Flybe-9

[Cloud1]

Originally Posted by Cozy F

Lots of arguments forming here around apparent political motivation to save Flybe, when so many other private companies have been exclusively left to fail under basic market principles. Even in the air transport sector Monarch and particularly Thomas Cook provided salaries for a vast number of citizens, but were allowed to sink beyond trace without public intervention.

Rank poor, fat cat ineptitude should never be bailed out by the public purse irrespective of cosmetic arguments. The market will always facilitate the void to be filled by a sustainable business.

Certainly if Government use some form of emergency argument to bankroll Flybe short term they would need to be very transparent around the fairness and equitability of the vehicle used. For example a holiday on or total removal of domestic air tax in the UK expressly to keep Flybe in the air would need to be applied fully and equally to all other UK domestic air services - easyJet, BA, Ryanair etc. Or the scheme will be rightfully - and very likely successfully - challenged in court!

Monarch and Thomas Cook had sufficient competition which would mean customers still had a means of travelling to those destinations albeit on another carrier after folding. Such as Jet2, TUI, EasyJet and BA. There are a larger number of routes Flybe serve that are not replicated by other carriers or indeed matched in terms of frequency enabling that regional connectivity.

If the UK wants to be the self sufficient independent state it claims by leaving the EU, we need to be able to get from the south of the country to the north without incurring half a day on a train or in a car.

Flybe now needs a very tough review. I also believe there needs to be an independent enquiry as to how it has got to its current state and what continues as I hear they are still allowing staff costs to be higher than needed with inconsistent control over staff expenses. If they were to go bust I have no doubt an enquiry would be called for so may as well do that now.

Trim down the routes, adjust its business model and get the rebrand done ASAP as the name Flybe now has even more negative connotation sadly.

[LTNman]

BBC Radio 4 'Today' programme reporting that the govt is looking at abolishing APD for all domestic routes - as well as helping BE, helps their 'regional connectivity' agenda. Nice windfall for BA, etc..

If true so much for trying to reduce UK air travel and helping to reduce pollution not that I ever liked the tax but it did serve a purpose in reducing demand. This if proposed as a Flybe only deal would be banned by the EU although I would just tell the EU to get stuffed as we are leaving anyway so get over it.

[Jonty]

It shouldn’t be allowed as a Flybe only deal. If you want to reduce APD on domestic routes then it has to be for every carrier, not just Flybe.

[Copenhagen]

Originally Posted by LTNman

If true so much for trying to reduce UK air travel and helping to reduce pollution not that I ever liked the tax but it did serve a purpose in reducing demand. This is being proposed as a Flybe only deal would be banned by the EU although I would just tell the EU to get stuffed as we are leaving anyway so get over it.

It was obviously a tax take, dressed as an environmental benefit.

You can't just tell the EU to get stuffed. It's either all of Europe or none of Europe. That's the law.

​​​​​​

[AirportPlanner1]

Originally Posted by LTNman

If true so much for trying to reduce UK air travel and helping to reduce pollution not that I ever liked the tax but it did serve a purpose in reducing demand. This is being proposed as a Flybe only deal would be banned by the EU although I would just tell the EU to get stuffed as we are leaving anyway so get over it.

The problem LTNman is that I’m guessing you like myself live in the south in close proximity to London market and more specifically have a busy airport nearby. The tax was always very London-centric, the assumption being that because we can jump on a train to almost anywhere everyone can and should. Our viewpoint may be very different were we to be residing in Exeter or Isle of Man.

One good thing about our new Government is their fragile landslide which comes only from the midlands/north will hopefully force some better and tangible regional policy.

[LTNman]

It’s a tough call. Other EU countries ignore EU law while we follow the rules. Surely we will be unleashed next year to follow our own path but then no doubt the EU will still think they have full control over a sovereign nation that is outside the EU if we want a trade deal.

The EU position is that for Flybe to get a domestic concession then all airlines get a concession so giving tax breaks to profitable airlines like Easyjet and BA.

UK airports follow different rules as Inverness for example is exempted while Aberdeen gets the tax added to their domestic flights.

[ETOPS]

As you can imagine the frontline staff at Flybe are very upset at the news of millions of pounds of tax being owed to the UK Gov. This has come as a complete suprise as most employees would have little knowledge of the accountancy procedures and would have assumed that APD was being forwarded in the normal way.
It really hasn't been mentioned before this weekend.
Many are still worried about their jobs and can't understand how this situation has been allowed to build up.
Questions will need to be answered by the directors.

[SWBKCB]

Originally Posted by Jonty

It shouldn’t be allowed as a Flybe only deal. If you want to reduce APD on domestic routes then it has to be for every carrier, not just Flybe.

Consideration of removal of APD on all domestic routes is what was being reported.

[onion]

Taxes can be deferred, question is have they already previously deferred tax (I havent seen the accounts) .
It then becomes a question of what is the likelihood of paying the deferred amount, are there other creditors, do they have any fixed and floating charges, what are the assets.

[fatmed]

Originally Posted by Jonty

It shouldn’t be allowed as a Flybe only deal. If you want to reduce APD on domestic routes then it has to be for every carrier, not just Flybe.

IIRC Grant Shapps (transport sec) was fairly close to the previous Stobart group CEO. Not sure if he has a relationship with the current board still, this may explain the government helpfulness with this ?? Pure speculation on my part thou.

[toscana24]

Originally Posted by onion

Taxes can be deferred, question is have they already previously deferred tax (I havent seen the accounts) .
It then becomes a question of what is the likelihood of paying the deferred amount, are there other creditors, do they have any fixed and floating charges, what are the assets.

Air passenger duty is paid by passengers in advance - i.e. when they buy their tickets - the amounts collected should be remitted to the Govt via a monthly return. That actually helps the cash flow of businesses BUT it is not money an airline should use for their own business purposes; to do so to my mind is a "criminal" misuse of APD paid by a pax to Govt via the airline. If, as is being reported, BE owe £100m, someone should be held accountable. No one likes paying APD (or any taxes) but when a businesses diverts taxes to keep themselves afloat that is clearly wrong.

[SWBKCB]

Grant Shapps is well down the food chain on this one, so won't be calling the shots.

BBC - Flybe: UK air passenger duty cut considered to save airline

The government is to consider cutting air passenger duty on all domestic flights as part of a plan to save regional airline Flybe from collapse.

Improving connectivity outside of London was a key Conservative manifesto pledge and at least one of Flybe's routes, between Newquay and London, is subsidised by the government.

The amount depends on the destination and class of travel. Under current rules, passengers on domestic flights pay £13 in APD for a single journey, with higher rates for longer flights and premium cabins.
Flybe is a long-time critic of air passenger duty which it said disproportionately burdens its domestic customers because they have to pay it each time they take off from a UK airport.

As there is already differentiated rates for different classes/flight lengths, there should be no problem setting a separate rate (i.e. zero!) for domestic flights.

[Gurnard]

Originally Posted by toscana24

Air passenger duty is paid by passengers in advance - i.e. when they buy their tickets - the amounts collected should be remitted to the Govt via a monthly return. That actually helps the cash flow of businesses BUT it is not money an airline should use for their own business purposes; to do so to my mind is a "criminal" misuse of APD paid by a pax to Govt via the airline. If, as is being reported, BE owe £100m, someone should be held accountable. No one likes paying APD (or any taxes) but when a businesses diverts taxes to keep themselves afloat that is clearly wrong.

Absolutely. But how is this scheme going to work? Passenger A booked a domestic flight for a date in March (for instance) and has already paid APD. Passenger B books the same flight after APD has been abolished. Presumably Passenger A has no hope of a refund from the Government. It would be an administrative nightmare to work out anyway. Many will be disgruntled.

[Skipness One Foxtrot]

Originally Posted by AirportPlanner1

One good thing about our new Government is their fragile landslide which comes only from the midlands/north will hopefully force some better and tangible regional policy.

“Fragile landslide”? You win the internet for today!
Key issue here is the collateral damage flybe going bust would cause to the lives of voters, especially places outside of London which we are assured do exist. (Cheeky, but you see my point.)

it’s the English equivalent of Loganair going bust, it’s too much of a key part of too many people’s lives.

[Asturias56]

" too much of a key part of too many people’s lives"

I really really doubt that. If it was so important why are they in a hole? Like all other airlines that go bust in 3 months people won't remember them (except on this website)

If there IS a need then someone else will try and fill it - hopefully without using tax payers money.

[ETOPS]

Quick bit of maths - 8 million passengers and £13 APD makes £104 million tax. Thus the £100 mil figure being bandied about is a whole years APD tax that hasn't been sent to the HMRC How has that situation been allowed to develope? Surely the tax man would have noticed the lack of income from this airline?

[Wycombe]

Originally Posted by ETOPS

Quick bit of maths - 8 million passengers and £13 APD makes £104 million tax. Thus the £100 mil figure being bandied about is a whole years APD tax that hasn't been sent to the HMRC How has that situation been allowed to develope? Surely the tax man would have noticed the lack of income from this airline?

Pretty shocking, but very poor senior management at Flybe has been a way of life for quite a few years now.

Sadly, the people at the coalface, who mostly provide great service, and the Customers (many of whom no doubt do rely on the "lifeline" nature of some of BEE's services) will be the ones to suffer if a solution can't be found.

For the sake of all of the latter I hope it can.

[DomyDom]

Originally Posted by LTNman

It’s a tough call. Other EU countries ignore EU law while we follow the rules. Surely we will be unleashed next year to follow our own path but then no doubt the EU will still think they have full control over a sovereign nation that is outside the EU if we want a trade deal.

The EU position is that for Flybe to get a domestic concession then all airlines get a concession so giving tax breaks to profitable airlines like Easyjet and BA.

UK airports follow different rules as Inverness for example is exempted while Aberdeen gets the tax added to their domestic flights.

Not sure it's true EU countries ignore the law while we follow rules. All the EU insists on is a level playing field if we want to operate in their market. That will continue after Brexit. Playing devils advocate why should Flybe be given public subsidies if Ryanair and Eastjet aren't? However there is nothing in EU rules that prevents any member state from implementing tax arrangements that happen to favour domestic service providers as other countries do in other areas. It was the UK's decision to impose and increase APD after all, nothing to do with the EU.

[MDS]

Outrageous that the government are even considering this.

What other business would be allowed to keep £100m+ in tax because it's struggling to stay afloat? I'm sick and tired of big businesses trying to privatize profit and publicize losses. There should be a full investigation as to why they've been allowed to withhold over a year of tax payments!

Mothercare had a similar amount of staff -- why weren't they allowed to pocket the VAT collected on sales to allow them to continue business? Because it's bonkers, that's why.

If Flybe provides a needed service with a high loadfactor (which I believe it does) then another company will be able to set up and perform, or alternatively another airline will take those routes over.

Besides this tidy corporate welfare handout to the Virgin consortium, what's going to miraculously change at Flybe to allow it to continue? What happens next year when they're burnt through the cash?

Yes, it's sad for the frontline staff but the government shouldn't be in the business of emotional corporate welfare. If Flybe as a business can't perform its duties due to poor business decision then it needs to fail. Simple.

[DomyDom]

Originally Posted by LTNman

If true so much for trying to reduce UK air travel and helping to reduce pollution not that I ever liked the tax but it did serve a purpose in reducing demand. This if proposed as a Flybe only deal would be banned by the EU although I would just tell the EU to get stuffed as we are leaving anyway so get over it.

I don't see why a deal that would happen to assist domestic operators would be banned by the EU. Other EU countries have arrangements like this and comply with EU law as long as there is a level playing field. Presumably Flybe and other UK airlines will still want to fly into the EU next year so just telling them to get stuffed isn't realistic.