Flybmi

Debate between Andy McDonald and Nusrat Ghani

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.

Oral Answers to Questions

Debate between Andy McDonald and Nusrat Ghani

Thursday 14th February 2019 Commons Chamber

[Ms Ghani]

I can. My hon. Friend is a great champion of the port of Immingham and I know I have an open invitation from him to visit it. I have indeed discussed that port with ABP and it has confirmed that ports across the country are looking forward to the extra business and trade that will come their way post Brexit.

[Andy McDonald (Middlesbrough) (Lab)]

On 8 January, the Secretary of State told the House that no public money was used in the Seaborne Freight contract, yet the National Audit Office says that £800,000 of taxpayers’ money was spent on consultants. The Prime Minister says that things are hunky-dory, but it has been revealed that the Department bypassed its own procurement rules to award a high-risk contract to Seaborne. Will the Minister acknowledge that the Secretary of State has, however inadvertently, misled the House and has not followed his Department’s procurement processes?

[Ms Ghani]

That is such a ridiculous statement to make. It is just inaccurate. There are complaints when due diligence is not done and complaints when due diligence is done. When funding is allocated and spent within the Department, due diligence is carried out for a variety of reasons. What is interesting is that the Labour party is against business, against us helping our port sector and against Brexit. It would be interesting to know what it actually stands for.

[Andy McDonald]

Poor, very poor. The Secretary of State is, presumably, simply never wrong, but what about the timetabling mess on the trains, the east coast bail out, multiple transport and justice contracts to Carillion, the book ban on prisoners, court fees that push the innocent to plead guilty, and the catastrophic privatisation of probation and prisons? His ongoing presence in the Government makes an international laughing stock of us all. Quite simply, the country cannot afford him. So I ask in all sincerity: will he please step down before he does any further damage?

[Ms Ghani]

I am not quite sure what show we are on, but this is Transport questions and the hon. Gentleman attacking an individual because he has nothing left to say is absolutely embarrassing. We have record investment in our infrastructure. I believe that under the Labour Government infrastructure investment in our country dropped from seventh to 33rd. Labour is not a party for our country. May I just reflect on ports? Our ports are doing a fantastic job trading, they do the majority of trade outside the EU and they will continue to do really good trade post Brexit.

Oral Answers to Questions

Debate between Andy McDonald and Nusrat Ghani

Thursday 22nd November 2018 Commons Chamber

[Ms Ghani]

I have been following the Select Committee inquiry very closely. It is interesting that the hon. Gentleman mentions Bristol, because bus passenger numbers have gone up by 42%. He raises a valid point, because punctuality, the timing of bus arrivals and departures, and journey times are key to increasing bus patronage, which is why we are increasing funding to make sure that information is available.

[Andy McDonald (Middlesbrough) (Lab)]

Since 2010, bus funding has been almost halved, fares have been increased by over 50% and thousands of routes have been cut, shrinking the network to its smallest size in decades. Does the Minister agree with the United Nations assessment of Tory transport policy:

“Abandoning people to the private market in relation to a service that affects every dimension of their basic well-being is incompatible with human rights requirements.”?

[Ms Ghani]

I would rather stick to the facts. We make over £1 billion of funding available for concessionary bus passes every year, and we continue to be committed to that. Some £250 million is paid to support bus services up and down the country. There is no denying that there are challenges in some parts of the country. However, the hon. Gentleman forgets to note that bus patronage is up by 42% in Bristol, up by 38% in South Gloucestershire and up by 31% in Central Bedfordshire. There are services that are working right, and local authorities are working with bus providers to make sure that up-to-date information is available.

[Andy McDonald]

Just as Conservative Members ridicule complaints about the state of our roads, the Government have dismissed the UN report as political. Let me tell the Minister that the decision to axe vital public services to fund tax cuts for millionaires, now that is political. Now the Prime Minister has declared that austerity is over, will the Minister commit to reversing these cruel and harmful cuts that are denying people their human rights?

[Ms Ghani]

I am afraid that Labour Front Benchers have run out of anything positive to say about any part of our transport infrastructure, even to support buses across the country. As I said, there is £1 billion of funding for concessionary bus travel. We are making franchising available to those mayoral authorities that wish to take it up, but they refuse to do so. [Interruption.] I do not know whether this is just going to go back and forth, but the fact is that we are putting funding into bus services, making sure they are greener, making sure that more information is available and making sure that more people can catch a bus.

Oral Answers to Questions

Debate between Andy McDonald and Nusrat Ghani

Thursday 19th April 2018 Commons Chamber

[Andy McDonald]

The Secretary of State is supporting the sale of Network Rail’s property assets. The Federation of Small Businesses says that this will put small companies out of business because the new private owner will rapidly rack up rents, which will restrict key developments in places such as Chesterfield. Does he not see that the sell-off will lose the railway valuable and vitally important income?

[Ms Ghani]

I thank the hon. Gentleman for repeating himself. The Secretary of State met the FSB yesterday and discussions on negotiations are ongoing.

[Andy McDonald]

In 2015, the DFT accepted Sir Peter Hendy’s plan to sell £1.8 billion of Network Rail property. These assets are now worth only £1 billion but generate £90 million of revenue each year. How can the Secretary of State still argue that this sell-off of the family silver makes sense? Is it not clear that his plan will cost Network Rail and British taxpayers dearly?

[Ms Ghani]

The Secretary of State will continue to realise assets when he can. We will then reinvest them in the railway network.