The BBC reported today that the government will consider cutting air passenger duty on domestic flights as part of a plan to save regional airline Flybe, after it was suggested by Sky News that the airline is in crunch talks for emergency funding.
The government will also reportedly consider measures including short-term funding for the airline.
The airline’s future is hanging in the balance once again after avoiding insolvency last year. To save it, the government could cut air passenger duty across the whole swathe of the UK airline industry, because of rules which make it difficult to give the carrier special treatment.
The claim has been condemned by environmental groups, who said this move would be “reckless” given the work already in place to prevent climate change.
The change would allow Flybe to defer its tax bill, design a rescue plan, and secure more than 2,000 jobs.
EY is on standby to handle any potential liquidation, Sky said.
Prime minister Boris Johnson told the BBC today, there is “no doubt” about the importance of Flybe.
This comes after Sky News reported that Flybe, which has already been saved from collapse once, has been struggling to secure fresh finance. The possible deal over air passenger duty could see Flybe defer a payment of £106m for three years.
The UK government has been urged by the pilot’s union, Balpa, to do “whatever it takes” to ensure the survival of Flybe.
Brian Strutton, Balpa’s general secretary, said: “If Flybe didn’t exist, it would have to be invented. The importance of that regional connectivity cannot be overstated.”
He said cities such as Exeter, Southampton, Birmingham and Cardiff relied on Flybe for air links and economic prosperity, while Northern Ireland, the Channel Islands and the Isle of Man would also suffer if the routes suddenly disappeared.
“The government must recognise that the UK cannot afford to lose yet another airline, and the markets that Flybe serves cannot afford to lose their air connections which help businesses thrive. So we urge the government to take every possible action to keep Flybe flying.”
Based in Exeter, Flybe carries about eight million passengers a year from airports including Southampton, Cardiff and Aberdeen, to the UK and Europe.
Its network of routes includes more than half of UK domestic flights outside London.
If the business collapses, a staggering 2,000 airline jobs will be at risk.
The shadow transport secretary, Andy McDonald, said: “Flybe is a hugely important airline for UK domestic aviation and its financial predicament is a real concern.”
The airline could become the third significant airline collapse in the UK in less than two and a half years, following the failure of Monarch Airlines in October 2017 and Thomas Cook in September 2019.
Flybe boss Mark Anderson told staff on the 13th January that he and the management team remained “focused” on turning the airline around:
“We continue to operate as normal … I do appreciate that the headlines are disturbing but I want you to know that we are determined to do everything we can to make this work.
“What I now ask from all of us is that we all remain focused on our responsibilities and continue to work and support each other as a team to deliver what we know we can do.”
Image: Flybe media
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