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

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

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.

Suggested Citation

  • Bock, Sebastian & Forsyth, Peter & Niemeier, Hans-Martin & Mantin, Benny, 2019. "Chapter 11 and the level playing field: Should chapter 11 be considered as a subsidy?," Journal of Air Transport Management, Elsevier, vol. 74(C), pages 39-46.
    • Handle: RePEc:eee:jaitra:v:74:y:2019:i:c:p:39-46
    DOI: 10.1016/j.jairtraman.2018.09.005
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    References listed on IDEAS

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    Cited by:

    1. Wu, Hanjun & Hong Tsui, Kan Wai & Ngo, Thanh & Lin, Yi-Hsin, 2020. "Impacts of aviation subsidies on regional wellbeing: Systematic review, meta-analysis and future research directions," Transport Policy, Elsevier, vol. 99(C), pages 215-239.
    2. Salesi, Vinolia Kilinaivoni & Kan Tsui, Wai Hong & Fu, Xiaowen & Gilbey, Andrew, 2022. "Stakeholder perceptions of the impacts of aviation subsidies in the South Pacific Region," Journal of Air Transport Management, Elsevier, vol. 103(C).
    3. Luis Martín-Domingo & Juan Carlos Martín, 2022. "The Effect of COVID-Related EU State Aid on the Level Playing Field for Airlines," Sustainability, MDPI, vol. 14(4), pages 1-14, February.

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