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Insolvent Airline Not Entitled to Valuable Take-Off and Landing Slots

In a decision of interest to insolvency practitioners, the High Court has ruled that an insolvent airline is not entitled to be allocated valuable take-off and landing slots, in which there is a thriving secondary market.

Airport 1After the airline had been placed in administration, it continued to assert a right to be allocated slots for the pending summer season and launched judicial review proceedings against airport authorities with a view to enforcing that entitlement.

In dismissing the airline’s arguments, however, the Court noted that its air operator certificate had been provisionally suspended by the Civil Aviation Authority. It no longer had any aircraft at its disposal and employed, at most, three pilots, all of whom currently held managerial, non-flying positions. There was only a theoretical possibility of the airline emerging from administration as a going concern.

The Court noted that it was one thing to permit a secondary market in airport slots but quite another to extend its operation to insolvent companies. The allocation of slots to the airline would distort or sterilise part of the market, to the potential detriment of other airlines, and was positively impermissible. The Court ruled that the relevant slots should be placed in a pool for distribution to other airlines.

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