pricing system on the Internet, through which 75 percent of all bookings are made, the minimum and maximum price for each route are stated. The lowest fare offered is around 40 Euros plus taxes and charges, while the most expensive ticket costs 299 Euros.
At the moment the Swiss airline, with its staff of just under 100, only flies from Geneva. It was in July 2003, when Switzerland's flag carrier Swiss unexpectedly announced that it was cutting back services to Lugano, that the airline started to fire up. The Geneva-Lugano connection is very popular, especially with business travellers, not least on account of the awkward journey by land to Ticino. As a result, a race for this lucrative route got under way. Moritz Suter was keen to be at the starting line with his Hello company. The Darwin Airline planned to try its luck, as did the founder of Crossair with the Saab 2000. Finally in August 2003, Cook founded Flybaboo. And he succeeded in winning the first lap of the contest, as the Swiss Federal Office for Civil Aviation turned down the plans of his rivals. After reviewing the unusual approach procedure, the authorities decided to only allow aircraft certificated for a glide angle of six degrees to operate on this route. The Saab 2000 had not yet achieved such certification at the time, whereas the Bombardier Q300, on which Cook was banking, had.
In the event, however, flying operations started up in November 2003, initially using a Dash 8 wet-leased from Cirrus Airlines of Saarbrücken, as the Q300 had not yet been certificated in Switzerland. It was not until May 2004 that the first Swiss-owned Q300 arrived, the crucial operating licence having finally been issued. The second turboprop followed three months later.
Today the route network extends from Geneva to eleven destinations. The most profitable route is Geneva-Nice, which boasts a utilisation of about 65 percent. Otherwise the average utilisation is in the high 50s. Meanwhile Darwin now flies to Lugano in a codeshare, currently the only teaming agreement between Flybaboo and another airline. Flybaboo's target group ranges from business travellers journeying to Nice through to the more affluent tourists on their way to St Tropez.
However, this strategy has not yet brought the airline to break even. The involvement of the Mikati family-owned M1 company group is intended to provide a boost in this area. Together with several other investors, the Lebanese invested around 7.5 million Euros in October of last year. “It was not possible to survive with the size we had. We needed to grow,” says Cook today.
An order placed for two Bombardier Q400's plus a further four options in November 2006 by M1 Travel marked the start of this expansion course. The aircraft are owned by a new leasing company which is a member of the M1 Group. The first Q400 has been flying since 25 March and the second is set to arrive in August.
But that is not all: at the end of February M1 Travel struck again and ordered five Embraer 190's (plus five options) which are due for delivery commencing in April of next year. Installation of onboard TV could even be on the cards. Cook plans to use the 100-seat jets on routes with high passenger volumes and flights of three to four hours' duration. He is currently looking at destinations in North Africa, the Middle East and Russia. At present he has no plans for Germany, however. The contract with Embraer specifies that the E-190 should be certificated for London City. This would make Flybaboo the first operator of this type at City airport.
One possibility is that the aircraft which are the subject of options could also be operated by other airlines. The Mikati family wants to expand its business activities in this area and is looking for further airlines. British Mediterranean was one possible candidate, but this airline, which still flies from Heathrow to Africa and Eurasia for British Airways, was taken over by bmi.
Meanwhile, the acquisition of the extra aircraft reinforces the need for Flybaboo to find a second base in addition to Geneva. This could commence operations in 2008, and does not have to be in Switzerland. In the second half of the year Cook then plans to achieve break-even.
From page 26 of FLUG REVUE 6/2007
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