In a significant turn of events, the ailing airline Flybe has averted a collapse following the announcement that a rescue deal has been agreed with its investors and the government. The UK’s Business Secretary of State for Business, Energy and Industrial Strategy Andrea Leadsom confirmed the government deal on Tuesday 14 January.
Early reports suggest that shareholders will stump up more money for the loss-making airline while the government has agreed to reduce the level of Air Passenger Duty (APD) paid by the regional carrier in order to stimulate demand. At £13 per person on short-haul flights the UK’s APD – which is levied against each adult passenger on every flight departing from the UK (excluding Northern Ireland and the Scottish Highlands) – is the highest in the EU.
The agreement is welcome news for Flybe’s staff, customers, regional airports and communities served by the airline. Referencing today’s agreement Leadsom stated that she was “delighted we have reached an agreement with Flybe’s shareholders to keep the company operating, ensuring that UK regions remain connected.”
Meanwhile a statement on Twitter from Flybe, who had previously refused to speculate on the situation, read: “We are delighted with the support received from the Government and the positive outcome for our people, our customers and the UK. Flybe remains committed to providing exceptional air connectivity for the UK regions with the full support of its shareholders.”
The government has also agreed the need to review the way that APD is applied to domestic flights throughout the UK.
“Delighted we’ve been able to work closely with Flybe to ensure Europe’s largest regional airline is able to continue connecting communities across Britain,” said Transport Secretary Grant Shapps. He added that the Department for Transport “will undertake an urgent review into how we can level up the country by strengthening regional connectivity.”
While many have applauded the government’s commitment to review APD on domestic flights in the UK, the news has angered climate activists who argue that removing this tax in the face of climate change would be “irresponsible” and “an act of vandalism”.