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Airline Insolvency

Following the collapse of Monarch in 2017 the UK Government undertook an Airline Insolvency Review in which the final report has been published. You can read it here and if implemented it would help to protect passengers in the event an airline goes bust.

There are some key changes in respect of ensuring passengers can be returned to the UK and it looks at a new Insolvency regime (Special Insolvency Regime "SAR") for airlines that may allow a period of trade in Administration. This will be known as "Keep the Fleet Flying".

This regime would look at ensuring key people such as staff and suppliers are guaranteed payment to ensure continuation and a stop would be placed on the terminating of contracts for essential supplies. 

The law is also likely to impose terms on the airlines to provide information about their financial fitness to the Civil Aviation Authority, in particular any adverse changes to their financial position. The CAA would be given extra powers to to monitor and enforce airline licence compliance.

We are not covering this report as part of CPD Tap as we consider this a niche area of the law that may not interest all of our clients (the latest analysis estimates a 13% chance of an airline insolvency in the next year). However, we all love a holiday and often do not consider what would happen if your airline went bust. These changes make for interesting reading for IPs and holiday-makers alike.  

 

Posted: 06.09.2019
Tags:  announcement
 


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