The British government reached a deal Tuesday to save Flybe, whose network includes more than half of British domestic flights outside of London. Though full details were not revealed, the government said it would review a tax slapped on flights that many airline groups have long complained restricts growth.
Flybe shareholders also agreed to inject extra capital into the business. British Airways' owner, International Airlines Group (IAG), filed a complaint with the European Union over the government's decision. Britain's Press Association reported that IAG has claimed the Flybe rescue deal breaches state aid rules, giving the airline an unfair advantage.
“The government is fully compliant with state aid rules. There has been no state aid to Flybe,” Johnson’s spokesman, James Slack, said Wednesday. He said the government’s tax office had a record of support for “viable businesses with genuine short-term difficulties.” Slack said there was nothing unusual in British tax authorities giving businesses more time to pay their bills - some 700,000 arrangements were in force at the end of the 2018-2019 financial year.
"The actions we have taken will support and enhance regional connectivity across the UK so local communities have the domestic transport connections they rely on,'' Slack said. "Any changes implemented as a result of our reviews of air passenger duty and regional connectivity will apply to all airlines in the competitive aviation market," he added.
Flybe has a major presence at airports such as Aberdeen, Belfast City, Manchester and Southampton, and flies some 9 million passengers a year to 170 destinations across the continent. Its connectivity in some difficult-to-reach spots in the UK is among its most important selling points to the government.