British Airways’ owner, International Airlines Group, has filed a complaint with Brussels over the Government’s decision to rescue Flybe.
IAG told the European Commission that the rescue deal breached state aid rules and gave the struggling airline an unfair advantage.
The move followed criticism of the £110m rescue deal from outgoing IAG chief Willie Walsh, who called the rescue deal a “blatant misuse of public cash”.
Flybe is owned by Connect Airways, a consortium involving Virgin, Stobart Aviation and Cyrus Capital, which purchased the airline at the start of last February. It is understood that IAG’s complaint claims that the Government is propping up “feeder flights” that benefit Virgin and its partner Delta.
Grant Shapps, the Transport Secretary, highlighted that supporting “regional connectivity” was a key reason for the Government’s agreement with Flybe shareholders.
Mr Walsh said the deal made a “mockery” of previous promises from Flybe about the expansion of regional flights.
Flybe 'backed by well-funded businesses'
Other airline rivals, such as easyJet, have also criticised the state support, while praising the Government’s decision to review Airline Passenger Duty.
Johan Lundgren, the chief executive officer of easyJet, said: “We do not support state funding of carriers but, without the detail of what is exactly proposed, it is hard to comment further. Having said that, what is clear is that taxpayers should not be used to bail out individual companies especially when they are backed by well-funded businesses.”
The shadow transport secretary, Andy McDonald said: “This is another taxpayer bailout for Richard Branson from the Tories. The Government needs to come clean on the restructuring plan, which must include the trade unions, agreed as part of the deal.”
Cyrus Capital is the largest shareholder in Connect Airways, with 40 per cent. Virgin and Stobart Aviation each hold 30 per cent.