Flybe-9

[22/04]

This is a mess. What proportion of Flybe's routes can bee deemed essential If they are they should be identified and operated under some kind of PSO agreement and as a taxpayer I would support that. Bit I can't support help being given to take wealthy pensioners for example to their second home in France under the same umbrella. That is giving Flybe competitive advantage as an entity when compared with competitors.

I can't help thinking that in its present form Flybe is not able to be saved and it is better to start with a clean sheet - or maybe several different sheets.

[JSCL]

There seems to be confusion in postings here.. how I see this is quite simple;

- Flybe shareholders when it was publicly traded were pushed in to a deal to accept the Connect offer due to the cash injection needed to turn the business around.

- Said cash injection hasn't actually come to fruition and I wonder if the markets authority might have something to say about this given this was the basis of the takeover offer that led to many shareholders losing substantial sums of cash.

- A lot of commentary here and elsewhere about how 'wrong' this is. But read carefully, it is a proposed 3 year deferral and not outright allowing them to get away without paying the last 12 months of APD.

- Gov insisting investment is made to a certain level if they do this, guaranteeing the turnaround required.

- Followup to that is a suggested marketwide reduction or potential abolishment of APD on domestic travel that will benefit all domestic flying airfares across all airlines. This is good for business and the economy generally.

- All this commentary about climate change, nothing will change. The fact is that a majority of Flybe's services succeed because there is no alternative or the alternative requires substantial increase in journey time.

I see nothing wrong with what is being proposed here and the EU will certainly have no input on supporting industry-wide domestic fares through APD as it isnt an EU tax, its country specific. If you cant see that this is not only good news, but the right decision for Flybe and the UK.. then I'm at a loss.

[willy wombat]

Yes, it’s not as if all FlyBe’s routes are “lifeline” ones. LHREDI, LHRABZ, LCYEDI, BHXEDI/GLA, SOUEDI/GLA not exactly lifeline and these are probably some of the routes with the highest number of pax and thus the largest amount of APD collected but not remitted.

[willy wombat]

Also, APD in Scotland is surely devolved to the Scottish Government so wouldn’t wee Nicola have to agree ant deal? She’ll probably demand an indyref as a quid pro quo.

[SealinkBF]

Originally Posted by True Blue

why was this money not paid over? I know of lots of coffee shops etc that collected VAT from customers, didn't pay it over and when they were found out, they were bankrupted by HMRC. How do you describe money collected from passengers, but not paid as expected to HMRC? I hope this outfit don't survive and I realise the implications of what I am saying for all the staff involved. That does not make me proud. But the top management here knew what they were doing and I don't believe this money will ever be paid. But no doubt the top management have continued to collect their top salaries.

Disgusted.

VAT is a whole different ballgame. VAT inspectors have more powers than the police.

But it is odd that Flybe have been allowed to sit on £106m which isn't theirs. I wrongly assumed it would be paid monthly (in line with how travel agents pay via Bank Settlement Plan) or even quarterly. £106m seems like a huge amount of back APD

[Gurnard]

Originally Posted by 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.

Very well put. Every sympathy for the dedicated Flybe staff, but none for unethical management. Grossly unjust for the Government to even think of stepping in here when big names on the High Street (such as Mothercare) have had no such preferential treatment.

[01475]

Well... It's a chancer's world. Who would have ever believed you could try and pull a stunt as cheeky as this and have it given serious consideration?

[SWBKCB]

But it is odd that Flybe have been allowed to sit on £106m which isn't theirs. I wrongly assumed it would be paid monthly (in line with how travel agents pay via Bank Settlement Plan) or even quarterly. £106m seems like a huge amount of back APD

Is it confirmed they have? I read it that they are looking to defer future payments??

[GayFriendly]

Bit I can't support help being given to take wealthy pensioners for example to their second home in France under the same umbrella. That is giving Flybe competitive advantage as an entity when compared with competitors.[/QUOTE]
[QUOTE]

I totally get this bit - the vast majority of said customers will be Conservative Party voters!

Having worked as cabin crew for Flybe, regional French flights attract a much wider range of passengers than many people think, yes second home owners but also families going on villa/gite holidays, specialist tour package groups and also a fair few students studying in the UK going back home for Uni holidays,

[OneBellEnd]

Bottom line, this money has been collected from consumers by flybe on behalf of HMRC. It is NOT flybe's to keep!

Furthermore, if a ham-fisted bail-out is agreed here on some altruistic basis solely to maintain flybe's 'essential UK regional connectivity', the whole process will open up a massive can of worms unless carriers like easyJet and Ryanair get equivalent tax break support in the same markets. Otherwise suppliers in the chain like airports and handlers who are providing basement charges to promote and sustain growth on these routes with the low cost airlines would not only end up supporting their own business and faciltating a take for Treasury, they would also indirectly and totally unsustainably finish up propping flybe's business! Where would the unravelling within the industry end!??? .

[GCILover]

Not only would the shut down of flybe be disasterous to the front line staff who give it there all. There is also the likes of all the staff at airports like SOU who for whatever reason mainly depend on the likes of flybe. Without them, there would also be god knows how many airport staff surplus to requirements that would also be out of work.

Yes! the management need to be held accountable, but this would be unbearable for more than just flybe staff.

[inOban]

The DofT has its own train division which steps in to run franchises when the private sector pulls out - its currently operating LNER. They should do the same for PSO routes. But only them. The only routes from Edinburgh or Glasgow that are necessary, and should be viable, are those to SOU, Exeter and cardif, which cannot be reached on business for a day visit by any other means.

[c52]

Agree with the above by inOban.

Am I a terrible cynic to think that a £100m loan from the government will mostly end up in someone's pocket as the airline goes out of business a few months later?

[Skipness One Foxtrot]

I suspect the management knew the business was unsustainable and beyond help, the question is how you manage that fact. Sometimes you can come into a failing business and say all the right things about turning it around, but enthusiasm and ambition are not enough. A re-brand of an existing incomplete re-brand is a pointer to lack of strategic direction. A revolving door at senior level is another, and the rapid opening and closing and reopening of routes and bases can show how a business is ruthless about making money, but in this case shows a lack of belief in what;s going to work, as every way they turned, the results were underwhelming against their debt.
Shareholder value has gone, indeed the very rationale for being in business at all has been changed as they now want to be a feeder for a larger brand but the mechanism to accomplish this on the scale needed just is not there.

However it's very political now and given the PM's intent to re-balance towards the regions, you can see how flybe threw the dice and screamed "The regions will blame you if you don't let us pocket the tax we collected!" It's sneaky but it will probably work.

[116d]

Originally Posted by 22/04

This is a mess. What proportion of Flybe's routes can bee deemed essential If they are they should be identified and operated under some kind of PSO agreement and as a taxpayer I would support that.

The thing is a route doesn't necessarily have to qualify for PSO status to be seen as a "lifeline" route. If you ask me, the IOM routes are lifelines in one way as Flybe are the biggest airline out of there and only have competition on one route, as well as holding a contract to transport medical patients to the UK for treatment that's not available in the Isle of Man (now that is literally a lifeline depending on the case).

[116d]

Originally Posted by Gurnard

Very well put. Every sympathy for the dedicated Flybe staff, but none for unethical management. Grossly unjust for the Government to even think of stepping in here when big names on the High Street (such as Mothercare) have had no such preferential treatment.

People can cope without the likes of Mothercare (with all due respect to those who are now unemployed due to their demise) as baby products can be bought elsewhere. The same can't be said for some of the routes and airports Flybe serves.

That's not me advocating government intervention per se, just merely pointing out there's no comparison between the two.

[V12]

Originally Posted by GCILover

Not only would the shut down of flybe be disasterous to the front line staff who give it there all. There is also the likes of all the staff at airports like SOU who for whatever reason mainly depend on the likes of flybe. Without them, there would also be god knows how many airport staff surplus to requirements that would also be out of work.

Yes! the management need to be held accountable, but this would be unbearable for more than just flybe staff.

Too right! Regional airports and regional airlines struggle to survive as it is: take FlyBe out of BHD, SOU, NQY, EXT, JER, and IOM, and it will be curtains for regional passengers over time. Yes we can lose FlyBe from LHR and maybe MAN/BHX and others will fill any hole. For me the question is how to keep the essential regional business routes open. EG: To get from GLA to SOU and back in a day is going to be 5hr+ compared to 1.5hr atm. But don't think any route that can't support a 319 is going to be picked up and served well over the medium term by any other airline. Most UK Regionals have gone bust already, in case you haven't noticed. And you can't recreate these routes with Loganair and Eastern. And trains on such routes are ludicrously expensive and slow. EDI to EXT by train is typically 8hr each way, so a half day business meeting becomes a 3 day jaunt, not a day return.
The regional airport/airline business model is already pretty much broken, with FlyBe being the last remaining comprehensive offering, fast disappearing. A swathe of Q400s parked up and available on the cheap is not going to entice other airline investors to rush in and grab.
I think there is a place for Govt to assist regional air connections (away from LON/SE), and help all airlines and potential airlines to maintain key non-LON trunk routes, whilst letting the peripheral French ones go. Otherwise remote communities are going to need more Govt support, and many thousands will need long term unemployment benefits.
(Similarly if FlyBe fails the CI residents will suffer: AUR isn't that healthy, and ACI has already seen its service deteriorate.)
That said it's a tall order to subsidise and yet avoid boosting the profits of other airlines and the pockets of airline investors, and keeping the green agenda going. Above my pay grade, that one.

[flyerguy]

So I have just been watching parliament live on sky news, at first they seemed very happy to back an ADP review but then it quickly turned to changing the provider of the PSO routes should the worse happen today

[LTNman]

I am watching the debate on the Parliamentary channel. The more I hear the more I feel the government should not intervene. The same MP’s that want the airline bailed out also want the government to cut emissions. The airline is a business and this government does not prop up failed businesses.

[toledoashley]

Originally Posted by LTNman

I am watching the debate on the Parliamentary channel. The more I hear the more I feel the government should not intervene. The same MP’s that want the airline bailed out also want the government to cut emissions. The airline is a business and this government does not prop up failed businesses.

I absolutely agree, but given a lot of the network provides valuable links for many communities the government should have a plan on how to maintain service, especially to Northern Ireland, Isle of Man, Cornwall and the Channel islands (even Southampton). Maybe reduce APD, provide local subsidies for the most important services... Keeping flyBe on life support shouldn't be the only option on the table.