Hitting turbulence

With more and more regulations and company pacts, work is taking off for aviation lawyers, but Paula Rohan says that concerns about passengers and recession could clip airlines' wingOfficials at Europe's busiest airport face the worrying issue of strikes recently, having had six so far this year.But it is not Heathrow's air traffic controllers - the subject of a high-profile public-private partnership announced at the end of last month - at fault this time.

Flocks of Canada geese, said to be attracted to the reservoirs and gravel pits around the airport, have been sucked into jets' engines; these 'bird strikes', are a hazard to passenger planes and result in emergency landings.The Air Accidents Investigation Branch has described the matter as 'serious', and the authorities will have to look at how to solve the problem if they want to avoid an accident - and legal action.But the feathered nuisances present just one headache for the aviation industry, which needs lawyers to deal with issues ranging from air rage to terrorist hijackings.

But the bulk of the workload revolves around three areas: finance, liabilities and claims, and regulatory matters.The first of these can involve anything from sorting out funding for a new fleet, to drawing up a contract for catering services.

The amounts of money involved can be huge, says Nick Chandler, partner at City firm Denton Wilde Sapte.'On the finance side, companies such as Airbus and Boeing are building lots of aircraft - but most don't have the money, so they have to borrow it,' he explains.

'At its most basic, it's like glorified house-buying but on a much larger scale.

We worked for Sabena on the finance for a new fleet of around 30 aircraft.

The A320 can be worth about $45 million [31 million], so when you are talking about 30 of them you are getting into the realm of billions of dollars.'The finance side is growing in importance as airlines form alliances, says John Balfour, partner at specialist aviation firm Beaumont & Sons in London.

'Airlines are getting together as part of a move to become more competitive, and this is the main single factor affecting the industry today.

It's going to throw up a lot of legal and competition issues.' Nicholas Hughes, partner at City firm Barlow Lyde & Gilbert, agrees.

With 21 years of aviation law experience, he says that the industry is on the verge of a new era.

'So far, aviation has not experienced the type of global companies you see operating in fields like telecommunications and gas,' he says.

'Airlines have not been allowed to merge without being penalised through loss of traffic rights.

But recently there has been deeper integration, because some alliances have sprung up to pool engines, for example, and now marketing alliances exist, so airlines are becoming virtually one operation.' Furthermore, the government's support for public-private partnerships means that it is not just airlines uniting.

This became apparent when the Airline Group consortium recently hit the headlines with its successful bid for National Air Traffic Services.

The group is comprised of seven UK airlines - Airtours, Britannia Airways, British Airways, British Midland, easyJet, Monarch and Virgin - in partnership with British Telecom and the Irish Aviation Authority.Top ten firm Norton Rose pushed the deal through on behalf of the consortium, with Lovells acting for the National Air Traffic Services.

Slaughter and May advised the government.Lovells had worked on the deal from July 1999 until its realisation last month.

The firm advised on the structure and implementation of the partnership, the creation of a new regulatory regime, and the restructuring of the company to separate it from the Civil Aviation Authority, which formerly ran the service.

Malcolm Hitching, acquisition financing specialist at Norton Rose, describes his firm's role in the process as 'looking at the financing side of the deal and negotiating leveraged banking facilities.

It was an amalgamation of acquisition, project finance and transport infrastructure'.As an acquisition lawyer who rarely enters into the aviation field, Mr Hitching says he found working on the deal 'very good fun'.

He explains: 'It called for a lot of lateral thinking.

For example, we had to link the banking into the regulatory framework to make sure it was acceptable to the bank and the government, as well as the group.

It was very interesting as it is the first public-private partnership that has been successfully achieved.' Looking in from the outside, Mr Hitching says that it makes 'absolute sense' for airlines to be able to enjoy the same benefits of alliances as other industries.But shifts in the way airlines operate and the move into different fields inevitably means a plethora of regulations, to which new bodies must conform.

Everything - from the funding and licensing of aircraft, to permission to use foreign airspace - requires regulatory clearance in scores of countries.Regulation will be an expanding area, predicts Barlow's Mr Hughes.

'At the moment the big issue is passenger health.

There has been a lot of concern about deep vein thrombosis [DVT], also known as "economy class syndrome", and the quality of air in the aircraft cabin,' he explains.

The media raised awareness of DVT earlier this year after the death of a 28-year-old woman following a flight from Australia to Heathrow.Mr Hughes adds: 'This may all be the focus for new regulation.

At the moment regulation is designed to ensure the safety of the flight - that the aircraft are safe, and that the people flying them are fit to fly and so on.

There is nothing in there dealing with health, which is becoming the focus of attention, both from the public and the industry.'Breaching regulations is not the only way of falling foul of aviation law, and by its nature this is one practice area where a spanner in the works can mean tragedy.

For Mr Hughes, past cases range from the 1985 Manchester air crash, in which 55 died, to the hijacking of a Sudan Airways 310 Airbus in 1996.

He is currently working on a claim against British Airways after 40 kilogrammes of diamonds went missing from a cargo aircraft.Mr Hughes says the liability industry has seen 'rapid developments' over the past 15 years, and it can get complicated and emotive.

'We cover a broad basis of risks,' he says.

'In the event of a large crash, we could be acting for the airline or the manufacturer.

We would have to assess the extent of the claims that would arise out of it, the appropriate jurisdictions, potential damages, and any claims that might arise between defendants.'As air crashes and hijackings thrust the aviation industry into high-profile litigation, Mr Hughes admits this is a 'dynamic area that the ordinary person in the street can relate to.' Therefore, it is surprising that there are so few practitioners - around 100, says Mr Hughes - working in the field compared to others such as shipping.

In fact, it seems to have developed into something of an lite club, though Mr Chandler maintains that aviation lawyers are 'more down to earth' than many.

'What I like about it is that you are dealing with a real thing,' he says.

'If you want to be a plane spotter you can go to the airport and see a new plane taking off and think "I was part of that", whereas a banking lawyer in the City just knows that a lump sum has disappeared out of an account, and doesn't think much more about what happened to it.'The 'down to earth' quality may come in handy for those practising in an area facing tough times, according to Mr Chandler.There is the eternal problem of money in an industry where borrowing is vital, and he is pessimistic about the UK avoiding a recession that will hit airlines hard.

'The industry is in a state of flux, and the test will be the downturn in the economy,' he says.

'The good will survive whilst the less profitable will go out of business or be swallowed up,' he says.And how will this affect lawyers? 'There will still be work around because the specialism is concentrated in the hands of just a few of us,' Mr Chandler says.

'When there is a recession people don't look for someone who will offer them the cheapest deal - what they want is an expert.'It seems that aviation is not about to nosedive, even if lawyers should fasten their safety belts for an exciting ride.