The chief executive of London City airport on Friday urged the government to look at a tax holiday for airlines, in the wake of Flybe collapsing and coronavirus hurting the sector.
Robert Sinclair made the plea a day after regional carrier Flybe failed, putting 2400 jobs at risk. His airport had around 70 Flybe arrivals and departures each week.
Sinclair said: “We are very supportive of the government saying earlier this year it would review air passenger duty. But, in light of Flybe’s demise and the coronavirus outbreak I think more urgent action is needed.”
He added: “I think the Treasury should give airlines an APD holiday for domestic flights for at least the next few months. That would be massively positive and signal that the government wants to help carriers while they grapple with difficult months ahead.”
Tim Alderslade, chief executive of Airlines UK, the trade body representing UK-registered airlines, said: “We’ve spoken privately to Government about an APD holiday, not just for domestic routes but across the board. It would certainly help, although its impact would clearly be short term.”
The collapse of Flybe yesterday came just two months after it narrowly avoided going under, thanks to the Government deferring its air passenger duty bill. The government said at the time that ahead of the Budget the Treasury would review APD.
But despite the APD help, Flybe continued to struggle with currency headwinds, softer customer demand and the coronavirus outbreak. The International Air Transport Association has warned the virus could cost the airline sector up to $113 billion in lost revenue from passengers this year.
EY is handling the Flybe administration.
Virgin Atlantic, logistics group Stobart and private equity group Cyrus Capital formed Connect Airways to buy the struggling airline in a rescue deal last year. They claim to have invested more than £135 million to keep it flying.
Stobart, which owns 30% of the business, yesterday told the stock market it would have to write off the £50.3 million it invested, comprising cash and assets it put into the venture.
