Airline insolvencies and environmental concerns: a comparative legal perspective

Abstract Airline insolvencies can be economically stressful for the countries concerned. One of the significant challenges associated with such insolvencies is the grounding of the aircraft over an extended period due to the pendency of the legal proceedings. The ease with which the lessors can regain possession of the aircraft, triggered by the default of the insolvency company, determines the efficacy of the regulatory climate. Leaving aside the financial troubles the insolvent company faces, it may be additionally expected to match its environmental obligations. Therefore, the push for ‘green insolvencies’ is slowly gaining momentum within the international community. The Cape Town Convention stipulates a sui generis process of seeking possession of an aircraft without undue delay. The countries incorporating the Convention into their domestic setups stand to gain a tremendous regulatory edge over those that are yet to align their national laws with this international instrument. While focusing on developing an efficient insolvency framework is not enough in light of the Sustainable Development Goals, it is possible to address environmental concerns by incorporating more climate-sensitive insolvency frameworks at the national level. The countries may continue to turn to their domestic environmental norms in this regard. This research study aims to throw light on how airline insolvencies need to be more considerate towards environmental interests. It seeks to fill the gaps in the current literature regarding this interface and explore this rather tenuous relationship from a comparative legal lens. The first section of the paper provides an overview of the study. The second section considers the applicability of the Cape Town Convention and discusses the relevant insolvency frameworks in the USA, the United Kingdom, Canada, India, and Nigeria. The last section of the study provides the concluding remarks and suggestions.