Air India Crash Payout To Follow Global Rules, Montreal Convention To Decide Compensation For Victims

New Delhi: A London-bound Air India flight crashed shortly after taking off from Ahmedabad International Airport. The plane had 242 people on board, including passengers and crew. Sadly, many lives were lost in the accident.

Among the passengers, 169 were Indian, 53 British, 1 Canadian, and 7 Portuguese. The crash has shocked the nation and raised questions about passenger compensation and insurance coverage.

Montreal Convention Will Decide Compensation

Experts say the compensation to families of the victims will be given as per the Montreal Convention of 1999. India became a part of this global agreement in 2009. This convention is followed in many countries to decide the liability of airlines in case of death or injury.

Aviation insurance expert Hitesh Girotra explained that the nationality of the passengers will play a key role in deciding the minimum payout the airline must give. Each country has different legal practices, but the Montreal Convention ensures a global standard.

Compensation in Special Drawing Rights (SDRs)

Amit Agarwal from Howden (India) said that compensation will be based on Special Drawing Rights (SDRs). This is a unit of account used by the International Monetary Fund (IMF). As of October 2024, one SDR equals around USD 1.33.

The set compensation under the Montreal Convention is 128,821 SDRs, which is about USD 171,341 per passenger. However, this may change based on legal outcomes and the exact insurance coverage bought by Air India.

Interim vs Final Compensation

Airlines may give interim compensation soon after the crash to help the victims’ families. But the final amount will be decided later, based on the Montreal Convention and court rulings. This process may take time.

Aircraft Insurance: Large Amounts Involved

The crashed plane was a Boeing Dreamliner, with the registration number VT-ABN. It was built in 2013. Experts say the aircraft was insured for about USD 115 million in 2021.

Even if the plane is partially or fully damaged, this amount is expected to be covered under the airline’s aviation hull all-risk insurance. The exact payout depends on the declared value and the terms of the policy.

Global Reinsurance System Spreads Risk

According to the Insurance Brokers Association of India (IBAI), large airlines like Air India do not rely on a single insurance company. Instead, their risk is shared among international reinsurers in cities like London and New York.

One lead reinsurer may take 10-15 percent of the risk, while others may hold just 1.5 percent or 2 percent. This global system helps manage huge financial losses from accidents like this one.

Too Early for Final Figures

Experts say it is too soon to know the total liability for passenger deaths and other third-party losses. Investigations are still going on. The final payouts will depend on legal proceedings, insurance policies, and the findings from the crash inquiry.

(With PTI Inputs)