Michael O’Leary lambasts UK bailout of Flybe

Ryanair boss said legal action could be brought over rescue of ‘chronically loss-making airline’

Ryanair’s Michael O Leary said the UK government’s rescue of Flybe was a badly thought out bailout. Photograph: Collins

Ryanair’s Michael O Leary said the UK government’s rescue of Flybe was a badly thought out bailout. Photograph: Collins

 

Ryanair boss Michael O’Leary has lambasted Britain’s bailout of Flybe, describing it as a breach of competition and state aid laws.

In an open letter addressed to the UK’s chancellor of the exchequer, Sajid Javid, Mr O’Leary laid out his concern and shock at the UK state rescue of Flybe, which he said “represents a badly thought out bailout of a chronically loss-making airline model in the UK”.

Regional carrier Flybe narrowly averted collapse on Tuesday after the UK government said it would review air passenger duty (APD), a tax charged on passengers at a certain rate depending on their final destination. On Wednesday, the UK government said it would review APD to “ensure regional connectivity is strengthened while meeting the UK’s climate change commitments”.

“These measures featured in discussions today with Europe’s largest regional airline, Flybe, which plays an important role in the UK’s connectivity by flying regional routes that other providers do not operate,” the UK government said.

Flybe has reportedly been told it will not have to pay APD for a certain period of time, or what Ryanair called a “holiday” for between one and two years. Mr O’Leary called on Mr Javid to extend this “holiday to all competitor airlines of Flybe in the UK, including Ryanair, Easyjet BA and many others”.

“Unlike Flybe, we all operate profitable business models (without the benefit of being owned by billionaires like Richard Branson, Delta Airlines and Cyrus Capital), and we must be treated the same as Flybe if fair competition is to exist between all airlines operating to and from the UK,” he wrote.

Willie Walsh

Mr O’Leary’s comments follow the condemnation on Wednesday from Willie Walsh, the chief executive of Aer-Lingus owner IAG, of the deal. Mr Walsh described the move as a “blatant misuse of public funds” and said the British taxpayer was effectively picking up the tab for mismanagement of the airline.

Ryanair warned Mr Javid that if he doesn’t confirm what state supports have been granted to Flybe within the next week, it intends to launch proceedings against the UK government “for breach of UK and EU competition law, and breach of state aid rules”.

Mr O’Leary rubbished the argument that Flybe provides unique connectivity for the UK regions, saying airlines such as “Ryanair, Easyjet, BA and others not only provide hundreds of connecting routes form regional airports all over the UK on both domestic and European routes, but we also do so at lower fares and better frequency than that provided by Flybe”.

“Were Flybe to fail under the ownership of its experienced, billionaire, owners, then these services would readily be taken up by additional flights provided by Ryanair, Easyjet, BA and others. There are some domestic routes which would not be taken up, but these are already well served by train, bus and motorway alternatives, which is why the Flybe model cannot viably make profits,” Mr O’Leary said.