Flybe’s rivals scrambled to fill the void left by Europe’s biggest regional airline on Thursday, launching replacement services for half of its main routes within hours of the company’s collapse.
Scottish airline Loganair took over 16 of the 45 core winter services previously run by Flybe, while Hull-based Eastern Airways took a further three.
Channel Islands carrier Blue Islands said the 13 daily services it had previously run on Flybe’s behalf would be uninterrupted with industry sources expecting it to take on about eight routes.
Meanwhile Downing Street said ministers were exploring options to maintain loss-making services.
Flybe fell into administration in the early hours of Thursday morning after a government rescue collapsed.
Bookings plummeted as coronavirus rips across Europe, leaving Flybe shareholders – including Sir Richard Branson’s Virgin Atlantic – unwilling to support the airline.
According to Flybe boss Mark Anderson, the Sir Richard Branson-backed airline spurned the chance to inject fresh cash into Flybe amid concerns about plummeting demand for its own flights.
The parlous state of Flybe’s finances was brought sharply into focus as it emerged the carrier was just days from being able to cash in lucrative landing slots at Heathrow.
Sources said a regulatory moratorium on the airline being able to trade the slots – which could have been worth tens of millions of pounds – was due to be lifted at the end of this month.
Its chief executive, Mark Anderson, said Britain had “lost one of its greatest regional assets”.
About 2,300 airline staff are threatened with redundancy with more than 1,300 pensioners at risk of losing their retirement savings.
Loganair boss Jonathan Hinkles said: “It is clearly a sad day for the industry as a whole but particularly for the people of Flybe. We have been able to contingency plan since the most recent signs of trouble at Flybe emerged in January.
“It is a backdrop to the fact that the aviation market will find its own level. If you get to a point where there are Flybe routes that are no longer served by anybody, then that is the answer – that they probably shouldn’t have served in the first place.”
Larger airlines such as easyJet and British Airways remained on the sidelines but are primed to pick up any slack. Roughly two in five domestic routes run by easyJet overlapped with Flybe, meaning it was ready to increase services to meet demand.
While Flybe ran a total of 120 routes, industry sources said that more than half were infrequent, once-a-week, or summer-only services.
One senior UK airline executive said they expected about 80pc of Flybe’s capacity to be covered within a week.
The race to deal with Flybe’s void came as global airline shares were further savaged.
The International Air Transport Association warned the coronavirus will cost the industry between $63bn and $113bn (£86bn) in lost revenue from passengers.
The forecast was nearly four times the size of the IATA’s previous $30bn estimate made less than a fortnight earlier. The body said the outbreak’s international spread had severely affected routes beyond China.
The association warned that in a worst-case scenario in which the disease spread more widely, revenues could drop by almost a fifth – equivalent to the hit experienced during the financial crash, with southeast Asia and western Europe the worst-affected areas.
IATA chief Alexandre de Juniac said the sector was facing “extraordinary times”.
“Many airlines are cutting capacity and taking emergency measures to reduce costs. As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation,” he said.
The sector led falls on Wall Street when US trading began, further dragging down the S&P airline index, which is at its lowest level since 2016. In London, Tui dropped 7.2pc, IAG fell 5.3pc and easyJet lost 4.4pc.
US carrier Southwest Airlines also warned that a fall in bookings will hit its first-quarter revenue.
Meanwhile, Transport Secretary Grant Shapps wrote to Britain’s aviation regulators urging them to relax rules that would otherwise force airlines to fly “ghost flight” in order to hold on to take off and landing slots.