A-I, IA ask Govt to bear war-risk insurance costs

Air-India (A-I) and Indian Airlines (IA) have asked the government to bear the cost of war-risk insurance charges notified by insurance comp...

Air-India (A-I) and Indian Airlines (IA) have asked the government to bear the cost of war-risk insurance charges notified by insurance companies to the airlines operating to Kuwait in the wake of Iraq war. “We have received a request from the airlines to bear the cost of war-risk insurance charges,” a civil aviation ministry official confirmed.

The insurance charge is around 0.125 per cent of the hull value of the aircraft. For the airlines, it will translate into an additional cost of $50,000-100,000 per flight depending upon the aircraft used on Kuwait route. War-risk insurance would have a major impact on airlines like IA which operates 16 flights a week to Kuwait. However, A-I and IA are reluctant to pass on the increased insurance burden to passengers as load factors to the region are already down in the wake of the ongoing war.

A-I re-routes flights to US, UK, France

NEW DELHI: Mumbai: Air-India, the country’s national flag carrier has re-routed its flights operated between India and UK/USA as also those to Paris in the wake of Iraq war. The route, finalised by IATA and ICAO for safe operation of flights by all airlines, omitting the war zone airspace, entails an additional flying distance of 36 nautical miles and 5 minutes of extra flying time, as compared to the normal route followed prior to the outbreak of hostilities in Iraq.

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The route for West-bound flights now being followed for a flight from Mumbai to London is over the Arabian Sea – Dubai – Central Iran exiting from N.W.Iran – Georgia – then across Ukraine – N.Romania – Hungary – Austria – Germany – Belgium and land in London. Interestingly, the demand for seats from Kuwait seems to have tapered off. Two flights operated by Air-India on the Kuwait-Mumbai sector in the last 36 hours have returned with a significant number of vacant seats.

“War-risk insurance has been notified to all airlines by the insurance companies for flights operated to and from Kuwait. We are taking up the issue with the government as this charge will make flight operation to Kuwait economically unviable,” A-I sources said.

“The insurance companies are negotiating for lower re-insurance charges with re-insurers in London,” an A-I official said. Many governments have earlier stepped in with emergency cover for their state carriers in order to save the aviation industry from collapse due to rising costs and falling load factors.

Insurance companies feel that a flat surcharge to cover war risks is a better solution than the standard seven-day notice system, whereby policies are scrapped and have to be renegotiated when there is a war situation.

After the September 11, 2001, attacks on the United States and after Iraq’s invasion of Kuwait in 1990, insurance companies around the world handed air carriers seven days notice before scrapping their insurance policies.

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