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KPMG Appeals Monarch Slots Ruling

Photo: Slots previously held by Monarch at Manchester and Birmingham have been returned to the slot pool for re-allocation to other carriers. (Monarch Airlines)

 

Administrator KPMG has launched an appeal after losing a High Court battle to retain lucrative airport slots held by the recently failed Monarch Airlines.  The UK’s fifth-biggest carrier ceased operations in early October after running into financial difficulties, leaving thousands of passengers stranded overseas.

Commenting in the immediate aftermath, the administrator said it was “hopeful” some of Monarch’s take-off and landing slots at London/Gatwick, Luton, Manchester and Birmingham, worth an estimated £60m and described by KPMG’s lawyers as the airline’s “last valuable asset”, could be sold to pay company creditors.

This bid was derailed, however, after London’s High Court ruled on November 8 that as Monarch is not flying and is unlikely to do so in the future, Airport Coordination Limited (ACL) – the independent body responsible for slot allocation – had no duty to assign them slots for the summer 2018 season.

Confirming their decision, Lord Justice Gross and Mr Justice Lewis said: “It is one thing to permit a ‘secondary market’ in slots.  It is another to extend it to companies in insolvency.”  The judges added: “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 sterilise or distort part of the market, to the potential detriment of third parties, for an uncertain period of time.”

As a result of the ruling, described by KPMG as “disappointing”, slots at Birmingham and Manchester were immediately returned to the slot pool for re-distribution to other airlines.  Those at Gatwick and Luton, however, remain unallocated pending the outcome of the appeal.

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