News
Boost for domestic aviation: Insurance rates reduced
View(s):In a boost to domestic aviation, the Government has gazetted significantly lower insurance liability limits for air transport within Sri Lanka, ending a requirement for companies to pay prohibitive international rates of up to US$ 174,000 for a passenger.
In the case of death or injury, the liability is now Rs. 5mn for a passenger, and for damage caused by delay in the carriage of persons it is Rs. 10,000 for a passenger.
For destruction, loss, damage or delay in the carriage of baggage, the payout is Rs. 5,000 for a passenger. In the case of destruction, loss, damage or delay in the carriage of cargo, it is Rs. 100 a kilogram.
The changes come after several years of lobbying by air carriers which complained that earlier insurance limits were strangling growth in domestic aviation and grounding aircraft. The new limits are expected to clear the path for internal passenger transport by a larger number of operators.
Till now, only the better-funded aircraft owners and companies could afford the heavy insurance coverage for passengers.
Insurance liability limits for passengers, baggage and cargo are governed by Sri Lanka’s Carriage by Air Act, passed in 2018 to bring domestic legislation in line with the Montreal Convention (MC) which defines airline liability when passengers die or are injured, or when baggage and cargo is delayed, damaged or lost.
But through an oversight, Sri Lanka—under its Carriage by Air Act—decreed that the same terms applicable to international flights would also apply to domestic ones, including soaring insurance liability limits.
A subsequent Civil Aviation Authority of Sri Lanka (CAASL) directive then set the limit of liability for a passenger at 128,821 SDRs. At yesterday’s rate of conversion, this amounted to US$ 174,328.07 for a passenger. There were other limits set for baggage and cargo, all of which were towering amounts requiring high premium payments.
In implementing its directive, the CAASL also notified domestic operators that it would not issue the mandatory Air Operators’ Certificate (AOC) if insurance requirements were not met. This meant that aircraft operators were required to strictly comply.
This crippled the domestic aviation sector as companies could not meet payment stipulations.
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