Sunday, April 22, 2012

In the West, airline would have had to pay $20 million damages to all passengers: Bhoja Air Boeing 737-200, AP-BKC, Flight B4-213, Islamabad, Pakistan

Sabir Shah 

 Monday, April 23, 2012
LAHORE: Had Bhoja Air been operating anywhere in the developed West and had any of its planes met a disaster there, the May 1999 Montreal Convention on Air Law would have legally forced it to pay a compensation to the tune of over US $20 million to all the on-board passengers.

On the contrary, if one takes into account the fact that while the victims of the PIA Fokker crash at Multan were paid Rs two million each and that the Air Blue had announced a compensation of Rs5.5 million per ill-fated passenger after one of its planes had encountered a disaster at the Margalla Hills of Islamabad in July 2010, these figures speak volume of the plight of the Pakistanis travelling by their local air carriers if one compares them in the international perspective-as has been done in the introductory paragraph of this story.

The Pakistan Carriage by Air Act 2010, approved in 2011 by the National Assembly, is piteously nowhere near to the May 1999 Montreal Convention on Air Law, when it comes to compensating the victims of air crashes that take place in this part of the world.

According to Article 21 of the May 1999 Montreal Convention on Air Law, unless an airline proves that an accident during flight operations was not caused by the negligence of its crew or other wrongful act or omission of the carrier and until it does not present substantial evidence that the damage was inflicted solely due to a third party, it is legally bound to pay a liability of 1,00,000 Special drawing rights (SDRs) to each passenger on-board.

In simple economic terms, SDRs are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF). These SDRs are actually a mix of currency values established by the IMF.

Although an SDR is not a currency, it represents a claim to currency held by IMF member countries, for which it may be exchanged.This figure of 1,00,000 SDRs under the May 1999 Montreal Convention on Air Law, was later updated to 1,13,100 on December 31 2009.

A per passenger liability of 1,13,100 SDRs would have meant that had Bhoja faced an accident in any of the Western countries, the family of each passenger aboard its flight in that case would have been paid an amount to the tune of US $1,69,650 (equivalent to Pakistani Rs15.39 million).

This is how these calculations have been done:According to the IMF website, each SDR during April 2012 is roughly equivalent to US $1.47639 or $1.5 (as per the three significant figure phenomenon of Mathematics).

Therefore, with 1,13,100 SDRs equivalent to US $1,69,650 (1,13,100 SDRs multiplied by 1.5), the per passenger compensation in today’s value would have come to $1,69,650 or Pakistani Rs15.39 million.

These calculations have been conducted by taking into view the latest rupee-dollar parity in Pakistani kerb market.Now multiplying this figure of US $1,69,650 by 118 passengers (the number of travelers aboard the unfortunate Bhoja Air flight), the total compensation amount for all passengers would hence have come to $20,018,700 or over US $20 million.

It is interesting to note that the Montreal Convention of 1999, which was attended by 118 states including Pakistan, is quite silent on the compensation of the crewmembers aboard the flights that meet accidents.

It is imperative to note that the Montreal Convention of 1999 had re-established the urgency needed for the uniformity and predictability of rules relating to the international carriage of passengers, baggage and cargo in a bid to recognize the tragic consequences flowing from aircraft accidents and taking cognizance of the plight of the families of victims or survivors of such calamities.

This moot, formally known as the Convention for the Unification of Certain Rules for International Carriage by Air, was held in the Canadian city of Montreal between May 10 and 28, 1999 under the auspices of the International Civil Aviation Organisation.

It had basically amended the important provisions of the Warsaw Convention’s regime concerning compensation for the victims of air disasters.This Convention had also amended the jurisdictional provisions of Warsaw Convention and had allowed the victims or their families to sue foreign carriers, where they maintained their principal residence.

This conference had required all air carriers to carry liability insurance.By the way, as research reveals, Pakistan had ratified the Montreal Convention on December 19, 2006 and as of July 2010, not fewer than 97 countries had signed the Montreal Protocol treaty.

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