Flybmi

To ask the Secretary of State for Transport to make a statement on airline Flybmi going into administration.

On 16 February British Midland Regional Limited, the east midlands-based airline which operates as Flybmi, announced that it had ceased operations from that date and filed for administration. The group has surrendered its licence to operate in the United Kingdom, which means that it is no longer able to operate flights.

There has already been significant speculation about the reasons behind Flybmi’s failure. Ultimately, this was a commercial matter for the airline. Flybmi operated in a very competitive industry and was exposed to wider pressures faced by the global aviation industry, such as increasing fuel prices. It is very disappointing that it has gone into administration, and we know that this will be a very difficult time for those who have lost their jobs as a result. Many of those affected are highly skilled. We are confident that they will find suitable employment opportunities, and we welcome the moves by the sector to offer such opportunities.

The Insolvency Service’s redundancy payments service is working with the administrators of Flybmi to ensure that former employees’ claims from the national insurance fund, which may include redundancy pay, holiday pay, arrears of pay and compensatory notice pay, are assessed as quickly as possible. However, given that the sector is ready to recruit, I hope that new jobs will be found soon.

I also recognise that this is a disruptive and distressing time for passengers, and the Government’s immediate priority is fully focused on supporting those affected. We are in active contact with airports, airlines and other transport providers to ensure that everything possible is being done to help them. We and the Civil Aviation Authority are working closely with the travel industry to ensure that the situation is managed with minimal impact to passengers.

There are enough spaces on other flights for passengers to return home on other airlines, and we welcome the sector’s move to offer rescue fares for affected passengers. For example, Flybmi has codeshares across the Lufthansa group and passengers on these flights will be subject to the EU passenger protection rules. They will be provided with assistance and rerouted to their final destination. Travel insurance and credit card bookings are worth noting here, and most passengers were business travellers so will be covered through their work. In addition, the Civil Aviation Authority is providing detailed information for affected passengers on its website, including how people can claim back money they have spent on tickets.

The Government recognise the importance of maintaining regional connectivity, which is why we fund a public service obligation route from Derry/Londonderry to London, which was recently extended from 1 April 2019 for a further two years, the norm for PSOs. The chief executive of Derry council has the power to transfer the PSO contract to another airline for up to seven months to allow for a new procurement process to be conducted. Subject to due diligence we expect the council to sign contracts and appoint an airline later this week, and we expect services to resume swiftly. Derry City and Strabane Council takes forward that part; it is its responsibility.

It will not have escaped anybody’s attention that the Transport Secretary is sitting on the Treasury Bench yet has not come to this House to make a statement. He seeks to hide behind his Minister; she has been dropped in it. Perhaps he has been dealing with the bombshell dropped by Honda this morning.

Eighteen months ago Monarch Airlines left taxpayers with a bill for more than £60 million. Clearly the Government have failed to learn the lessons from that disaster. In fact, the Transport Secretary has dithered and delayed for nearly a year, allowing Loganair to cherry-pick the profitable parts of Flybmi before putting it into administration. The Government have clearly done nothing to stop a repeat of Greybull’s asset-stripping of Monarch.

Flybmi has been in difficulty for some time, so what plans did the Department for Transport have for an airline’s collapse? Have not the Government left both Flybmi’s passengers and staff high and dry? Why was the airline allowed to sell tickets only hours before administration? Why are the Government not helping people get home this time?

On Thursday last week, the Government agreed to extend the subsidy for Flybmi’s London to Derry route. Was the DfT aware that the airline was about to collapse when it agreed this commitment of public money? What checks did Ministers do on the airline prior to agreeing this? The Government’s aviation Green Paper boasts of growth and connectivity; in reality, Flybmi is the second UK airline to fail within months, while the UK’s direct connectivity has declined.

The Government’s complacency is staggering. Flybmi has said that

“the challenges, particularly those created by Brexit, have proven to be insurmountable”,

and:

“Current trading and future prospects have also been seriously affected by the uncertainty created by the Brexit process, which has led to our inability to secure valuable flying contracts in Europe and lack of confidence around Flybmi’s ability to continue flying between destinations in Europe.”

I have never been a woman who has been “dropped in it”; it is my job and I am disappointed that the shadow Transport Secretary wanted to see a he and not a she at the Dispatch Box, but hopefully I can respond to his questions in the best way I can. I am also a little disappointed that the shadow Front-Bench team are all in their seats today considering the bold decisions their colleagues have taken to leave the Labour party because of a number of issues, including leadership and institutionalised antisemitism. We are talking about disappointment, but we should focus on the passengers.

We were made aware of Flybmi going into administration at the weekend. A number of conversations have been taking place. The Aviation Minister has spoken to the Cabinet Secretary responsible for transport in Scotland.

The Secretary of State has spoken to the Northern Ireland Secretary and to the local MP, the hon. Member for East Londonderry (Mr Campbell). Information is being made available on the Civil Aviation Authority website to alert passengers about how they can get home. We must focus on the passengers who may be struggling to get home, but there are lots of alternative flights and that information is being made available. More than 300 staff have been impacted, but it is interesting to note that Loganair and Ryanair are making jobs available and recruiting heavily. The British Airline Pilots Association is also exploring options for pilots with partner airlines.

The hon. Gentleman noted the business case for Flybmi. It was possible to recognise, looking at its accounts, that it had been struggling for a while, including before Brexit and before the referendum. It is not an easy market for airlines to be in, especially regional and local airlines. He mentioned Brexit as a reason for Flybmi going into administration, but it is important to note that several other smaller airlines in Europe have also gone into administration, including Germania, VLM, Cobalt and Primera, and there are lots of different reasons why this takes place. We cannot always blame Brexit when we do not understand the business case.

Is there any known interest from other aviation companies or entrepreneurs in buying assets and taking over the staff in greater numbers, rather than in just cherry-picking the routes?

My right hon. Friend makes an important point. The staff are all highly skilled and very professional, and it is important to note that Loganair has already made it clear that it is keen to recruit. I also believe that Ryanair has set up a stall in some of the regional airports to try to bring some of those professional staff on board. We are very positive that they will be able to secure jobs, although this must be a very distressing time for them, as it must be for the passengers. A number of airlines are showing interest in the routes, and Derry Council has made it clear to us that it has some interested parties lined up to take on the route from Derry airport. It will make that information public as soon as it can.

Our thoughts at this time are with the staff, whose future is uncertain, and with those who have had their travel plans thrown into disarray, who are out of pocket or who are stranded as a result of the collapse of Flybmi. I am pleased that Loganair has announced that it is stepping in to cover the routes from Aberdeen to Bristol, Oslo and Esbjerg from 4 March. At a time when Aberdeen is feeling the impact of the loss of easyJet flights, the news of Flybmi going into administration is deeply worrying, particularly because it explicitly mentioned Brexit uncertainty as one of the reasons for this happening. Recent studies have shown that Aberdeen is set to be the UK city that will be the hardest hit by Brexit. It would be helpful if the Minister told us what the Government are doing to protect slots at Aberdeen and other regional airports after Brexit and what they are doing to ensure that airlines are encouraged to use those slots and that our regional airports have access not only to hub airports but to destinations.

The hon. Lady makes some important points, focusing on passengers and ensuring that they can continue their journeys and on the staff involved. One of Flybmi’s issues was that its flights were not always full, but the number of people who could have been impacted has been reduced as result. However, everyone whose journey home or to work has become difficult must be taken care of, and I ask them to pay attention to the CAA website for further information. Flybmi’s business model was just no longer working in a competitive market. Its public accounts show that it was in trouble before the referendum, so putting the blame on Brexit really does not wash. The hon. Lady makes a powerful point about Aberdeen, and we will do what we can to ensure that we support all our regional airports.

While the failure of Flybmi’s business model and the loss of 100 jobs in my constituency is a setback causing obvious distress for employees and disruption for passengers, it comes at a time of considerable growth and development in and around East Midlands airport, with over 7,000 new jobs being created over the next two years. Will the Government do all they can to ensure that Flybmi’s highly skilled employees are returned to employment as soon as possible, just as they did in 2012 when Flybmi’s parent company, British Midland, ceased trading with the loss of 1,100 jobs in my constituency?

My hon. Friend is a powerful advocate for his constituency and makes some valid points, particularly about the loss of skilled jobs. We were only made aware that Flybmi was going into administration over the weekend, and it is interesting to note the number of other airlines that have nipped in to see who they can recruit. I am confident that jobs will be found. My hon. Friend refers to passengers. The UK has a healthy aviation sector, and we must not dwell on undermining it. We had 284 million terminal passengers in 2017—an increase of 6% on 2016—so the market is healthy.

The Government have been consulting on arrangements for airline insolvencies for almost a year, so will the Minister explain how yet another UK airline can fail without the Government taking any action? Can I press the Minister to explain why the airline continued to sell tickets just hours before going into administration?

An independent review of airline insolvency by Peter Bucks is due to report, and it will make clear what happens to airlines when difficult decisions are made. There is an interesting point to note about how airlines can continue to sell tickets when they are struggling, which is one of the peculiar things that happens in the sector. If an airline were to stop selling tickets, that would make it clear that it was about to go into administration, so airlines do keep selling tickets quite close to the point at which they are about to go into administration. The Peter Bucks review will no doubt examine that point.

I welcome the Minister’s restated commitment to the PSO in relation to Derry and Stansted. Given this latest news, what further assessment is necessary of the long-term viability of Derry airport and of the welcome improvements to the A6 between Londonderry and Dungiven, which will increase connectivity to Belfast International airport? What further support does the Minister anticipate in the light of the Derry City and Strabane regional city deal?

It is good that my hon. Friend notes the importance of Derry City and Strabane District Council’s role in procuring and maintaining the contract, and it is interesting to note the council’s positivity about other airlines taking on the route. I noted over the weekend that Ryanair was offering flights for less than £10 for those who wished to travel from Belfast, although that means making another journey. We are obviously committed to supporting our regional airports, to holding the CAA to account so that it monitors what airlines are doing when they are struggling and to examining what we can do to help passengers to continue their journeys across the UK.

It is quite frankly astonishing that the Minister did not mention Brexit in her initial comments, because the company certainly did. Flybmi said that uncertainty around Brexit and the possible costs of needing both UK and EU licences in the event of a no-deal Brexit were factors in its decision to go out of business. Will the Minister now make it clear whether all airlines should be planning for a no-deal scenario and looking at how to get dual licences?

The EU has been very clear that the UK aviation industry can continue as it is. We have been having good conversations with the EU on this, and we have tabled a number of statutory instruments and regulations to make sure we can continue flying. I just do not buy the argument that planes will not fly.

These won’t fly anymore.