The Act of Placing…..

The fin of a 747 is 60 foot high. The screen height of an airplane is sometimes 50 feet, sometimes 35, sometimes as little as 15.

You don’t pay parking by the height of an aircraft. More typical is payment by weight.

Landing and parking costs mount up over time. It could well be that an aircraft runs up significant debts well before it is seized by someone – it is not something done lightly. The debt is important since in some commercial arrangements, the debt has to be written off if the aircraft ceases to exist – meaning someone, somewhere has to take a hit on their balance sheet.

Well, if it is not flying, there are no airspace costs.

Maybe I expressed myself poorly. Where does airspace begin? The fin of a 747 is 60 foot high. The screen height of an airplane is sometimes 50 feet, sometimes 35, sometimes as little as 15.

But the debts accrued by the aircraft can definately outweigh the value of the hull. That’s why you can see loads of old aircraft laid up and rotting around the place, since the cost of removing them outweighs the value of the hulk. If the aircraft is worth $10,000 as razor blades, the airport is owed $15,000 in landing and parking, and the removal cost is $5,000 – why wouldn’t you leave it there??

What is the relevant parking cost here? The landing and parking costs estimated and accrued by past operations? Or, the costs of losing the plot of land permanently for all future times? If the aircraft is worth $10 000 as razor blades and the removal cost is $5000, how are the debts relevant and why not remove it? The airport can never get the debts paid for, and unless they remove the plane whether as scrap or flying frame, they have lost a valuable piece of land.

After all, when a company goes bankrupt and its planes are sold, the debts do not stay fixed at its planes

In an ideal world, yes. But frequently, before the airline actually gets wound up, creditors will put liens against the aircraft – rather in the same way that some unfortunate people find that the car they had bought had outstanding hire purchase debt.

But then there is the scrap value of the airframe, and the value of airport land and airspace taken up by the plane…

Well, if it is not flying, there are no airspace costs. But the debts accrued by the aircraft can definately outweigh the value of the hull. That’s why you can see loads of old aircraft laid up and rotting around the place, since the cost of removing them outweighs the value of the hulk. If the aircraft is worth $10,000 as razor blades, the airport is owed $15,000 in landing and parking, and the removal cost is $5,000 – why wouldn’t you leave it there??

In the general case – when an airline fails, there will be a number of companies, and individuals, who will be owed money. This will typically include fuel companies, staff, airports, leasing companies and Eurocontrol.

And ticketed passengers?

What the receivers must ensure is that all available funds are distributed according to strict rules – that means, in effect, that there is a pecking order for creditors, and if this is not observed, then the legal ramifications can be long and unpleasant – and very expensive.

The first stage will be the receivers trying to establish exactly what the company has – in terms of cash, outstanding debtors, assets etc – and then paying out whatever it can raise, according to the debtors schedule, from this. It may amount to just a few pence in the pound.

The reasons airports stop airliners, physically in some cases, is that there can be a grey area about where the airline’s assets and debts are. In the case of a leased aircraft, the lessor will want their aircraft back asap – since it has to earn its keep, and the lease agreement with the failed airline means that if the airline defaults (as, by definition a failed airline has), then the aircraft reverts to the lessor. However, in the early stages of a liquidation, the airport can take the view that the aircraft is still a chattel of the airline which owes it money; until the whole situation is clarified, the airport makes efforts to stop the aircraft being removed – to force the issue.

The reason some aircraft are left to rot is rather simpler. If Airline ABC owns a 727, for example, which lands somewhere and is impounded by the airport for non-payment of bills, then the airport will prevent the aircraft from leaving. If the airline can’t pay, then the bills mount up – parking etc – until the outstanding bill becomes larger than the aircraft is worth. Tends to happen with older, less desirable aircraft (eg the 727) than with newer equipment (which has a far higher value). So, do all flyable aircraft have a positive value? No, some will have debts that outstrip any potential resale price.

But then there is the scrap value of the airframe, and the value of airport land and airspace taken up by the plane…

If the plane cannot be moved and sold while still flyable rather than derelict (for legal reasons), it would be difficult, for the same legal reasons, to scrap the plane once it is derelict. Which means that a valuable part of airport land and airspace is lost for good, and not paid for.

After all, when a company goes bankrupt and its planes are sold, the debts do not stay fixed at its planes. The planes are sold for what their market value is, the creditors get their proportional share of the proceeds and lose everything else owed to them, and the buyers of the planes get the planes for their market value unburdened by the debts lost by the creditors of previous owner… Where does this thing go wrong?

Parking behind a/c has happened before. Where i am we had a certain airline which did not like to sign the documents for de-icing so the rig got parked up behind the aircraft!:dev2:

It is very dubious, legally, to impound anything on behalf of a third party.

In the general case – when an airline fails, there will be a number of companies, and individuals, who will be owed money. This will typically include fuel companies, staff, airports, leasing companies and Eurocontrol.

What the receivers must ensure is that all available funds are distributed according to strict rules – that means, in effect, that there is a pecking order for creditors, and if this is not observed, then the legal ramifications can be long and unpleasant – and very expensive.

The first stage will be the receivers trying to establish exactly what the company has – in terms of cash, outstanding debtors, assets etc – and then paying out whatever it can raise, according to the debtors schedule, from this. It may amount to just a few pence in the pound.

The reasons airports stop airliners, physically in some cases, is that there can be a grey area about where the airline’s assets and debts are. In the case of a leased aircraft, the lessor will want their aircraft back asap – since it has to earn its keep, and the lease agreement with the failed airline means that if the airline defaults (as, by definition a failed airline has), then the aircraft reverts to the lessor. However, in the early stages of a liquidation, the airport can take the view that the aircraft is still a chattel of the airline which owes it money; until the whole situation is clarified, the airport makes efforts to stop the aircraft being removed – to force the issue.

The reason some aircraft are left to rot is rather simpler. If Airline ABC owns a 727, for example, which lands somewhere and is impounded by the airport for non-payment of bills, then the airport will prevent the aircraft from leaving. If the airline can’t pay, then the bills mount up – parking etc – until the outstanding bill becomes larger than the aircraft is worth. Tends to happen with older, less desirable aircraft (eg the 727) than with newer equipment (which has a far higher value). So, do all flyable aircraft have a positive value? No, some will have debts that outstrip any potential resale price.

Hope this helps.

I don’t know about the 727, but the short answer is maybe. In some cases the ownership issue is so complex, that the aircraft becomes derelict before these issues are settled. The Aircraft as an asset maybe written off by the owner, again normally after ensuring the cost of making it flyable exceeds any value other than scrap. There are many variations.

Occasionally there is an ironic twist in that the owner is showing a full value for the AIrcraft on its books, when the Actual Aircraft has been stripped, and dumped at the Airfield edge with weeds growing through it. But hey if you don’t pay for someone to keep an eye on it and indeed ensure it is maintained what can you expect!

So do airports ever recoup their monies from impounded aircraft, or are they in fact just ‘guarding’ someone elses payback ? Glasgow’s new remote stands by the tower have become notorious for hosting impounded aircraft in recent years, the Air Scotland A320 being a recent example, the Zoom and XL aircraft more recent.

….There is a 727 left in Hanoi by a bankrupt Cambodian airline. What is it doing?

Rotting away most probably, in that climate.

Do all flyable/parked planes have a positive value?

There is a 727 left in Hanoi by a bankrupt Cambodian airline. What is it doing?

I don’t know about the 727, but the short answer is maybe. In some cases the ownership issue is so complex, that the aircraft becomes derelict before these issues are settled. The Aircraft as an asset maybe written off by the owner, again normally after ensuring the cost of making it flyable exceeds any value other than scrap. There are many variations.

Occasionally there is an ironic twist in that the owner is showing a full value for the AIrcraft on its books, when the Actual Aircraft has been stripped, and dumped at the Airfield edge with weeds growing through it. But hey if you don’t pay for someone to keep an eye on it and indeed ensure it is maintained what can you expect!

Its a cruel world, but as one who ended up being owed GBP20,000 by one Airline Client, I wish I had been able to seize assets equivalent to that amount, instead I got 4 pence in the pound.

Do all flyable/parked planes have a positive value?

There is a 727 left in Hanoi by a bankrupt Cambodian airline. What is it doing?

Expanding on PMN’s comments:
An Airline with a contract at an Airport gets billed for landing fees and parking charges by invoice at the end of each Month, with usually a specified number of days to pay after invoice date. Similarly the GHA and function specific Agencies will operate in a similar way.
When a Carrier suddenly ceases Operations, then Airports, GHA’s etc will tend to be owed at least one month, possibly three (as these Invoices are often subject to queries from the carrier).

As the Airports etc are suppliers they are way down the list of creditors to be paid off, hence they automatically stop Assets being removed to ensure they at least see some of the debt paid.

Sometimes the Airport and the GHA will cooperate on Asset seizure, other times the Airport acts alone. Depending on jurisdiction a Writ may be posted on the Asset.

Its a cruel world, but as one who ended up being owed GBP20,000 by one Airline Client, I wish I had been able to seize assets equivalent to that amount, instead I got 4 pence in the pound.

…Airport cars behind grounded planes.

Is it symbolic thing or law?

Seems to be a bit OTT imo, not like some crew are going to turn up and run off with the planes is it?

It’s certainly happened in the past.

…Half completed thread titles on the forum!

not like some crew are going to turn up and run off with the planes is it?

It’s not so much crews running off with the planes, it’s more the fact that the airline owe the airport company rather a lot of money for landing and handling fees, so when that amount of money gets a little too much, the airport company park things round the aircraft and say ‘it goes nowhere until you pay us!’

Paul

Seems to be a bit OTT imo, not like some crew are going to turn up and run off with the planes is it?

They are still looking for the stolen B.727 in Africa!:p