The Gujarat air crash couldn’t have come at a worse time for Air India. While the Tatas were splurging billions of dollars in revamping the ‘white elephant’ the airline had become under the government, the management will now have to deal with the very real, and very hard-hitting, liabilities that come with an air crash of this magnitude.
While an initial compensation of 10 lakh rupees is usually paid out by airlines, additional compensations will need to be looked into depending on a host of factors. The ‘why’ of the crash will also matter here.
Expenses will include not just compensation to families of victims, but also aircraft repair or replacement, reworking routes and passengers, as well as indirect costs like air crash investigations (though they are done by the government). Airlines will also have to brace for lawsuits against negligence and any other factor that may come up, stated or alleged.
I was in the same damn flight 2 hours before it took off from AMD. I came in this from DEL-AMD. Noticed unusual things in the place.Made a video to tweet to @airindia i would want to give more details. Please contact me. @flyingbeast320 @aajtak @ndtv @Boeing_In #planecrash #AI171 pic.twitter.com/TymtFSFqJo
— Akash Vatsa (@akku92) June 12, 2025
The International Civil Aviation Organisation (ICAO) had set an amount in the range of 1.5 crore rupees (varies depending on exchange rate) late last year for compensation in the event of death of passengers on international flights out of India.
However, that amount could change, as various passengers’ near and dear could litigate asking for more. In such situations, all parameters like the person’s origin and earning capabilities come into play.
For example, after an Airbus A320 run by its subsidiary GermanWings crashed a decade ago, Lufthansa had set aside 300 million dollars to deal with the compensation claims.
Closer home, Air India was ordered by the Supreme Court to pay a particular passenger more than 7 crore rupees as compensation, after his death in the Air India Express crash in Mangaluru in 2010. The National Consumer Disputes Redressal Commission, and later the SC, had tabulated this figure based upon the passenger’s then job as the regional director of a UAE-based company and what his entitlement may have been.
The plane that crashed on Thursday in Ahmedabad was a Boeing 787-8, billed the ‘Dreamliner’, and had 242 passengers and 12 crew members. The passengers included 169 Indians, 53 British, seven Portuguese and one Canadian.
It is quite the possibility that many of the Indians were in high-paying jobs or businesses in the west, with the difference in economic parameters dictating a much higher payout for citizens of other countries.
While the Tatas are already paying through their nose billions of dollars in revamping Air India, including an order of 570 planes from Boeing and Airbus, with an additional 200 presently under discussion. Diverting funds to payout victims would leave a bigger hole in the Tata exchequer.
Interestingly enough, the airline should be able to recover the cost of the aircraft hull itself, depending on the age of the said aircraft and its insurance terms. During its earlier major crashes this century, it had received an estimated $51 million for the 737 aircraft it lost in Kozhikode in 2020, while the cost to insurers for the 2010 Mangaluru crash was put at around $70 million.
While a Dreamliner costs in the range of $280 million, the Air India one that crashed is several years old. Even then, an insurance claim of over $100 million by Air India is not out of the realm of conjecture.
Ironically, all these three major air crash incidents in the country this century involved Boeing aircraft, though the Gujarat one is the first reported fatal accident involving the Dreamliner.
