A recent Court of Appeal decision regarding a claim of economic duress against an airline reinforced the fundamental importance of ensuring contractual clarity and certainty as a matter of English law. For companies operating in the aviation sector, where there may be an unequal power dynamic, parties will be unable to look to economic duress to undo a lop-sided bargain unless there is some unlawful action or provable bad faith on the part of the party with greater power.
In a recent High Court Case, Aircraft Purchase Fleet Limited (APFL) sought $260 million in damages from Compagnia Aerea Italia (CAI) for an alleged repudiatory breach of a framework agreement under which CAI had agreed to lease certain new Airbus A320 family aircraft. APFL had agreed to buy these aircraft from Airbus. However, CAI argued that it had become impossible for either party to perform the framework agreement following Airbus' termination of its obligations to sell aircraft to APFL.
In July 2017 the government released proposals to regulate the use of drones in the United Kingdom. Since then, the regulation of drones has been transferred to the European Union and now falls under the EU Basic Regulation. Many of the UK government's proposals for drone operators are included in the EU Basic Regulation, which sets the groundwork for establishing rules that will require operators of drones that weigh 250kg and above to register them and ensure that they are marked for identification.
Monarch Airlines Limited's administrators have won an appeal with the Court of Appeal regarding Monarch's rights in and to certain 'slots' at Luton and Gatwick airports after it went into administration. The case is significant, as it reaffirms the value ascribed to slots by airlines and their financiers as rights of the airline and the fact that, as a result, they can be traded for value even after insolvency.
With competition among aircraft lessors remaining fierce, airlines are taking an increasing proportion of aircraft on operating leases. The 'wholesaling' of debt financing – where the primary recourse entity on financings is the lessor rather than the airline – is an important recent trend in the aircraft financing market that is likely to continue. Aircraft financiers should be aware of the structural items to consider in executing operating lessor financings and the pitfalls to be avoided.