Scotland: airline bankruptcy leaves thousands of passengers stranded

The demise of Scottish carrier Flyglobespan leaves about 4,000 passengers stranded abroad. Around 1,300 people were due to fly tomorrow. The accounting firm brought in to take control of the failed airline, told passengers to stay at home and warned that the Civil Aviation Authority was only responsible for financially bailing out 1,000 people who have booked package holidays.

Source: The Guardian; find article here>>.

Bust airlines

MEPs back compensation for grounded passengers:

If your airline goes bankrupt and leaves you stranded what are your legal rights? Members of the Parliament's Transport Committee want grounded passengers to have access to a special compensation fund. In the last decade almost 100 airlines across the European Union have gone bankrupt - leaving thousands of holiday makers and business flyers out of pocket and stuck at a foreign airport.

Sabena, Sky Europe and Olympic Airlines are just three of the large carriers that have gone bankrupt due to a combination of high fuel costs, competition and new security measures after 9/11.

Transport Chair Brian Simpson speaks of "clear loophole"

On 7 October during the plenary session in Brussels, the Chair of the all-party Transport Committee, Brian Simpson (Labour, North West of England), formally asked the European Commissioner for Transport Antonio Tajani to set up "a reserve compensation fund" and consider updating passengers' rights legislation.

He told fellow MEPs that "here we have a clear loophole and it would be preferable for all if we could work together and fill it in".

He added: "We have also floated the idea of establishing a reserve compensation fund, but this must not be seen as a demand. We merely wish to open up the debate as to what mechanism will help us best solve this problem."

Transport Commissioner Tajani backs compensation

Commissioner Tajani told Members that "passengers should indeed receive compensation. We are working on specific measures to find the best solution. One solution is a compensation fund derived from airlines' contributions. Another would be changes in bankruptcy law in the member states".

There is a consensus across the Parliament's main political groups that the European Union needs to do more to help passengers stranded by bankrupt airlines. A Parliamentary resolution is due to be tabled later in the autumn.

Source: 20091002STO61739

Australia: holiday makers warned on using unlicensed travel agents

The Australian Travel Compensation Fund says booking with a licensed agent is “more important than ever'”as more businesses struggle in the tough economic climate. The TCF has exceeded $50 million in payments to Australian travellers who have been left out of pocket after their travel agencies collapsed. However, travellers are eligible for financial protection only if they used a licensed agent. The TCF was set up in 1986 to provide a safety net for travellers who would lose money if a travel agency collapsed or became insolvent.

Source: news.com.au; find article here>>.

Europe: Thousands of passengers stranded after financial crash of Sterling Airways

Icelandic-owned Sterling Airways has cancelled all flights, leaving hundreds of passengers stranded at London Gatwick and thousands stranded across Europe. The airline which flies from Gatwick to Copenhagen, Stockholm and other Scandinavian cities, blamed the Icelandic financial crisis for its bankruptcy.

In the information issued to passengers, the airline told customers who have directly purchased their tickets on Sterling’s website that they will not be refunded neither will their return flights. They are advised to book their return flights with another airline company.

Source: eTurboNews; find article here>>.

UK: Federation of Tour Operators calls for financial protection for all air travellers

Many Silverjet customers face applying as unsecured creditors to the airline’s adminstrator, while others who booked flights as part of a package will be protected.
Following a long drawn out review, in April this year the £1 per passenger Air Travel Organisors' Licensing Protection Contribution arrangements began as a financial contribution used to pay for repatriation costs and refunds from the Air Travel Trust Fund for customers of any failed tour operator.
The FTO argued strongly that the opportunity should be seized to widen the scheme to include customers of airlines, but regrettably this was rejected by the Government following strong lobbying by some airlines. Events before and since have shown that airline customers badly need comparable protection to customers of tour operators, and in turn tour operators deserve a level playing field to compete fairly with airlines, given the increasingly blurred and irrelevant line between a ‘package’ and separate air and hotel bookings.

Source: FTO; find full statement here>>.

Hawaii: Aloha Pilots Seek Court Injunction

The Aloha Airlines pilots, represented by the Air Line Pilots Association, Int'l, (ALPA), filed a complaint in U.S. Bankruptcy Court today seeking injunctive relief against the airline. ALPA asserts that Aloha Airlines management's total disregard for pilots' collective bargaining agreement during the past few weeks has triggered a "major dispute" under the Railway Labor Act, which governs airline contract negotiations. ALPA seeks an order from the Court to force Aloha Airlines to comply with its contract.

ALPA will continue efforts to resolve the major dispute with management, but if no agreement is reached by 12:01 a.m. on Saturday, April 26, 2008, ALPA and the Aloha pilots may, after following all of ALPA's internal preliminary procedures, strike any or all of Aloha's operations.

Source: eTurboNews; read full article here>>.

Spain: airline in crisis

Air Madrid has suspended all of its flights leaving thousands of passengers stranded over Christmas.It is reported between 200,000 and 300,000 passengers could be abandoned as a result of the airline's action. Its main destinations are Buenos Aires, Sao Paolo and Mexico. The independent carrier is blaming its actions on a development ministry threat to suspend its licence. The budget airline said ticket sales had fallen dramatically since the announcement from the development ministry and suppliers had refused it credit. The ministry said that Air Madrid had not fully carried out an action plan to cut delays, saying it would have to present new information to support its case to keep flying.

Read more here.

"Who Takes the Haircut When a Carrier Fails?"

When Canada 3000 ("C3") failed in late 2001, it owed CDN$34m. to various Canadian Airport Authorities and to NAV Canada ("Authorities"). Its planes were leased from a variety of legal titleholders ("Owners"). The Authorities exercised statutory powers to seize the C3 aircraft on account of the debts. The Owners went to Court to recover "their" planes. The Authorities sued the Owners, contending they were jointly and severally liable with C3 for the debts. The Supreme Court ruled on June 9 that: a) The Owners were not jointly and severally liable for the debts; b) The Authorities' rights take priority and they CAN look to the aircraft (or the security that was posted to allow for their release) to satisfy the debts. The Court found the Owners to be sophisticated business people quite able to assess (and bear) risk. Conversely, the Authorities are obliged by law to provide services to all carriers, regardless of their solvency.
See http://scc.lexum.umontreal.ca/en/2006/2006scc24/2006scc24.html

(Originally posted by Doug Crozier)