Javid dismisses Ryanair complaint over Flybe rescue package
Chancellor Sajid Javid has insisted that embattled airline Flybe has not received state aid to ensure its survival.
In a letter to Ryanair chief executive Michael O’Leary, Javid said that the decision to defer Air Passenger Duty (APD) for Flybe was a “standard ‘Time to Pay’ arrangement…because of their short-term difficulties”.
The chancellor’s letter, which was seen by Sky News, came after O’Leary threatened to sue the government for breaking state aid rules.
The Ryanair boss had called for the regional airline’s exemption from paying APD be extended to cover its fellow airlines.
“Time to Pay arrangements are open to all businesses and more than 700,000 such arrangements were in place with business and individuals last year,” Mr Javid wrote.
“These arrangements seek to support viable businesses with genuine short-term difficulties and ensure that taxes owed are paid in full.
“Indeed, were Ryanair to ever get into short-term difficulties, the company could ask for such an arrangement.”
The decision to brand Flybe’s difficulties a “short-term challenge” has infuriated airline chiefs, with outgoing International Airlines Group (IAG) boss Willie Walsh labelling the government’s decision a “blatant misuse of public funds”.
In a letter to transport secretary Grant Shapps last week, Walsh wrote: “Flybe’s precarious situation makes a mockery of the promises the airline, its shareholders and Heathrow have made about the expansion of regional flights if a third runway is built.”
IAG, which owns British Airways, also made an official complaint to the European Commission regarding the decision.
The airline group said the intervention breached EU state aid rules because taxpayers would be subsidising an airline that competes directly on BA routes.
Last week Flybe hit back at its competitors in order to correct reports that the government had deferred a tax bill of more than £100m to keep it aloft. Instead, it said, the bill was less than £10m.
HM Revenue and Customs has given the airline extra time to pay the bill.
“This agreement will only last a matter of months before all taxes and duties are paid in full,” Flybe said.
Flybe was only saved last year after a Sir Richard Branson-led consortium bought its assets in an unconventional move.
This is a breaking story and will be updated.