This article is more than 6 months old

This article is more than 6 months old

Flybe, Europe’s largest regional airline, has collapsed into administration with the loss of more than 2,000 jobs, less than two months after the government announced a rescue deal.

The impact of the coronavirus on flight bookings proved the last straw for the Exeter-based airline, which operates almost 40% of UK domestic flights, as the government stalled on a controversial £100m loan.

Flybe falls prey to coronavirus and 'stronger' airlines are likely to follow Read more

The UK Civil Aviation Authority (CAA) announced early on Thursday morning that the airline had entered administration.

It said all flights were cancelled and urged passengers not to go to airports.

UK Civil Aviation Authority (@UK_CAA) Flybe has entered administration.



All Flybe flights are cancelled. Please do not go to the airport as your Flybe flight will not be operating.



For flights operated by franchise partners, passengers should make contact with their airline.#Flybe pic.twitter.com/O9vQ7mvnR8

In a statement, the chief executive, Mark Anderson, said the company had made “every possible attempt” to avoid collapse but had been “unable to overcome significant funding challenges”.

Anderson said: “The UK has lost one of its greatest regional assets. Flybe has been a key part of the UK aviation industry for four decades, connecting regional communities, people and businesses across the entire nation.”

Flybe’s administrator, the accountancy firm EY, referred to coronavirus in its statement as it flagged “added pressures” on the travel industry in the last few weeks that made its precarious financial situation worse. Before the viral outbreak, Flybe was already struggling with rising fuel costs – a key factor in any airline’s ability to make a profit – soft demand and competition.

The transport secretary, Grant Shapps, tweeted it was “very sad” Flybe had gone out of business after serving passengers for four decades. He said the government was “urgently working” with the airline industry to “identify how key routes can be re-established by other airlines as soon as possible”.

Flybe passengers and staff are being offered free travel by all First Rail train operators, which consist of Great Western Railway, South Western Railway, TransPennine Express and Avanti West Coast. EasyJet has offered rescue fares for passengers and free flights to Flybe staff to get home.

Flybe’s bankruptcy has come only a week before a budget that it hoped would help bolster its precarious finances, after the previous chancellor said he would look again at levels of air passenger duty (APD) .

However, the airline’s owners Connect Airways – a consortium of Virgin Atlantic, Stobart Air and the hedge fund Cyrus Capital – have pulled the plug, a little over a year after buying it.

The airline employed more than 2,000 people directly and was one of the leading carriers at airports including Belfast, Southampton, Manchester and Birmingham. About 8 million people a year used its services. Unions have warned that other jobs would be put at risk by Flybe’s collapse and transport links lost on dozens of domestic routes where it is the sole operator.

Flybe has long struggled to balance the books, despite cost-cutting plans and redundancies, and was reporting losses of about £20m a year before the Connect takeover.

With the new government having promised to “level up” the economy, it was anxious to demonstrate it was helping the ailing airline and ministers announced the Flybe rescue in January. However, the measures – which included some deferral of tax, a potential loan and promises to review regional air connectivity and APD levels – have not proved enough.

Public anxiety and curbs on business travel because of the coronavirus outbreak have forced airlines around the world to retrench in the face of falling bookings and Flybe was also suffering from the drop in demand.

Quick guide Coronavirus travel shutdown: what are your rights? Show Hide My flight to Europe is cancelled. All I’m being offered is an alternative flight or vouchers. Is this legal? No. But that hasn’t stopped a number of airlines doing exactly that. All flights on EU carriers within, or into the EU, and all flights leaving from an EU airport, are protected by the EU’s “denied boarding” rules, which require a full refund in seven days when flights are cancelled. The problem for consumers is that enforcing these rights is proving very difficult. After initially promising to refund passengers within 20 working days, Ryanair has now said passengers should accept vouchers valid for 12 months, or wait until the Covid-19 pandemic is over for a refund. Refunds at British Airways are only being processed by customer services which, of course, is impossible to contact. easyJet, initially only offered refunds through customer services but now has a web portal to request refunds. Note: the EU cancellation rules do not apply to non-EU carriers where the flight started outside the EU – for example, a Korean Air flight from Seoul to London. In the face of a no-refund policy, what should I do? Taking the offer of replacement vouchers in the current climate is highly risky given the airline may not be around in six months. While some will be happy to accept vouchers, many will not. Coby Benson of the specialist flight compensation lawyers, Bott and Co, advises passengers to submit their refund request in writing, using the following text: I understand that my flight [fight number] on [flight date] has been cancelled and I therefore request a full refund pursuant to articles 5(1)(a) and 8(1)(a) of EC Regulation No.261/2004. You are reminded that the refund must be made within seven days. For the avoidance of doubt, I do not accept a travel voucher. If the airline does not respond or does not agree then the passenger can either issue court proceedings or use Alternative Dispute Resolution. If your flight cost more than £100 and was booked using a credit card, you can hold the card provider jointly liable. When things calm down we suspect many passengers will be forced down this route. My flight operated as scheduled but I was unable to go on it. What then?

The fact that the government advised against all but essential travel means travel insurance policies should pay foreign trip cancellation claims provided you bought your policy before the pandemic was declared on 11 March. Miles Brignall

The government has been unwilling to bail out Flybe, despite calls from unions and MPs in the regions, with other airlines, led by the British Airways owner, IAG, and Ryanair, objecting about the prospect of state aid and threatening legal action.

It is the second major British airline to go bankrupt in six months after the collapse of Thomas Cook last September.

Unite’s national officer for aviation, Oliver Richardson, said it was “outrageous” that the government had not learned the lessons of last year’s collapse of Thomas Cook or of Monarch in 2017 . He said Flybe staff would be feeling “angry and confused”.

He said: “The UK economy is highly dependent on a viable and supported regional airline and airport network. For central government not to support and nurture this, especially as we deal with the twin uncertainties of the Covid-19 virus and the changes that will come with Brexit, is unhelpful and irresponsible.”

Andy McDonald, the shadow transport secretary, said the loss of Flybe would cause “real anxiety” throughout the country.

The British Airline Pilots’ Association hit out at the government and Connect for the collapse. The trade union’s general secretary, Brian Strutton, said: “Six weeks ago, when the ownership consortium lost confidence, the government promised a rescue package, apparently at that time recognising the value of Flybe to the regional economy of the UK.

“Throughout, pilots, cabin crew and ground staff have done their jobs brilliantly, while behind the scenes the owners and, sadly, government connived to walk away. Flybe staff will feel disgusted at this betrayal and these broken promises.”

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A government spokesman said the closure of Flybe was a commercial decision by the company.

He added: “We will bring forward recommendations to help ensure that the whole of the UK has the connections in place that people rely on.

“Flybe’s financial difficulties were longstanding and well-documented and pre-date the outbreak of Covid-19. We are well prepared for a potential outbreak and this week we have set out an action plan with details of our response.”

The CAA will not be operating a repatriation programme for any stranded customers in Europe and said passengers should make their own alternative travel arrangements via other airlines, rail or coach operators.