Ryanair boss Michael O’Leary has threatened to sue the government over its bailout of “billionaire-owned” regional airline Flybe.
O’Leary wrote to chancellor Sajid Javid today demanding that the government extend an air passenger duty “holiday” handed to the struggling carrier to all other airlines.
If it does not do this, he said, it would be in breach of state aid and 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 deal is also thought to include a £100m loan, as well as up to £30m in contributions from its shareholders.
Ryanair claimed the Flybe business model is “neither profitable nor viable and has lurched from failure to failure repeatedly over the last 20 years”.
It also hit out at Flybe’s billionaire shareholders including Sir Richard Branson. Flybe is owned by a consortium including Branson’s Virgin Atlantic, Delta Airlines and US private equity firm Cyrus Capital.
These parties “do not need a government subsidy to prop up their failed airline investments,” Ryanair said.
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.”
Speaking on Sky News, he called on Sajid Javid to publish the details of the government’s deal with Flybe “today, on his Twitter feed”.
The complaint echoes IAG’s statement yesterday. The airline group said the intervention breached EU state aid rules because taxpayers would be subsidising an airline that competes directly on BA routes.
In a letter to transport secretary Grant Shapps on Tuesday, IAG boss Walsh wrote that Flybe’s owners “want the taxpayer to pick up the tab for their mismanagement of the airline”.
“This is a blatant misuse of public funds,” he said.
The Department for Business, Energy and Industrial Strategy (Beis) yesterday insisted it has not broken state aid rules.
City A.M. has contact HM Revenue and Customs for comment.