The signing of an inter-carrier agreement aimed at waiving all liability limits is a bold initiative aimed at overcoming global political inaction.

The accord, signed at the Iata AGM in Kuala Lumpur, removes all limits on passenger liability claims, which currently range from $10,000 to the unlimited ceiling in Japan. The so-called Kuala Lumpur convention was initially signed by 12 Iata member airlines at the end of October. It is a bid by the airlines to push for a freeing up of the liability limits which have remained frozen since the Montreal Convention in 1966 because of the inability of governments to agree to amend international law.

But the effectiveness of the course taken by Iata's members is still unclear, as most signatory carriers will have to seek approval from their governments before the agreement becomes enforceable. The target date for implementation is November 1996, but Lorne Clark, Iata's general counsel and corporate secretary, will not estimate how many carriers would be in a position to implement it.

Clark expects approval from both the European and US regulatory authorities, although he believes assent from Washington may take longer as it still has to 'bury the Montreal agreement.' However, should this happen, any carrier wanting to serve the US will have to meet the unlimited liability requirement, he warns.

There are concerns among carriers, especially from the developing world, over the cost of insurance premiums for unlimited liability. But Iata is looking at bringing this cost down by 'grouping those carriers together, which could be disadvantaged,' says Clark.

Mark Odell

Source: Airline Business