What’s the financial cost behind India’s biggest aviation disaster?

Who will be liable for the costliest aviation insurance claim in India’s history?

Transcript

00:00Rupees 2.8 crore per victim

00:02Who bears the cost of the deadliest aviation accident in a decade?

00:06The AI-171 crash has shaken the country's score,

00:10and Air India is expected to cover a minimum of Rupees 435 crore

00:14in passenger compensation and claims related to the damaged hostel.

00:18Air India is also liable to pay a fixed amount of Rupees 1.8 CR per victim

00:23in accordance with the Montreal Convention.

00:25The Montreal Convention of 1999 is an international treaty

00:29that governs airline responsibility for death or injury to passengers,

00:33as well as for damage or baggage.

00:35The Convention also mandates the airline to make an advance payment

00:39of Rupees 18 lakh to victims' families promptly,

00:42even before any investigations conclude.

00:44This payment is usually done to cover immediate needs of the family

00:47such as funeral and related expenses.

00:50Airlines are required to settle all claims within two years of an accident.

00:54Beyond the legal obligation, the Tata Group, which owns Air India,

00:57has pledged an additional Rupees 1 CR compensation for each victim's family.

01:02This brings the total compensation per victim to Rupees 2.8 CR.

01:06Air India would also receive an insurance payout

01:08for the physical damage to the aircraft under the Hull Insurance Policy.

01:12This means that Air India would receive between Rupees 665 CR to Rupees 960 CR

01:17from its insurer, which is predominantly Tata AIG General Insurance, among others.

01:22All in all, this is turning out to be the costliest aviation insurance claim

01:26in India's history.

01:28As grim as it is, the financial burden of compensation payments

01:31begins soon after a tragedy as this.

01:33What are your thoughts?

01:34Let us know in the comments below.