Long wait likely for compensation claims

The fact that the Montreal Convention became effective for India on June 30,2009 now holds the key to the kind of compensation that is made available.

The fact that the Montreal Convention became effective for India on June 30,2009 now holds the key to the kind of compensation that is made available to the families of the 158 passengers killed in Saturdays air crash at Mangalore airport. But with almost all of the compensation to come from Air Indias insurers,who are expected to contest the claims,there are concerns over the quantum of compensation that is eventually awarded and the time period in which it is finally delivered to the claimants.

Air India is insured by a consortium of four companies Reliance General,Bajaj Allianz,HDFC Ergo,Iffco Tokio. These firms have parked their liabilities with an international reinsurer. What this means is that a lot of negotiation and paperwork is on the cards before a final settlement is arrived at.

Sources in the government are already saying that it would be highly optimistic to expect the insurance companies to pay compensations as laid down in the Montreal Convention,without contesting the claims.

Even as a team of insurers was visiting the site of the crash on Sunday to evaluate the damage,senior Air India officials,alongwith lawyers,were closeted in a meeting with the insurance companies in Mumbai.

Air India Chairman and Managing Director Arvind Jadhav,meanwhile,announced in Mangalore that the carrier would pay an interim compensation of Rs 10 lakh for passengers aged over 12 years,Rs 5 lakh for passengers aged below 12 years,and Rs 2 lakh for every injured passenger. Jadhav had taken the insurance firms on board before making this announcement.

Stating that the compensation was subject to the execution of appropriate documentation,Air India clarified that this interim compensation will be taken into account and adjusted against the final compensation to be assessed. The carrier stated that this compensation was over and above the ex-gratia payment announced by the Prime Minister.

While Air India will shortly issue a notification asking the families of the victims to file their claims,identification of the authentic next of kin could emerge as a roadblock in case multiple claimants come forward demanding compensation.

Story continues below this ad

The contents of the final accident report,which will establish the exact sequence of events and will zero in on the reason behind the crash,will play a critical role in the overall evaluation and assessment of the compensation to be paid.

Article 21 of the Montreal Convention limits the liability of an airline at 1,00,000 Special Drawing Rights SDR in case of death or bodily injury sustained during an accident on board the aircraft or in the course of any of the operations of embarking and disembarking. The Montreal Convention states that the value of a national currency,in terms of the SDR,of a State Party which is a Member of the International Monetary Fund IMF,shall be calculated in accordance with the method of valuation applied by the IMF for its operations and transactions.