Flybmi

Andy McDonald Excerpts

Monday 18th February 2019 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)(Urgent Question)]

To ask the Secretary of State for Transport to make a statement on airline Flybmi going into administration.

[The Parliamentary Under-Secretary of State for Transport (Ms Nusrat Ghani)]

On 16 February British Midland Regional Limited, the east midlands-based airline which operates as Flybmi, announced that it had ceased operations from that date and filed for administration. The group has surrendered its licence to operate in the United Kingdom, which means that it is no longer able to operate flights.

There has already been significant speculation about the reasons behind Flybmi’s failure. Ultimately, this was a commercial matter for the airline. Flybmi operated in a very competitive industry and was exposed to wider pressures faced by the global aviation industry, such as increasing fuel prices. It is very disappointing that it has gone into administration, and we know that this will be a very difficult time for those who have lost their jobs as a result. Many of those affected are highly skilled. We are confident that they will find suitable employment opportunities, and we welcome the moves by the sector to offer such opportunities.

The Insolvency Service’s redundancy payments service is working with the administrators of Flybmi to ensure that former employees’ claims from the national insurance fund, which may include redundancy pay, holiday pay, arrears of pay and compensatory notice pay, are assessed as quickly as possible. However, given that the sector is ready to recruit, I hope that new jobs will be found soon.

I also recognise that this is a disruptive and distressing time for passengers, and the Government’s immediate priority is fully focused on supporting those affected. We are in active contact with airports, airlines and other transport providers to ensure that everything possible is being done to help them. We and the Civil Aviation Authority are working closely with the travel industry to ensure that the situation is managed with minimal impact to passengers.

There are enough spaces on other flights for passengers to return home on other airlines, and we welcome the sector’s move to offer rescue fares for affected passengers. For example, Flybmi has codeshares across the Lufthansa group and passengers on these flights will be subject to the EU passenger protection rules. They will be provided with assistance and rerouted to their final destination. Travel insurance and credit card bookings are worth noting here, and most passengers were business travellers so will be covered through their work. In addition, the Civil Aviation Authority is providing detailed information for affected passengers on its website, including how people can claim back money they have spent on tickets.

The Government recognise the importance of maintaining regional connectivity, which is why we fund a public service obligation route from Derry/Londonderry to London, which was recently extended from 1 April 2019 for a further two years, the norm for PSOs. The chief executive of Derry council has the power to transfer the PSO contract to another airline for up to seven months to allow for a new procurement process to be conducted. Subject to due diligence we expect the council to sign contracts and appoint an airline later this week, and we expect services to resume swiftly. Derry City and Strabane Council takes forward that part; it is its responsibility.

All affected regional airports have been contacted, and while they are disappointed, we are confident that this will not cause them significant issues. A number of airlines have already indicated that they will step in to replace routes previously served by Flybmi. For example, Loganair has publicly announced that it will cover routes from Aberdeen, Bristol and Newcastle. Our priority is to protect employees, passengers and local economies. We are fully focused on supporting those affected and remain in close contact with the industry and the CAA to ensure that everything possible is done to assist.

[Andy McDonald]

It will not have escaped anybody’s attention that the Transport Secretary is sitting on the Treasury Bench yet has not come to this House to make a statement. He seeks to hide behind his Minister; she has been dropped in it. Perhaps he has been dealing with the bombshell dropped by Honda this morning.

Eighteen months ago Monarch Airlines left taxpayers with a bill for more than £60 million. Clearly the Government have failed to learn the lessons from that disaster. In fact, the Transport Secretary has dithered and delayed for nearly a year, allowing Loganair to cherry-pick the profitable parts of Flybmi before putting it into administration. The Government have clearly done nothing to stop a repeat of Greybull’s asset-stripping of Monarch.

Flybmi has been in difficulty for some time, so what plans did the Department for Transport have for an airline’s collapse? Have not the Government left both Flybmi’s passengers and staff high and dry? Why was the airline allowed to sell tickets only hours before administration? Why are the Government not helping people get home this time?

On Thursday last week, the Government agreed to extend the subsidy for Flybmi’s London to Derry route. Was the DfT aware that the airline was about to collapse when it agreed this commitment of public money? What checks did Ministers do on the airline prior to agreeing this? The Government’s aviation Green Paper boasts of growth and connectivity; in reality, Flybmi is the second UK airline to fail within months, while the UK’s direct connectivity has declined.

The Government’s complacency is staggering. Flybmi has said that

“the challenges, particularly those created by Brexit, have proven to be insurmountable”,

and:

“Current trading and future prospects have also been seriously affected by the uncertainty created by the Brexit process, which has led to our inability to secure valuable flying contracts in Europe and lack of confidence around Flybmi’s ability to continue flying between destinations in Europe.”

So when will this Government wake up to the undeniable truth that their shambolic handling of Brexit is leading our country into an economic disaster?

[Ms Ghani]

I have never been a woman who has been “dropped in it”; it is my job and I am disappointed that the shadow Transport Secretary wanted to see a he and not a she at the Dispatch Box, but hopefully I can respond to his questions in the best way I can. I am also a little disappointed that the shadow Front-Bench team are all in their seats today considering the bold decisions their colleagues have taken to leave the Labour party because of a number of issues, including leadership and institutionalised antisemitism. We are talking about disappointment, but we should focus on the passengers.

We were made aware of Flybmi going into administration at the weekend. A number of conversations have been taking place. The Aviation Minister has spoken to the Cabinet Secretary responsible for transport in Scotland.



The Secretary of State has spoken to the Northern Ireland Secretary and to the local MP, the hon. Member for East Londonderry (Mr Campbell). Information is being made available on the Civil Aviation Authority website to alert passengers about how they can get home. We must focus on the passengers who may be struggling to get home, but there are lots of alternative flights and that information is being made available. More than 300 staff have been impacted, but it is interesting to note that Loganair and Ryanair are making jobs available and recruiting heavily. The British Airline Pilots Association is also exploring options for pilots with partner airlines.

The hon. Gentleman noted the business case for Flybmi. It was possible to recognise, looking at its accounts, that it had been struggling for a while, including before Brexit and before the referendum. It is not an easy market for airlines to be in, especially regional and local airlines. He mentioned Brexit as a reason for Flybmi going into administration, but it is important to note that several other smaller airlines in Europe have also gone into administration, including Germania, VLM, Cobalt and Primera, and there are lots of different reasons why this takes place. We cannot always blame Brexit when we do not understand the business case.

The hon. Gentleman mentioned the public service obligation and wanted to put the blame at the door of the Department for Transport. In case I did not make myself clear in my opening statement, Derry and Strabane Council is responsible for maintaining and managing the contract. We of course support the route via the public service obligation because it is a lifeline route. I know that that reply must come as a disappointment to him, but that is where the responsibility lies. Derry and Strabane Council has made it clear to the press and to us that it is very positive that an alternative airline will be in place soon enough. It is important to note that the aviation sector in the UK is thriving and that passenger numbers have gone up by almost 60% compared with the numbers in 2000, but it is a very tricky sector to be in, especially for the small regional players in this very large market. I hope that those responses will not be too disappointing for the hon. Gentleman.