Ryanair CEO Michael O’Leary has complained to the government that their rescue plan for Flybe breaches competition rules and asked that the measures be extended to other airlines.
In a letter to the chancellor, Sajid Javid, O’Leary threatened to initiate legal proceedings if the measures – thought to centre around outstanding Air Passenger Duty (APD) – are not extended.
The objection by Ryanair comes after the British Airways owner IAG filed a complaint with the EU, arguing the rescue breaches state aid rules.
O’Leary’s letter describes the rescue as a “badly thought-out bailout of a chronically loss-making airline” and calls for any tax holiday granted to Flybe to be extended to rival operators.
“Unlike Flybe we all operate profitable business models (without the benefit of being owned by billionaires)” the letter says “We must be treated the same as Flybe if fair competition is to exist.”
Flybe’s owners include Richard Branson’s Virgin Atlantic, Stobart Group and Cyrus Capital who have agreed to invest £30m into the airline.
Stobart Group said it will provide £9m of capital “with the funds drawn down only if required”.
HMRC has indicated in a tweet that what is being described as a “tax holiday” for Flybe is available to other businesses that run into trouble.
“Time to Pay agreements are common where taxes or duties are owed,” it said. HMRC said last year more than 700,000 such arrangements were used.
O’Leary has also accused the UK government of covering up the true terms of the deal to rescue Flybe, saying he does not believe the government’s claim that it has not offered unlawful state aid to the ailing company.