Kevin O'Toole/LONDON

US INSISTENCE THAT its citizens have the right to claim unlimited compensation on any international flight, has again emerged as the major stumbling block, in efforts to agree new world limits on passenger-liability limits.

An outline agreement on updating the Warsaw Convention limits was hammered out by airlines at the conference hosted on 23 June by the International Air Transport Association (IATA) in Washington.

IATA has heralded the deal, which would see liability limits raised from only $75,000 to around $350,000, as a victory in its efforts to keep the Warsaw framework in place.

"We have achieved the long-awaited breakthrough which we needed," says IATA director-general Pierre Jeanniot. "We are now on the fast track to modernising the Warsaw Convention System."

Lack of progress on updating limits had raised fears that the Warsaw framework would disintegrate as regions went their own way on setting higher levels of compensation.

The USA and Japan already have provision for unlimited compensation, which they will be able to keep in some form under the proposed agreement, while Australia has also broken ranks by proposing to raise limits and Europe is threatening to follow suit.

The consensus could still break down, however, over US insistence that its citizens have the right to claim unlimited compensation on any international flight around the world.

The US Department of Transportation made it clear, in granting anti-trust immunity for the Washington discussions that the outcome should allow, for implementation of the US "supplemental compensation plan".

The plan calls for US-ticketed passengers on international flights to be entitled to "prompt and complete compensation on a strict liability basis with no per-passenger limits", and with damages at the same level as for US domestic services. The same rights would also be extended to US citizens and residents travelling on international flights outside the USA.

Airlines at the conference were clearly angered by the US stance, claiming that the proposals would effectively "...discriminate among passenger nationalities" as well as burdening airlines with " unreasonable responsibility that should be borne by the US Government".

Japan has also taken an initiative to waive limits on liability claims where fault can be shown, but has not sought to impose the rules on other carriers.

The conference agreed to set up a working group to find ways to incorporate the US plan and Japanese "Initiative" into the Warsaw framework. The group has been instructed to take "particular account" of the impact on smaller airlines.

A second working group has been charged with making "specific proposals" on how to help "small- and medium-size airlines" meet the extra costs of raised liability.

Insurers have already signaled their intention to raise rates in line with any rise in liability limits (Flight International, 24-30 May). In 1994, passenger-liability claims from the USA and Japan helped to produce the worst losses in aviation history, despite an average volume of accidents.

Source: Flight International