Ryanair court threat over Flybe tax break
MINISTERS were yesterday under mounting pressure to explain the rescue deal struck with regional airline Flybe as Ryanair boss Michael O’Leary threatened legal action.
He told Chancellor Sajid Javid in a letter that the air passenger duty (APD) “holiday” given to Flybe should be extended to all of its UK rivals.
Mr O’Leary said: “Otherwise, this Government subsidy to the billionaire owners of Flybe will be in breach of competition law and state aid rules.”
His intervention followed an official complaint filed to the European
Commission by IAG, the owner of British Airways, over the bailout which could include the deferral of an outstanding tax bill and a state-backed loan of up to £100million.
Flybe was taken over last year by a consortium comprising Sir Richard Branson’s Virgin Atlantic – 49 per cent owned by US airline Delta, Southend airport owner Stobart Group and hedge fund Cyrus Capital. Stobart said the consortium had so far provided £110million of funds and was committed to further short-term funding, with the firm contributing up to £9million.
IAG has written to the Treasury, Transport and Business departments asking if the Government is a “financial guarantor” to Flybe, has a tax deferral been agreed and what reassurances have been made.
The questions, sent in a Freedom of Information request, are being asked “due to a lack of transparency about Government involvement”.
Mr O’Leary added: “The Flybe model is not viable which is why its billionaire owners are looking for a state subsidy for their failed investment.”
He said that rivals would step in if Flybe fails. Downing Street insisted there has been no state aid to support the company.