Flybe collapse averted after Government announces review of Air Passenger Duty

Flybe's collapse has been avoided after the Government told the airline it would review air passenger duty (APD) and shareholders agreed to add additional investment.
Photo: Pete Byrne/PA Wire — Flybe's collapse has been avoided after the Government told the airline it would review air passenger duty (APD) and shareholders agreed to add additional investment. Photo: Pete Byrne/PA Wire

The Treasury announced on Tuesday, January 14 that the carrier would continue operating after the review of the tax featured in rescue talks.

Campaigners warned Boris Johnson that any air passenger duty (APD) review that leads to cheaper air travel would be a "complete scandal" and "rip up" the Prime Minister's pledge to show leadership on the climate crisis.

The emergency agreement seeks to prevent Flybe becoming the second UK carrier to fail in four months after Thomas Cook went bust in September.

The airline’s 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".

It was also reported that Willie Walsh, chief executive of International Airlines Group which owns British Airways, has written to Transport Secretary Grant Shapps questioning the deal.

In a letter seen by the BBC, Mr Walsh asked why the taxpayer was being asked to foot the bill as one of Flybe's biggest shareholders was Virgin Atlantic, which is part-owned by US avaiation giant Delta.

Flybe's shareholders also agreed to a cash injection - understood to be in the region on tens of millions of pounds - to keep it in business "alongside Government initiatives".

The airline, which operates from both Newcastle and Teesside International Airports, would not comment when asked if the Treasury had separately agreed to the deferral of a portion of the airline's outstanding tax bill over a period of months.

Chancellor Sajid Javid added: "I welcome Flybe's confirmation that they will continue to operate as normal, safeguarding jobs in 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."

The Treasury said the APD review ahead of the March Budget would consider the UK's climate commitments to meet net zero greenhouse gas emissions by 2050.