Loganair Ltd. Business Information, Profile, and History

Company Perspectives:

Loganair's growth has stemmed from the rightful return of the Scottish internal routes to Loganair's ownership, and from a steady and watchful eye on new opportunities. Loganair continues to hold a British Airways franchise, conforming to the high standards of service quality set by British Airways and expected from us by our passengers. The airline's unique pattern of operation and current success is based on the skill and dedication of the professionals who have been involved in the services for many years. Loganair looks forward with confidence to the future as it continues to provide the lifeline community services and develops further the business routes, which have enabled Loganair to stake its claim as an independent airline of significance. Loganair is not an "overnight" success; it is the product of years of work and dedication. The qualities, which have brought the company this far--skill, service, enthusiasm--shall ensure Loganair's future.

History of Loganair Ltd.

Loganair Ltd., known as "Scotland's Airline," provides remote island communities in the region with a commercial lifeline, making trade and tourism feasible, and in some cases provides air ambulance service as well. Once owned by British Midland, the carrier operates regional routes on behalf of British Airways.

Loganair is known for operating the world's shortest scheduled flight--the two-minute hop between Westray and Papa Westray in the Orkneys. Another unique service, the daily flight from Glasgow to the remote island of Barra in northwest Scotland, was the only known scheduled route to land on a beach, according to Airliners World. The airline operates a fleet of Britten Norman Islander piston engine planes, two de Havilland Twin Otter turboprops, and seven Saab 340 34-passenger turboprop aircraft.

Air Taxi Origins

Loganair's origins can be traced to February 1, 1962, when Logan Construction Company Ltd. (or Duncan Logan Contracts, according to one source) started a small air taxi service in Edinburgh. The only equipment was a single Piper Aztec, the company reports.

Scheduled services were soon added to meet a readily apparent demand. In 1964, a route network was established centering on the island community of Orkney. The Shetland Islands received similar attention beginning in 1970. The company began providing air ambulance services for several remote locations in 1967. Loganair also began operating the eight-seat Britten Norman Islander that year. In addition, the airline picked up other public service contracts such as carrying mail and received government subsidies to keep some routes open.

The Royal Bank of Scotland acquired Loganair in 1968. Future company chairman Scott Grier later told The Herald the story of how one bank employee, Maisie Munn, took more than 8,500 flights visiting island communities as a kind of traveling teller. Grier also passed on tales of "Shetland ponies being stuffed into sacks" and other livestock conveyed on Loganair's earliest flights.

After British Airways (BA) was formed by the merger of British Overseas Airways Corporation (BOAC) with British European Airway (BEA) in the mid-1970s, Loganair picked up handle some of BEA's less traveled feeder routes in the area. One of these was a unique Glasgow-Barra service that had been operated by various airlines since June 1936, according to Airliner World. The only suitable landing spot at Barra, in Scotland's northwestern isles, was on the beach.

Expansion then moved to Northern Ireland, with services between Glasgow and Derry introduced in 1979. The next year, Loganair took over British Airways' Belfast-Edinburgh route.

The fleet was subsequently upgraded to Shorts 360 and Fokker Friendship aircraft. Loganair was Scotland's largest independent airline, with two dozen aircraft, reported The Guardian in January 1981. Manchester was added to the route network in the early 1980s as the company catered to increasing numbers of business travelers.

Loganair posted an annual loss of £1 million in 1982, its fourth losing year in a row. Turnover was £10 million. The airline was plying about 20 routes at the time with fifteen aircraft.

Acquired by British Midland in 1983

British Midland Group acquired control of Loganair in September 1983 for less than £1 million. The buy was part of British Midland's challenge to British Airways following BA's withdrawal of transatlantic service from Scotland. British Midland was part of the Airlines of Britain Group led by Michael Bishop.

By the late 1980s, Loganair was a leading player at the Manchester, Belfast City, and Southampton airports. The company was profitable through most of the decade and posted record income of £808,000 in 1988. In 1988, Loganair began flying its first jets: two 101-seat BAe 146 "Whisper Jets" from British Aerospace. These first saw service on the Edinburgh-Manchester route.

In 1990, Loganair was operating 18 aircraft of five different types. The carrier employed 520 people. The scheduled route network stretched as far south as Brussels. The airline also had charter operations based in Manchester for tours to southern Europe. Loganair operated the shortest scheduled air route, a 90-second trip between Westray and Papa Westray in the northern Orkney Islands, as managing director Scot Grier told the Sunday Times.

The Glasgow-Manchester route was cancelled in March 1990 after six years due to severe competition from BA. Interestingly, in taking over Loganair's schedule on this route, British Airlines simply leased the same jet Loganair had been using on it. Loganair was able to pick up the Glasgow-Leeds route in July 1990 after Capital Airways folded.

Around this time, Loganair invested £22 million in new aircraft to bolster its fleet. Loganair was the launch customer for a turboprop airliner made in Scotland. The Jetstream 41, built by British Aerospace at its Prestwick plant, seated 29 passengers. The first of the initial order of three was delivered to Loganair in November 1992.

The early 1990s were devastating years for civil aviation around the world. Nevertheless, Loganair was able to post a pre-tax profit of £500,000 million in 1990 while most airlines (including sister carrier British Midland) were posting losses. However, Loganair was unable to outmaneuver the aviation industry's recession, posting losses in 1991 and 1992. The loss of some Royal Mail contracts added to the airline's problems. A number of carriers operating in the region saw their operations restructured in the wake of the financial crisis.

Loganair cut 170 jobs. Another 80 employees were transferred to sister carrier Manx Airlines, along with eleven of its turboprop aircraft, as Airlines of Britain assigned Manx all of Loganair's routes outside the "Highlands and Islands" of Scotland.

In 1996, Airlines of Britain moved Loganair's headquarters to the Isle of Man to share an accounting department with sister company Manx Airlines. Both carriers retained their own accounts and identities.

Loganair had begun operating internal Scottish routes on behalf of British Airways in July 1994. As a BA franchisee, Loganair painted its aircraft in BA colors and began operating as British Airways Express. Though popular in America, franchise arrangements between major carriers and regional feeder airlines were relatively new to Britain, observed the Sunday Times.

Acquired by Management in 1997

A group of Loganair managers led by managing director Scott Grier completed a buyout of the company in March 1997. Grier had attempted a similar deal twice in the previous four years. The buyout did not include the carrier's heaviest routes, which former owner British Regional Airlines retained. Loganair continued flying as British Airways Express. Grier, who had first come to the airline in 1975 as an accountant, became the company's chairman and largest shareholder with a 25 percent shareholding that was eventually increased to 70 percent, according to The Herald. Former Loganair executive Trevor Bush returned from a job at British Midland to replace Grier as managing director.

The company continued to update its fleet. It began acquiring 34-seat Saab 340 turboprops in 1999 to replace its aging Shorts 360s.

Loganair carried 250,000 passengers in 2001. The company posted a pre-tax profit of £368,664 on turnover of £25 million in the fiscal year to March 31. Scotland's Business a.m. noted this was the company's best performance since its 1997 management buyout. Surviving to its fortieth anniversary was another reason for celebration. "Since we started in 1962, more than 30 airlines have come and gone," Scott Grier told Business a.m.

In 2002, Loganair's regional network expanded outside of Scotland as it took over feeder routes from British Airways. The routes connected Glasgow and Manchester to destinations in Ireland.

The expanded scheduled meant a dramatic increase in business. Loganair carried 315,000 passengers in 2003 and had a turnover of £30 million. The airline expected to have 585,000 passengers in 2004 while taking in £48 million, as Loganair acquired seven routes from BA's CitiExpress operation. Leases and pilots for four of BA's turboprops were transferred to Loganair, whose BA franchise had been extended another four years, to 2008. In April 2004, Loganair also launched service between Glasgow and Galway, the largest city on Ireland's west coast.

Principal Competitors: EasyJet Airline Company Ltd.; Highland Airways; Ryanair Holdings plc; ScotAirways.

Chronology

• Key Dates:
• 1962: Loganair is established as an air taxi service.
• 1968: Royal Bank of Scotland acquires Loganair.
• 1983: British Midland acquires a controlling interest in the company.
• 1988: The company acquires its first jets.
• 1994: Loganair becomes a British Airways affiliate in Scotland.
• 1997: Loganair is acquired by management.
• 2002: More than 300,000 passengers fly Loganair in its 40th anniversary year.