Air India Crash: How Passenger & Aircraft Insurance Works

A recent Air India plane crash in Ahmedabad has led to questions about how compensation for passengers and damages to the aircraft will be handled. Experts say that the payouts to the families of passengers will be governed by the Montreal Convention of 1999, which India signed in 2009.

Also See: Air India Flight Black Box Recovered After Deadly Crash — Can Investigators Decode Its Clues Before Time Runs Out?

This international agreement sets rules for compensating victims of air accidents. Compensation is calculated using Special Drawing Rights (SDRs), a global currency unit managed by the International Monetary Fund.

As of October 2024, one SDR equals about $1.33, and the minimum compensation per passenger is 128,821 SDRs, or roughly $171,000. Air India may first issue an interim payout to families, with the final amount depending on the airline’s insurance policy and legal proceedings.

Regarding the aircraft damage, Air India’s plane involved in the crash—a 2013 Boeing 787-8 Dreamliner—was reportedly insured for about $115 million in 2021. Depending on its configuration and condition, Dreamliners can be valued between $211 million and $280 million. Whether the aircraft is completely destroyed or only partially damaged, the insurance payout will be based on the declared value.

However, no single insurance company bears the full financial burden. Air India’s aviation insurance is shared among many global reinsurers, mainly based in markets like London and New York. A lead reinsurer may take 10–15% of the risk, while many others handle 1.5–2% each, ensuring the financial impact is spread internationally.

Air India currently operates 34 Boeing 787 aircraft, including 27 older 787-8s and 7 newer 787-9s that came after the Vistara merger. The aircraft involved in the crash (VT-ABN) was one of the legacy planes. This crash is historically significant because it marks the first-ever total hull loss for a Boeing 787 worldwide. In summary, compensation for the victims and damage to the aircraft will be handled under global aviation rules, with shared responsibilities among international insurers.

Image Slider