How do airlines compensate for a plane crash?
As the details of the Germanwings plane crash continue to be put together, one question yet to be determined is how the families or heirs of victims will be compensated.
Regardless of the circumstances that caused the crash — and remember, a prosecutor has said the co-pilot intentionally flew the plane into the ground — Lufthansa, the parent company of Germanwings, will probably not pay punitive damages.
Under an international agreement called the Montreal Convention, the families of victims probably will be entitled to ‘unlimited compensation,’ unless Lufthansa claims in court that it was not responsible for the crash in any way. That’s a claim the company is highly unlikely to make.
Unlimited compensation means that courts will decide compensation for each victim according to fairly standard calculation. “Things like age, income, the earning capacity, marital status, education,” says aviation attorney Mark Dombroff with the law firm McKenna Long and Aldridge.
Punitive damages, designed to punish a company in cases of willful negligence, do not apply under the treaty. “Let’s hypothecate that they did everything wrong, the fact is underneath the international agreement, you still can’t get punitive damages,” Dombroff says.
Still, some compensation cases may yet argue negligence on the part of Lufthansa. The fact that two pilots were not required to be in the cockpit will likely still come up in court.
“Did they know that that could have left them open to sabotage or pilot suicide?” asks Mary Schiavo, a former Inspector General of the U.S. Department of Transportation. “Of course I’d argue that and I will argue that if I’m involved in the case. And they should have known that. So, am I saying that there is no way they’ll have additional liability? No.”
Schiavo estimates that total payments will reach into the hundreds of millions of dollars, which is well short of the $1.5 billion insurance policy that nearly all airlines carry per flight.
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