Flybe: Boris Johnson keeps options open on air passenger duty cut
Boris Johnson has fuelled further speculation that the government will cut air passenger duty on domestic flights in a bid to keep struggling regional airline Flybe aloft.
The Prime Minister said that although he does not see it as the government’s role to bail companies out, Flybe was important for people getting around the country.
Read more: What do we know so far about Flybe’s ‘near collapse’
Speaking to the BBC, he said: “Well, it’s not for government to step in and save companies that simply run into trouble.
“But be in no doubt that we see the importance of Flybe in delivering connectivity across the whole United Kingdom.
“It’s very important, for instance, where I was yesterday in Northern Ireland.”
When pressed on what the government might do, he replied: “I can’t go into commercially confident discussions … We’re working very hard to do what we can. But obviously people will understand that there are limits commercially to what a government can do to rescue any particular firm.
“But what we will do is ensure that we have the regional connectivity that this country needs, and that is part of our agenda of uniting and levelling up.”
The statement comes after reports that chancellor Sajid Javid could lower the tax as he meets officials at the business and transport departments today.
Such a change would allow Flybe to defer its tax bill, put a rescue plan in place and save 2,000 jobs.
Flybe faces an annual APD bill running to tens of millions of pounds.
The airline could call in administrators as soon as today if the government does not agree to the deferral.
The cash crunch was triggered after two of Connect’s shareholders – Southend Airport-owner Stobart Group and hedge fund Cyrus Capital Partners – expressed reservations about a plan to inject £100m into Flybe in the coming year.
Government’s climate credentials under fire
However, the suggestion has drawn criticism from environmental groups and the City alike for damaging the government’s credibility on its pledge to fight climate change, and being expensive.
Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “The notion doesn’t just dent the government’s claims to prioritise the climate, it could gouge a bit of a hole in the budget finances too.
“Slashing the rate could mean Sajid Javid having to try to find hundreds of millions of pounds lying around somewhere to plug the gap.”
Greenpeace UK policy director Dr Doug Parr said: “This is a poorly thought out policy that should be immediately grounded.
“The government cannot claim to be a global leader on tackling the climate emergency one day, then making the most carbon-intensive kind of travel cheaper the next.”
However, aviation industry figures have praised the idea and urged the government to do all it can to save the 2,400-job company.
Brian Strutton, general secretary of pilots’ union Balpa, said: “If Flybe didn’t exist, it would have to be invented.
Read more: Troubled airline Flybe insists flights continue as normal amid survival funding talks
“The airline plays an incredibly important role connecting the regions and nations of the UK and onwards to Europe.”
Alana Gomez, a spokesperson for flight-comparison site Jetcost, said: “Flybe is a hugely important airline for many areas of the UK and its passengers and air passenger duty is equally as vital in helping to reduce our collective carbon footprint, we would recommend that other measures are looked at first, but ultimately it’s great to see the government doing what they can to save an airline.”