Economies of scale see bmi regional and Loganair merge to create new airline group

Aberdeen-based bmi regional and Glasgow-based Loganair, two regional UK carriers, are to merge and form a new holding company, Airline Investments Limited (AIL). AIL now becomes a regional airline group having 46 aircraft which carry approximately 1.5 million passengers on an annual basis. The two airlines currently turn over around £200 million (US$310m).
The combination will see both airlines retain their autonomy in many respects, but as they are currently owned by the same people, economies of scale make it a sensible move to see them come under one roof. Stephen and Peter Bond are the principal investors in AIL; the brothers having originally been the owners of Bond Aviation, a major UK helicopter operator.
Bmi regional at present has a fleet of 18 Embraer ERJ-135 and 145 regional jets operating across 10 European countries, while Loganair operates 28 aircraft—mainly Saab 340s, but also Saab 2000s and Dornier 328s, as well as DHC-6 Twin Otters and Britten-Norman islanders which are used for specialized services in Scotland’s Northern and Western Isles.
A spokesman for AIL is quoted as saying that “Since bmi regional and Loganair have a single owner, the time was right to place them within a corporate structure that reflected this.
“The airlines will continue to operate as separate businesses within their own markets with their own management teams, brand identities and route networks, including their established franchise and codeshare arrangements.
“Bringing the two sister airlines together under the AIL Group structure does create opportunities to capitalize upon the combined scale of the enterprise in terms of natural efficiencies and economies of scale that will enhance both carriers.”
Peter Simpson, previously managing director of British Airways’ operation at London Gatwick Airport, will be the new group’s CEO. He has stated that “The opportunity to run the AIL Group, building on the turnaround program at bmi regional and the continued success of Loganair is very exciting.
“The AIL Group now has substantial size and reach; each brand has tremendous partnerships in their respective market. The two airlines operate in clear niche markets in vital roles such as feeding traffic to mainline carrier networks like Lufthansa, Brussels Airlines and British Airways, with Loganair operating a successful franchise with major regional carrier Flybe.”