NEW DELHI: The crashing of AI171, a Boeing 787-8 Dreamliner bound for London Gatwick, shortly after takeoff from Ahmedabad on Thursday afternoon is set to place a huge financial burden on Air India.
Under the international Montreal Convention, the airline is liable to pay a compensation amounting to 151,880 Special Drawing Rights (SDRs) per deceased passenger. This translates to approximately Rs. 1.8 crore at current exchange rates to the next of kin.
The value of SDR is derived from a basket of five international currencies—the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling. One SDR is valued at Rs 120.
This compensation must be paid to the families of each passenger, regardless of who was at fault for the crash.
The Tata Group has so far announced a compensation of Rs 1 crore to each passenger.
SDRs function like a universal unit of account used by the International Monetary Fund (IMF), ensuring that compensation for incidents like injuries, lost baggage, or fatalities is fair and standardized across countries, regardless of national currencies.
Compensation could cross Rs 400 crore
Based on the fixed liability limit under the Montreal Convention, Air India is required to pay over Rs 377 crore for the passengers alone. If compensation is extended to include the crew members, the total liability crosses Rs 412 crore.
While the Montreal Convention outlines passenger rights, crew members are generally not covered under its provisions for death or injury. Instead, their compensation typically falls under workers’ compensation laws, employment contracts, or aviation-specific insurance policies that apply to on-duty airline staff.
In addition to this base amount, families may be entitled to higher compensation if it is proven that Air India was negligent or committed a wrongful act or omission that directly caused the crash. In such cases, courts may award compensation above the SDR cap, taking into account factors such as the deceased's age, income, number of dependents, and other personal circumstances.
However, to receive any amount beyond the fixed SDR compensation, families would need to establish the airline’s fault in court.
Rs 18 lakh per dead passenger in advance payment
The Montreal Convention also mandates that airlines make advance payments to the victims' families without delay to meet immediate financial needs, such as funeral costs or temporary living expenses.
These advance payments must be no less than 16,000 SDRs, or approximately Rs 18 lakh per passenger, and are required to be issued promptly, even before the official investigation concludes.
Dreamliner would have cost up Rs 1450 crore
Beyond the human tragedy, the crash also represents a significant material loss for Air India. The aircraft involved—a Boeing 787-8 Dreamliner—was among the airline’s primary assets used for long-haul international operations.
The estimated cost of the aircraft at the time of acquisition ranged between $125 million and $175 million, or approximately Rs 1,040 crore to Rs 1,450 crore. Air India currently operates around 30 Dreamliners and has been flying this aircraft type since 2012.
"Incidents like the Air India flight crash can lead to a total loss, this means that the aircraft is completely destroyed, cannot be repaired, and has no salvageable parts. Estimated loss during such cases can go around $130 million — $80 million for the aircraft and $50 million for liabilities," says Saurav Das, business head, Aviation Insurance, at Alliance Insurance Brokers.
The aircraft crashed into a medical college campus, causing additional fatalities on the ground. However, the Montreal Convention does not explicitly cover liability for third-party damage or injury on the ground. Such cases are typically governed by domestic tort law or other aviation-specific liability conventions, depending on jurisdiction.
