Business

Counting the cost of the Germanwings crash

Airbus A320 of the airline Germanwings Image copyright AP
Image caption Legal redress for the loss to a family normally takes the form of compensation

The terrible, stark human cost of the Germanwings flight 4U 9525 air disaster is easy to count - 150 people dead.

But the effect on the families of those who died is very difficult to get to grips with for people who have not lost loved ones in a plane crash.

News is emerging that Andreas Lubitz, the co-pilot suspected of causing the crash, deliberately concealed sick notes, and may have suffered from mental health issues.

Legal redress for the loss to a family normally takes the form of compensation.

So is the airline legally obliged to compensate the families of the victims, and would any mental health problems suffered by the co-pilot make a difference to the amount of compensation people could receive?

The answer appears to be yes, according to aviation lawyers.

Under aviation rules concerning the death of passengers, there is a definite amount that the airline must pay, if the family can prove it has suffered economic damage, according to Jim Morris, a partner at law firm Irwin Mitchell.

Image copyright Reuters
Image caption The airline must pay up to around £105,000 per passenger without quibble

Mr Morris, who specialises in representing air crash victims and their families, says that the set of rules - the Montreal Convention - is very clear about the amount of compensation that families could be entitled to.

The airline must pay up to 113,000 "special drawing rights" - a form of international money - to the equivalent value of around £105,000 per passenger - without quibble, if the family can prove at least that amount of economic damage.

Strict liability

For example, if the loss of earnings over the lifetime of the victim would have been at least £105,000, then the airline must pay that, without mounting a defence.

In the event of a death, the airline must immediately pay 16,000 special drawing rights - around £15,000 - to the victim's families.

Assuming the victims' families claim for the full £105,000 amount, Germanwings and its parent company Lufthansa face a compensation bill of at least £20m.

But Lufthansa, and ultimately its insurers, which include Allianz, probably face a bill many times higher than that, Mr Morris says.

If the family can prove it has suffered an economic loss greater than 113,000 special drawing rights, then the airline must prove that it wasn't negligent, or pay the full amount.

Germanwings may have a difficult time proving that Mr Lubitz wasn't negligent, Mr Morris says.

"Its duty is to ensure its crew are fit to fly," he says, and such fitness criteria includes mental health.

"In this accident, their employee has flown the aircraft into the ground.

"From the airline's perspective, I would be very surprised if they denied liabilities - all the families have to do is prove the value of their losses."

The value of economic losses "would be significant", he said, adding that the total cost to the insurers "could be over £100m".

According to James Healy Pratt, an aviation lawyer at Stewarts Law, the compensation could stretch to hundreds of millions of pounds.

Image copyright Getty Images
Image caption Families with children who died could potentially receive less, depending on where they live

National differences

But the total value of the eventual compensation bill is difficult to put an exact figure on, according to Professor Elmar Giemulla, a German legal expert who has represented air crash victims.

Ultimately, the jurisdiction in which the families bring the claim could radically alter the amount of compensation they get, he said.

Different jurisdictions have different damages that are open to victims. So for example, in the UK and Germany, damages for pain and suffering - called "moral damages" - are typically not an option.

"If you lose a child or partner, you are destroyed," he says. "[But] in German law there's no obligation to moral damage. It's brutal."

In these jurisdictions, it's merely financial loss that is taken into account, so families with children who died could potentially receive less, he says.

"In theory, there is absolutely no compensation for a baby," he says.

However, in the US, the families of victims can claim for the pain the families suffer, and may receive much higher damages.

"In the US, compensation is much higher, to reflect loss of companionship, and the loss of the life you could have had with that baby, [and other factors]," he says.

In the air crash, passengers included 72 Germans, 51 Spanish citizens, and there were victims from the UK, Australia, Argentina, Iran, Venezuela, the US, the Netherlands, Colombia, Mexico, Japan, Denmark and Israel.

But it may not be in Lufthansa's interests to contest the amount of compensation too closely, he adds.

"Lufthansa should pay beyond their legal obligations," he said. "Lufthansa has an interest not to spoil its reputation."

Image copyright Getty Images
Image caption Lufthansa chief executive Carsten Spohr has indicated that the airline has the wherewithal and the intent to treat victims' families fairly

Several top UK legal firms who represent airlines in insurance cases were reluctant to talk to the BBC about liabilities in the event of a crash.

But Lufthansa gave assurances that it would pay out at least €50,000 per victim, and that any further claims would be "expressly unaffected" by this payment.

"On behalf of Germanwings, Lufthansa will cover the immediate expense resulting from this tragic accident by making an advance payment of at least €50,000 per passenger," a Germanwings spokeswoman told the BBC.

And Lufthansa chief executive Carsten Spohr has indicated that the airline has the wherewithal and the intent to treat victims' families fairly.

"We will be able to meet the financial liabilities," he says. "Our first priority is to help the families where we can."

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