IAG Files EU Complaint over Flybe Rescue

 - January 15, 2020, 12:02 PM

Less than 24 hours after the UK government announced it had reached an agreement with Flybe’s core shareholders to avoid the collapse of the airline, British Airways parent company International Airlines Group (IAG) submitted a complaint to the EU about the deal, arguing it represents state aid.

“IAG has submitted a complaint to the EU competition directorate this morning about the state aid that the UK government has granted to Flybe,” a company spokesperson confirmed to AIN. A European Commission spokesperson confirmed that the bloc’s competition authority received the submission from IAG Wednesday morning, though she declined to comment whether it warrants a full investigation ahead of Brexit. “As long as the UK is an EU member state, EU competition law, including EU state aid rules, continue to apply in full to the United Kingdom,” she stressed. The UK will exit the EU on January 31, though it still will have to respect EU law, including all EU rules relating to state aid until the end of a transition period expected to run until December 31.

IAG CEO Willie Wash also wrote a letter to the UK department for transport about the deal, which he called “a blatant misuse of public funds.”  

“Prior to the acquisition of Flybe by the consortium which includes Virgin/Delta, Flybe argued for taxpayers to fund its operations by subsidizing regional routes," Walsh said in an emailed statement to AIN. "Virgin/Delta now want the taxpayer to pick up the tab for their mismanagement of the airline.”  The consortium consists of Virgin Atlantic, Stobart Group, and investment firm Cyrus Capital Partners. Delta Air Lines, which holds 49 percent of Virgin Atlantic, ranks as one of the world’s most profitable airlines. The U.S. carrier this week reported $4.7 billion in net income for 2019. “Flybe’s precarious situation makes a mockery of the promises the airline, its shareholders, and Heathrow have made about the expansion of regional flights if a third runway is built,” Walsh said.

Flybe and the UK government Tuesday evening hailed the deal they reached to keep the airline operating; however, the parties remained largely silent on the specifics of the rescue measures including a reported short-term deferral of some of the airline’s air passenger duty (APD) and a commitment to review the APD.

APD levies £13 per departing passenger on a domestic/ EU flight in economy and £26 per departing passenger in any other class of travel or where the seat pitch is more than 40 inches.