SHOULD GOVERNMENT STEP IN WHERE ANGEL INVESTORS FEAR TO TREAD?
FLYBE RESCUE PLAN SETS CAT AMONG THE PIGEONS
The Government announced plans to help Flybe after the firm’s fall from financial grace and the move has sent feathers flying as competitors jostled to voice their opposition to any kind of rescue package.
And as the row continues the cases for and against are not straightforward. Not least among the issues in contention is the government’s plan to defer some of Flybe’s air passenger duty (APD) payments (potentially more than £100m).
British Airways’ owner IAG complained to the EU that the rescue breaches state aid rules while budget operators EasyJet and Ryanair lodged an objection to the taxpayer picking up the tab to save a rival.
And, as all of this is against the backdrop of concerns about climate change, the pressure groups and the rail industry have been vocal too.
Then there’s the fact that the failing company is backed by individual companies (Virgin/Delta) with deep pockets. So why should the taxpayer pick up the bill?
Criticism from environmentalists has been rapid. The government has said the review of plans involving tax will be consistent with its zero-carbon targets.
The Rail Delivery Group, which represents train operators, tipped its hat in the ring, offering the view that any review of APD that encourages more people to fly domestically would limit efforts to tackle the climate crisis.
The pressure is on and from virtually every angle.
Flybe’s situation is different to that faced by travel firm Thomas Cook, which collapsed last year. Thomas Cook had huge amounts of debt and taxpayers’ money would not have turned things around.
Flybe was kept aloft on Tuesday after the government provided support, with that deferral of a tax bill worth more than £100m. Had it decided to bail out Thomas Cook, it would have involved handing over £200m to a company which had liabilities of £9bn.
Wherever the rescue comes from its good news for the 2,400 Flybe staff whose jobs are secured with the government deal.
It’s a difficult balancing act. The financial exposure is significantly less than that offered by a Thomas Cook bail out, and jobs will be saved, but is this also an indicator that perhaps domestic air travel on Flybe’s scale in a territory as compact as mainland UK is contracting as a sort of natural selection climate concerns grow?
We’ll see.
Source BBC:
