The future of flybe. (2002) (Exeter) has been thrown into doubt once again as the UK’s newly appointed chancellor - equivalent to finance minister in other countries - may scrap a planned cut in Air Passenger Duty (APD), which had been a crucial part in a package of measures designed to help the ailing carrier, the Daily Telegraph has reported.
The airline’s supporters, including billionaire and Virgin Atlantic founder Richard Branson, have warned that a cut in the tax is essential for its survival. Every passenger is currently taxed GBP26 pounds (USD34) for a short-haul flight (under 2,000 miles or 3,220 kilometres) and GBP172 (USD224) for longer flights. The government had pledged to review the tax before presenting a new budget on March 11.
But the new chancellor, Rishi Sunak, is against a cut. A source told the Telegraph: “The change of chancellor will make it significantly less likely to happen. The message was: ‘Don’t bank on it happening’”.
It has also been claimed that the UK government is tightening its contingency plans to deal with stranded passengers if flybe collapses. It has put aviation services group Air Partner on notice to assist any stranded passengers. It has lined up the accounting services firm EY to handle a potential administration, according to the newspaper.
The flybe rescue deal, which the British government was understood to have agreed to last month, reportedly also includes a short-term deferral in having to pay GBP106 million (USD138 million) in APD, plus a possible GBP100 million (USD130 million) bridging loan. Ryanair chief executive Michael O’Leary and IAG International Airlines Group boss Willie Walsh have spoken out against the measures.
Nevertheless, talks are continuing over whether to provide flybe with a loan, the Daily Telegraph said, and transport secretary Grant Shapps is understood to be “broadly in favour” of supporting the airline.
Air Partner declined to comment, but a flybe spokesman said: “Flybe and its shareholders continue to have productive and positive discussions with the government regarding support to enable us to deliver our long-term strategic plan.”
flybe currently operates a fleet of fifty-four Dash 8-400s, nine E175s, one E195 and two ATR72-600s, according to the ch-aviation fleets module. Just under half of the fleet is owned. Of its 44 destinations, 26 are within the United Kingdom, and the remainder are in western Europe.
