New Lows for Air India Crash Compensation

George's Point of View

Compensation disbursal has hit a new low. It was recently published on the Khaleej Times site that Air India’s insurance company is calculating compensation claims based on ‘the loss of livelihood” rather than “loss of life.’ Loss of life according to the Montreal Convention (in terms of Indian currency) amounts to nearly Rs7.5million. Advocate and solicitor Hoshang D Nanavati, who represents Air India’s legal counsel, is saying they are settling cases where the issue of applying 100,000 SDR (Special Drawing Rights) equivalent to $160,000 did not arise.

Compensation is complicated—a complicated process, and it is frequently misunderstood.

Families understand, or are made to believe that soon the carrier will be coming around to pay no less than $100,000 SDRS less the amount of the advance they received. This is not always the case. If the emergency advance was $10,000 and that 100,000SDRs equates to $151,000 US dollars, the family is entitled to the $141,000 that is still due under the treaty ONLY IF THEY CAN PROVIDE THE DOCUMENTATION. To qualify, documents must show that the person who died had a life span long enough to earn at least that amount based on the decedent’s profile, hence the term above, “loss of livelihood.” It’s always been my opinion that the Montreal Treaty, as other treaties/conventions before it, is not intended to protect the passenger. It’s to protect the operator of the airline from being sued for more than the amount called for in the treaty. The 100,000 SDRs is not a right, it’s a cap, the maximum that, in addition to a small amount for baggage, the operator will have to pay each family of a decedent unless negligence is proved. (Negligence can creep into the picture in a number of ways, such as lack of maintenance, or inferior pilot training leading to pilot error.)

The insurance companies and lawyers commonly require a global release upon payment of any funds, so even if they paid the maximum per the treaty, if more culpable parties turn up, those who signed too early have signed away their rights. If a global release was required before operator paid the compensation, all doors would be shut to sue anyone else later found responsible, such as the manufacturer of a component or the manufacturer of the aircraft.

Keep in mind that we don’t even have a final report on the cause of the crash, other than bits and pieces about pilot error. Other responsible parties may turn up.

The loss of a decedent is handled by profile. It is NOT generic. The loss is based on the person’s age, employment, if not employed, what did he do when he was employed, then how many children, wife/husband, who else depended on the decedent for support, was he the bread winner for how many? All these factors play into what make determining compensation complicated. But in this circumstance, that cap is not a baseline, it is a ceiling.

And unless you have a top earner, there is nothing to negotiate beyond the economics which depend on the country (in this case, India.) And then there’s pain and suffering, and how each country handles it. In India, it is possible that pain and suffering is not even considered. In some countries, there may be a fixed amount for pain and suffering; or it may be banned all together. What happens to the family member in India who was not a top earner?

For those families who are trying to hold out for the compensation they deserve, for authorities to say cases are delayed because of pending case opposition is just a typical delay tactic. There’s always the ambition on the part of airline and insurance lawyers that the families who are most in need of cash will capitulate and accept lesser compensation. The longer the lawyers take, the more red tape and loopholes the families have to weave through, the longer the families have to struggle along, make their bills, and stretch out whatever interim compensation the law has allowed. The more likely they are to capitulate and accept less.

When the Indian Civil Aviation Minister assures speedy disbursal of maximum compensation, if he is thinking of his constituents, is he referring to maximum compensation to take care of widows and orphans, or that completely different number that the insurance companies and airlines would like to redefine as “maximum,” in other words, the least possible that they can legally get the victims to accept?

The Montreal Convention is a treaty that governs international aviation incidents. The airline is automatically liable for up to 100,000 Special Drawing Rights I mentioned above. But an airline is liable to claims over that limit if it is unable to prove that the crash was not due to the negligence or wrongful act or omission of the company or any of its servants, or that the crash was solely due to the negligence or wrongful act or omission of a third party.

If there is no cap, because of the certain pilot error, shouldn’t that victim, even if a low earner, at least get the cap amount? Their life has value. Every life has value.

Air India’s parent company, National Aviation Company of India Ltd said that next week they will make public the steps toward safety taken during the past year. “We are now preparing a whole list of what all actions we have taken. That should come out in public domain in a week’s time.”

That is a very good thing. I look forward to seeing the list of actions taken that comprise improvements, for is also the selfsame list of practices which were negligent in 2010. Every item on that list should be financially compensated as an action which was denied the victims of the Mangalore crash.

I wish there were some way to empower the struggling families to see that there is a light at the end of the tunnel if they do not cave in to lesser offers. The pain and suffering, the loss of life, the decreased quality of life, and the loss of income are very real. They have more than the emotional weight which the families are suffering, but also a physical reality reflected in concrete family circumstances.

The families are living through a terrible ordeal, and the song and dance that the victims are being forced to endure is unnecessarily cruel punishment.There is no question that the airline and insurance companies bear the responsibility; they should just stop playing a numbers game, stop extending the misery, and just provide the families the compensation they deserve.

Originally posted by George Hatcher on Monday, April 25th, 2011