UPDATE 1-UK to consider tax cut on domestic flights to help Flybe -BBC

(Adds detail, background)

LONDON, Jan 14 (Reuters) - Britain could cut air passenger
taxes on all domestic flights to help rescue struggling regional
airline Flybe, the BBC reported on Tuesday.

Finance minister Sajid Javid will meet later with
representatives from the Department for Transport (DfT) and
Business to discuss the tax and a possible deferring of Flybe's
bill, the corporation said.

A possible deal could allow Flybe to defer a payment of more
than 100 million pounds ($130 million) for three years,
according to Sky News. Under the plan, Flybe's owners would be
required to invest tens of millions of pounds in fresh equity
into the company as a condition of any deal.

Flybe's flights appeared to be operating as normal on
Tuesday, a day after news reports emerged suggesting it needed
to quickly raise new funds to help it survive through the winter
when demand for travel is lower.

That has heaped pressure on Prime Minister Boris Johnson's
government which was elected in December. His Conservative party
won new seats across regions served by Flybe, helped by a
promise to improve connectivity between UK cities beyond London.

Flybe's network of routes include more than half of UK
domestic flights outside London.

Based in Exeter, south west England, it connects smaller
cities such as Southampton to Newcastle and carries 8 million
passengers a year between 71 airports in the UK and Europe.

Air Passenger Duty is a tax of at least 13 pounds levied by
the UK government on passengers departing from UK airports which
the aviation industry has long opposed as making them less
competitive compared to their European rivals.

Flybe has in the past argued that the tax disproportionately
affects it, making its flights more expensive compared to its
rail and road competitors, because passengers travelling on
return flights within the UK will pay it twice.

The DfT and Flybe declined to comment, while the finance
department could not immediately be reached for comment.

Should the government cut APD for domestic UK flights, other
airlines such as easyJet and British Airways,
which fly routes such as London to Edinburgh, would also
benefit.

Flybe has 68 aircraft and about 2,000 staff and was already
struggling financially when it was bought by Connect Airways, a
consortium created by Virgin Atlantic, Stobart Group
and investment adviser Cyrus Capital for $2.8 mln last year.

The airline, due to be rebranded Virgin Connect later this
year, has suffered as the fuel price has risen in recent months,
and news stories about its demise could cause a cash flow
squeeze as potential customers stop booking.

Should Flybe collapse, it would be the second high-profile
failure in Britain's travel industry in less than six months
after Thomas Cook went into liquidation last September,
stranding thousands of passengers.

That followed the collapse of UK holiday airline Monarch in
2017 and Flybe competitor FlyBMI last year.
($1 = 0.7699 pounds)
(Reporting by Sarah Young, Editing by Paul Sandle and Kate
Holton)