After Dreamliner Crash, Insurance Cost May Raise Airfare By 2-5%

The recent crash of an Air India Boeing 787-8 Dreamliner in Ahmedabad is expected to significantly impact aviation insurance premiums, potentially leading to a 2-5% increase in airfares. Industry experts indicate that the crash, which killed 241 passengers and crew and 10 people on the ground, could result in insurance claims ranging from $120–150 million (Rs 1,000–1,200 crore). These claims cover hull loss (estimated at $75–115 million for the 2013-model aircraft) and liability for passenger deaths and third-party damages under the Montreal Convention of 1999. The global aviation insurance market, already strained by prior incidents and a UK court ruling on aircraft losses in Russia, may see a hardening of rates, with premiums for airlines like Air India and SpiceJet potentially rising from $28 million to $40–50 million in the next renewal cycle. This cost increase is likely to be passed on to passengers, contributing to the projected airfare hike.

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