Tourism Ministry is preparing new bill with conflicting provisions on plane crash compensationGovernment move to fix a uniform liability amount equal to international airlines is unfair, domestic airlines say.
Just as the Civil Aviation Bill with a provision for compensation of domestic air passengers is set to be tabled in the Cabinet, the Tourism Ministry is drawing up a new bill envisioning unlimited compensation in the case of death or injury to passengers, as well as in cases of damage or loss of baggage.
The Civil Aviation Bill has a provision for compensation of up to Rs10 million for the death of domestic air passengers.
Drafting of the new bill is one among the various plans Tourism Minister Yogesh Bhattarai announced earlier this week.
One of the crucial policies includes preparing a draft of a modified version of the Montreal Convention 1999, a separate law applicable for domestic carriage within Nepal. The ministry has promised to complete a draft bill and table it in the Cabinet within four months.
The Montreal Convention 1999 imposes strict liability on airlines in three cases: Accidental death or bodily injury of a passenger while on board, embarking, or disembarking the aircraft, damage to cargo and damage resulting from delay of passengers, baggage, or cargo.
Nepali domestic airlines have been opposing the government’s move to fix a uniform liability amount equal to international airlines.
Multiple officials at the Tourism Ministry with whom the Post talked to said they were locked in a dilemma.
One official involved in preparing the draft of the Civil Aviation Bill said it was complicated to bring a separate law in the domestic sector as a modified version of the Montreal Convention 1999 because there are a number of clauses that airlines would not be able to comply with.
For example, in any crash under the Montreal Convention 1999, the families of the victims have a right to claim unlimited compensation if it is wrongful death. “But in the case of domestic airlines, they cannot afford to bear the unlimited compensation,” the official told the Post on condition of anonymity because he was not authorised to speak to the media.
Recently, the families of the US-Bangla Airlines crash victims sued the airline for $19.09 million in the Kathmandu District Court.
Under the Montreal Convention 1999, in the case of airline passenger deaths involving international flights, the family of the victims are paid $158,565. This works out to approximately Rs18.23 million at the current exchange rate ($1=Rs115). For domestic carriage within Nepal, the minimum liability is $20,000.
“We can force domestic airlines to pay $80,000 to $100,000 per passenger in case of death,” said another official at the ministry who also requested anonymity.
Under the Montreal Convention 1999, the liability for delay is limited to $6,580.94 or Rs723,903 per passenger. A carrier’s liability for damage or loss of baggage is limited to $1,585.65 or Rs174,421 per passenger. The carrier’s liability limitation for cargo lost, damaged or delayed shall be $26.63 or Rs2,929 per kilo.
“But given Nepal’s geographical terrain, climatic behaviour and airport facilities, Nepali airlines cannot afford to bear liability for delays and other mishaps,” the official added. “If a separate law is enforced, it should replicate the provisions of the Montreal Convention 1999. That’s why the ministry has incorporated provisions for paying compensation for passenger death on a domestic carriage in the Civil Aviation Bill,” said the official.
According to the official, after the bill becomes law, the government plans to announce a compensation amount of up to $100,000 per passenger in case of death.
“But Monday’s announcement for a separate law has complicated things,” he said.
Ghanshyam Acharya, senior general manager of Sita Air, said the Montreal Convention boosts consumer confidence in air transport and that domestic airlines welcome the government’s decision to introduce new laws applicable to the domestic carriage.
“We are ready to increase the compensation for passenger death or injury in line with the policy that the government will adopt,” said Acharya. “But there are some clauses that need to be discussed extensively before making any decision.”
According to Acharya, who is also the spokesperson for Airlines Operators Association of Nepal, the aviation context in Nepal is different.
“Penalties like claims for loss or damage to baggage and delayed flights in the domestic sector should be practicable because of the geographical difficulties and harsh climatic conditions,” said Acharya. “Clauses like unlimited liability are not practical in Nepal.”
The Indian government implemented a modified version of the Montreal Convention in January 2014 by publishing it in the Gazette Notice. It has set cargo claims in Indian currency where the domestic limit is less than a third of the equivalent international limit. In case of death on domestic flights within India, it has set the compensation at only INR2 million ($33,000).
Nepal submitted its ratification instrument to the International Civil Aviation Organization in Montreal, Canada on October 16 last year. The Montreal Convention 1999 came into force in Nepal on December 15, 2018.
“We have an obligation when it comes to the international airlines, but in the domestic sector, the state can make a separate law for liabilities based on the business and size of the industry,” said Sanjiv Gautam, former director general of the Civil Aviation Authority of Nepal.
According to Gautam, domestic airlines cannot bear the uniform liability amount equal to international airlines, but the government can enact laws and fix a small amount of compensation.
“The best option will be,” said Gautam, “incorporating some provisions of compensation in the appendix of the Civil Aviation law and publishing the amount in the Nepal Gazette.”
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