United Kingdom
United States
Asia Pacific
Flybe bailout opens a can of worms
The Government’s decision to step in and save Flybe was a bold but risky move, says Ian Bell, head of travel and tourism for business advisory service group RSM. Here he explains why.
"The financial difficulties facing Flybe have set the new Government an early test. In responding to the crisis, Boris Johnson has had the unenviable task of balancing the competing priorities of honouring election promises to promote regional connectivity, sticking to climate change commitments, staying on the right side of EU state aid rules and protecting the tax take.
While the details of the support package are not yet clear, the suggested forbearance on Air Passenger Duty (APD) payments and the promise of a review to decrease domestic APD are both unprecedented.
While the move will be a great relief to the 2,400 Flybe employees, it has already provoked howls of protest from competitors and environmental campaigners alike. It also raises questions about previous governments’ decisions not to support other struggling businesses and increases the likelihood that other distressed companies could go cap in hand to the government in the future.
There is also a risk that delaying collection of APD is simply a case of kicking the can down the road to keep the flights in the air. What happens if and when the cash runs out again?
In its review of APD, the Government will be very keen to avoid criticism that it is not taking its carbon reduction commitments seriously. It will also be keen not to reduce tax receipts. One outcome could be a rejigging of the APD rate bands so that longer haul flights incur a higher charge to offset the money lost through a reduction to APD on domestic routes. This is a risk that the travel sector will need to monitor closely.
There could also be unintended consequences from a reduction in domestic APD – notably an increase in demand for regional flights as prices become more competitive than equivalent train fares. This wouldn’t be a good look for a Government keen to burnish its green credentials."
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
Tony from Gatto’s Pizza on Columbus’s Unique Pizza Trail
Sophia Hyder Hock on Global Social Inclusion in Tourism
Sustainable Tourism: Don Welsh on Community Values and Global Collaboration
Jane Cunningham: Enhancing European Engagement in Tourism
Kristin Dunne: Navigating Destination Strategy
Revolutionizing Mobile Connectivity: Boris Bijlstra on HUBBY eSIM
Capturing Glasgow’s Vibrancy: An Interview with Susan Deighan, Chief Executive of Glasgow Life
Lebua Hotel & Resorts: Rajan Khurana on Hospitality and Bangkok’s Charms
Sustainable Tourism and Growth: Insights from Chiravadee Khunsub from Tourism Authority of Thailand
Revolutionizing Travel: SmartSIM USA’s Dale Takio Unveils the Power of E Sims
TravelMole Interview with Hishan Singhawansa, Deputy CEO of Cinnamon Hotels & Resorts, Sri Lanka
Unveiling the Essence of Magari Tours: A Dive into Authentic Italian Experiences
Abercrombie & Kent hails $500 million funding boost
British Airways passengers endure 11-hour 'flight to nowhere'
CLIA: Anti-cruise demos could cause itinerary changes in Europe
Gatwick braces for strike
Co-pilot faints, easyJet flight issues ‘red alert’