Cheap by Western standards

Air Safety Week, Jan 31, 2000

Insurance payments for the families of the passengers killed in the Oct. 31, 1999 crash of EgyptAir Flight 990 will average about $472,000. Carrier officials, quoted in Cairo press accounts Jan. 22, said insurance payments will range between $89-$116 million. Taking the mid-point of this range, dividing by the 217 victims, yields an average settlement of around half a million dollars. While the amount may seem low by Western standards, Egypt's gross domestic product (GDP) hovers around $2,900 per capita. In this context, the average settlement for Egyptian families represents a small fortune. As a point of comparison, the statistical value of a life in the U.S. is $2.7 million.

Under the 1929 Warsaw Convention, U.S. court jurisdiction, and the potential for significantly greater recoveries, is only available to the families of those passengers who bought and paid for their tickets in the U.S. The new so-called Montreal Convention, which eliminates caps on liability, has not yet gone into effect.

Recoveries tend to be significantly smaller in many foreign countries; Japan is the notable exception, with average settlements of about $2.8 million. In the wake of the fatal 1997 crash of a SilkAir B737, 20 families received payments of $332,000. The families of those killed in the 1996 crash of a Birgenair B757 received a paltry $20,000 (the Warsaw cap), although Boeing [BA] made payments of $42,000 to the victims' families, and more to widows with proof of economic damages.

Shortly after the Flight 990 crash, EgyptAir officials promised up-front payments to the families. Swissair, American Airlines [AMR] and Crossair made such payments after the crashes of their respective airplanes in 1998, 1999 and three weeks ago this year. To the best of our knowledge, EgyptAir has not followed through on its original promise of advance payments. Had this accident occurred within the countries of the European Union, advance payments of 15,000 ECU ($20,000) would have been required by law within 15 days of the crash.

Furthermore, in response to the first lawsuit, EgyptAir just recently claimed sovereign immunity as a state-owned carrier against any liability.