Tensions have been mounting since last week, when the government stepped in to save Flybe from collapse by offering the regional airline an Air Passenger Duty (APD) tax holiday.

In return, Flybe’s shareholders – including Virgin Atlantic, Stobart Group and Cyrus Capital Partners – agreed to inject cash into the business, BBC News reported.

In a letter sent on 16 January, Michael O’Leary, Ryanair’s chief executive, accused the government of breaching state aid law if it did not extend the break to all Flybe’s competitors.

He said Ryanair would “launch legal proceedings” if the demand was not met.

Sky News has reported that the Chancellor of the Exchequer, Sajid Javid, will say the rescue deal does not constitute state aid in his response to O’Leary, Sky News reported. 

He will reportedly label the agreement as a “standard ‘time to pay’ arrangement”.

IAG, parent company of British Airways, has also lodged a complaint with the European Union over the deal. 

Ministers have reportedly promised to reassess APD in the March Budget.

The Treasury did not respond to Sky News’ request for comment. TTG has contacted Ryanair for a response.