Flybe’s collapse has prompted mixed response from the UK government, unions and investors. We review the key comment and insight from this emerging story.
Last month, Westminster approved a £100m loan and deferred Flybe’s Air Passenger Duty (APD) obligations to keep the carrier afloat, but the developing coronavirus threat impacted the already financially vulnerable airline.
Transport secretary Grant Shapps, tweeted: “We are urgently working with [the airline] industry to identify how key routes can be re-established by other airlines as soon as possible.”
But union leaders reacted angrily to the news. Brian Strutton, BALPA General Secretary said: “Six weeks ago, when the ownership consortium lost confidence, the government promised a rescue package, apparently at that time recognising the value of Flybe to the regional economy of the UK… sadly, Government connived to walk away. Flybe staff will feel disgusted at this betrayal and these broken promises.”
Nadine Houghton, GMB National Officer added: "The collapse of Flybe is a tragedy for the company’s loyal workforce. A domino effect now puts 1,400 jobs in the wider supply chain at immediate risk and threatens the future of vital regional airports.
“The last thing regions crying out for investment need is to see infrastructure that maintains good jobs ripped away. We need the Government to urgently step in and save jobs wherever possible. The damage to already fragile local economies must be minimised."
Flybe is owned by Connect Airways, a consortium made up of Cyrus Capital Partners, Stobart Group and Richard Branson's Virgin Atlantic – itself, half-owned by US giant Delta Airlines. Virgin intervened in 2019 to prevent the collapse but has now withdrawn all financial support.
A Virgin Atlantic spokesman said the consortium had invested more than £135m to keep the airline flying for an extra year, maintaining 2,400 jobs and ensuring flights continued. This amount includes approximately £25m of the £30m committed in January, alongside a “time to pay” arrangement with the Treasury for APD of £3.8m.
However, the government’s handling of APD has come in for near-universal criticism.
Tim Alderslade, chief executive of Airlines UK, the industry body representing UK-registered airlines, said: “This is now the fourth UK airline to go out of business in two years. APD is the prime example of a disproportionate and penalising policy that is actively holding us back. Leaving the EU presents ministers with opportunities to intervene - for example getting rid of the double domestic APD anomaly… with next week’s Budget presenting the perfect opportunity.”
The UK government’s support had also angered the bosses of rival airlines. Speaking earlier this year, Michael O'Leary, CEO of Ryanair Group questioned why taxpayers were being asked to pay for a company owned by three of the industry's richest billionaires. “If Branson and Delta won't put their hands in their pockets, why should the taxpayer?” O'Leary told The Times.
Willie Walsh, head of the airline group IAG, also blasted the government’s pledge as a “blatant misuse of public funds” and additionally called on Delta Air Lines to rescue its sister airline.
Steve Double, Conservative MP for St Austell and Newquay on Twitter said: “This is a real blow for [Cornwall Newquay Airport] local businesses and Flybe staff. I will be working with [Department of Transport] to secure government support for our London route and find a new operator as soon as possible.”
Labour MP Ben Bradshaw, whose constituency includes Exeter Airport, where Flybe is headquartered, also took to social media: "A devastating day for [Flybe] staff, uncertainty for passengers and big blow to our local and regional economy. Why did the Government say [Flybe] was vital to regional connectivity last month and promise to reform Air Passenger Duty in next week's budget ... to apparently break that promise, which was the last straw for the company.”