Emergency talks will take place on Tuesday between the chancellor, Sajid Javid, and the business and transport departments, amid attempts to ensure the survival of Flybe, Europe’s largest regional carrier.
The government is considering whether to cut air passenger duty on all domestic flights, allowing the Exeter-based airline to defer a tax bill of about £100m for three years. The rescue proposal would give Flybe time to implement a turnaround plan, and would also avoid a breach of EU state aid rules.
Flybe operates almost two in five British domestic flights, and 2,000 jobs are at risk if the company fails, just a year after it was rescued by a consortium led by Virgin Atlantic.
The air passenger duty proposals have attracted criticism from environmental groups and campaigners. Greenpeace UK’s chief scientist, Doug Parr, tweeted that cutting air passenger duty “encourages flying and should not be messed with [or] reduced in order to save a struggling airline”. “If this becomes response of govt confronting tricky industrial issue, can be little hope for UK decarbonisation efforts.”
Air passenger duty is charged on each passenger on a flight departing from the UK, and is set according to the distance of their final destination.
The Scottish government abandoned its controversial plans to scrap aviation tax in 2019, after it introduced a pledge to cut Scotland’s carbon emissions to net zero by 2045.
Regional connections within the UK could be at risk if Flybe collapses, the chairman of Newquay airport told the BBC. Tim Jeans told Radio 4’s Today programme that competitors would not necessarily rush to replace some of the airline’s routes.
“Flybe are by far and away the largest UK domestic airline and there are relatively few other players in that market. The routes that it flies are too small for EasyJet and Ryanair with their 150- to 180-seat aircraft,” he said.
Flybe flights were operating as normal on Tuesday morning.