Third UK airline collapse in three years threatens as Flybe nears bankruptcy
Source: https://www.insider.co.uk/news/flybe-aberdeen-newcastle-flights-times-13870564
Updated to reflect the developments of January 15th.
If asked, most would tell you that a British airline in financial trouble is old news. Just four months ago, UK tour operator Thomas Cook’s sudden bankruptcy announcement left 600,000 travellers stranded and 21,000 employees out of work. Many might also think of Monarch Airlines’ collapse two years prior, in October 2017.
Yet on Monday, Sky News reported that another British airline, Exeter-based Flybe, was on the brink of insolvency. Running nearly 40% of domestic flights in Britain, the importance of Flybe to British commuters cannot be overstated. It operates out of 26 destinations in the British isles—more than almost any other carrier—and 30 in Europe, providing accessible, competitively-priced travel options for 8 million passengers each year. Reporting from Cornwall, The Guardian explained how, tired of poor rail and road services into major economic hubs, many Cornish inhabitants regularly rely on the airline for transport to work destinations. Workers commuting to or from relatively small locations have few other options: on Monday, for example, Flybe was operating 32 of 37 flights out of George Best Belfast City airport.
UK trade unions and MPs have urged the government to do “whatever it takes” to ensure the airline’s survival. Brian Strutton, the general secretary of the national pilots’ union, Balpa, said that the “government must recognise that the UK cannot afford to lose yet another airline, and the markets that Flybe serves [he later cited cities such as Exeter, Southhampton, Birmingham, and Cardiff] cannot afford to lose their air connections which help businesses thrive.” The sentiment was echoed by major MPs, such as shadow transport secretary Andy McDonald.
Last February, Flybe staved off seemingly imminent financial troubles by selling to Virgin under the plan to streamline and rebrand the smaller airline as part of Virgin Connect, with the £100m roll out scheduled for later this year. Virgin’s own struggles have, however, led to Flybe’s continued losses, meaning that emergency government aid is now sought.
Whether the government steps in is a major question. Flybe is of course a major facilitator of UK business. Yet, there may also be hesitancy to pump public cash into a private company bought less than a year ago by owners confident enough to set aside £100m for its improvement. If a deal is to be struck, the government must be prudent not to given Virgin and its partners undeserved aid. Equal or lower risk should be shouldered by public money—that’s only fair.
UPDATE: On Wednesday, the government stepped in and made clear it would work with Flybe on a repayment plan for their significant tax debt, with the understanding that the Virgin owners would continue with their plan to invest in streamlining their subsidiary. The CEO of International Airlines Group, the company who owns both British Airways and Aer Lingus, dubbed the agreement a misapplication of taxpayer money, asking why public funds should be used to right a floundering airline. UK Business Secretary Andrea Leadsom, meanwhile, praised her team’s decision, reciting Flybe’s importance for regional connectivity and economy. Leadsom continued that she believes the new deal will keep the airline functional for UK commuters for the foreseeable future.
