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Come fly with me
Law Society Gazette – 30 June 2005

Superjumbos, 'Dreamliners' and a post-9/11 recovery mean that aviation law is on the up. Following a recent high-profile law firm merger, Mark Smulian takes to the air

Solicitors who possess any or all of the following might care to consider a career specialism in aviation law: the ability to speak Chinese, gain a pilot's licence, withstand ten days in an Ecuadorian jail, and sort out the legal ramifications of an aircraft crashing onto a ship.

These unusual qualifications are not essential, but candidates will need to show enthusiasm for extensive foreign travel and the finer points of foreign jurisdictions. The slump in the market caused by the 11 September 2001 attacks on the US shows signs of ending, with a fresh war brewing between Europe's Airbus and US company Boeing, both in the air and before the World Trade Organisation (WTO).

Airbus's new A380 is going for size as the world's largest-ever passenger airliner. It will carry 555 passengers in standard layout, and up to 840 if fitted out in a one-class configuration. Meanwhile, Boeing's 787 Dreamliner is a smaller plane (200-300 seats) that offers far more range than similar-sized aircraft and aims to improve passenger comfort.

At the same time, the WTO is investigating separate complaints that each side benefits from unfair state aid or subsidies.

English aviation lawyers can be called almost anywhere in the world that an air accident occurs. Since most aircraft are insured in the London market, insurers tend to use London law firms.

Earlier this month, niche London aviation firm Beaumont & Son announced a merger with City firm Clyde & Co, creating a new force in this small market where everyone knows everyone else.

Clyde partner Colin Franke points out that aviation is a highly regulated field, although there is no strict definition of 'aviation law', or indeed of an 'aircraft'.

Aviation is governed by international treaties, in particular the 1929 Warsaw Convention, which has been periodically updated, most recently by the 1999 Montreal Convention.

Broadly, aviation law breaks down into regulation, liability and commercial work, each of which can deal with anything from a jumbo jet to a hot air balloon. Lawyers can act for manufacturers, airlines, airports, passengers, financiers and insurers.

There can be high-profile cases. Mr Franke's experience includes acting for Oxford Aviation when a light aircraft carrying jockey Frankie Dettori crashed at Newmarket Racecourse in 2000, killing the pilot and destroying the aircraft.

'The case involved recovering the value of the aircraft, outstanding hire amounts and loss of profits; we also obtained an indemnity in respect of passenger claims,' he recalls.

Other cases Mr Franke and his colleagues have tackled include a mid-air collision over Germany, total loss of cargo in a take-off in Canada and two cases of aircraft landing on ships 'where issues of maritime salvage came into play'.

There is diversity in what aviation lawyers do, and in where they work. Speaking to the Gazette from Sweden, having just arrived from Paris, Giles Kavanagh, head of aviation at City firm Barlow Lyde & Gilbert, says: 'There is no doubt the world fleet is growing, so there is a greater amount of regulation and finance work, whereas liability work is declining as airlines become safer and is definitely below where it was five years ago.'

Much regulatory work concerns European Union directives, and a recent controversy has arisen over its insistence that airlines compensate passengers for delayed or cancelled flights.

'If you have to pay out 400 (265), and you are Ryanair and making about 15 a seat, that is quite a bit,' he says. 'Also there is a requirement from the EU for facilities for people with reduced mobility.'

Jeremy Edwards, the partner who heads aviation in City firm Norton Rose's asset and structured finance group, says: 'The airline industry in general is highly cyclical, and aircraft financing activity rises and falls with those cycles, though they do not necessarily match each other around the world.'

'The US market remains extremely depressed with a number of airlines still in insolvent reorganisations. Europe is quiet, but is beginning to bounce back.'

The most buoyant markets are south-east Asia, the Middle East and India. 'In the Chinese market, the major airlines are re-fleeting,' he says.

'In the rest of Asia, including India, we are seeing a massive surge driven by low-cost operators, so there is a lot of corporate activity in addition to aircraft acquisition and financing. Prospects are rosier again than [they have been] since 9/11.'

Richard Venables, head of aviation and travel at niche firm Lane & Partners, advises both airlines and tour operators on regulatory work. This takes him into lobbying, since the key issues require presenting convincing arguments to the main regulators, the Department for Transport and the Civil Aviation Authority.

'Slots allocation is still an issue because airlines like BA, Lufthansa and Air France tend to have a significant chunk of the slots at their home airports for historical reasons, so that is a deterrent to other carriers serving them,' he explains.

Another issue is protectionist attitudes in the US towards foreign airlines that wish to compete in the internal market. 'We do a lot of work which is lobbying for changes in the law,' Mr Venables says. 'I can't say the lobbying came naturally, but I have done it now for a long time and do not use commercial lobbyists.'

John Balfour, senior partner at Beaumont & Son, says the merger was at Clyde's initiative and it 'seemed sensible to have a broader base'. Merging will allow a wider geographical spread, though despite having only 20 partners and 50 lawyers, Beaumont has offices in Paris, Singapore and Rio de Janeiro.

He sees possible expansion coming now that the industry has pulled out of its post-9/11 trough, with the low-cost airline phenomenon spreading to other countries.

'Entry to market by and large is concerned with legal issues,' he says. 'Entrants need a licence, and that is not just a technical thing - it involves showing you have enough money and an acceptable ownership structure.'

Sean Gates left Beaumont two years ago to set up another niche firm, Gates & Partners. He avoids regulatory work - 'you have to be a particular type of person to enjoy dealing with Brussels' - and believes one firm should not act both for airlines and manufacturers. His speciality is the former. 'I feel very strongly that you cannot act for airlines and for manufacturers because it is likely that you will have a conflict of interest,' he says.

'In an accident there is very rarely one cause. It may involve the airline, the manufacturer and perhaps the airport, and you would quickly end up unable to act for any of them. Other firms take different views, though.'

His colleagues do finance and purchasing work 'but it is too boring for me', he says.

It was Mr Gates who suffered ten days' incarceration in Ecuador, following a dispute with a senior official who 'wanted to help me settle some cases but in return for a very large fee'.

'A sense of adventure is useful,' he advises younger solicitors considering a move into aviation. 'You do get to see the world.'

More mundanely, he says 'languages are useful, in particular Spanish or Chinese, and an interest in the civil law systems of other countries, which are usually rather opaque'.

Mr Edwards has found aviation 'full of interesting and stimulating people and transactions'. He notes: 'Everyone knows each other. One is likely to know the primary lawyer on the other side of any transaction and to deal regularly with the same bankers and insurers.

'It is a good thing, as it encourages everyone to behave sensibly because they know they will be doing business with each other again.

'The great appeal for me is that at the end of a transaction your client has something tangible. You can go to the airport and see your client's aircraft.'

One key attraction of the aviation sector, Mr Kavanagh says, is that it 'exposes people to litigation in jurisdictions throughout the world'.

Mr Balfour advises those interested in the field: 'It is not essential, but it is helpful, to have an interest in the industry and some special knowledge or skills.

'We do have pilots on our staff, and that is helpful, as are language skills - in particular Russian, Chinese and Arabic. I have a few languages, but none very perfectly. We look for general skills; you'll find there is no bar to entry because of a lack of these specialisms.'

Airline passengers think about the pilot, crew and ground staff. But every time an aircraft flies, a lot of lawyers have helped to get it airborne.

Mark Smulian is a freelance journalist