Chapter 11 and the level playing field: should Chapter 11 be considered as a subsidy?

Sebastian Bock, Peter Forsyth, Hans-Martin Niemeier, Benny Mantin

Research output: Contribution to journalArticleResearchpeer-review

2 Citations (Scopus)

Abstract

This paper assesses whether Chapter 11 is a form of subsidy for US airlines. US airlines have used Chapter 11 to restructure their operations. This has been criticized as a subsidy by major non US airlines and governments for a long time and recently, in the “level playing field” debate. Applying legal and economic perspectives of subsidy, we examine the different opportunities of Chapter 11 to reduce airlines’ costs. It is argued that most of the forms available, such as the modification of collective bargaining, do not constitute a subsidy. Only the termination of pension plans might involve a subsidy, but only using a legal definition of doubtful relevance since there is normally no use of public funds.

Original languageEnglish
Pages (from-to)39-46
Number of pages8
JournalJournal of Air Transport Management
Volume74
DOIs
Publication statusPublished - Jan 2019

Keywords

  • Bankruptcy protection
  • Chapter 11
  • Level playing field
  • Subsidies

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