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Introduction of Insurance
Introduction of Indian Aviation sector

Introduction of Aviation insurance

2.1 Aviation Insurance in India
2.2 Cs & Aviation Insurance

History of Aviation Insurance

Objective of Aviation Insurance

Benefits of Aviation Insurance


Risk Covered in Aviation Insurance
5.1 Normal Risk
5.2 Liability Risk
Aviation Insurance Policy

Indian Government on Aviation Insurance

Top Aviation Company in India

Role of Aviation Industry in India (GDP)

Aviation Liability Insurance Limits in India

Aviation Insurance Services Provide by Air India

Aviation Policy of Air India

Future of Aviation Insurance :- by Air India

Forms regarding aviation insurance
Personal Accident Insurance Form
Aircraft/Aviation Liability Insurance Form
Loss Of Flying License Insurance Form
Weblography & Biblography
Objective of the project

This project has been undertaken with following objectives in mind:

To understand the Insurance Sector in India, its nature & functioning.

To understand the concept of Aviation Insurance.

To comprehend the impacts of the new norms on the functioning of the Insurance
sector in India.
To understand how these norms are put to practice. This involves understanding of the
coalition of input data, the process of data sorting, computing according to the norms,
assessing different stress scenarios and the final output of such computations. It also
involves close observation of the problems faced in implementation.
To draw a parallel of this situation to the Insurance industry as a whole.
Executive Summary
Aviation Industry in India is one of the fastest growing aviation industries in the world. With
the liberalization of the Indian aviation sector, aviation industry in India has undergone a
rapid transformation. From being primarily a government-owned industry, the Indian aviation
industry is now dominated by privately owned full service airlines and low cost carriers.

Aviation accidents are serious accidents, especially those that happen while the plane is in
flight. Aviation or plane accidents do not only mean pilot error. It could also be caused by
malfunctioning gauges as a result of product liability or failure of maintenance. Also, aviation
accidents do not only connote plane crashes or mishaps.

Aviation insurance is different from other forms of insurance in that it is very subjective. Due
to the vast array of aircraft types, uses and pilot experience, policies should always be
specifically tailored to suit the unique requirements of each individual applicant. For this
reason it is recommended that a broker, specialising in aviation insurance be engaged to
arrange cover.

The Indian aviation industry has witnessed remarkable growth in recent years, with key
drivers being positive economic factors, including high GDP growth, good industrial
performance, and corporate profitability and expansion. Other factors include higher
disposable incomes, growth in consumer spending, and availability of low fares. Before the
boom in the Indian aviation sector, the airline insurance market was dominated by the four
state-owned general insurance companies: New India Assurance Company, Oriental
Insurance Company, National Insurance Company and United India. Aviation insurance
business is a high severity loss business. Aviation has come a long way the last 100 years.
The industry is still developing. With growth comes a problem that must be solved before the
industry can go to the next level.
Introduction of insurance

Insurance is a contract between an individual (the policyholder) and an insurance

company. This contract provides that the insurance company will cover some portion of a
policyholders loss as long as the policyholder meets certain conditions stipulated in the
insurance contract. The policyholder pays a premium to obtain insurance coverage. If the
policyholder experiences a loss, such as a car accident or a house fire, the policyholder files a
claim for reimbursement with the insurance company. The policyholder will pay a deductible
to cover part of the loss, and the insurance company will pay the rest.

For example, suppose you have a homeowners insurance policy. You pay $1,000
per year in premiums for a policy with a face value of $200,000, which is what the insurance
company estimates it would cost to completely rebuild your house in the event of a total loss.
One day, a huge wildfire envelopes your neighborhood and your house burns to the ground.
You file a claim for $200,000 with your insurance company. The company approves the
claim. You pay your $1,000 deductible, and the insurance company covers the remaining
$199,000 of your loss. You then take that money and use it to hire contractors to rebuild your

When you buy an insurance policy, youre pooling your loss risk with the loss risk of
everyone else who has purchased insurance from the same company. If you get your
homeowners insurance from State Farm, which sells far more homeowners insurance policies
than any of its competitors, youre joining forces with millions of other homeowners to
collectively protect each other against loss. Each homeowner pays annual premiums; State
Farm collected more than $15 billion in premiums in 2011, according to data from A.M. Best,
a major insurance ratings company. Only a small percentage of homeowners will experience
losses each year 5.3% of insured homeowners filed a claim in 2014, for example. And most
of those losses will be relatively small; the average homeowners insurance claim was for
$11,402 in 2015, which is more than most people could comfortably pay out of pocket on
their own, but far from a worst-case scenario. Further, the average homeowner only files a
claim once every 9 or 10 years. Insurance companies are therefore able to use the premiums
from homeowners who dont file a claim in a given year to pay for the losses of homeowners
who do file a claim, which is called risk pooling.
Chapter 1

A proud Air India Flying

Aviation Industry in India is one of the fastest growing aviation industries in the
world. With the liberalization of the Indian aviation sector, aviation industry in India has
undergone a rapid transformation. From being primarily a government-owned industry, the
Indian aviation industry is now dominated by privately owned full service airlines and low
cost carriers. Private airlines account for around 75% share of the domestic aviation market.
Earlier air travel was a privilege only a few could afford, but today air travel has become
much cheaper and can be afforded by a large number of people.

The origin of Indian civil aviation industry can be traced back to 1912, when the first air
flight between Karachi and Delhi was started by the Indian State Air Services in collaboration
with the UK based Imperial Airways. It was an extension of London-Karachi flight of the
Imperial Airways. In 1932, JRD Tata founded Tata Airline, the first Indian airline. At the time
of independence, nine air transport companies were carrying both air cargo and passengers.
These were Tata Airlines, Indian National Airways, Air service of India, Deccan Airways,
Ambica Airways, Bharat Airways, Orient Airways and Mistry Airways. After partition Orient
Airways shifted to Pakistan.

In early 1948, Government of India established a joint sector company, Air India
International Ltd in collaboration with Air India (earlier Tata Airline) with a capital of Rs 2
crore and a fleet of three Lockheed constellation aircraft. The inaugural flight of Air India
International Ltd took off on June 8, 1948 on the Mumbai-London air route. The Government
nationalized nine airline companies vide the Air Corporations Act, 1953. Accordingly it
established by 1995, several private airlines had ventured into the aviation business and
accounted for more than 10 percent of the domestic air traffic. These included Jet Airways
Sahara, NEPC Airlines, East West Airlines, ModiLuft Airlines, Jagsons Airlines, Continental
Aviation, and Damania Airways. But only Jet Airways and Sahara managed to survive the
competition. Meanwhile, Indian Airlines, which had dominated the Indian air travel industry,
began to lose market share to Jet Airways and Sahara. Today, Indian aviation industry is
dominated by private airlines and these include low cost carriers such as Deccan Airlines,
GoAir, SpiceJet etc, who have made air travel affordable.
Chapter 2

Introduction Of Aviation Insurance

Aviation insurance is insurance which is designed specifically to meet the needs of aviators.
There are a number of different types of available for a variety of aircrafts and pilots. Laws
about aviation insurance tend to be less clearly defined than those regarding car insurance,
which can make it difficult to choose the right policy and carrier. Pilots who are not familiar
with the specifics of the industry may want to consider asking for advice from an insurance
broker or an experienced pilot.

Just as with insurance for other types of vehicles, there are a number of levels of coverage in
aviation insurance policies, including liability coverage for accidents when the policyholder
is at fault, theft and loss coverage, life insurance riders, and insurance for other types of
situations, such as loss of cargo. The more services requested on a policy, the more expensive
it will be. Coverage also varies depending on the type of craft: helicopters, sport planes,
commercial airliners, and so forth are all covered differently.

People who own and operate their own aircraft generally purchase aviation insurance so that
they are covered in a wide variety of situations, and so that their aircraft will be replaced if
they are damaged, lost, or stolen. Owners may also cover insurance on aircraft they rent out,
lease, or hire pilots to fly, in which case the individual pilot may need to carry additional
insurance to be fully covered in the event of an incident.

People who lease or rent aircraft usually get aviation insurance which will cover them in the
event that something happens to the aircraft while it is under their control. This insurance
replaces the aircraft or pays for repairs and covers liability issues, such as injuries to people
who were riding in the aircraft at the time of an accident. Many rental and leasing agencies
ask for proof of insurance before they will release aircraft to pilots, or request that pilots
purchase additional temporary coverage for special aircraft.

Aviation Insurance

Commercial Aviation Insurance

Aviation Insurance Agency

Aircraft Insurance
Airplane Insurance

When shopping for aviation insurance, people should think about the overall cost of the
policy, and the cost of the deductible. They should also make sure that they understand what
is covered, and in which circumstances. For example, many policies exclude damages which
occur in the hangar, requiring an additional hangar insurance rider for people who are
concerned about theft of the aircraft or its equipment while it is in storage. Likewise, a pilot
may be covered by insurance, but his or her family may not be part of the insurance policy
unless this is specified.

Aviation Insurance

Many rental and leasing agencies ask for proof of insurance before they will release
aircraft to pilots, or request that pilots purchase additional temporary coverage for
special aircraft. When shopping for aviation insurance, people should think about the
overall cost of the policy, and the cost of the deductible.

Often, an aviation expert is needed to give an opinion about how a plane crash
occurred and what factors led to the accident. If an insurance company is refusing to
pay out insurance because they believe a crash was due to owner negligence, for
instance, an aviation witness might be called on to examine maintenance records and
analyze the crash evidence.

Commercial Aviation Insurance

Many rental and leasing agencies ask for proof of insurance before they will release
aircraft to pilots, or request that pilots purchase additional temporary coverage for
special aircraft. When shopping for aviation insurance, people should think about the
overall cost of the policy, and the cost of the deductible.

A degree, in combination with professional flight training, makes the student more
competitive when entering commercial markets. Once a student decides which type of
flight school training will work best for them, the choice is then based on many of the
same principals used for choosing any type of school.
Aviation Insurance Agency

Many rental and leasing agencies ask for proof of insurance before they will release
aircraft to pilots, or request that pilots purchase additional temporary coverage for
special aircraft. When shopping for aviation insurance, people should think about the
overall cost of the policy, and the cost of the deductible.

Meeting the instructor is particularly important, as flight training is done primarily

one on one, and students and instructors will spend a lot of time together. Schools
should have proper insurance coverage and meticulous record keeping. Just as with
any school, flight school is the student's investment in him or herself, and decisions
should be made carefully.

Aircraft Insurance

People who own and operate their own aircraft generally purchase aviation insurance
so that they are covered in a wide variety of situations, and so that their aircraft will
be replaced if they are damaged, lost, or stolen. Owners may also cover insurance on
aircraft they rent out, lease, or hire pilots to fly, in which case the individual pilot may
need to carry additional insurance to be fully covered in the event of an incident.

The primary customers for war risk insurance are airlines and shipping companies.
Insurance for ships or aircraft themselves is called war risk hull insurance, while
insurance for the crews, passengers, and cargo is called war risk liability insurance.

Airplane Insurance

General damage whiplash settlements are not as straightforward. Some courts and
insurance companies use set guidelines to evaluate what dollar amount to award for
pain and suffering.
Depending on the size and scope of a corporation, a field auditor may be required to
log several hundred miles a week in travel by car or airplane. In most cases, trip
expenses such as food and hotel room fees are compensated by the auditor's employer.

1.1 Aviation Industry in India

Overview of Airlines industry in India

The aviation industry in India is one of those sectors

that saw a constant pace of growth among the other
industries in the world over the past many years. The
open sky policy of the government has helped a lot of
overseas players entering the aviation market in India.
From then, it has only been growing in terms of
players and the number of aircrafts. At present,
private airlines account for around 75% portion of the
domestic aviation market.

The 9th largest aviation market in the world is India. Taking the help of the statistics from the
Ministry of Civil Aviation, approximately 29.8 million passengers traveled to/from India in
2008, showing a surge of 30% from 2007. The prediction stated that international passengers
will touch 50 million by 2015. More opportunities in the aviation industry in India are likely
to make way for about 69 foreign airlines from 49 countries.

Growth of Indian Aviation industry

The Indian Civil Aviation market grew at a CAGR of 18%, being valued round US$ 5.6
billion in 2008. Further statistics revealed that the air traffic in August 2009 was a double
digit figure. The domestic airliners flew 3.67 million passengers in August 2009, as against
2.92 million in the corresponding period of 2007, up by 26%. The Centre for Asia Pacific
Aviation (CAPA) has estimated that the domestic traffic will go up by 25% to 30% till 2010
along with a surge in the international traffic by 15%. There would be more than 100 million
passengers by 2010. Then again by 2020, Indian airports will in all probability handle over
100 million passengers every year. The investment plans to the tune of US$ 9 billion has been
made by the Aviation Ministry for modernizing the existing airports by 2010.
In terms of domestic passengers' volume, US have always been the leader with followers in
the league like China, Japan and India. The number of domestic flights went up by 69% from
2005 to 2008, with the domestic aviation sector growing at 9-10%.

Market share of key players in the Indian aviation sector

Name of the players Market

Kingfisher Airlines and Kingfisher Red (previously Air 28%
Jet Airways and Jet Lite (previously Air Sahara) 25%
Air India and Indian (previously Indian Airlines) 16%
IndiGo 14%
SpiceJet 12%
GoAir 3%
Paramount Airways 2%
MDLR Airlines 0.004%


CS&A Aviation Insurance combines of one of the knowledgeable teams of aircraft
insurance professionals with the aviation insurance industry's most respected underwriting

At CS&A, we can handle all your aviation insurance needs, including aircraft insurance,
airplane insurance, airport liability coverage, FBO insurance, pilot life insurance, helicopter
insurance, airline insurance, general aviation insurance and more. Our aviation insurance
agents and support staff will provide you with superior customer service and the best
available aircraft insurance quotes.

We also specialize in superior insurance coverage for: Corporate Aircraft, Private Aircraft,
Regional Airlines, Repair Facilities, FBO's, Aircraft Dealers and Brokers, Charter
Companies, Rotorcraft, Pilot Life Insurance and Airports.
CS&A can provide many insurance needs. We insure small aircraft, large aircraft, helicopters,
aircraft maintenance facilities, flight schools, fixed base operators, regional airlines, and



Pilots Life Insurance

Special Risk & International Coverage

Niche Aircraft


CS&A's Aviation Division has grown to be one of the nation's largest and most
respected aviation insurance specialty agencies. Due to it's industry-wide respect and
its large premium volume, CS&A maintains direct underwriting contracts with all the
aviation underwriting facilities in the United States. In addition, CS&A enjoys close
ties with the London and Western European underwriters. This broad market capacity
coupled with its highly experienced staff of insurance professionals gives CS&A
Insurance's Aviation Division the ability to provide insurance coverage for any
aviation insurance risk.

Experience, market command, and a "Client First" approach has placed CS&A's
Aviation Division at the top of the aviation insurance industry.

Helicopter Division
Whether your helicopter is piston or turbine powered, CS&A Aviation Insurance can help by
creating the proper insurance program for you. How? Through experience. Terry McDowell
leads our helicopter division. He possesses more than 40 years of experience as a helicopter
pilot, instructor, examiner, aviation manager, and insurance account executive. His extensive
expertise offers sensitivity to the actual needs of any situation with regard to helicopter

CS&A insures commercial helicopter fleets as well as individually owned and operated
pleasure craft. Whether it is a Robinson helicopter (R22 and R44), , a Bell helicopter, an
Erickson Air-Crane, an MD Helicopter, a Eurocopter, an FH1100 helicopter, an Enstrom
Helicopter, or a Sikorsky helicopter, CS&A understands the wide variety of missions and uses
from charter to traffic and law enforcement, cargo hauling, emergency medical services
(EMS), oil platform operations, fire fighting, cattle herding, and more. Whatever your
purpose, CS&A can place your coverage at the most competitive prices available.
Pilot's Life Insurance
"Now you can protect your family with a life insurance program that provides coverage 24
hours a day, even while you're flying."

Term Insurance 10 - 15 - 20 - 30 Year Level

Permanent Plans Also Available

No Aviation Exclusions

Lowest Smoker Rates

No Association Dues Required

Level Premiums

Issue through Age 75

Competitive rates for both pilots and spouses

Flexible benefit amounts from $50,000-$30 million

Hassle-free, simple processing

Why CS&A Aviation Insurance (Chappell, Smith & Associates)?

We have specialized software that allows us to give you the best quotes at the most
current rates. By keeping track of the most current rates out there, we can provide you
with the most complete coverage at the best prices.

We represent the best insurance companies in the business.

We have a highly trained staff in both aviation insurance and in life insurance.

Our easy to use quote form allows for quick turn around.

Aviation Special Risk & International Coverage

CS&A is proud to employ agents who have worked in aviation insurance underwriting for
over 50 years. Along with the keen understanding of international insurance issues that
experience provides, we maintain an innovative attitude to find and create policies
specifically tailored to our customers? needs. In addition to brokering for the worldwide
airline industry, we also place airports, manufacturers, municipalities, and special use risks.
CS&A?s Special Risk & International Coverage Division is headed by David Tyler, one of
the most prestigious aviation insurance brokers in the world. We broker accounts with
underwriters throughout Eastern and Western Europe, the U.S., and the Pacific Rim.
Wherever you are, CS&A can provide coverage for you.

A Niche within a Niche

Owners of high-performance aircraft demand specialized training to operate safely. Likewise,

insurance brokers must have superior knowledge of the aviation industry and aviation
insurance to properly arrange coverage that will satisfy the underwriters and promote their
acceptance of the training and ability to operate high performance aircraft.

A complete "risk" portrait consists of the aircraft, its intended use, the qualifications of its
pilots, and any special circumstances that may affect the safe operation of the aircraft.
Understanding the actual level of risk involved enables CS&A to build a plan that allows
owners and operators to fly safely while being insured at the best price.

Securing the proper insurance coverage for an aircraft depends on much more than simply
faxing a quote request to every possible underwriter. Aviation insurance underwriters can
receive hundreds of quote requests each week. It is impossible to review each submission, so
in many cases, it?s easiest to just say ?No.? CS&A works with its clients to create a pilot
transition and aircraft operation plan that will work for both the client and the insurance

The service staff at CS&A uses their in-depth knowledge of aircraft and their relationships
within the aviation community to help the owner and operator transition into the kind of
aircraft he wants to fly, whether for business or for pleasure.



Aviation Insurance was first introduced in the early years of the 20th Century. The first
aviation insurance policy
was written by Lloyd's of
London in 1911. The
company stopped writing
aviation policies in 1912
after bad weather and the
resulting crashes at an air
meet caused losses on
many of those first

It is believed that the first

A light flight of 1911 aviation polices were
underwritten by the
marine insurance Underwriting community.

In 1929 the Warsaw convention was signed. The convention was an agreement to
establish terms, conditions and limitations of liability for carriage by air, this was the first
recognition of the airline industry as we know it today.

By 1933 realizing that there should be a specialist industry sector the International
Union of Marine Insurance set up an aviation committee, and by 1934 eight European
aviation insurance companies and pools were formally established and the International
Union of Aviation Insurers was born.

The London insurance market is still the largest single centre for aviation insurance.
The market is made up of the traditional Lloyds of London syndicates and numerous other
traditional insurance markets. Throughout the rest of the world there are national markets
established in various countries, this is dependent on the aviation activity within each
country, the US has a large percentage of the world's general aviation fleet and has a large
established market.

No single insurer has the resources to retain a risk the size of a major airline, or even a
substantial proportion of such a risk. The Catastrophic nature of aviation insurance can be
measured in the number of losses that have cost insurers hundreds of millions of dollars
(Aviation accidents and incidents). Most airlines arrange "fleet policies" to cover all aircraft
they own or operate.

Benefits of Aviation Insurance

Team of Aviation Insurance Specialists

Access to more aviation insurance companies

Free insurance inspection and risk analysis annually, in person where possible

Multiple, written quotations provided every year

Alternate coverage's and limits available

Property insurance and all other coverage's arranged

Low premium financing terms with 12 equal monthly installments

Access to our Account Executives 24/7, 365 days a year

Claims reporting and claims following

24 hours claims service


The gsrowth in the aviation sector and capacity expansion by carriers has posed
challenges to aviation industry on several fronts. These include shortage of workers and
professionals, safety concerns, declining returns and the lack of accompanying capacity and
infrastructure. Moreover, stiff competition and rising fuel costs are also negatively impacting
the industry

Employee shortage: There is clearly a shortage of trained and skilled manpower in

the aviation sector as a consequence of which there is cut- throat competition for
employees which, in turn, is driving wages to unsustainable levels. Moreover, the
industry is unable to retain talented employees.

Regional connectivity: One of the biggest challenges facing the aviation sector in
India is to be able to provide regional connectivity. What is hampering the growth of
regional connectivity is the lack of airports.

Rising fuel prices: As fuel prices have climbed, the inverse relationship between
fuel prices and airline stock prices has been demonstrated. Moreover, the rising fuel
prices have led to increase in the air fares.

Declining yields: LCCs and other entrants together now command a market share
of around 46%. Legacy carriers are being forced to match LCC fares, during a time of
escalating costs. Increasing growth prospects have attracted & are likely to attract
more players, which will 15 lead to more competition. All this has resulted in lower
returns for all operators.

Gaps in infrastructure: Airport and air traffic control (ATC) infrastructure is

inadequate to support growth. While a start has been made to upgrade the
infrastructure, the results will be visible only after 2 -3 years.
Chapter 5

Risk Covered in Aviation Insurance

There are different types of risk which takes place in aviation insurance and those risks are
covered in aviation insurance they are as follows:


The above diagram suggests that there are mainly two kinds of risks which an aviation
insurance company will cover which has been divided into two parts. They are:
1. Normal Risks
2. Liabilities
These two risks are further divided into various parts which involve various risks and
liabilities they are which is explained in detail later on.
These risks are those risks which every aviation company in this industry carries it on
its back when it enters into the business. These risks may differ from time to time and
situation to situation. These are
Hull Risks
Hull War Risks
Spares All Risks/ War Risks
Hull total Loss Only cover

These risks are those risks which

takes place when these takes place when
any of these factors comes into action.
Because all the above risks mentioned
above are unpredictable and may occur at
any time
Hull Risks

The hull "All Risks" policy will usually refer to something like "all risks of physical loss or
damage to the aircraft from any cause except as hereinafter excluded".
Airline hull "All Risks" policies are subject to a standard level of deductible (that is
an uninsured amount borne by the Insured) applicable in the event of partial (non-total) loss.
Currently, this deductible can range from $50,000 in respect of a Twin Otter to $1,000,000 in
respect of a wide-bodied jet aircraft, such as a Boeing 747.

Deductibles too can be reduced by means of a separate "Deductible Insurance" policy.

The Deductible Insurance Policy is effected to reduce the large "All Risks" policy deductibles
to a more manageable level. For example the US$1,000,000 applicable to a Boeing 747 can
be reduced to say US$100,000.

The term "all risks" can be misleading. "All risks of physical loss or damage" does not
include loss of use, delay, or consequential loss. "Grounding" is a good example of
consequential loss. Some years ago when there had been a couple of accidents involving
DC10 Aircraft, the Civil Aviation Authorities throughout the world imposed a "grounding
order" on that type of aircraft.

That order in effect said until certain things had been established and checked out
those aircraft could not fly. The operators of those aircraft were unable to fly them and as a
consequence of that they "lost" the use of them. But the aircraft were not "lost" - it was
known precisely where they were but they could not be used to carry passengers. Such an
eventuality would not be covered by an "all risks" policy because in such circumstances there
is no PHYSICAL loss or damage.

What the policy will cover is the reinstatement of the aircraft to its "pre-loss"
condition, if repairable damage is involved, or some other form of settlement in the event that
more substantial damage is sustained. Exactly what form of settlement will depend on the
policy conditions.

Today, the vast majority of airline hull "all risks" policies are arranged on an "Agreed Value
Basis". This provides that the Insurers agree with the Insured, for the policy period, the value
of the aircraft and as such, in the event of total loss, this Agreed Value is payable in full.
Under an Agreed Value policy the replacement option is deleted.

The hull risks does not cover some risks whish are as follows:

1. Wear, tear and gradual deterioration - in common with most non-marine policies
(which includes aviation insurance) these perils are thought to be a trading
expense and not a peril to be insured.

2. Ingestion damage - caused by stones, grit, dust, sand, ice, etc., which result in
progressive engine deterioration is also regarded as "wear and tear and gradual
deterioration", and as such is excluded. Ingestion damage caused by a single
recorded incident (such as ingestion of a flock of birds) where the engine or
engines concerned have to shut down is not regarded as wear and tear and is
covered subject to the applicable policy deductible.

3. Mechanical Breakdown - likewise is thought by aviation insurers to be an

operating expense, but subsequent damage outside the unit concerned is usually
covered. However, it is possible to obtain insurance coverage against mechanical
breakdown of engines by way of a separate policy. This coverage has a high
degree of exposure and as a result is relatively expensive. The majority of airlines
do not purchase it probably viewing such exposure as a part of the "engineering"
The hull "All Risks" policy
will contain the exclusion of
"War and Allied Perils". Generally speaking, throughout the aviation insurance world, "War
and Allied Perils" have a defined meaning. In the London Aviation Insurance Market the
standard exclusion is called the War, Hi-jacking and Other Perils Exclusion Clause
(currently known by its reference - AVN48B for short) this lists and defines these so-called
war and allied perils. It say,

War - this includes civil war and war with no formal


The detonation of a weapon

Strikes, riots, civil commotions and labour disturbances.

Political or terrorist acts.

Malicious or sabotage acts.

Confiscation, nationalization, requisition and the like by any


7.Hijacking or Unlawful exercise to control plane other than

crew members of the flight concerned.
The majority of the excluded "War and Allied Perils", other than the detonation of a
nuclear weapon and a war between the Great Powers (the aviation insurance world identifies
these as the U.S.A., the Russian Federation, China, France and the UK), can normally be
covered by way of a separate "War and Allied Perils" policy. Aircraft deductibles are not
normally applied in respect of losses arising out of "War and Allied Perils".

Other exclusions insurers will usually apply are, as follows:-

1. Confiscation etc. by the "state" of registration (this exclusion can

often be deleted in respect of financial interests - albeit, in some
instances at an additional premium charge)

2. Any debt, failure to provide bond or security or any other financial

cause under court order or otherwise;

3. The repossession or attempted repossession of the Aircraft either by

any title holder or arising out of any contractual agreement to which
any Insured protected under the policy may be party;

4. Delay and loss of use. (Although there is often an extension to the

policy for a limited amount for extra expenses necessarily incurred
following confiscation or hijacking).

The aircraft hull "War and Allied Perils" policy will cover the aircraft on an "Agreed
Value" basis against physical loss or damage to the aircraft occasioned by any of these perils.
This statement is made carefully and deliberately in order to highlight the essential difference
from a "Political Risks" Insurance.

First of all we must identify what we mean by a "spare" or perhaps - "when is a spare
not a spare" to which a simple answer is "when it is attached". Under most "Hull" policies the
word "Aircraft" means Hulls, machinery, instruments and the entire equipment of the aircraft
(including parts removed but not replaced). Once a part is replaced it is no longer, from an
insurance viewpoint, part of the aircraft. Conversely once a spare part is attached to an
aircraft as a part of that aircraft (not in the hold as cargo or on the wing as an extra pod) it is
no longer a "spare".

If the equipment is insured on the hull "All Risks" policy the automatic transfer of
coverage from "aircraft" to "spare" and vice versa is automatically accomplished.
Having established when a spare is a spare how is it insured as such? Usually in one
of two ways. Either under a "spares" section of a hull policy or by a separate Spares Policy. In
either case the scope of coverage will probably be similar. All Risks whilst on the Ground and
in Transit for a limit of [so much] any one item or sending or any one location. War Risks can
also be covered (in respect of transits), Strikes, Riots, Civil Commotions can be covered in
accordance with standard market clauses. Spares coverage is usually subject to a small
deductible except, however, in respect of ground running of spare engines when the
appropriate Ingestion deductible will be applied. Spares are normally covered on an agreed
value basis - usually their replacement cost (be it new or reconditioned - as is required).
Spares installed on any aircraft are not covered by the Spares Insurance. They become, from
an insurance standpoint, a part of the aircraft upon which they are installed and a part of the
Agreed Value for which it is insured. This becomes particularly important if the parts are
loaned to another airline.


The Aerocor (Aerolineas Cordeillra) DC-3 used in 60s and 70s

This is similar to Hull All Risks cover given above but will respond only to total losses of
aircraft, whether actual, constructive or arranged. This is particularly given for old aircraft
since the old aircraft are heavily depreciated and insured for low sums and premium on such
low sums would result in low premium, which would be inadequate for the partial losses. The
ratio of partial losses to total losses in such old aircraft is distorted.

Chapter 6
Top aviation companies in India
India is one of the flourishing global aviation markets. As per Airport Authority of India
(AAI) statistics, there are 127 airports in India which incorporates 13 international, 80
domestic, 28 civil and 7 custom airports. Moreover India has around 1091 registered aircrafts.

Over the years there has been steady growth in the number of private players establishing
their business in India due to increasing liberalization and deregulation. Hence, at present
aviation industry consist of three types of players namely, Full cost carriers, Low cost carriers
(LCC) and other start-up airlines.

An overview of Aviation sector in India

The aviation sector in India has registered an estimated increase in domestic passenger sector
by 50% per annum in the recent years, while the growth in international passenger section is
estimated as 25%. Experts foresee future growth in international cargo by 12%.

As per the prediction of the Ministry of Civil Aviation, India in the coming decade will
require 1,500 to 2,000 passenger aircrafts out of which 135 planes have already been added.
It is also predicted that India's aircraft capacity will stand at 500-550.

In the year 2010, as estimated by the ministry, the domestic market will exceed 60 million
and the international traffic will achieve 20 million. And in 2020, Indian airports will be
effective enough to support 100 million passengers, which would include 60 million domestic
passengers. The quantity of cargo managed by the airport is estimated to decline in the range
of 3.4 million tonnes per year.

Top aviation companies in India

Air Charter Services Pvt Ltd: Air Charter Services Pvt. Ltd. performs its business
operations with private business aircrafts, executive and corporate air charters,
helicopter tours, VIP charter flights, and photo and video flights. Its client list
incorporates VIPs, corporate firms, tour co-ordinators, travel agents and air medical
evacuation professionals. It provides services such as relief, VIP, air ambulance and
privacy services.
Air Charters India: Air Charter India is owned by the STIC Travel Group and has
around 100 airplanes in India. It covers several international destinations with an
unmatchable logistics support. The aviation company has 40 offices with a highly
skilled manpower of above 1000 people. It offers services like heli-skiing, charter
flights for pilgrimage in India, heli-sightseeing, corporate jets, executive jets, etc. Air
Charter India provides airplanes such as helicopters, business aircrafts, aircrafts for
corporates, individuals and group travelers.

Air India: National Aviation Company of India Limited (NACIL) was the first Indian
aviation company which led the way for other companies in the aviation sector. It was
initiated before the India gained its independence. Later it collaborated with Indian
Airlines and gained the reputation of being the largest airline in South Asian airline.
Air India Cargo, Air India Express and Air India Regional are its subordinates in
aviation market. It offers First class, Executive class and Economy class services and
has codesharing pacts with companies like Air France, Austrian Airlines, Aeroflot, Air
Astana, Emirates Airline, Air Mauritius, Kuwait Airways, etc.

Aviation India: Aviation India provides services like cargo services, flight operation,
air charter services, passenger services, freight control, advisory and consultancy,
aircraft preservation and renovation, international flight operation, air supervision and
helipad engineering, etc. The airlines has skilled workforce and offers total control
and functional back-up to several international schedule / non-schedule operations.

Indian Airlines: Indian Airlines was inaugurated on 1st August, 1953 and in
collaboration with its fully governed subordinate in aviation market Alliance Air, it
takes pride in being recognized as one of the biggest regional airline systems in Asia.
It has a fleet of 70 airplanes and covers 76 destinations, 58 Indian destinations and 18
foreign destinations. Globally it covers Oman, UAE, Kuwait, Qatar, Singapore,
Yangon, Pakistan, Maldives, Bangladesh, Sri Lanka, etc.

Deccan Aviation Ltd.: The aviation company has its presence in 8 places namely,
Mumbai, Ranchi, Surat, Hyderabad, Bangalore, Katra, Colombo (Sri Lanka) and
Delhi. It has 350 daily departures and covers 65 destinations in India. It offers the
benefit of no-cost travel to infants, ticketing counters, lavish aircraft interiors and
ticketing flexibility.

Indigo: Indigo is a utilitarian low-price domestic airline which offers feasible flying
alternatives for millions. The airline was facilitated by the Air Passengers Association
of India (APAI) as the Best Low-Fare Carrier in India for the year 2007. Indigo has
120 daily departures and a fleet of 19 Airbus A320. The airline covers 17 destinations
namely, Agartala, Bangalore, Bhubaneshwar, Ahmedabad, Delhi, Chennai, Guwahati,
Hyderabad, Goa, Imphal, Kolkata, Mumbai, Vadodara, etc.

Paramount airways: Paramount Airways is a business class airline which has its
base in India and headquarters at Chennai. Endorsed by Madurai-based Paramount
Group and Paramount Railways was inaugurated in 19th October 2005. Its fleet
comprises 5 aircrafts and it operates in 8 destinations.

Go Air Airlines: Like SpiceJet, a Go Air airline is also a low price airline endorsed by
the Wadia group. It was inaugurated in Mumbai in June 2004. It operates in 11 cities
with 61 daily departures. It has started its functions in Ahmedabad, Chennai,
Bangalore, Coimbatore, Goa, Cochin, Jaipur, Mumbai, Pune, Delhi, Srinagar, etc.

Kingfisher Airlines: It is the one and only 5-star airline in India which offers
excellent first class service on domestic itineraries also. A part of UB group,
Kingfisher Airlines has received 30 awards for its novelty and customer satisfaction.
After its tie-up with Deccan, the airline covers 64 cities and has 484 daily departures.

Spice Jet: Spice Jet is basically a low cost airline which incorporates many Boeing
737-800 airplanes in its fleet. It covers 14 destinations in India.

Air Sahara: Air Sahara was inaugurated on December 3, 1993 with a fleet of only
two Boeing 737-200s. Now it comprise of 27 aircrafts, 135 daily departures and
availability of 16500 seats on regular basis. It reaches various Indian destinations like
Bangalore, Kolkata, Delhi, Lucknow, Mumbai, Chennai, etc.

Jet Airways: Jet Airways was established on May 5, 1993. It earns yearly revenue of
Rs 2502.89 and total income of approx Rs. 117868.8 Million. At present it id India's
biggest private domestic airline with 62 aircrafts and a market share of 25%. It covers
50 destinations with 340 regular departures. Jet Airways has pacts with foreign
airlines, such as Lufthansa, Swiss, Gulf Air, Austrian Airlines, Qantas and Thai.


In the course of the analysis various trends and

developments in the aviation industry were discussed that
provide partial answers to this question. Airlines employ a
wide variety of business models while taking an aviation
insurance contract. For example, some companies like
Kingfisher Airlines take policy with high premium while
others like Air India take an aviation insurance contract
with low premium. It was also observed that airlines with
huge and expensive airbuses like ATR 42-500 aircraft tend
to generate high amounts of risk; while relatively less
expensive aircraft like A330 aircraft tend to generate less risk.

The aviation insurance market is highly volatile due to the

inherent nature of the risk and the underwriting cycle of
insurance. Historically, the market wide premium appears to be
almost as volatile as the claims, suggesting a lack of
consistency in underwriting this business. The major caveat
to my conclusion is that there is significant amount of
public data available to assist in underwriting and pricing
aviation insurance. This data can be used to develop more
effective underwriting rating models for aviation insurance
and this should result in better selection of risks and more
consistent profits for the insurer.
The aviation insurance market, by its own nature, is highly
volatile. There are many causes including the overall insurance
underwriting cycle, the major accident risk, the short-term
memory of the insurance market, and the long-tailed nature of
determining responsible parties. However, the increasing
involvement of analytical professionals such as actuaries
should introduce more effective methods for pricing airline
insurance and this should help stabilize the premium
component of the loss ratio equation.