Flybe

Lord Empey Excerpts

Thursday 5th March 2020 Lords Chamber

[Lord Kilclooney (CB)]

My Lords—

[Lord Empey (UUP)]

My Lords—

[Viscount Younger of Leckie (Con)]

My Lords, there will be plenty of time for Back-Bench questions, and I urge noble Lords to keep them short.

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[Baroness Vere of Norbiton]

My noble friend raises an interesting point, because there is a lot of misconception around what happened in January and what public funds were or were not made available. The conversation in January focused on a number of commitments from the Government, which included a review of air passenger duty, the review of regional services and a time-to-pay agreement, which any business can enter into with HMRC to get through a short-term cash-flow difficulty. Not a single penny of taxpayers’ money was given to Flybe. In return for looking at those things, the share- holders put in additional cash to get Flybe through its operational difficulties. It is those same shareholders who have now concluded that Flybe has no long-term future.

[Lord Empey]

My Lords, if the normal public service obligation process is used, it will take a long time. Will the Minister consider a short-term use of a PSO to keep some of the critical routes open while negotiations to get long-term operators continue? We have a perfect storm whereby all airlines are suffering because of the virus and because this is a very difficult time of year for them. As has been pointed out, in Belfast between 80% and 90% of the flights are Flybe. There are some critical routes, and we have no alternatives. I appeal to the Minister to bring in a special type of PSO in the short term to keep some of these key routes going while negotiations continue, because many of them will profitable. Also, would she be prepared to meet with me and my colleagues as soon as possible to discuss this?

[Baroness Vere of Norbiton]

The noble Lord raises an interesting point about PSOs. The Government are looking at all options to restore as many routes as possible. We must also be mindful that wherever we restore routes, we must do so within the law as it stands regarding PSOs.

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[Baroness Vere of Norbiton]

Aviation services are part of the market economy and we would expect the profitable routes to be taken up by other airlines. As I have mentioned, we have had proactive input from a number of airlines looking to service those routes. I can say no more about PSOs. The Government are looking at both the profitable routes and those that may need support, and at all possible options to get them up and running.

[Lord Empey]

My Lords, the issue of air passenger duty has been raised. I ask the Minister to consult with her Treasury colleagues about it because, in the event of it being devolved to, say, the Northern Ireland Assembly, the difference in revenue created by the reduction in air passenger duty would automatically come out of the Northern Ireland block grant. As the new Executive are at least £600 million short, that would be a huge challenge. Will she consult with her colleagues in the Treasury, pre-Budget, to make that point? It could be a way of opening things up but it would cost the Northern Ireland Executive an awful lot of money that they do not have at their disposal at the present time.

[Baroness Vere of Norbiton]

I thank the noble Lord for his comments. I will certainly make sure that the Treasury sees them.