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The UK Government has been slammed for a reported plan to cut air passenger taxes on all domestic flights to help rescue struggling regional airline Flybe.

A possible deal could allow Flybe to defer a payment of more than £100 million for three years, according to Sky News.

Flybe's owners would be required to invest tens of millions of pounds in fresh equity into the company as a condition of any deal.

By applying the move to the whole industry, the government would avoid breaching EU state aid rules.

Environmental groups have reacted with anger at the proposal.

But the ailing airline carries more than half of domestic flights outside London and the government has made significant pledges about improving connectivity throughout the UK.

(Image: REUTERS)

Chancellor Sajid Javid will meet with representatives from the Department for Transport (DfT) and Business to discuss the tax and a possible deferring of Flybe's bill, the corporation said.

Asked about talks to save airline Flybe , Boris Johnson told the BBC: "It's not for Government to step in and save companies that simply run into trouble.

"But be in no doubt that we see the importance of Flybe in delivering connectivity across the whole United Kingdom.

"It's very important, for instance, where I was yesterday in Northern Ireland, and we're working very hard.

"I can't go into commercially confidential discussions.

"We're working very hard to do what we can, but obviously people will understand that there are limits, commercially, to what a government can do to rescue any particular firm.

"But what we will do is ensure that we have the regional connectivity that this country needs."

If Flybe collapses, it would be the second UK airline to fail in four months, after Thomas Cook went bust in September.

The airline carries about eight million passengers a year from airports including Birmingham, Manchester, Southampton, Belfast City, Cardiff and Aberdeen, to the UK and Europe.

(Image: BBC)

Greenpeace UK policy director Dr Doug Parr said: "This is a poorly thought out policy that should be immediately grounded.

"The Government cannot claim to be a global leader on tackling the climate emergency one day, then making the most carbon-intensive kind of travel cheaper the next.

"Cutting the cost of domestic flights while allowing train fares to rise is the exact opposite of what we need if we're to cut climate-wrecking emissions from transport.

"The aviation sector has got away for years with increasing its carbon footprint. The last thing we need is another incentive for them to pollute more."

Friends of the Earth campaigner Jenny Bates said: "It would be completely unacceptable and even reckless if the Government cut air passenger duty on domestic flights.

"These short UK trips are exactly the ones we need to avoid in the drive to cut aviation climate emissions to help prevent climate breakdown.

(Image: BBC)

"Instead, the Government could invest more in our rail system and make such trips more affordable."

Last night Flybe told the Mirror: "Flybe continues to focus on providing great service and connectivity for our customers, to ensure that they can continue to travel as planned.

"We don’t comment on rumour or speculation."

The company was last year bought by a Virgin Atlantic-led consortium called Connect Airways, which paid £2.2m for Flybe's assets and operations.

Air Passenger Duty is a tax of at least £13 levied by the UK government on passengers departing from UK airports which the aviation industry has long argued makes them less competitive compared to their European rivals.

Flybe has in the past argued that the tax disproportionately affects it, making its flights more expensive compared to its rail and road competitors, because passengers travelling on return flights within the UK will pay it twice.

Should the government cut APD for domestic UK flights, other airlines such as easyJet and British Airways, which fly routes such as London to Edinburgh, would also benefit.

Flybe has 68 aircraft and about 2,000 staff and was already struggling financially when it was bought by Connect Airways, a consortium created by Virgin Atlantic, Stobart Group and investment adviser Cyrus Capital for $2.8 mln last year.

The airline, due to be rebranded Virgin Connect later this year, has suffered as the fuel price has risen in recent months, and news stories about its demise could cause a cash flow squeeze as potential customers stop booking.

Should Flybe collapse, it would be the second high-profile failure in Britain's travel industry in less than six months after Thomas Cook went into liquidation last September, stranding thousands of passengers.

That followed the collapse of UK holiday airline Monarch in 2017 and Flybe competitor FlyBMI last year.