Mark Anderson, the Chief Executive Officer of Connect Airways, the parent of once-again struggling Flybe, has sent a letter to British ministers, reiterating the airline’s request to cut taxes related to aviation, specifically the Air Passenger Duty (APD) tax.
Anderson, arguing that regional routes would be left abandoned if Flybe were to collapse, proposed to reduce the APD rate to half, or $8.3 (£6.50).
“If Flybe were to cease trading, only a small number of our routes are likely to be taken up by another carrier, almost certainly at reduced frequencies.”
The regional carrier is responsible for over 50% of the total traffic in some airports in the United Kingdom, including such airports as Southampton Airport (SOU), where Flybe carries 90% of the total traffic. In addition, the company operates some regional routes that, as Anderson argues, could be converted into Public Service Obligation (PSO) routes, meaning Flybe would receive a government subsidy to operate them and make them commercially viable.
Sources close to the matter indicate that the airline has enough cash to keep running until the end of March. However, the survival after the said month depends “firstly on the APD reform,” according to Sky News.
Connect Airways consortium, comprising of Virgin Atlantic, Stobart Aviation and Cyrus Capital Partners, took over the struggling Flybe in early 2019. In July 2019, the European Union approved the deal and a few months after, in October 2019, Virgin Atlantic announced the rebranding of the regional airline to Virgin Connect.
In January 2020, rumors of the impending collapse of the airline began to emerge. The British government, reportedly, delayed Air Passenger Duty tax payments and considered a commercial loan worth $129 million (£100 million) to help the regional airline, prompting negative reactions from some of Flybe’s competitor CEOs, including Ryanair’s own Michael O’Leary and International Airlines Group (IAG) (IAG) Chief Executive Willie Walsh.