(Alliance News) - UK Chancellor of the Exchequer Rishi Sunak could abandon a controversial overhaul of air passenger duty agreed as part of a rescue deal for Flybe, putting the regional airline's future into jeopardy, the Telegraph reported late Monday.
The new chancellor is against a cut to the tax, the newspaper said, citing "industry sources". His predecessor, Sajid Javid, had backed a reduction in the tax to help keep Flybe afloat.
According to the Telegraph, one source said: "The change of chancellor will make it significantly less likely to happen. The message was: 'Don't bank on it happening.'"
https://www.telegraph.co.uk/business/2020/02/17/ministers-could-backtrack-crucial-flybe-tax-cut/
Back in January, Flybe struck a deal with the UK government for a reprieve of air passenger duty to stave off collapse.
Flybe is owned by Connect Airways, a joint venture among Stobart Group Ltd, Virgin Atlantic and investment adviser Cyrus Capital Partners. It said at the time that the reprieve from HMRC "will only last a matter of months, before all taxes and duties are paid in full".
"A payment plan was agreed with HMRC for a debt of less than GBP10 million. This is a standard time to pay arrangement with HMRC that any business in financial difficulties may use," Flybe said last month.
However, the arrangement has drawn the ire of competitors, including British Airways-owner International Consolidated Airlines Group SA and Ryanair Holdings PLC. Both have written to the UK government asking for more information about the deal that was struck with Flybe and asking for the tax reprieve to be extended to all air carriers.
Stobart shares were up 0.8% at 92.20 pence in London on Tuesday morning.
By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
