Fabulous Flybe flies again – but at what cost?

Simon Calder
Purple patch: a Flybe Q400, just arrived at Edinburgh airport: Simon Calder

Flybe shareholders may have watched the value of the regional airline plummet from £250m to zero in just nine years, but the fleet of purple planes continues to connect 20,000 passengers a day.

And earlier this week – if politicians are a proxy for the nation – it seemed as though we had all become besotted with the Exeter-based carrier.

On Monday morning, Flybe’s 2,300 staff (plus passengers holding around half a million advance reservations for flights on the airline) woke to an uncertain future. Last-ditch talks were under way with the government to try to rescue the troubled firm.

For the next 48 hours, MPs jostled to see who could lavish the most praise on Flybe – an airline cherished for providing what the transport secretary, Grant Shapps, called “valued services, connecting communities across the UK”.

So smitten with fabulous Flybe was the chancellor that he granted the airline its own tax holiday. No need to pass on the odd £10m in air passenger duty (APD) collected from passengers just yet, said Sajid Javid. (If you face a tax bill at the end of January, you might want to ask HMRC for a financial mini-break of your own.)

The airline’s owners – a consortium comprising Virgin Atlantic, Stobart Group and a US investment fund, Cyrus Capital – can expect another gift in Mr Javid’s Budget in March, when APD is likely to be cut for domestic flights.

Yet as terrified viewers of the BBC’s Dracula trilogy will testify, not being completely dead isn’t necessarily the same thing as being alive and well.

Perhaps smelling blood, Michael O’Leary, chief executive of Ryanair, said: “Flybe has lurched from reconstruction to reconstruction and has never been profitable or viable.”

Johan Lundgren, chief executive of easyJet, also sank his teeth into Flybe, saying: “Taxpayers should not be used to bail out individual companies, especially when they are backed by well-funded businesses.”

Ferocious competition from easyJet has intensified the suffering of Flybe. Bristol, for example, looks a natural hub for the purple planes, on routes such as Belfast, Edinburgh and Newcastle. But they have all turned orange.

Meanwhile Willie Walsh, ultimate boss of British Airways, saw red. He lambasted the Flybe rescue deal as “a misuse of public funds” and has complained to the European Commission in Brussels about what he calls illegal state aid.

Mr Walsh has a point. Could the UK government be following the Mediterranean model of propping up “zombie” airlines such as Cyprus Airways (now deceased) and Alitalia (eternally undead)?

Rome’s eternal subsidies of the still-twitching national airline have done no favours to Italy’s travellers and taxpayers.

In contrast, the UK – with a not-dissimilar population and geography – has the most flourishing airline market in the world.

The battlefield of British aviation is littered with the corpses of domestic airlines such as Air Southwest, FlyBMI and Little Red. It’s a cut-throat business. And the victor is the traveller.

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