The boss of Ryanair has vowed to sue the government over its bailout of “billionaire-owned” regional airline Flybe.

Michael O’Leary has written to Chancellor Sajid Javid insisting that the government extends an air passenger duty deferral handed to Flybe to all other airlines at the same time.

He said, if it doesn’t do this, it would be in breach of competition laws.

It comes after British Airways (BA) owner International Airlines Group (IAG) yesterday filed an official complaint to the European Commission, after its boss Willie Walsh castigated the government for deferring Flybe’s tax bill as part of a rescue package.

The plan is reported to include a £100m loan, plus £30m in contributions from its shareholders. These are a consortium of Richard Branson’s Virgin Atlantic, Delta Airlines and American private equity firm Cyrus Capital.

Mr O’Leary said: “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, BA and others; and it cannot compete with lower cost road and rail alternatives on many smaller UK domestic routes. 

“If Flybe fails (as it undoubtedly will once this Government subsidy ends) then Ryanair, easyJet, BA and others will step in and provide lower fare flights from the UK regional airports, as we already have to make up for the recent failure of Thomas Cook Airways.”

“This Flybe ‘subsidy’ cannot comply with Competition, or State Aid rules unless the same APD eco tax holiday and other government subsidies are extended to all other UK competitor airlines including Ryanair, easyJet, BA among others.”

 

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