IAG International Airlines Group has filed a complaint with the European Union’s Directorate-General for Competition over the UK government's rescue of flybe. (2002) (BE, Exeter), asking it to look into whether the support breaches EU rules on state aid.

Willie Walsh, chief executive of the British Airways (BA, London Heathrow) parent, has publicly criticised the bailout agreed by the UK government on January 14, saying that UK taxpayers were footing the bill for the consequences of flybe.'s mismanagement.

Taxpayers will be subsidising an airline that competes directly on BA and Aer Lingus (EI, Dublin Int'l) routes, he argued, telling the news agency Reuters in an emailed statement on January 15: "This is a blatant misuse of public funds." One of flybe.'s biggest shareholders is BA’s old rival Virgin Atlantic (VS, London Heathrow).

IAG wrote to the Directorate-General that the rescue, which could include a GBP100 million pound (USD130 million) loan and the deferral of an outstanding GBP106 million (USD138 million) tax bill related to the UK's Air Passenger Duty (APD), contravenes state aid rules.

easyJet (U2, London Luton) CEO Johan Lundgren said it was hard to comment given the lack of detail about the support but added that "taxpayers should not be used to bail out individual companies especially when they are backed by well-funded businesses," Reuters reported.

The European Commission responded that it was ready to discuss the bailout, warning that any state aid must not distort competition.

“As with all member states, we stand ready to discuss with the UK the compatibility and proposed public measures with EU state aid rules,” Arianna Podesta, a commission spokeswoman said at a news conference. “In general [...] any state aid intervention needs to be designed so that competition is not distorted and a level playing field is maintained.”

Meanwhile, the British government has insisted its support for flybe. is compliant with state aid regulations.

"The government is fully compliant with state aid rules and there has been no state aid for flybe. Any support that is given would be made on strictly commercial terms,” a spokesman for Prime Minister Boris Johnson told a news conference on January 15, adding that any proposed changes to APD would apply to all airlines.