Flybe will continue full operations after its owners reached an agreement with the British government Tuesday.

Following discussions with the faltering carrier over the past couple of days, the U.K. Treasury said that it plans to review the country’s Air Passenger Duty on roundtrip domestic flights ahead of setting the next federal budget in March. Flybe has said that the air tax has hampered Flybe’s finances. The tax is 26 British pounds (about $34) for domestic roundtrips, excluding flights from the Scottish Highlands and Islands.

The government also pledged to conduct a review of regional connectivity in an effort to ensure that all communities and regions have adequate domestic transport options.

In exchange, Flybe’s owner consortium has agreed to invest additional funds into the carrier. Flybe, which is slated to change its name to Virgin Connect this year, was acquired last February by a consortium called Connect Airways, which includes Virgin Atlantic.

“We are very encouraged with recent developments, especially the government’s recognition of the importance of Flybe to communities and businesses across the U.K. and the desire to strengthen regional connectivity,” Connect Airways CEO Lucien Farrell said in a prepared statement. “As a result, the shareholder consortium has committed to keep Flybe flying with additional funding alongside government initiatives.”  

Flybe is Europe’s largest regional airline, serving 80 destinations in 15 countries.


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