British Airways f lies into a rage over Flybe

Airline bosses say ministers’ rescue deal for struggling rival flouts state aid rules

FURIOUS bosses at British Airways have complained to the European Union after regional airline Flybe was offered a government rescue deal.

International Airlines Group (IAG), which owns BA, said the package flouted state aid rules and called on Brussels to intervene.

IAG boss Willie Walsh blasted the deal, saying it was a ‘blatant misuse of public funds’. His comments were echoed by other rivals, including Ryanair and EasyJet, which questioned why Flybe needed taxpayer support when it had deeppocketed backers such as Virgin Atlantic’s Sir Richard Branson.

Ryanair complained in a letter to Chancellor Sajid Javid, saying the deal was illegal and unfairly favoured ‘a financially profligate airline’ over others.

But Downing Street insisted there had been ‘no state aid to Flybe’ and claimed all support given to the firm would be on ‘strictly commercial terms’.

The row erupted after ministers hastily agreed a support package for Flybe – Europe’s biggest independent regional airline – following weekend reports that the loss-making firm was on the verge of going bust.

Ministers agreed to delay some of Flybe’s air passenger duty (APD) payments and to consider giving it a government loan, while also promising a review of APD, raising the prospect that it could be slashed for domestic flights.

In exchange, Flybe owner Connect Airways – a consortium made up of Virgin Atlantic, Cyrus Capital and Stobart Air – agreed to pump £20 million into the business.

But Mr Walsh, 58, said the deal was an attempt by Flybe and its owners to get taxpayers to partly ‘fund its operations’. He added: ‘They now want the taxpayer to pick up the tab for their mismanagement of the airline. This is a blatant misuse of public funds.’

An IAG spokesman said: ‘IAG has submitted a complaint to the EU Competition directorate about the state aid that the UK Government has granted to Flybe.’

EU state aid rules, which are designed to stop governments from distorting competition, ban financial support to individual companies without approval from the European Commission.

And although Britain is set to leave the bloc on January 31, it will still be bound by laws from Brussels – including those on state aid – until a transition period ends on December 31.

Eoin Kealy, Ryanair’s head of competition and regulatory affairs, told Mr Javid: ‘We trust that the UK Government will not act in a manner that unlawfully favours a financially profligate airline over other airlines that offer UK passengers low fares and reliable service.’ EasyJet boss Johan Lundgren said: ‘We do not support state funding of carriers.’

Whitehall sources said officials had carefully considered whether the deal breached state aid rules and were confident it did not.

Business Secretary Andrea Leadsom told BBC Breakfast: ‘The Government isn’t in the market to bail out private companies.

‘What we do, on a case by case basis, is look to see whether a business is viable. The difference, for example, between Flybe and Thomas Cook was that in the case of Thomas Cook... it was not a viable company.’

Flybe and Virgin Atlantic declined to comment.