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bmibaby and British Midland win airport agreement case

1st May 2009 - 12:00 GMT | by The Shephard News Team


Judgement has been handed down in the Durham Tees Valley Airport (DTVA) -v- bmibaby and bmi case in the High Court.

In March 2008, DTVA sued bmibaby (and bmi, as its parent and guarantor) for in excess of £12 million losses allegedly sustained as a result of bmibaby's decision to cease operating two Boeing 737 aircraft it had based at the airport in 2004/6 under a contract which had a term of 10 years.

The decision to withdraw services had been made as, despite significant investment, bmibaby was unable to create a commercially viable operation.

The court ruled in favour of bmibaby and bmi.

The case is significant at a time when airlines are under increasing financial pressure to review their operations from airports and, and if necessary, change or withdraw flying programmes to order to keep capacity in line with consumer demand.

The court found that implied terms could not be read into the contract by the court regarding the extent of the obligation to operate (such as how many flights bmibaby was obliged to operate and how many passengers it was obliged to carry), as such terms could not be established sufficiently precisely in order to be given legal effect.

To imply such terms would involve the court making a bargain for the parties which was neither agreed nor intended. The Judge, consequently, found in favour of the airline and the claim was dismissed.

Mark Franklin, the Head of Aviation at DLA Piper UK LLP, who represented bmibaby and bmi, commented that: "The prevalence of agreements between airports and low cost carriers is now such that, while carriers can take comfort from the fact that this case has resulted in a justifiably successful outcome for bmibaby, many carriers may consider it appropriate to dust off their existing airport contracts to check if their understanding of their rights and obligations fully matches the terms of those contracts as the risk of onerous terms being implied by the contract can never be dismissed".


The Shephard News Team


The Shephard News Team

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