Boris Johnson accused of a ‘taxpayer bailout for Richard Branson’ over Flybe rescue package
Boris Johnson has been accused of handing Richard Branson a “taxpayer bailout” after the Government agreed a rescue package to save Flybe.
The entrepreneur’s company Virgin Atlantic is part of a consortium which owns the beleaguered airline, which was set to fold until the Government agreed a £106million bailout.
It is understood the deal could see the rate of Air Passenger Duty reduced in order to cut the size of the company's bill.
Business Secretary Andrea Leadsom said the package, which includes a repayment plan for a £100m tax debt, would help to protect jobs and give the firm a "sustainable" future.
But Shadow Transport Secretary Andy McDonald said any review of Air Passenger Duty “makes a mockery of the Government's climate commitments.”
He said: “This is another taxpayer bailout for Richard Branson from the Tories.
“The Government needs to come clean on the restructuring plan, which must include the trade unions, agreed as part of the deal.
“Any cuts to Air Passenger Duty will encourage the small number of wealthy frequent flyers who are responsible for 70% of all trips to fly even more, increasing carbon emissions.”
Liberal Democrat transport spokesperson Munira Wilson said: "Boris Johnson's decision to bail out Flybe is a misuse of taxpayers' money to say the least.
“If Flybe is a failing business, then it is not the right business to run these routes.
"The fact that the Tories are considering cutting air passenger duty is even worse.
“Our planet is under threat, yet this Conservative Government is offering to cut taxes for high-polluting aviation instead of investing in rail."
And British Airways owner International Airlines Group has filed a complaint with the European Union arguing the rescue deal state aid rules.
The firm’s departing boss Willie Walsh said it "makes a mockery" of previous promises by Flybe about regional flights in the UK.
But a Downing Street spokesman defended the Flybe package, saying: “The actions we’ve taken will support and enhance regional connectivity across the UK, so local communities have the domestic transport connections they rely on.
“Any changes implemented as a result of our reviews of Air Passenger Duty and regional connectivity will apply to all airlines in the competitive aviation market.”
Hitting back against BA’s claims, the PM’s spokesman said: “The Government is fully compliant with state aid rules.
“There has been no state aid to Flybe.”