The government saw Flybe’s collapse coming. What next?

The airline's problems go way beyond coronavirus.

Here’s what Transport Secretary Grant Shapps had to say about Flybe going into administration and their 2,000 staff being thrown out of work: “We really tried to do everything we could back at the turn of the year, but unfortunately, with the situation that’s developed with coronavirus, an already weak company just hasn’t been able to survive.”

There is some truth here, in that the Coronavirus appears to be sweeping the world and causing industrial and economic failure and a truly awful human impact. But were there really no past opportunities to correct an unfair and chaotic approach to transport in the country?

This is actually a closure that was totally predictable and expected by the government.

Bogus rescue package

The severe weakening of the pound by the UK leaving the EU has had a massive impact on the cost/profit balance of an already weak Flybe. It raised the price of leasing as well as of aviation fuel.  A ‘rescue package’ was looked at last year by the owning consortium, Connect Airways, led by Virgin Atlantic with Stobart Air and hedge fund Cyrus Capital.

They set aside £100 million for the job and requested a government loan to cover the cost. The imminence of the election late last year and the need for good news stories might have been the reason for a delayed Government decision. But only in recent weeks were they officially denied the loan by Ministers. The failure of the consortium’s broader objectives of tax reductions and loans had also become clear and their decision to close was probably made by early January.

Long term Air Passenger duty has been a bone of contention in the industry for many years, it is a form of taxation that is intended to make the passenger pay for the environmental damage of the flight. However, domestic carriers argue it unfairly penalised local flight users in comparison to long haul international flyers: short haul internal flights are charged more, but the greater overall damage to the environment is made by long haul. Successive governments have continued to increase APD without a review (while still failing to make rail travel cheaper than domestic flights).

Cash grab

A year ago, Flybe’s consortium committed to investing in the business and giving it a ‘bright future’ Nothing could be further from the truth, both the government and the consortium have sat on their hands and done nothing but wait.

This now looks like nothing but a chance to secure changes to Air Passenger Duty and some free money. Let’s not forget: the companies wanted a £100 million loan from the government, despite the consortium all being hugely wealthy concerns, with plenty to gain from tax changes.

Walking away

Perhaps the most telling comment of the day is from the union BALPA; “Throughout, pilots, cabin crew and ground staff have done their jobs brilliantly, while behind the scenes the owners and, sadly, government connived to walk away. Flybe staff will feel disgusted at this betrayal and these broken promises.”

Ryan Air and Easy Jet will be struggling any day now, as will countless other companies. There is no doubt that ‘we’ have already reassessed our attitudes to flying and travel generally. London and Northern Italy streets are empty of tourists, holidays have been cancelled and there appears to a general acceptance of ‘not going out much.’

This is good for our environment and might break our love affair with cheap foreign stag parties and other short breaks by air. Perhaps one day Britain will have a truly green, integrated transport strategy, under Labour, which will resolve many of these human and environmental issues. I live in hope. In the meantime, we have to learn from the appalling handling of this crisis.

Fiona Dent was on Labour’s Economy Commission from 2016-19, and is a former Labour candidate. She is running for the Labour NEC as a constituency representative.

As you’re here, we have something to ask you. What we do here to deliver real news is more important than ever. But there’s a problem: we need readers like you to chip in to help us survive. We deliver progressive, independent media, that challenges the right’s hateful rhetoric. Together we can find the stories that get lost.

We’re not bankrolled by billionaire donors, but rely on readers chipping in whatever they can afford to protect our independence. What we do isn’t free, and we run on a shoestring. Can you help by chipping in as little as £1 a week to help us survive? Whatever you can donate, we’re so grateful - and we will ensure your money goes as far as possible to deliver hard-hitting news.

One Response to “The government saw Flybe’s collapse coming. What next?”

Comments are closed.