Tue, Jan 25, 2005
A380 "Poses Significant Insurance Challenges For The
Airlines"
With the introduction last week of
the 555-passenger Airbus A380, an aviation insurance expert says
the world's aviation industry must now look to the past to
accommodate what may be its future.
Wayne Wignes, president of Aon's Aviation Group, says the A380,
with a tail assembly nearly 80 feet high and a fuselage measuring
nearly 240 feet, poses significant insurance challenges for the
airlines. He predicts insurance liability limits will rise for the
entire industry, regardless of whether a given airline places an
order for the A380. "An airline doesn't have to own the aircraft to
be affected by the increased liability limits," he says."There will
likely be a need for an alternative capital market for this
airplane. Airlines will probably have to carry $3 billion in
liability limits to indemnify themselves."
That, Aon says, pushes the edge of the financial capabilities of
the traditional aviation insurance market, which usually works with
liability limits in the $1.5 to $1.75 billion range. "That is
simply a bridge too far for a small community with finite
resources. So the airlines will have to depart from their
traditional approaches," according to Wignes.
He says that is what happened some 35 years ago when Pam Am
introduced the 747. In 1969 a new financial model was developed to
accommodate the liability demands posed by the jumbo jet. Wignes
suggests the industry should refer to that model as the basis for
creating a new financial facility.
The introduction of the Airbus also poses some equally daunting
operational challenges. "Some taxiways simply aren't long enough,"
Wignes says. "In other cases, airport gates may have to be spaced
farther apart to contend with an airplane with a 262-foot long
wingspan."
Providing nearly every insurance and risk management resource to
support the growth of the aviation industry, Aon delivers risk
management solutions to many companies in a variety of aviation
industry sectors, including: airlines, corporate aircraft,
helicopters, airports, fixed-base operations and aerospace product
manufacturers. Aon Aviation is the US airline market share
leader.
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