Having ceased trading last month, Monarch Airlines (MAL) is in the process of ‘losing’ its most valuable asset, runway slots, which its administrators had hoped to exchange with other carriers in a bid to raise cash for its creditors.
The problem lies in the fact that Monarch does not own the take-off and landing slots, but instead has historically been allocated them by Airport Co-ordination Limited (ACL), which is responsible for slot allocation. The slots in question cover Manchester, Gatwick, Birmingham, Luton and Leeds-Bradford airports. ACL had chosen not to allocate any slots to Monarch of the 2018 season in view of the business folding.
Monarch’s administrators, KPMG, had taken ACL to the High Court as the carrier had believed it was still entitled to the slots’ allocation “by reason of historical precedence”. One of the administrator’s lawyers stated that: “ACL has no lawful power to refuse to allocate these slots or to ‘reserve’ them pending determination of proposals to revoke or suspend MAL’s operating license.”
Lord Justice Gross said: “Whatever flexibility and discretion ACL enjoys in other circumstances to reserve (or postpone) a decision, it is no longer entitled to reserve its decision on the summer 2018 slots on the facts of this case.
“That would be to sterilize or distort part of the market, to the potential detriment of third parties, for an uncertain period of time.”
KPMG have immediately sought leave to appeal. The judges adjourned a decision on granting the administrators’ request until making a full judgement on the case at a later date. However, they did refuse the administrators’ request for a “stay” on their order in respect of Manchester and Birmingham airports, but granted one in relation to Gatwick and Luton until November 17, or further order.