Flybe

Lord Foulkes of Cumnock Excerpts

Thursday 5th March 2020 Lords Chamber

[Baroness Randerson (LD)]

My Lords, I thank the Minister for the Statement, which comes at a time of huge concern in the aviation industry. When Flybe first publicly hit problems a couple of months ago, the Government wildly overpromised the help that was on offer, or potentially on offer. It turns out that virtually none of that help was possible, partly because of the concern in the rest of the aviation industry about fair competition but also because the Government, for one reason or another, have not been able to offer money on reasonable terms to the company.

All the grand schemes in the world will not help the people who are losing their jobs today or who are being cut off from the regular routes that they use which are important either to their families or to their businesses. In this Statement the Government repeat some of these grand, long-term promises—but, to be fair, that is actually irrelevant at this time.

On competitive market companies that fail, the Statement is really surprising, given the Government’s response couple of months ago. It says:

“It is not the role of government to prop them up.”


But two months ago, the Government were offering assistance that effectively was promising to do that. Shape shifting will not help the market. What help, if any, did the Government, in the end, provide to Flybe? Was Flybe able to defer the payment of any taxes, or was that not possible?

Beyond the concerns for Flybe employees and the passengers who have paid money for flights, amply outlined by the noble Baroness, Lady Hayter, there will be a very serious knock-on effect at smaller regional airports in the UK. Some of those airports could also find they cannot continue operating. The Statement says:

“Government stands ready to support this sector.”


Exactly how will the Government offer help to this sector? There is a danger that the Government are offering more help that actually cannot be implemented in the end.

The importance of Flybe has been overwhelmingly in its routes to isolated parts of the UK. Some such routes in the UK have PSO status, but only one is a Flybe route: the Newquay to Gatwick route. France has 22 PSO routes, so, even if we are still working to EU rules on this, I ask the Government to reconsider the number of internal routes that are given PSO status, because that is what will provide long-term certainty and a long-term levelling up for parts of the country that are very isolated.

Coronavirus is undoubtedly a factor in tipping this company over the edge probably slightly earlier than would otherwise have happened, and there will be other cases.

[Lord Foulkes of Cumnock (Lab Co-op)]

Look at the time. This is a Statement, not a debate.

[Baroness Randerson]

The two Opposition Front Benches are allowed 10 minutes, and I would like to finish what I am saying. Coronavirus will tip other transport operators into difficulties as well. Especially at this time, when we are expecting a large number of people to need healthcare, I ask the Government what measures they are putting in place to help the transportation of NHS patients from the Isle of Man to hospitals in Liverpool, which is a role that Flybe has undertaken up to now. This is a very specific concern.

--- Later in debate ---

[Baroness Vere of Norbiton]

My Lords, the aviation industry is a highly competitive market, and obviously, private companies operate in it. None the less, the noble Lord makes an important point about the Government’s insight into the financial future and sustainability of airlines. I am sure that he will be pleased to hear that the CAA already undertakes that role. Where potential financial issues are on the horizon, the Government are made aware. Therefore, plans can be put in place.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, may I declare an interest, in that my wife and I are due to fly with Flybe to Bergerac for Easter? I am particularly concerned about that. I am grateful for the Minister’s helpful advice on seeking compensation but my question is about the Flybe shareholders. My understanding is that Virgin is a major shareholder and that the plan was for it to operate these services as Virgin Connect. Why has Virgin not been involved? Why is it not ready to take over the services? Our understanding is that Virgin is a major aviation company in the United Kingdom.

[Baroness Vere of Norbiton]

The noble Lord is right. Virgin is a minority shareholder in Flybe, with a 30% stake. My understanding is the same as his—that Flybe was due to be rebranded as Virgin Connect. I think that overnight, the shareholders reached an agreement that there was no long-term future for Flybe as it stood, so they decided to pull the plug and make it insolvent. From now on, therefore, the winding-up process will be in the hands of the insolvency practitioner, using the usual well-established processes of insolvency. On the other point, I am sorry to hear that the noble Lord’s tickets to Bergerac may not be valid, but I am sure that he will receive compensation somehow.