What started as a regular international journey turned into one of India’s worst aviation disasters. On June 12, Air India Flight AI171, a Boeing 787-8 Dreamliner headed to London, crashed shortly after takeoff from Ahmedabad, killing 241 people on board and a few more on the ground. Only one person survived. While the airline has announced ₹1 crore compensation for each family of the deceased, experts estimate that total insurance claims could reach ₹1,000 crore—potentially making this one of the costliest air disasters in Indian history.
Compensation Under International Rules
Airline liability in cases of injury or death is governed by international frameworks like the Montreal Convention, 1999, which India ratified in 2009. As per the convention, airlines are liable to pay up to 128,821 Special Drawing Rights (SDRs)—a currency unit of the International Monetary Fund (IMF)—per passenger, regardless of fault. That’s about $1.33 per SDR, making the baseline compensation approximately $171,000 per passenger. Additional compensation may apply if the airline is found negligent.
Amit Agarwal, MD and CEO of brokerage firm Howden India, said the final payout will depend on the airline’s insurance coverage and the extent of damages claimed by victims’ families. Compensation will be assessed based on several factors, including the deceased’s age, job status, education, income, dependents, and lifestyle.
Aircraft and Liability Insurance Coverage
Air India has insured its entire fleet under a global $20 billion aviation insurance programme, divided into hull insurance (for aircraft damage) and liability insurance (for legal and passenger claims). The aircraft involved in the crash, registered as VT-ABN, was a 2013 Dreamliner model and was reportedly insured for around $115 million in 2021.
According to Narendra Bharindwal of the Insurance Brokers Association of India, no single insurer bears the full risk. Instead, the coverage is shared among global reinsurers, with individual firms holding just 1.5–2% of the total risk and a lead reinsurer covering up to 15%.
While the hull damage will be covered within the estimated $211–$280 million value range for a Dreamliner, the bigger concern lies in the liability coverage for passengers and third parties. The full financial impact is still being calculated, but experts believe this disaster could cause a major shake-up in the global aviation insurance market.
