Perhaps I'm misreading this report, but this is a weird ruling:
The Supreme Court has affirmed a law that allows airport authorities to seize aircraft from bankrupt carriers — even if the planes are leased.
But in a ruling filled with technical twists and turns, the court says the leasing companies are not responsible for landing fees and other fees owed by airlines that go belly up.
In a unanimous 7-0 decision, the high court today ruled in favour of Nav Canada and a number of airport authorities across the country in cases involving the bankrupties of Canada 3000 and Inter-Canadian Airlines.
If that's a correct report, it's morally incomprehensible. How is a leasing company supposed to be responsible for the finances of a lessor? Why does the leasing company lose their assets — the planes in question — for debts contracted and defaulted upon by a customer? Does this not move the moral hazard from the defaulting contracting party to a non-contracting party? How is this right?
Posted by Nicholas at June 9, 2006 11:32 AM
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