Prime Minister Boris Johnson has said the Government is "working very hard to do what we can" to save crisis-hit airline Flybe – but stressed it is not the Government’s job to bail out failing firms.
He warned there are "limits" to what a Government is allowed to do to help individual companies that fall on hard times and said: “It's not for Government to step in and save companies that simply run into trouble.”
Meanwhile, Chancellor Sajid Javid is understood to be locked in talks with the business and transport secretaries to discuss if can defer paying this year's estimated air passenger duty (APD) bill of £106million for three years or whether the tax should be cut for all domestic flights.
It is also understood the Government is considering measures including short-term funding to save the Exeter-based airline, which operates more than half of UK internal flights outside London, from collapse.
It has been claimed by unions that the collapse of Flybe could cause the loss of up to 3,400 jobs, including 2,000 of the airline’s employees, and have a "significant impact" on several UK airports.
But Mr Johnson is making no promises of a rescue and said: “We're working very hard to do what we can, but obviously people will understand that there are limits, commercially, to what a government can do to rescue any particular firm.
"But what we will do is ensure that we have the regional connectivity that this country needs."
CBI deputy director general Josh Hardie backed the PM’s position and said: “The news about Flybe is deeply worrying for the thousands of staff, their families and communities affected.
“The CBI is clear that it’s not the role of Government to bail out failing companies. But it’s right the Government examines what help it can provide, given the importance of regional connectivity to so many people’s jobs and livelihoods.
“More broadly, the new Government has a huge opportunity to look at the overall cost of doing business and to support growth through high quality, sustainable infrastructure. That’s what will ultimately drive shared prosperity and level up growth across all.”
Devon and Plymouth Chamber of Commerce chief executive and British Chambers of Commerce South West (BCCSW)chair Stuart Elford called for Mr Johnson and his ministers to find a solution that protects the region.
He said: “The Government recognised the importance of regional connectivity in its manifesto and BCCSW calls on it to now find a sustainable solution for Flybe and all regional transport providers that provide a vital link for businesses, whilst not exacerbating the huge carbon reduction challenge we already face.”
Flybe was bought by a consortium consisting of Virgin Atlantic, Stobart Group and Cyrus Capital in February 2019 following poor financial results.
The consortium, known as Connect Airways, paid just £2.2million for Flybe's assets but pledged to pump tens of millions of pounds into the loss-making airline to turn it around.
The holding of rescue talks with the Government over the weekend indicates the financing requirements have become greater than expected and now ministers are looking at the impact of APD.
Airlines claim the tax restricts connectivity and passenger growth.
Passengers on domestic flights pay £26 in APD for a return trip, with higher rates for longer flights and premium cabins.
The tax is expected to be worth £3.7billion to the Treasury in 2019/20.
Transport minister Paul Maynard refused to comment on calls to reform APD and said it is a "matter for the Treasury", telling the Commons he would not deviate from this process and would make no comment.
If Flybe collapses, it would be the second UK airline to fail in four months, after Thomas Cook went bust in September.
Mr Johnson said: “Be in no doubt that we see the importance of Flybe in delivering connectivity across the whole United Kingdom.”
But he added: “I can't go into commercially confidential discussions.”
Shadow chancellor John McDonnell claimed "bailing out a company through a tax cut across the industry is not the way forward".
He added: "Working with the company and unions, the Government should look at targeted assistance to support routes judged on economic, environmental and social grounds."
Transport minister Paul Maynard told the Commons that Flybe "remains a going concern" and advised passengers to "continue to go to the airport as usual".
The airline, which is centred at Exeter Airport, is Europe's largest regional carrier, flying around nine million passengers a year to 170 destinations across the continent. It has a major presence at other UK airports such as Aberdeen, Belfast City, Manchester and Southampton.
The airline began as Jersey European Airways in 1979, operating regional flights from Jersey. Its route network grew and it was rebranded British European in 2000, before becoming Flybe in 2002.
