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Flybe to invest in international routes only Flybe to invest in international routes only
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Flybe has warned it will only invest in continental Europe from now on as the UK's tax and supplier costs are making regional airlines barely viable.Flybe has warned it will only invest in continental Europe from now on as the UK's tax and supplier costs are making regional airlines barely viable.
Jim French, chief executive of Europe's largest regional airline, said it had already restricted aircraft deployment in the UK and was focussed entirely on growing passenger numbers and revenue abroad. He said the domestic business – which accounts for 75% of Flybe's customers – should account for no more than 25% within five years. Jim French, chief executive of Europe's largest regional airline, said it had already restricted aircraft deployment in the UK and was focused entirely on increasing passenger numbers and revenue abroad. He said the domestic business – which accounts for 75% of Flybe's customers – should account for no more than 25% within five years.
Taxation needed to be addressed urgently, he said, if the government was sincere in its stated aims to rebalance the economy. But French admitted there was no hope of achieving a cut in the overall take from aviation by the Treasury.Taxation needed to be addressed urgently, he said, if the government was sincere in its stated aims to rebalance the economy. But French admitted there was no hope of achieving a cut in the overall take from aviation by the Treasury.
He suggested air passenger duty (APD) could be reformed to only tax domestic passengers one way or, as regional airports have proposed, cut tariffs outside London. French pointed to a 21% decline in domestic flights compared with a 2% drop in international ones as evidence of the impact of APD. He suggested air passenger duty (APD) could be reformed to tax domestic passengers only one way or, as regional airports have proposed, cut tariffs outside London. French pointed to a 21% decline in domestic flights compared with a 2% drop in international ones as evidence of the impact of APD.
He said: "The government is not going to give up the money so we need to find a pricing structure that fits in with their objective of helping the regional economy. We need to protect their overall revenues but distribute the charges, so there is more tax in the south-east, with high incomes and demand, but less in the regions where you want to stimulate growth and regional economies.He said: "The government is not going to give up the money so we need to find a pricing structure that fits in with their objective of helping the regional economy. We need to protect their overall revenues but distribute the charges, so there is more tax in the south-east, with high incomes and demand, but less in the regions where you want to stimulate growth and regional economies.
"In an ideal world we'd look at a domestic tariff, an international tariff, and a tiny premium in the south-east to offset that. If you genuine believe that regional economic development is a sincere objective, then aviation is an integral part of that and a solution has to be found.""In an ideal world we'd look at a domestic tariff, an international tariff, and a tiny premium in the south-east to offset that. If you genuine believe that regional economic development is a sincere objective, then aviation is an integral part of that and a solution has to be found."
Otherwise, he said, the "responsibility to our shareholders" meant Flybe would have to seek better opportunities abroad. "We have an alternative strategy now. We have a very substantial business growing in Europe and we can expand more there. Until such time as we can see a supplier cost base and taxation base that makes an economic return, we'll be only investing in Europe." Otherwise, he said, the "responsibility to our shareholders" meant the Exeter-based Flybe would have to seek better opportunities abroad. "We have an alternative strategy now. We have a very substantial business growing in Europe and we can expand more there. Until such time as we can see a supplier cost base and taxation base that makes an economic return, we'll be only investing in Europe."
French said Flybe and regional airports would lobby the Davies commission on APD reform as a potential solution to encourage people to use aviation hubs outside the south-east. "His mandate is not APD, but you can't get away from the fact that it impacts on aviation."French said Flybe and regional airports would lobby the Davies commission on APD reform as a potential solution to encourage people to use aviation hubs outside the south-east. "His mandate is not APD, but you can't get away from the fact that it impacts on aviation."
Flybe reported a slight drop in UK passengers from 4.2million in the first six months of 2011-12 to 4 million in the ame period for 2012-13. Revenue remainded stable at £340m, rising to £396m with its new joint venture of Flybe Finland. The group made pre-tax losses of £1.3m. Flybe reported a slight drop in UK passengers from 4.2 million in the first six months of 2011-12 to 4 million in the same period for 2012-13. Revenue remained stable at £340m, rising to £396m with its new joint venture of Flybe Finland. The group made pre-tax losses of £1.3m.