James Stanbury & Mark Jennings examine ash cloud liability & losses
The eruption of Eyjafjallajokull in April and ensuing airspace restrictions has caused well-reported disruption and financial losses to the aviation industry.
The recent slowdown in the ferocity of the eruption coupled with relaxation of the maximum permissible volcanic ash concentrations has resulted in a return to “normal” services. Now that the dust has settled, it is interesting to analyse not only what recovery options have been suggested as available to airlines but also how such losses may be calculated.
A business interruption policy that may have been bought by an airline, unless there are specific extensions, will normally only respond when there is physical damage. Thankfully, the volcanic ash did not result in such damage but did in airspace restrictions due to obvious concerns and thus, insurers have not been obliged to pay on losses that have been incurred.
This is also the situation for passengers who are also generally unable to recover costs from personal travel insurance policies as the “extraordinary circumstances” exclusion would tend to apply. However, passengers
