The UK Government is considering cutting air passenger taxes on all domestic flights to help Flybe stay in business, it has been reported.
Chancellor Sajid Javid is to will meet today with Department for Transport (DfT) officials and will also discuss the possibility of deferring a payment of more than £100 million pounds, said Sky News.
That could hand the Scottish Government a dilemma because APD is devolved and the SNP last year cancelled plans to reduce it on environmental grounds. A cut south of the border would put Scottish airports at a competitive disadvantage and Edinburgh Airport in particular has been vocal in its opposition to the levy.
Flybe's owners - the Connect Airways consortium of Virgin Atlantic, Stobart Group and Cyrus Capital - would in return be required to invest tens of millions of pounds in fresh equity into the company.
Flybe's flights appeared to be operating as normal on Tuesday, a day after reports suggested it needed to quickly raise new funds to help it survive through the lower revenue winter period.
APD is a tax of at least 13 pounds levied on passengers departing from UK airports which the aviation industry has long opposed as making them less competitive compared to their European rivals. Flybe says the tax hinders it when competing with rail and road competitors, because passengers travelling on return flights within the UK will pay it twice.
Flybe, which has 68 aircraft and about 2,000 staff, was saved from going out of business in February last year when it was bought by Connect Airways. The airline is due to be rebranded Virgin Connect this year but has suffered as the fuel price has risen in recent months.
