Insurance Problem Grounds Manx Airlines

by Justin Gorringe, Tax-News.com, London

28 September 2001

Manx Airlines, the Isle of Man's lifeline with the UK and Ireland, is grounded following withdrawal of insurance cover for its fleet of five planes early this week.

Even though the airline was acquired by British Airways earlier this year along with its parent company British Regional Airlines (BRAL), the UK government indemnity which has allowed BA and other subsidiaries to keep flying does not extend to Manx Airlines because its fleet is not based in the EU.

Chief Minister Donald Gelling says the government is still waiting for UK Chancellor Gordon Brown to decide whether the five Island-based planes can be included in a scheme giving indemnity after insurers withdrew third party liability cover for war and terrorist acts at midnight on Monday.

The airline is offering a patchy service using BRAL aircraft, but many flights have been cancelled, and the Dublin route is not operating for similar reasons.

Mr Gelling says he is annoyed that the UK Government didn't inform him directly about the Island's exclusion - he found out from Manx Airlines, who found out from British Airways - and that intensive talks are going on with junior minister Michael Wills, who is responsible for the Crown dependencies; representations have also been made to the UK Treasury. But Mr Gelling rules out direct action by the Manx Government because the risk - in the hundreds of millions of pounds - is simply to large to bear.

'Our legal interpretation of the scheme is that is doesn't bring in the Isle of Man or Channel Islands because they are not in the EU,' Mr Gelling said; but he finds it difficult to understand the exlcusion of part only of BA's fleet.

'I have had several conversations with the minister Michael Wills and he has had to take it to a higher level because the only one who can change it in Treasury is Gordon Brown,' said Mr Gelling. 'We are having difficulty getting his time. 'We have made approaches to them and they have said it is only the Chancellor that can make the decision. So, basically, we are waiting for that decision.'

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