Legal Aspects of Airport Programs. Topic 1-07. The Impact of Airlines Bankruptcies on Airports

The establishment of a system of bankruptcy was entrusted to Congress under Article One of the Constitution of the United States. The basic theory of a succession of bankruptcy acts has been to provide debtors protection from their creditors while providing an orderly system for paying all creditors. Following the September 11, 2001 ("9/11") terrorist attacks on the U.S., airline losses surged and bankruptcy of several major carriers became increasingly likely. In the year 2005, Northwest Airlines; Delta Air Lines, including its wholly owned subsidiary, Conair; Mesaba Aviation (Northwest Airbank); Era Aviation; and Independence Air all filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code. Many of these airlines were already experiencing record financial losses due to rapid cost escalation and a decline in business traffic. Major network carriers began reducing operating costs and restructuring operations by cutting back on seat capacity, reducing or withdrawing service or service frequency, and in some markets replacing large aircraft with smaller aircraft. Accordingly, a significant number of airports, particularly those served by major network carriers, faced significant financial challenges. Since 9/11 these airports have experienced an increase in safety and security costs while many have suffered a decline in revenue due to a reduction in passenger air travel. This project will examine how bankruptcy courts have responded to legal questions raised concerning these issues. The objective of this study is to determine the legal issues presented by the filing of airline bankruptcies and how airport lawyers and courts responded to them. There is a need for an information source that synthesizes the available legal theory, statutes, analysis, and case decisions pertaining to the impact of airline bankruptcies on airports; includes in one place those sections of the Bankruptcy Code that apply to airport claims; summarizes the bankruptcy process for airport attorneys, paying particular attention to those sections of the bankruptcy code that apply only to airports; references reported judicial decisions in airline bankruptcies; and summarizes any recent articles in law reviews or similar publication that describe problems and issues that have arisen in airline bankruptcies.


  • English


  • Status: Completed
  • Contract Numbers:

    Project 11-01, Topic

  • Sponsor Organizations:

    Federal Aviation Administration

    800 Independence Avenue, SW
    Washington, DC  USA  20591

    Airport Cooperative Research Program

    Transportation Research Board
    500 Fifth Street, NW
    Washington, DC    20001
  • Project Managers:

    Chisholm-Smith, Gwen

  • Performing Organizations:

    Jocelyn Waite Associates

  • Principal Investigators:

    McDaniel, James

  • Start Date: 20071001
  • Actual Completion Date: 20091201
  • Source Data: RiP Project 18103

Subject/Index Terms

Filing Info

  • Accession Number: 01462591
  • Record Type: Research project
  • Source Agency: Transportation Research Board
  • Contract Numbers: Project 11-01, Topic
  • Files: TRB, RiP, USDOT
  • Created Date: Jan 3 2013 2:06PM