Compensating for an irreconcilable loss

Airlines have usually dragged their feet in making reparations for the loss of their passengers.

Saad Hasan July 15, 2012


Over the last six years, the aviation industry has witnessed five major airline disasters and numerous near-misses. Within that timeframe 362 individuals have lost their lives in aviation-related accidents.

Many hoped that the devastating crashes – which irretrievably damaged the safety track-record of Pakistani carriers – would ring alarm bells at the Civil Aviation Authority (CAA). Those affected thought the CAA would rush to restore the confidence of the general public in air travel, and deputing officers on special duty to guide traumatised families for speedy settlement of insurance claims.

But business has continued as usual.

The service provider oligopoly

There are just a handful of passenger airline service providers in the country. As standards of living improve, an ever-growing number of passengers are willing to pay a premium for air travel; especially while the most popular transport medium – Pakistan Railways – struggles to emerge from a financial mess. Therefore, contrary to expectations, airlines’ revenues have instead increased, relieving some pressure on airlines to be extra careful about their reputations.

Murky business

What lawyers and insurance industry officials have told The Express Tribune about the compensation process for affectees can only be summarised as a murky business.

An aircraft crashes; people die. The aircraft is usually insured, so the airline gets compensated. The victims are also insured, and their families are also supposed to be recompensed: but an aeroplane is made up of parts supplied by two dozen manufacturers. None of these want to be dragged to the courts in liability claims in the years to come. They want a clean chit. So the remuneration comes in only after they have been relieved of any further liability.

“The airlines are least bothered about the plight of victims’ families,” Dr Abdul Razzaq, a legal expert helping some of the families get compensation, relates from a personal ordeal: his own brother was on a Pakistan International Airlines (PIA)’s Fokker craft which crashed in Multan in 2006.

Most recently, the last airline to gain notoriety was Bhoja Air. One of its aircraft crashed in Islamabad in April, killing all 127 people on board. After initial promises to victims’ families – made in the heat of the crisis – Bhoja Air and the CAA soon set their liabilities aside.

“The insurance companies also want to save money. In Bhoja’s case, affectees are being made to sign a six-page release deed,” reveals Dr Razzaq. The release deed exempts Boeing and all other part manufacturers from any further claims.

“This is significant, because if it is ever found that the plane crashed due to a fault in the engine, or any other system, these manufacturers could be sued for millions of dollars.”

PIA’s Fokker crash had first brought the issue of compensation forward. There were many ‘important’ people on board the flight, including two army brigadiers, a high court judge, a university vice chancellor and a famous surgeon.

In the absence of any compensation law, PIA knew it could land in hot water if victims’ families went to court. Slowly, the national carrier negotiated with each family, paying Rs2-Rs3.5 million to each over the years. Five of the victims’ relatives are still fighting legal battles for better compensation.

The Airblue crash in 2010 took place under the spotlight of dozens of television news channels. The airline was quick to start the compensation process, but not everyone was happy with the Rs5 million offered as remuneration.

Over the years, families of many PIA, Airblue and Bhoja Air victims have decided to sue the carriers. Their cases are pending in different courts.

“These could drag on for years, and the airlines would face no trouble. They will keep on adding aircraft and growing their operations. But if families stick to their demands, then Pakistan could see some unprecedented insurance settlements,” says an insurance industry veteran.

The knowledge gap

Under Pakistani law, formalised under the Carriage by Air Act 2012, compensation amounting to Rs5 million has to be paid for each passenger life lost. This amount has to be paid in any case – notwithstanding the findings of the investigation report – which usually takes time to be released.

Naseem Ahmed, president of the Society of Air Safety Investigators’ Pakistan chapter, says that 37 families have not even applied for settlements of such claims.

“Many of them have not received any phone calls, telegrams or emails. They do not know what to do. There is no counselling. An airline would never do that for obvious reasons, but at least the regulator should step in,” he observes.

A can of worms

Additionally, new issues keep popping up as people come forward to claim compensation. Family disputes come to the fore: a husband and wife were killed in the crash. Families of both man and woman stand as heirs. Who receives the money?

Victims of the ill-fated Bhoja flight hailed from all over the country. Heir-ship certificates can be obtained easily in Sindh, attested by a commissioner. But in Punjab, the families have to go to court; and courts are usually shut these days, with lawyers agitating against the government on one pretext or another.

Furthermore, when an heir comes forward to claim compensation, he or she has to obtain a no objection certification (NOC) from other family members. Under law, the NOC then has to be certified by a Justice of Peace... Presently, there is no Justice of Peace to serve victims’ families hailing from Badin.

“Therefore, many of the families feel so hopeless that they do not believe they will ever be compensated for their losses,” says Ahmed. “Nobody promises them any justice.”

Published in The Express Tribune, July 16th, 2012.

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syed nasir ali | 8 years ago | Reply

The regulatory body has to wake up. So many deaths, so many accidents in the recent past. So many failed private airlines since deregulation. And the pathetic state of the National Carrier. Commercial Aviation is in such a sad state. CAA is responsible to provide a congenial environment to safe/profitable commercial aviation. But then CAA is part of that same failed Government. What can we expect.......but disaster!


Fazal ur Rehman | 8 years ago | Reply

and their Chief Justice is busy in political cases and cases of terrorists to release them on the pretext of insufficient evidence.

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