Government confirms Flybe will continue to operate
Shareholders agree to put in more money
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Your support makes all the difference.Britain’s biggest regional airline, Flybe, will continue to operate after rescue talks with the Government proved successful.
“Delighted that we have reached agreement with Flybe’s shareholders to keep the company operating, ensuring that UK regions remain connected,” said business secretary Andrea Leadsom. “This will be welcome news for Flybe’s staff, customers and creditors and we will continue the hard work to ensure a sustainable future.”
Flybe’s shareholders have agreed to invest more money in the airline, according to BBC business editor Simon Jack.
He tweeted: “Government pledges to review air passenger duty in run up to budget but will make changes in line with their zero carbon ambitions.”
Molly Scott Cato, Green MEP for South West England, said:
As evidence of the accelerating climate emergency intensifies, it is absurd to suggest that we should provide a further boost to the aviation industry. To encourage flying in this way is dangerous and irresponsible as climate change jeopardises the lives of future generations.
It is also illogical to determine the policy for a whole industry on the basis of one failing airline. It looks suspiciously like the government is using the failure of Flybe as an excuse to deliver on a dubious manifesto commitment to improve regional connectivity while conveniently blaming EU state aid rules.
This is misinformation because any routes that are socially necessary could attract subsidy and be exempt under these rules.
Of course it is always horrible to be on the receiving end of redundancies. But the cold reality is that many jobs in aviation and other fossil fuel based industries simply aren’t sustainable. This is why we urgently need a Green New Deal to train workers to transition to the environmentally and socially beneficial jobs of the future.
Rather than using subsidies to artificially prop up a financially and environmentally unsustainable business, the government should transfer aviation subsidies to rail travel to increase and improve regional and local rail networks and reduce fares.
Alexandra Phillips, Green MEP for South East England, called the attempt to cut Air Passenger Duty "an act of climate sabotage".
"Let's be real about this: we need more tax on frequent flying, and to build a transport infrastructure which makes domestic flights redundant within the next few few years," she added.
Insolvency barrister James Morgan QC of Radcliffe Chambers said:
If the tax is not cut or that does not remedy Flybe’s financial problems, there is the real possibility it will go into administration.
The primary purpose of administration is to rescue the company as a going concern, but usually this is not possible leaving the administrators to realise assets for the benefit of creditors. Secured debt is paid first leaving unsecured creditors at the bottom of the pile.
Tim Alderslade, chief executive of trade body Airlines UK, said:
One of the advantages of leaving the EU is the possibility of cutting or removing APD on domestic travel. It’s an anomaly that particularly hurts regional aviation as it’s levied on both legs of a return journey. Irrespective of the Flybe situation we hope the Government will take a closer look at this – and all other elements of our ruinously high and uncompetitive APD – as we need to support our strategically vital regional air connectivity and levying £26 in tax when – in the case of Flybe – the average fare is £52 – is not sustainable when so many other costs on airlines are increasing.
APD is not and never has been an environmental tax. It has no bearing on the ability of the aviation industry to decarbonise and achieve net zero emissions by 2050. This will be achieved via a range of other measures, including airspace modernisation, the development of sustainable aviation fuels, new, cleaner planes, and the UN carbon offsetting scheme CORSIA, which captures growth in all emissions from international aviation and will mitigate around 2.5 billion tonnes of CO2 between 2021 and 2035.
Unsure what Air Passenger Duty is – and how much it is?
The Independent's Simon Calder has put together a handy Q&A.
Speaking about Flybe, the shadow transport secretary, Andy McDonald, said:
The government must avoid feathering the nest of the new consortium, Virgin Atlantic and the Stobart Group. Surely they knew the scale of the financial challenges facing them when they acquired the business.
Slashing Airport [sic] Passenger Duty across the board would make a mockery of the government's supposed commitment to climate emissions.
Following the news that the UK government is rumoured to be considering changes to air passenger duty as Flybe’s future hangs in the balance, Nick Wyatt, head of R&A and travel and tourism at data and analytics company GlobalData, says:
The government finds itself in an unenviable position. On the one hand, the Conservatives put at the heart of their manifesto a pledge to improve connectivity outside of London. On the other, the UK is committed to reducing carbon emissions.
Flybe is important in delivering connectivity across the UK and Prime Minister Boris Johnson knows this. The decision he and his cabinet face is whether that importance is greater than environmental commitments and much needed tax revenue to fund public services.
Meanwhile, Storm Brendan has brought heavy rain and strong winds to Scotland, the Irish Sea and the West of England, disrupting ferries and trains.
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