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Lufthansa,
Europe’s biggest airline, will have to compensate the relatives of the 144
passengers who died aboard Germanwings flight 9525. It may also face lawsuits
for negligence after the pilot allegedly deliberately flew the plane into the
French Alps. According
to the French prosecutor in the case co-pilot Andreas Lubitz intentionally
crashed the plane into the mountains after locking the other pilot out of the
cockpit. This ‘accident’ doesn’t fall under the general insurance, which covers
inclement weather and mechanical failures but under a separate war risk policy.
RT.com report continues:
A
US$6.5 million claim for the loss of the plane itself was paid on Wednesday,
Reuters reported, citing industry sources. Under the Montreal Convention of
1999, the airline will be liable for an additional US$175,000 for each
passenger or a total of $25.2 million for the 144 passengers on board the
Airbus flight from Barcelona to Dusseldorf. In addition to the passengers,
there were 6 crew members onboard.
AirAsia,
which lost a plane and 162 passengers en route from Indonesia to Singapore, has
already racked up £310 million in claims.
However,
the US$175,000 compensation is a starting point; families can go after the
company for more if they sue for negligence. Lawyers suggest they may have a
strong case in this instance, since the pilot was left alone in the cockpit, or
wasn’t properly screened by the airline. Reports are emerging that pilot
Andreas Lubitz had a history of psychiatric treatment, and may have been concealed
from his employer. If the crash is prove to be caused by 'negligence' the 6
crew members could receive similar compensation, otherwise it will be logged as
a workplace death, which has a different compensation regime.
As
this isn’t the first time a pilot has committed suicide and brought passengers
down with himself, relatives may have a stronger case.
Allianz
is the lead insurer for Lufthansa, which owns the budget carrier Germanwings.
Part of the cost will be paid out by underwriter AIG Aerospace, which covers
war, hijacking, and terrorism, as well as costs associated with passenger loss
of life and third party damage, which could be interpreted to include payouts
to family and relatives. Reuters also reported that Cathedral, a subsidiary of
Lancashire Holdings, is in charge of the war policy in the Germanwing’s case.
The
search for black boxes, aircraft fragments, and passenger remains is a costly
expense. The search is being led by Germany, France, and Spain, who may late
file a claim with the airline.
Before
the plane descended into the mountains killing all aboard, the German airline
had a clean safety record. The last major incident was in 1993 when a crew
member and passenger died on the Warsaw tarmac after the Airbus burst into flames
during takeoff. The other five crew members and 63 passengers survived.
More than two
In
response to the loss of 150 lives in the Alps, many airlines are now
implementing a two person cockpit rule, to protect against a repeat scenario.
In
the US it is already mandated that the pilot cannot be left alone in the
cockpit without another crew member, as well as with Ireland’s Aer Lingus and
Ryanair, UK airlines Jet2 and Flybe, as well as Canada’s Porter.
Air
Berlin, Air Canada, easyJet, Monarch, Virgin Atlantic, Norwegian Air Shuttle,
Air Transat, Westjet, and Thomas Cook have all changed their policy in light of
the Germanwings crash.
Aviation
insurance
On
March 26, Lloyd’s insurance market reported a £310million loss, the largest on
record since 2001 and the 9/11 attacks.
Lloyd’s
said that 2014 “witnessed some
sizeable risk losses, notably the tragic events impacting the aviation sector.”
Lloyd’s
of London was founded in 1688 and is the world’s biggest insurance market with
gross written premiums of £25.3 billion.
Last
year was a particularly costly year for aviation insurers with a record number
of disasters that ranged in motives and causes.
Timeline of
crashes in last 365 days
March
8, 2014: Malaysia Airlines Flight MH370 disappeared
July
17, 2014: Malaysia Airlines Flight MH17 brought down over
E. Ukraine
July
23, 2014: TransAsia Airways Flight 222 crash landed in
Taiwan
July
24, 2014: Air Algerie Flight 5017 crashed in Mali
August
10, 2014: Sepahan Airlines Flight 5915 crashes after
takeoff from Tehran
December
28, 2014: Indonesia AirAsia Flight 8501 crashed into Java
Sea
February
4, 2015: TransAsia Airways Flight 235 crash-landed into
river in Taiwan
March
5, 2015: Delta Airlines Flight 1086 veered off NYC runway
March
24, 2015: Germanwings Flight 9295 crashed into French Alps
In addition to mid-air
tragedies, insurance companies also provide coverage for airports.
Fighting at
the Donetsk airport in Ukraine has all but destroyed the US$1 billion airport
built just 3 years ago for the European Cup, and rival militias in Libya have also
caused significant damage to Tripoli airport. The damage to the Ukrainian
airport has been ongoing since war broke out last year, and the Tripoli airport
was hit hardest by a militia attack in July.
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