UK Secretary of State for Business, Energy and Industrial Strategy, Andrea Leadsom said on Tuesday that the government had to come to an agreement with shareholders of regional airline Flybe to keep the company afloat.
In a tweet, Mrs Leadsom said that the deal would be good news for the struggling companies staff, customers, while keeping regions connected.
Delighted that we have reached agreement with Flybe’s shareholders to keep the company operating, ensuring that U.K. regions remain connected. This will be welcome news for Flybe’s staff, customers and creditors and we will continue the hard work to ensure a sustainable future.— Andrea Leadsom MP (@andrealeadsom) January 14, 2020
Secretary of State for Transport Grant Schapps also confirmed that an agreement had been made while pledging that the Department for Transport will "undertake an urgent review" with the aim of strengthening regional connectivity.
Delighted we've been able to work closely with Flybe to ensure Europe’s largest regional airline is able to continue connecting communities across Britain. @transportgovuk will undertake an urgent review into how we can level up the country by strengthening regional connectivity.— Rt Hon Grant Shapps MP (@grantshapps) January 14, 2020
The BBC's Andrew Jack reported the government pledged to review air passenger duty (APD) in the run up to the budget will remain "in line with their zero carbon ambitions".
Government confirms that Flybe will continue to operate. Shareholders will put in more money. Government pledges to review air passenger duty in run up to budget but will make changes in line with their zero carbon ambitions.— Simon Jack (@BBCSimonJack) January 14, 2020
The news comes as the British-owned airline was being considered for a bailout package involving tax relief on passenger duty levies.
Sky News reported earlier on Tuesday that UK government ministers would be discussing the future of the airline and potentially delay its £106 million ($137 million) duty bill for another three years and survive the uncertain winter economic terrain.
The company was reportedly facing collapse and looking frantically for funding to keep the airline in operation.
Flybe is a major competitor with giant British Airways for domestic flights especially outside of London - namely Aberdeen, Belfast City, Manchester, and Southampton.
The myriad of issues for the company include a run on the pound following the Brexit vote and competition from other budget airlines like EasyJet, which recently said it would be opening a route from Birmingham to Edinburgh.
Airlines have highlighted taxation as imposing unnecessary cost on smaller airlines, increasing their costs and driving away customers.
Cardiff airport released a statement calling for the abolition of Air Passenger Duty and describing it as a "punitive tax".
Cardiff Airport statement regarding Flybe: pic.twitter.com/sd6rLK8NpJ— Cardiff Airport (@Cardiff_Airport) January 14, 2020
Social media users highlighted the social cost of not saving the company, specifically pointing to the 2,300 employed as well as the 2,000 who's jobs would be at risk if it were to go under.
My son has just qualified as a Flybe pilot. He regularly flies into Belfast City from Edinburgh. Been in the job a matter of weeks and now facing unemployment along with thousands of others. Heartbreaking— Alison McClelland (@nosilanotlaw) January 14, 2020
The Liberal Democrat Lords criticised the proposal to abolish APD, saying it would be "harmful to the environment.
Statements of Flybe: A reduction in APD (Air Passenger Duty) would be harmful to the environment as flying will become more frequent. Baroness Randerson argues the gov need to increase subsidies to those socially necessary routed in isolated areas.— Lib Dem Lords (@LibDemLords) January 14, 2020
Government action to save the company follows its purchase and proposed rebranding by a consortium of Virgin Atlantic, Stobart Group and Cyrus Capital purchased Flybe in February 2019.
The group promised to invest £100m and make the company profitable once more.
In September, British travel group Thomas Cook went into liquidation due to long-term financial troubles, leading to more than 600,000 holidaymakers around the world cancelling their flights.