The queue to apply for Chapter 11 bankruptcy protection from your creditors starts here: please form an orderly line as a rush is expected. The Chicago appeals court decision this week to allow United Airlines to slide out from under US$9.8 billion in unfunded pension liabilities will have an impact in every corner of the airline industry. Perhaps, more importantly, it will again delay the vital consolidation in the United States that the industry desperately needs to set its finances straight. The International Air Transport Association (Iata) is fond of bemoaning the parlous aggregate economic state of its members in an effort to browbeat airports into reducing their user charges. 'The more we fly, the more we lose,' said Iata supremo Giovanni Bisignani during his recent visit to Hong Kong. But when Iata says industry losses were US$4.8 billion last year as it passes the hat for our beleaguered carriers, what it means is US airlines lost US$10 billion and carriers outside the US posted an aggregate profit of US$5.2 billion. In the US, where the industry has lost US$36 billion since 2001, the fallout from the court's decision to transfer the weight of United's promises to the federal Pension Benefit Guaranty Corp is expected to be immediate and very costly for taxpayers. US Transport Secretary Norman Mineta warned of a possible stampede to the Chapter 11 corral at a luncheon sponsored by the American Chamber of Commerce last month. He was responding to suggestions from a surly audience that the Chapter 11 laws were little more than a subsidy, propping up ill-considered business models that otherwise would collapse under the rigours of an increasingly global marketplace. 'Chapter 11 is not a subsidy at all. That is a legal right that you have under the rule of law that allows companies to be able to exercise whatever is available to them, to protect them,' Mr Mineta said, rather unconvincingly. 'In this case, we have five major airlines that are in Chapter 11 and, frankly, there may be some more going into Chapter 11 if the pension issue is not resolved. If United is able to get out from under its responsibility of providing pensions to its employees, then I think you may have Delta, American Airlines and others jumping into Chapter 11 protection.' United did, and surely now the others will follow at the expense of their retired and long-term staff, and the American taxpayer. But what angers airline executives outside the increasingly gated US community is that Tuesday's decision, and any subsequent Chapter 11 filings, will also affect their businesses. As one executive has said: 'The minute [US airlines] see any trouble, they file for Chapter 11. It's the equivalent of hiding behind their mommy's dress and then waiting until the coast is clear before coming out.' First, when uncompetitive airlines are protected from the global market forces that would otherwise weed out the weak, the industry's supply-demand balance is skewed. In this case, US protection of its airlines inflates supply and puts an artificial downward pressure on ticket prices and freight rates for other, well-run carriers. Chapter 11 filing also stops creditors from repossessing any aircraft a defaulting airline may have on loan and returning them to the market. It is designed to let the carrier continue operating while it sorts out its finances. But when that carrier is repeatedly allowed to file, particularly in the same decade, it is an unjustifiable level of protection that creates artificial levels of demand and higher global prices for aircraft leases. It also increases risk for the money lenders and inflates the cost of aircraft financing. Chapter 11 may offer temporary help to an ailing airline but it effectively erases the conditions that provide the industry with cheaper aircraft financing in exchange for the certainty of repossession. The chilling effect it could have on that sector is substantial. Iata is fond of urging partnerships in its increasingly globalised industry. It could take a big step in that direction by urging the US to assure the continued health of other countries' carriers by taking hard measures to stop being the sick member of the global aviation community.