Tax hikes and consumer squeeze hit Flybe

By DOMINIC JEFF
Published on 08/11/2012 21:02

REGIONAL airline Flybe flew back into the red this summer and warned of possible job losses amid “the most challenging conditions” it has ever faced.

A combination of squeezed consumers and soaring taxes on flying pushed it to a £1.3 million pre-tax loss in the six months to 30 September, compared to a £14.3m profit a year before.

Since 2007 the UK air passenger market had shrunk by 20.6 per cent, while air passenger duty had increased by 160 per cent.

Flybe’s Scots-born chief executive, Jim French, said the group would implement a range of cost-cutting initiatives over the next 12 months with a view to making savings equivalent to £2 per seat.

“The UK domestic aviation market continues to show little sign of recovery, with the market trending a year-on-year decline. Since this represents about 75 per cent of Flybe UK’s passenger base, this decline continues to pose challenges on our UK business.”

The firm will look to bolster its business in Europe and look for more tie-ups such as its joint venture with Finnair. French said the firm’s European management team was in talks with other parties seeking similar arrangements.