Flybe saved – Airline collapse avoided as government says it will review air passenger duty
PUBLISHED: 09:55 15 January 2020 | UPDATED: 09:56 15 January 2020
Flybe’s collapse has been averted after the Government told the airline it would review air passenger duty (APD).
The Treasury announced on Tuesday (January 14) evening the loss-making carrier, based in Exeter, would continue operating after the review of the tax featured in rescue talks.
Environmental groups have warned cutting APD would hamper efforts to combat the climate crisis, while airlines claim that it restricts connectivity and passenger growth.
Flybe, Europe's largest regional carrier, confirmed it will 'continue to operate as normal' following the deal.
The emergency agreement seeks to prevent Flybe becoming the second UK carrier to fail in four months after Thomas Cook went bust in September.
Chancellor Sajid Javid said: "I welcome Flybe's confirmation that they will continue to operate as normal, safeguarding jobs in the UK and ensuring flights continue to serve communities across the whole of the UK.
"The reviews we are announcing today will help level up our economy. They will ensure that regional connections not only continue but flourish in the years to come - so that every nation and region can fulfil its potential."
Business Secretary Andrea Leadsom said she was 'delighted that we have managed to reach an agreement with Flybe shareholders to keep the company in operation'.
Flybe chief executive Mark Anderson welcomed the deal as a 'positive outcome for the UK' which 'will allow us to focus on delivering for our customers and planning for the future'.
Transport Secretary Grant Shapps said his department will 'undertake an urgent review into how we can level up the country by strengthening regional connectivity'.
Mr Javid had been holding talks with colleagues to decide whether to let Flybe defer its estimated £106 million APD bill for three years or whether the tax should be cut for all domestic flights, according to multiple reports.
Passengers on domestic flights pay £26 in APD for a return trip, with higher rates for longer flights and premium cabins.
The tax is expected to be worth £3.7 billion to the Treasury in 2019/20.
The British Airline Pilots' Association (Balpa) said: "This is good news for 2,400 Flybe staff whose jobs are secured and regional communities who would have lost their air connectivity without Flybe."