An overhaul of Air Passenger Duty agreed as part of a rescue deal for Flybe could be abandoned under new chancellor Rishi Sunak.
The successor to Sajid Javid is reported to be against a cut to the air tax.
A government source told the Daily Telegraph: “The change of chancellor will make it significantly less likely to happen.
“The message was: ‘Don’t bank on it happening.’”
Slashing APD was a central part of a rescue deal agreed with ministers last month when the regional airline came close to appointing administrators after running low on cash.
The carrier’s backers – who include Virgin Atlantic and Southend airport owner Stobart Group – are thought to have warned that a tax cut is essential for its survival.
Talks are continuing over a taxpayer-funded £100 million bridging loan to fix a hole in Flybe’s finances, which could go ahead even if APD is not reduced.
Ministers last month announced a review of the levy as applied to domestic flights as part of a package of short-term measures to boost regional connectivity and ensure Flybe’s services continued running.
Sunak is said to have opposed the reforms in his previous role as chief secretary to the Treasury, according to the newspaper.
A Flybe spokesman said: “Flybe and its shareholders continue to have productive and positive discussions with the government regarding support to enable us to deliver our long-term strategic plan.”
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