Fleet insurance plans may not cover losses from cancellations

Mumbai: Airlines are discovering that their fleet insurance packages are insufficient to cover them from losses arising out of flight cancellations. But even as they discover this new risk that has the potential to severely hit their balance sheets, insurance companies are saying that covers may not be available.
Although flights to-and-from major airports in Europe resumed on Thursday, the airline industry is facing losses running into millions of dollars with over 95,000 flights being cancelled.
There is also a potential dispute brewing between perishable cargo owners and insurance companies, with insurers saying that damage to goods would not be covered, if airlines have refused to accept the cargo.
“We do not expect any major claims because of flight cancellations due to the volcanic ash,” said Yogesh Lohia, chairman, General Insurance Corporation — the national reinsurance company, which underwrites the business of all non-life insurers in India. Mr Lohia added that there would be travel insurance related claims, however, the amounts involved would be very small.
Losses due to flight cancellations are not new to airlines. In India such cancellations have been a frequent feature in flights leaving Delhi during winter because of fog. Flag carrier had so often been a victim of such cancellations that it took out a policy last year to cover the Delhi fog. This was a separate domestic policy and had nothing to do with its fleet cover.
22/04/10 Economic Times

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Apr 2010