The insanity of leaving transport in private ownership has never been more obvious than in the unfolding FlyBe saga.
Less than a year ago this airline company, which runs nearly two out of five domestic flights in the UK and is key to efforts to increase transport connectivity outside of the southeast of the country, was already running into trouble, bleeding £20m a year in losses.
Rather than itself taking responsibility for running this vital service, the government sat on its hands, leaving the company’s ‘rescue’ in the hands of a business consortium led by Virgin and including Stobart and Cyrus Capital.
Now the stricken company is back with its begging bowl, demanding state aid to see it through the winter, hoping to stumble along until better times arrive.
And again, rather than take the company into public ownership, the government is tying itself into knots attempting to square the circle, desperate to keep the planes flying between Exeter, Southampton, Birmingham and Cardiff but anxious not to be seen as pouring taxpayers’ money into propping up a failing enterprise, thereby riling competing airlines and possibly breaching European Union competition rules (though this latter is questionable, given that the German government rescue of the Thomas Cook subsidiary Condor sailed through unscathed).
The magic fix prime minister Boris Johnson has pulled out of his hat includes a potential government loan of around £100m and deferred payment of £106m worth of APD (air passenger duty) taxes.
In recognition of this government largesse, Virgin boss Richard Branson and his mates have agreed to dig into their own very deep pockets to shell out a few millions to cover the losses that continue to pile up – and of course they retain private ownership.
This sleight of hand is not impressing FlyBe’s business rivals. “British Airways and Aer Lingus owner International Airlines Group has filed a complaint with the European Commission, claiming the deal breaches state aid rules and gives the struggling airline an unfair advantage …
“Earlier, it was reported that Willie Walsh, the chief executive of International Airlines Group which owns British Airways, had written to transport secretary Grant Shapps questioning the deal. In a letter seen by the BBC, Mr Walsh asked why the taxpayer was being asked to foot the bill as one of Flybe’s biggest shareholders was Virgin Atlantic, which in turn is part-owned by US aviation giant Delta.” (British Airways owner lodges complaint with EU over Flybe rescue deal by Henry Saker-Clark and Charlotte Turner, Business Live, 15 January 2020)
Meanwhile, workers are still being kept in the dark as decisions affecting their future and their families’ future are wrangled over in secret behind the closed doors of government departments, company boardrooms and legal chambers. Unions warn that as many as 3,400 jobs could be riding on the outcome, 2,400 of them at FlyBe itself.
The pilots’ union Balpa point out that if FlyBe didn’t exist someone would have to invent it, so vital is the role it plays in the British economy.
Reliable, integrated and environmentally responsible air and rail transport between the regions is a basic necessity in any modern industrial economy, and if capitalism is incapable of delivering that, it is clearly past its sell-by date and ready to be bundled into the dustbin of history.
