How To Stop A Plane - Get It Impounded

LandSweetLand · Wed Apr 06, 2016 8:13 am

http://www.nbcnews.com/business/travel/court-rules-jet-can-be-impounded-over-compensation-passenger-n550846

Quote:

Ever been frustrated by an airport delay or by an airline that won't respond to your complaint?
One passenger took it to the next level after waiting so long for compensation over a marathon mechanical delay that authorities threatened to impound the airline's jet until it paid her $680.
Officials threatened to impound the Thomas Cook Airlines plane.
The German vacationer had been waiting four years for the payout after her Thomas Cook Airlines flight from Vienna, Austria, to the Caribbean took off 22 hours late.
...
A court order for payment was secured, and an official informed Salzburg Airport Friday that he was empowered to ground a Thomas Cook Airlines jet — worth tens of millions of dollars — until the outstanding amount was paid.
Thomas Cook's sister airline, Condor, immediately paid the money so that the aircraft did not need to be impounded and no enforcement action was needed.

This is the first time I've seen any real punishment threatened toward an airliner not giving the compensation they were meant to.
Now there's precedence it'll be interesting to see whether it happens more often.

[Edited 2016-04-06 01:19:42]

Francoflier · Wed Apr 06, 2016 8:42 am

Now that's what i call commitment.

He probably did it to make a point rather than for the money itself. It even probably cost him more to go all the way to the court than what was owed to him.

The thing is that (some) airlines drag their feet when it comes to compensating pax as they know most will likely not come this far to get their money back.

Most, but not all, obviously.

vfw614 · Wed Apr 06, 2016 9:20 am

Not spectacular at all. Once there is a court judgement, the winning party can execute it - an airline is not different from any other party to a court proceeding. It is a straightforward debt collection case. It has been done before as well - a couple of years ago Ryanair was faced with a bailiff who was about to impound a plane at HHN.

The case you mention was, IIRC, more or less a marketing gimmick by one of the companies collecting EU compensation on behalf of passengers. Usually, a lawyer would go after other property of an airline, e.g. money held at airport offices or in the airline's bank account.

mwhcvt · Wed Apr 06, 2016 9:23 am

This is not the first time such a threat has been issued, in the UK we have a TV documentary show called the sheriffs are coming, and it follows the work of high court sheriffs who's role is it to enforce high court writs on at least a couple of occasions they have visited the locations of airlines to collect payment for PAX owed money for delays...additionally I've seen them actually take the first steps to take possession of a private jet from a charter company that had a outstanding debt..basically they took possession of it that automatically makes it the property of the high court until the debt is paid so if not paid within a set time I think 14 days they can sell the assets to recover the debt

Francoflier · Wed Apr 06, 2016 9:53 am

What is funny is that they went straight for the jet.

I am sure the airline has plenty of property of which the impound value would have been closer to the debt.
They could have threatened to raid an office and take a couple of computers and copy machines.

That said, it had the merit of being pretty effective...

Planesmart · Wed Apr 06, 2016 10:04 am

Quoting francoflier (Reply 4):
I am sure the airline has plenty of property of which the impound value would have been closer to the debt.
They could have threatened to raid an office and take a couple of computers and copy machines.

The litigant must have had 'friends' in high places, or it was done for the media. Enforcing a judgement using an asset much greater in value, has repercussions in most countries, though obviously highly effective.

vfw614 · Wed Apr 06, 2016 10:22 am

Quoting francoflier (Reply 4):
I am sure the airline has plenty of property of which the impound value would have been closer to the debt. They could have threatened to raid an office and take a couple of computers and copy machines. That said, it had the merit of being pretty effective...

Quoting Planesmart (Reply 5):
The litigant must have had 'friends' in high places, or it was done for the media. Enforcing a judgement using an asset much greater in value, has repercussions in most countries, though obviously highly effective.

Sometimes the plane is the only asset of an airline available domestically if the debtor is a foreign airline that is being handled in said country by a handling agent and not through own personnel / offices. And enforcing judgments abroad, i.e. in the home country of the airline, is much more complicated.

Planesmart · Wed Apr 06, 2016 11:06 am

Quoting vfw614 (Reply 6):
Sometimes the plane is the only asset of an airline available domestically if the debtor is a foreign airline that is being handled in said country by a handling agent and not through own personnel / offices. And enforcing judgments abroad, i.e. in the home country of the airline, is much more complicated.

Agreed. My reply was based on previous posts. To recover a USD400-500 debt, most airlines operating outside their country base, would have assets of that value, like a local company car, or company mobile phone, or a local bank account.

Yes, if we are talking trade creditors, the threat of aircraft seizure (or in most instances, the threat of passenger inconvenience and publicity) is enough to secure payment.

Francoflier · Wed Apr 06, 2016 11:14 am

Quoting vfw614 (Reply 6):
Sometimes the plane is the only asset of an airline available domestically

Good point.

I doubt, however, that Thomas cook didn't have some sort of seizable asset in Austria other than an airplane.

vfw614 · Wed Apr 06, 2016 1:00 pm

From what I gather, in this case the decision was won in an Austrian court by an Austrian traveller travelling from VIE to the Caribbean on a German airline - and thus we are looking at a judgment against a foreign airline.

Quoting francoflier (Reply 8):
I doubt, however, that Thomas cook didn't have some sort of seizable asset in Austria other than an airplane.

From a legal point, it is often much more complicated. While "Thomas Cook" branded companies may have some assets in Austria, it is not necessarily the Thomas Cook subsidiary against which the judgment was won and which is the name that appears in the court order. I doubt that Thomas Cook (the German airline) has an Austrian branch - Thomas Cook (the tour operator) probably has.

JetBuddy · Wed Apr 06, 2016 1:17 pm

And it was sister company Condor that eventually paid up, not Thomas Cook.

vfw614 · Wed Apr 06, 2016 2:04 pm

Yes, it must have been a Condor flight. Probably the flight / package tour was sold by Thomas Cook and Condor as TC's German airline arm operated the flight element of the package, which resulted in the airline's liability for EU compensation.

diverdave · Wed Apr 06, 2016 2:12 pm

Quoting vfw614 (Reply 6):
Sometimes the plane is the only asset of an airline available domestically if the debtor is a foreign airline that is being handled in said country by a handling agent and not through own personnel / offices. And enforcing judgments abroad, i.e. in the home country of the airline, is much more complicated.

There are legends in this country of folks having a small claims court judgement collected by threatening to impound an aircraft. The legend has it that the marshal attempts to collect cash at the airline counter. When told that there is no cash, the marshal threatens to impound the aircraft and magically cash appears.

Well done on the part of the traveler. One can argue whether the EU rules are just or not, but they are the rules and the airlines should pay as required.

David

N1120A · Wed Apr 06, 2016 2:15 pm

This is a great way to prove a point. The airlines, especially.charters and Euro LCCs have been screwing around with EU261 for years.

vfw614 · Wed Apr 06, 2016 3:00 pm

Quoting diverdave (Reply 12):
When told that there is no cash, the marshal threatens to impound the aircraft and magically cash appears.

Which can be difficult as well as often the aircraft are not owned by the debtor (which usually will not prevent the aircraft from getting impounded in the first place, but could potentially make it difficult to conclude the debt collecting exercise successfully - however, because of the bad press, the debtor at this point is unlikely to resort to such legal technicalities and will simply cough up some dough...).

[Edited 2016-04-06 08:16:19]

diverdave · Wed Apr 06, 2016 3:11 pm

Quoting vfw614 (Reply 14):
Which can be difficult as well as often the aircraft are not owned by the debtor (which usually will not prevent the aircraft from getting impounded in the first place, but could potentially make it difficult to conclude the debt collecting exercise successfully - however, because of the bad press, the debtor at this point is unlikely to resort to such legal technicalities...).

Well, I did say it was a legend......

David

MD11Engineer · Wed Apr 06, 2016 4:44 pm

Quoting vfw614 (Reply 14):
Quoting diverdave (Reply 12):
When told that there is no cash, the marshal threatens to impound the aircraft and magically cash appears.

Which can be difficult as well as often the aircraft are not owned by the debtor (which usually will not prevent the aircraft from getting impounded in the first place, but could potentially make it difficult to conclude the debt collecting exercise successfully - however, because of the bad press, the debtor at this point is unlikely to resort to such legal technicalities and will simply cough up some dough...).

Just grounding the aircraft until the ownership issus have been sorted can be so expensive for the airline (which has to bring the right paperwork to show that the aircraft does not belong to then), that it will by far exceed the debt owed. Imagine crew falling out of duty time, all passengers and crew to be accomodated in a hotel, compensation for this delay now etc.

Jan

DocLightning · Wed Apr 06, 2016 4:55 pm

Quoting diverdave (Reply 12):

There are legends in this country of folks having a small claims court judgement collected by threatening to impound an aircraft. The legend has it that the marshal attempts to collect cash at the airline counter. When told that there is no cash, the marshal threatens to impound the aircraft and magically cash appears.

Well done on the part of the traveler. One can argue whether the EU rules are just or not, but they are the rules and the airlines should pay as required.

This also happened to a Florida couple when BofA tried to foreclose on their house that they'd purchased in cash. They racked up $2,500 in attorney fees and got a court order for the bank to pay them, but the bank never did until five months later when they showed up at a BofA branch with a sheriff and moving trucks ready to clean the place out of furniture unless BofA cut them a check.

They got their money within an hour.

vfw614 · Wed Apr 06, 2016 4:58 pm

Sure, but foreclosure into third party property can of course result in liability for damages, so the airline (theoretically) could recoup any resulting costs either from the claimant or his lawyer.

ua900 · Wed Apr 06, 2016 6:21 pm

Quoting francoflier (Reply 1):
It even probably cost him more to go all the way to the court than what was owed to him.

The lawyers picked it up for a 25% share (~170 Euros) and he didn't have to touch the case after providing his documentation to the lawyer.

Quoting francoflier (Reply 4):
What is funny is that they went straight for the jet.

After 4 years of wait it's not a straight line. The aircraft is one of the few things you can go after in a third country. The ticket counter is leased from the airport, what would you do with airline signage, luggage tags or airline staff polyester uniforms. And it's not like Thomas Cook has a lounge where you could impound dishware or furniture

litz · Wed Apr 06, 2016 6:38 pm

The fact of the matter is ... you impound lounge equipment, a supervisor's car, or a piece of ground equipment ... the airline still functions.

If you impound the airplane, the airline does not function. It's an immediate and direct effect on their ability to do business, and is almost always guaranteed to provide immediate response.

You see the same thing, for instance, in cases against cruise lines, where an agent will seize a cruise ship while it's in port ... it causes immediate action, to prevent departure delays.

hb88 · Wed Apr 06, 2016 7:26 pm

In my view, this is an excellent call by the aggrieved party.

The airline owned money and clearly had no intention of paying. Seizing one of its most sensitive assets is an excellent way of forcing the airline to step up to its legal obligations.

I hope this becomes precedent for similar cases. Tough on the carrier, but too bad. They are in business and cannot simply refuse a court-ordered compensation payment.

vatveng · Wed Apr 06, 2016 7:30 pm

From the article:

Quote:
"I think this was just an administrative mistake by the airline, the claim probably just got lost on somebody's desk."

And the traveler probably got blown off or passed around to various people with nothing to do with it just to get rid of him. It took the lawyer threatening to impound the airplane to get anybody's attention.

PanAm1971 · Wed Apr 06, 2016 8:52 pm

I have a dumb question-can this lady now be excluded by airlines from purchasing a ticket now that they know she's litigious?

vfw614 · Wed Apr 06, 2016 9:02 pm

Well, airlines have in principle freedom of contract. On domestic routes, depending on the country, the situation can be different.

luftaom · Wed Apr 06, 2016 9:24 pm

Quoting Planesmart (Reply 5):
Enforcing a judgement using an asset much greater in value, has repercussions in most countries

Does it? Could you perhaps elaborate on the countries and consequences you had in mind?

DTWPurserBoy · Wed Apr 06, 2016 9:25 pm

I have never seen a passenger have an aircraft seized but I did see one seized at LHR apparently for non-payment of fees. They pulled into the gate next to us and the next thing we knew they had trucks surrounding all of the landing gear and huge chains securing the gear to the vehicles. Unfortunately, the airline had gone Tango Uniform during the night so the poor crew had no way to get home. Fortunately, our captain took pity on them and walked over and offered them all a free ride home since it was obvious no one else was going to take care of them. We got them to DTW and from there they managed to rent a car to drive to Canada and their homes.

For those of you unfamiliar with the term "Tango Uniform" it is airline slang for t*ts up or bankruptcy.

MD11Engineer · Thu Apr 07, 2016 12:14 am

I seen have two aircraft being impounded by a bailiff for the owner not having paid parking fees (they were in storage at our airport, with components removed on the oner's orders by our company, so not flyable). The bailiff simply stuck his seal and a legal note to the nose gear doors, stating that this aircraft has ben impounded and any tampering with it would be a criminal offence. At the same time we made sure that the owner would pay his bils by withholding key components and the aircrafts logbooks. Normally once the bailiff sticks his seal to a piece of property the owner has four weeks to pay his debts, else the property will be auctioned off.

Jan

N1120A · Thu Apr 07, 2016 7:21 am

Quoting vfw614 (Reply 18):

Sure, but foreclosure into third party property can of course result in liability for damages, so the airline (theoretically) could recoup any resulting costs either from the claimant or his lawyer.

That isn't true. The airline has unclean hands and can't claim damages for loss of use when they are having a judgment executed. Remember, a Court ordered that they could execute against this property.

vfw614 · Thu Apr 07, 2016 8:48 am

Re-read my post. I said "foreclosure into third party property" (I referred to post #16). The owner of the company liable for the debt that is executed is not necessarily the owner of the aircraft. Just think about leased cars that are actually owned by banks, not by the drivers. If the lessor/driver faces foreclosure, this third party property is of course not subject to that foreclosure. If third-party ownership cannot be sorted out immediately, the bailiff can go ahead, but o course the owner of the property has legal redress.

Planesmart · Thu Apr 07, 2016 8:23 pm

Quoting luftaom (Reply 25):
Does it? Could you perhaps elaborate on the countries and consequences you had in mind?

In my experience, if a court orders seizure of a multi-million dollar asset to satisfy a miniscule debt, they have been either mislead by the litigant, or we are talking a tin pot 3rd world country, or judiciary seeking profile or a bailiff who hasn't crossed all the t's and dotted all the i's.

Most Western countries would apply a reasonableness test, when the airline in this case, seeks damages. Detaining say a USD150m aircraft and 300 passengers for a USD500 debt would definitely fail the test.

Ownership of commercial aircraft, even where 'apparently' owner operated is rarely straight forward, with trusts, subsidiaries, financing syndicates and financiers. It's a very brave bailiff, that doesn't first undertake careful homework.

For prompt payment, all the bailiff (or equivalent) needs to ascertain is who is the technical owner, usually a bank or finance company, and serve the papers on them. They pay, and in turn seek reimbursement.

In a commercial airport, how does a bailiff legitimately gain access to the air side of the airport with multiple vehicles, and 'chain' anything up?

MD11Engineer · Thu Apr 07, 2016 9:22 pm

Quoting Planesmart (Reply 30):

In a commercial airport, how does a bailiff legitimately gain access to the air side of the airport with multiple vehicles, and 'chain' anything up?

I live in a rented farm house, which is built in the style traditional here in this region:
It is a big building divided into three parts: The part closest to the street is the old living quarters, where the farmer used to live with his family. Next is a barn, wich I'm using for my metal shop. Then there would come the stables, but a prevuious owner had them torn down and replaced with a three floor attachment with a small flat on each floor.
The meters for electricity and gas for all four living quarters are located in the former barn, my workshop.

There used to be a young guy livig in the ground floor flat, who was always broke and never paid his bills.
One day somebody as ringng at my front door. It was a bailiff, together with an electrician of the electricity company. The bailiff showed me a legal paper, stating that on court orders he would have the electrician cut the electric supply to the young guy's flat and therefore he needed access to the guy's meter and main fuse. He also showed me the court order and told me that I had to comply with it and let the electrician in.
I asked him what he would have done if I happened not to be at home. He told me that he would have called the police for assistance and would have gotten a locksmith to open the door of my workshop. The locksmith would have then secured the door again and they would have left a note in my mailbox.

As fo airport access, I assume that the bailiff would have called the local police for assistance and then would enter the airport with an escort of police and airport security to carry out his jub.
It is not uncommon for a bailf to secure something a lot more valuable than the debt. If the object would need to be auctioned off, the difference would be paid back to the previous owner.

Jan

Bongodog1964 · Fri Apr 08, 2016 12:01 am

Quoting Planesmart (Reply 30):
In my experience, if a court orders seizure of a multi-million dollar asset to satisfy a miniscule debt, they have been either mislead by the litigant, or we are talking a tin pot 3rd world country, or judiciary seeking profile or a bailiff who hasn't crossed all the t's and dotted all the i's.

Most Western countries would apply a reasonableness test, when the airline in this case, seeks damages. Detaining say a USD150m aircraft and 300 passengers for a USD500 debt would definitely fail the test.

Ownership of commercial aircraft, even where 'apparently' owner operated is rarely straight forward, with trusts, subsidiaries, financing syndicates and financiers. It's a very brave bailiff, that doesn't first undertake careful homework.

For prompt payment, all the bailiff (or equivalent) needs to ascertain is who is the technical owner, usually a bank or finance company, and serve the papers on them. They pay, and in turn seek reimbursement.

In a commercial airport, how does a bailiff legitimately gain access to the air side of the airport with multiple vehicles, and 'chain' anything up?

Here in the UK, bailiffs are officers of the court, their powers are almost unlimited, they will always go after the biggest asset available to them.
Someone mentioned that this would have cost the claimant a fair amount to carry out. Here in the UK the court and bailiffs fees just get added to the debt and the debtor pays them as well.

MD11Engineer · Fri Apr 08, 2016 7:39 am

Quoting Bongodog1964 (Reply 32):
Someone mentioned that this would have cost the claimant a fair amount to carry out. Here in the UK the court and bailiffs fees just get added to the debt and the debtor pays them as well.

Same here. If the bailiff would have needed a locksmith to force the door to my workshop, the bill would go to the debtor as well, also if the locksmith would have damaged the door and a costly repair would have been necessary.

Jan

luftaom · Fri Apr 08, 2016 10:20 am

Quoting Planesmart (Reply 30):

Quoting luftaom (Reply 25):
Does it? Could you perhaps elaborate on the countries and consequences you had in mind?

In my experience, if a court orders seizure of a multi-million dollar asset to satisfy a miniscule debt, they have been either mislead by the litigant, or we are talking a tin pot 3rd world country, or judiciary seeking profile or a bailiff who hasn't crossed all the t's and dotted all the i's.

Most Western countries would apply a reasonableness test, when the airline in this case, seeks damages. Detaining say a USD150m aircraft and 300 passengers for a USD500 debt would definitely fail the test.

Ownership of commercial aircraft, even where 'apparently' owner operated is rarely straight forward, with trusts, subsidiaries, financing syndicates and financiers. It's a very brave bailiff, that doesn't first undertake careful homework.

For prompt payment, all the bailiff (or equivalent) needs to ascertain is who is the technical owner, usually a bank or finance company, and serve the papers on them. They pay, and in turn seek reimbursement.

I more or less agree with all that - with the exception of the last sentence.

The finance company will have a charge (usually mortgage) over the airframe and if the airframe is owned by an airline - it will be held by a SPV (shell company) which holds just that airframe and the financier will probably take a share mortgage over the shares in the SPV entity (so they can effectively control the airframe through the company). The mortgage will (for present purposes) give them a prior ranking right to the proceeds of the sale of the airframe - so serving the papers on them won't do anything from a legal perspective.

However, a court appointed receiver looking to take control of the airframe will however be an event of default default under the lending and security documents between the airline and the finance company. So putting the finance company on notice about this won't mean that you get your money that way - but it will probably mean that your debt gets brought to the attention of someone at a higher level within the airline.

The problem with these big organisations is that the layers of management mean that sometimes you just can't get in touch with/find the person who actually can sort something out - because the customer facing people just block you. Sometimes to actually get action, you have to do something which is out of all proportion to the amount of the judgment debt. I imagine that was the case here.

In Australia you can wind up a corporation for an unpaid debt of just $2000 via the statutory demand route. It doesn't even have to be a judgment debt - it can be just a regular old unpaid invoice. Although getting a judgment debt means that the person who owes the money can't argue that there is a dispute as to whether the amount is payable.

TheSonntag · Fri Apr 08, 2016 10:39 am

Quoting PanAm1971 (Reply 23):
I have a dumb question-can this lady now be excluded by airlines from purchasing a ticket now that they know she's litigious?

Depends on national legislation, but in Germany, they are not totally free, see para 21 section 2 of the german aviation act:

"Luftfahrtunternehmen, die Linienverkehr betreiben, sind außer im Falle der Unzumutbarkeit jedermann gegenüber verpflichtet, Beförderungsverträge abzuschließen und ihn im Rahmen des veröffentlichten Flugplanes zu befördern."

Airlines of line flights are, unless it is unacceptable, obliged to enter contracts with anyone and transport them according to the publicly announced flight schedule.

Unzumutbarkeit means it is not bearable for the Airline. Being litigious does not fall under this category, especially if it is a legitimate case.

Planesmart · Fri Apr 08, 2016 7:35 pm

Quoting MD11Engineer (Reply 31):
The bailiff showed me a legal paper, stating that on court orders he would have the electrician cut the electric supply to the young guy's flat and therefore he needed access to the guy's meter and main fuse. He also showed me the court order and told me that I had to comply with it and let the electrician in.
I asked him what he would have done if I happened not to be at home. He told me that he would have called the police for assistance and would have gotten a locksmith to open the door of my workshop. The locksmith would have then secured the door again and they would have left a note in my mailbox.

There are special rules relating to electrical disconnections in many Western countries, that allow access, not even with court approval, usually misuse of 'safety' rules.

In NZ, they have been somewhat smarter, and in most, but not all cases, main fuses for properties are placed on power poles, or for below ground connections, in street-side cabinets or on the outside of buildings.

Planesmart · Fri Apr 08, 2016 7:53 pm

Quoting luftaom (Reply 34):
Quoting Planesmart (Reply 30):

Quoting luftaom (Reply 25):
Does it? Could you perhaps elaborate on the countries and consequences you had in mind?

In my experience, if a court orders seizure of a multi-million dollar asset to satisfy a miniscule debt, they have been either mislead by the litigant, or we are talking a tin pot 3rd world country, or judiciary seeking profile or a bailiff who hasn't crossed all the t's and dotted all the i's.

Most Western countries would apply a reasonableness test, when the airline in this case, seeks damages. Detaining say a USD150m aircraft and 300 passengers for a USD500 debt would definitely fail the test.

Ownership of commercial aircraft, even where 'apparently' owner operated is rarely straight forward, with trusts, subsidiaries, financing syndicates and financiers. It's a very brave bailiff, that doesn't first undertake careful homework.

For prompt payment, all the bailiff (or equivalent) needs to ascertain is who is the technical owner, usually a bank or finance company, and serve the papers on them. They pay, and in turn seek reimbursement.

I more or less agree with all that - with the exception of the last sentence.

Many thanks.

Having a 'clean' asset and title are very important, especially to the organisation with the biggest financial exposure.

A bit off topic because we were talking about small debts relative to asset value. Not uncommon where there are early signs of financial problems, and creditors are discussing options and possible arrangements to keep the business flying,
that smaller funding participants will be taken out, either because they rock the boat, there are too many of them, or they are seen as the weak link in a scheme of arrangement.

If there is a threat a multi-million dollar asset will be seized, I can assure you, if brought to the attention of the syndicate leader or asset owner, the debt will be paid, or if a larger amount, they will move heaven and earth to have it resolved.

If the airline is poised to go into receivership, the same applies, except the financier will pay whatever to get the aircraft back to a 'safe' location, and they potentially will then be doing the seizing.

vfw614 · Sat Apr 09, 2016 11:21 am

Quoting TheSonntag (Reply 35):
Depends on national legislation, but in Germany, they are not totally free, see para 21 section 2 of the german aviation act:

"Luftfahrtunternehmen, die Linienverkehr betreiben, sind außer im Falle der Unzumutbarkeit jedermann gegenüber verpflichtet, Beförderungsverträge abzuschließen und ihn im Rahmen des veröffentlichten Flugplanes zu befördern."

Airlines of line flights are, unless it is unacceptable, obliged to enter contracts with anyone and transport them according to the publicly announced flight schedule.

Which of course is only relevant for domestic flights as German law cannot regulate transactions carried out in other jurisdictions. Anything else would be ultra vires.

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