Ryanair has slammed the government’s tax break in the Flybe rescue deal as “breaching competition law” if it is not extended to all airlines.
The budget airline has written to chancellor Sajid Javid urging him to extend the Air Passenger Duty (APD) tax break to all UK airlines.
It said if the tax holiday is not handed to all Flybe’s competitors, the government has breached competition law and state aid rules.
The letter also said if the government did not comply with Ryanair’s demands, it would “launch legal proceedings”.
“The Flybe model is not viable, which is why its billionaire owners are looking for a state subsidy for their failed investment,” said Michael O’Leary, Ryanair’s chief executive.
“The reason why Flybe isn’t viable is because it cannot compete with lower-fare services from UK regional airports on domestic and EU routes provided by Ryanair, easyJet, British Airways and others; and it cannot compete with lower-cost road and rail alternatives on many smaller UK domestic routes.”
He said Flybe will “undoubtedly” fail again and when it does, other airlines would “step in” and provide lower-fare flights from the UK’s regional airports.
In a statement released by Ryanair, a spokesperson said: “The Flybe business model is unsustainable, it is owned by billionaires including Richard Branson, Delta Airlines and Cyrus Capital, who do not need a government subsidy to prop up their failed airline investments.”
BBC News reported on 14 January that Flybe’s shareholders – including a consortium of Virgin Atlantic, Stobart Group and Cyrus Capital Partners – agreed to inject cash into the business and the government would defer its APD bill.
This comes as IAG, British Airways’ parent company, filed a formal complaint to the EU over the rescue deal.