Air India has announced it will include crash insurance coverage in all flight tickets, effective immediately, following the devastating crash of its Boeing 787 Dreamliner near Ahmedabad on 12 June. The move comes as the airline faces mounting financial losses and a significant reputational challenge for its owner, the Tata Group.
The crash, which killed 260 people, including 53 British citizens, has triggered what is expected to be the most expensive aviation insurance claim in India's history. Total liabilities are estimated at approximately £353 million, covering the aircraft's hull value, passenger compensation under the Montreal Convention, and third-party property damage. The airline has already paid interim compensation of £85,000 to each victim's family and £21,000 to the sole survivor.
A preliminary investigation report released last week revealed that the aircraft's fuel switches were moved from 'run' to 'cutoff' three seconds after takeoff, though both switches were found in the 'run' position at the crash site. Cockpit voice recordings captured one pilot asking the other why he had cut off the fuel, with the other denying the action. The report found no mechanical or maintenance faults, and all pre-flight checks were passed.
The accident has severely impacted Air India's operations, with bookings dropping 20% in the week after the crash and dozens of flights cancelled. The airline has also slashed ticket prices on key routes by up to 15%, deepening its financial losses. Air India, which holds a 30% share of the domestic passenger market, has been reporting losses since at least 2019-20, with a net loss of £386 million in 2023-24.
CEO Campbell Wilson, who has been pushing to revive the airline as a 'world-class carrier', now faces a major challenge. The airline was already ranked the worst for flight delays in the UK, with average delays of nearly 46 minutes in 2024. The new insurance measure is seen as an effort to restore passenger confidence and mitigate future liabilities.
