Flybe lifeline

Ministers’ tax review to aid threatened airline

‘Relief for 2,400 staff’

FLYBE was thrown a lifeline last night after securing a rescue deal from the Government.

The future of Britain’s biggest regional airline had been hanging in the balance, with backers including Virgin Atlantic preparing to call in administrators.

But ministers said they had secured a commitment from Flybe’s owners to continue operating after promising to review air passenger duty on domestic flights. Plans to cut the levy – currently £26 for a return flight in the UK – could be announced in the Budget in March.

The Government has also promised to review regional transport links which will look at subsidising more flights to remote parts of the UK.

Flybe had also been trying to persuade ministers to defer a £106million air passenger duty bill until 2023. But there are concerns that could breach EU state aid rules.

A senior Whitehall source last night claimed Flybe was not set to run out of money. However, bosses were not prepared to continue racking up big losses unless they extracted commitments from the Government.

The deal was announced after 48 hours of fraught negotiations. It will come as a relief to Flybe’s 2,400 staff and tens of thousands of people who have booked flights with the airline.

Chancellor Sajid Javid said: ‘I welcome Flybe’s confirmation that they will continue to oper which ate as normal, safeguarding jobs and ensuring flights continue to serve communities across the whole of the UK.’

The Government previously refused to step in to help Monarch Airlines and Thomas Cook, collapsed in September. But allowing an airline which operates two in five UK domestic flights outside London to go under would have undermined its manifesto pledge to boost regional economies and improve connectivity outside the capital.

Airports which depend heavily on Flybe include Anglesey, Southampton, Belfast, Exeter and Newquay. Any plans to slash air passenger duty will be fiercely resisted by environmental campaigners. It is a cash cow for the Government which is set to raise £3.9billion this year.

Flybe was bought by investors, including Virgin Atlantic, for £2.8million in 2019.

They promised to invest £100million in a turnaround plan. The airline had been struggling with huge debts, fierce competition and high fuel costs, but losses have since escalated.