Ryanair group chief executive Michael O’Leary has ratcheted up his criticism of the UK government’s rescue of Flybe, describing the business model of the regional carrier “doomed to fail” and arguing that the deal contravenes state-aid rules.
In an open letter to UK chancellor Sajid Javid, O’Leary writes that Flybe was purchased last year “by a group of billionaires” for £2 million ($2.6 million) “in the full knowledge that Flybe was a loss-making business”.
He complains: “Your suggestion that Sir Richard Branson (billionaire), Delta Airlines (a multibillion-dollar airline), Stobart Group and Cyrus Capital (a $4 billion venture capital fund) need ‘time to pay’ is absurd.”
O’Leary is demanding that the government publish the terms of its deal with Flybe, arguing that doing so is a legal requirement.
On reports that the UK government is preparing a loan to Flybe, O’Leary writes: “If Richard Branson and his mates won’t lend £100 million to Flybe, then why should the hard pressed British taxpayer rescue them?”
Disputing that Flybe is a viable business – which was cited as a justification for rescuing them – O’Leary comments that it has “lurched from failure to failure over the last 20 years” with a business model based on “carrying a small number of passengers, at very high fares, on half-empty turboprop aircraft”. This, he says, “has always failed and is doomed to keep failing”.
O’Leary suggests that any genuine attempt to improve connectivity to the UK regions would involve a reduction of air passenger duty for all airlines. He also asserts that the decision to allow Flybe to defer its air passenger duty payments is in breach of state-aid rules.
Following the threat of collapse, Flybe secured a rescue deal earlier this month as the UK government sought to ensure regional connectivity, especially to parts of the country that are islands or have weak rail or other air links.
