20 JANUARY 2020
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Two Irishmen walk into a pub …
It’s the start of several familiar jokes but its slightly-altered application to last week’s turmoil over Flybe is anything but funny.
For pub, read 10 Downing Street. Appearing as the Irishmen are Willie Walsh, soon to depart as chief executive of BA’s parent company IAG, and his counterpart at Ryanair, Michael O’Leary. They are unhappy about what they see as the special treatment meted out to Flybe to save it from what most observers agreed was its impending collapse, with the consequent loss of at least 2,400 jobs.
The deal was reported to involve deferment by the government of a £100m tax bill, a possible government loan to the airline and an undertaking by ministers to review in the March Budget the impact on the aviation industry of APD.
On Friday, it was reported the deal struck by Flybe involved £10m not £100m-plus and the airline had been given “a matter of months” to pay, an arrangement Flybe described as “a standard arrangement with HMRC that any business in financial difficulties may use”. It didn’t stop the arguments. In any event APD is collected at the time of booking but not due until the flight is actualy taken, which can be many months away.
While saving an historic airline and a lot of jobs sounds a good idea to many, the rescue deal provoked a furious backlash from Walsh and O’Leary, among others. Walsh called it “a blatant misuse of public funds” and said taxpayers were being asked to pick up the bill for “mismanagement” of Flybe.
O’Leary went further and threatened legal action against the government over its rescue of an airline he said was “owned by billionaires”. In a letter to chancellor Sajid Javid, he said any APD "holiday" given to Flybe should be extended to other airlines, otherwise the deal would breach rules on state aid and competition.
In a strange twist, Flybe hardly seemed to be helping itself at the weekend when it was reported to have decided to switch its London – Newquay flights from Heathrow to Gatwick. The Times noted the flights are taxpayer-funded and said Flybe was facing a new backlash as rivals feared the decision could benefit Virgin Atlantic, one of Flybe’s main investors, because it would release slots at Heathrow, to Virgin’s advantage. That was a nonsense, as the slots are owned by British Airways part of the Lufthansa - BMI deal. Did someone forget to tell Willie?
While Walsh and O’Leary grabbed the headlines last week, the measured tones of the government statement on the affair, with its repeated emphasis on reviewing the UK’s regional connectivity, went largely unnoticed.
The statement said the review was a sign of the prime minister’s commitment to levelling up all regions of the UK and would ensure all nations and regions of the UK had the domestic transport connections local communities rely on, including regional airports.
“As part of this work and ahead of the March Budget, the Treasury will also be reviewing Air Passenger Duty to ensure regional connectivity is strengthened while meeting the UK’s climate change commitments to meet net zero by 2050,” the document continued.
“These measures featured in discussions today with Europe’s largest regional airline, Flybe, which plays an important role in the UK’s connectivity by flying regional routes that other providers do not operate.”
The statement added that in light of the discussions, Flybe had confirmed it would continue to operate as normal, “preserving flights to airports such as Southampton, Belfast and Birmingham”.
Among groups with whom the deal did find favour was the pilots’ union BALPA, which said the rescue had secured the jobs of 2,400 staff and helped regional communities which would have lost their air connectivity had the airline collapsed.
"BALPA looks forward to discussing the airline's future plans in detail with management; meanwhile, passengers can be confident that Flybe remains an excellent choice for regional flying," it added.
All comments are filtered to exclude any excesses but the Editor does not have to agree with what is being said. 100 words maximum
Simon Jones, London
If the State can support the railways (ie LNER) why not the domestic air system too? Mind you the current leader of the Labour Party might not agree with nationalising Britain’s largest domestic airline. It is true BM (Before Maggie) BEA was owned by the nation.