The Kuala Lumpur protocols are set to upstage the much-maligned Montreal protocols on airline liability for passenger claims. If all goes as expected, a proposal adopted by 67 airlines will be approved at the International Air Transport Association meeting in Malaysia in October.

It took persistent badgering by Iata before Washington granted antitrust immunity so that airlines could discuss a proposed update on liability limits. Everyone agreed the current hodgepodge of limits, ranging from $10,000 to Japan's unlimited ceiling, was a worldwide embarrassment.

When Iata airlines finally convened in Washington, it only took a week to hammer out a new proposal. It provides a new strict liability limit of 250,000 special drawing rights ($282,000) per passenger. Defences under the Warsaw convention would survive, and the liability cap could still be exceeded upon proof of wilful misconduct.

That is the key difference from the Montreal protocols, which proposed an unbreakable cap. Some airlines argued that high claims, such as the recent $19 million judgment against Pan Am, show the need for an unbreakable cap. But the prevailing view was that a higher strict liability limit would encourage quicker, more realistic settlements.

One aspect of the new proposal may require more consultation. It allows individual carriers or governments to adopt supplemental plans so that passengers could recover more than the limit without proving wilful misconduct. Payments would come from a fund financed by a passenger surcharge. But uncertainties remain over the extraterritorial reach of such plans.

Source: Airline Business