Ministers are reportedly considering a cut to Air Passenger Duty (APD) to help rescue regional airline Flybe.
Updated: ministers have confirmed a review of APD as part of a wider review of regional connectivity.
Although Flybe – the biggest regional carrier in Europe – has declined to ‘comment on rumour or speculation’, it is widely believed to be close to collapse.
On Tuesday morning talks were reported to be taking place between the Treasury, the Department for Transport (DfT), and business department BEIS, with ministers considering the option of cutting Air Passenger Duty on all domestic flights and allowing Flybe to defer a £100m tax bill for around three years.
This would give the airline time to implement a recovery plan and avoid breaching EU state aid rules, if applied industry-wide.
Interviewed by the BBC on Tuesday morning, the prime minister said it was ‘not for government’ to rescue companies that run into trouble.
But he added: ‘We see the importance of Flybe in delivering connectivity across the whole of the United Kingdom.’
Mr Johnson said the Government was ‘working very hard to do what we can’ for Flybe.
The Exeter-based airline carries around eight million passengers a year on 139 routes from airports such as Birmingham, Manchester, Southampton, Belfast City, Cardiff and Aberdeen, to the UK and elsewhere in Europe.
According to the Office for Budget Responsibility, Air Passenger Duty is expected to reach £3.7bn overall this financial year. The tax is levied on all departures from UK airports, but varies according to the destination.
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. Instead the Government could invest more in our rail system, and make such trips more affordable.’
Transport Network has approached the DfT for comment.