News | Published January 15 2020

IAG chief Walsh condemns government bailout of Flybe

Willie Walsh, the chief executive of British Airways owner IAG, has branded the government rescue of rival airline Flybe “a misuse of public funds”.

Three cabinet ministers including transport secretary Grant Shapps, business secretary Andrea Leadsom and chancellor Sajid Javid, approved the deal.

Although the full terms of the bailout have not been revealed, it is thought that they include deferrals on Flybe’s Air Passenger Duty payments, which are thought to be more than £100 million.

Walsh aired his views in a letter to Shapps, arguing that the consortium which owns Flybe, which includes Virgin Atlantic and Delta Air Lines, has sufficient resources and that government support should not have been provided.

Flybe's consortium of owners are known to be investing around £20 million into Flybe to supplement government measures.

Walsh’s letter reads: “Prior to the acquisition of Flybe by the consortium which includes Virgin/Delta, Flybe argued for tax payers to fund its operations by subsidising regional routes.

"Virgin/Delta now want the taxpayer to pick up the tab for their mismanagement of the airline. This is a blatant misuse of public funds.

"Flybe's precarious situation makes a mockery of the promises the airline, its shareholders and Heathrow have made about the expansion of regional flights if a third runway is built.”

Despite the opposition from industry rivals, trade body Airline UK's policy director Rob Griggs backed the deal, arguing that deferring on duty payments does not constitute receipt of public money.

General secretary of the British Airline Pilots Association union, Brian Strutton, said that the deal was positive news.

Strutton 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”.

Lucien Farrell, who chairs the Connect Airways group which owns Flybe, said: "We are very encouraged with recent developments, especially the government's recognition of the importance of Flybe to communities and businesses across the UK and the desire to strengthen regional connectivity.”

The trio of ministers approving the bailout have also committed to carrying out a future review on on air passenger duties imposed on domestic flights, reassuring that it will be kept in line with the government's own net zero carbon goals.

Caroline Lucas, the Green Party leader, has criticised the move.

Lucas tweeted: “Addressing Flybe problems by reducing Air Passenger Duty on all domestic flights is utterly inconsistent with any serious commitment to tackle the Climate Crisis.

"Domestic flights need to be reduced, not made cheaper.”

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Authored by

Scott Challinor
Business Editor
January 15 2020

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