AIR INDIA CRASH: THE COST OF RISK IN MODERN AVIATION

Industry analysts estimate the total insurance payout could start at about $120 million and increase beyond $150 million with worst-case projections nearing $250 million

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On June 12, an Air India (AI) Boeing 787-8 Dreamliner bound for London tragically crashed shortly after takeoff from Ahmedabad. The disaster claimed 241 lives on board and 19 more on the ground, leaving only a single survivor.

It is one of the deadliest air disasters in Indian history and potentially, its costliest.

Quantifying disaster

Industry analysts estimate the total insurance payout could start at about $120 million and rise beyond $150 million with worst-case projections nearing $250 million. The hull loss (the value of the destroyed aircraft) alone, a Boeing 787’s market value, accounts for $75-80 million.

Passenger liability under the Montreal Convention adds another layer: airlines are strictly liable up to 1,51,880 SDR (roughly ₹1.5-1.8 crore) a passenger, or more if negligence is proven. For 241 lives lost, this would be at least ₹360-430 crore in no-fault compensation. On top of that third-party claims related to ground fatalities and property damage are still being quantified. The final payout will hinge on investigation findings and liability outcomes and full settlement could take several months or even years. But the sum far exceeds India’s entire annual aviation insurance premium pool (₹1,000-₹1,100 crore), highlighting scale of catastrophic financial exposure.

Risk, vulnerability