Air India set to pay out compensation for deaths and injuries caused by the crash on 12th June, 2025.

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Amit Dave/Reuters

Summary

On 12th June 2025, a plane operated by Air India was scheduled to go from Ahmedabad to London. It crashed shortly after taking off. 242 passengers and crew on the plane, including 169 Indian nationals, 53 Britons, seven Portuguese nationals and one Canadian. Those who lived in a residential area where the jet came down were also killed, increasing the death toll to at least 270. 

The Law:

There are two main laws governing airline accidents and emergencies. The Montreal Convention 1999 and The Carriage by Air Act 1972. 

The Montreal Convention 1999:

• Created by the International Civil Aviation Organisation.

• An international treaty that the UK is a part of aims to standardise rules relating to international carriage of passengers, baggage, and cargo by air.

• It sets liability rules for airlines relating to the passenger’s injury or death.

• It has a 2-tier compensatory scheme:

• First tier = strict liability – which means it is liable for committing an action regardless of their fault or negligence. In other words, the airline, Air India, must pay compensation for the deaths and injuries, even if it was not their negligence. 

• Second tier = unlimited liability – Air India can be liable to further payment unless they prove that they were not negligent or that the damage was solely due to a third party.

The Carriage by Air Act, 1972

• Gives legal effect to international air carriage treaties in the UK.

• Originally based on the Warsaw Convention, later updated to include the Montreal Convention via statutory instruments.

The Compensation

• Air India is owned by Tata Sons, and they have pledged to pay approximately £85,000 to each of the immediate families.

• That is merely the first-tier strict liability that Air India is carrying out; it does not include the unlimited liability, which is contingent upon the result of the ongoing investigation.

• Relatives are warned not to accept early payment without understanding their full legal rights.

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POLITICAL

It will lead to co-operation between the Indian government and the UK, Canadian, and Portuguese governments concerning the deceased.

The Indian government might be placed under public pressure to respond and conduct reform in the aviation industry to ensure the accident is not repeated by enacting legislation. However, we can only speculate, as the cause of the accident is still being investigated.

ECONOMICAL

Out of the £85,000 paid to eligible relatives, some will be covered by an insurance company. It is likely that Air India’s insurance premium (costs), after this accident, will increase. 

Reputational damages might reduce demand for Air India’s flights, leading to less revenue. If this persists, Air India might face bankruptcy and ultimately closure. 

Rival firms, e.g., Emirates, Qatar Airways, and Cathay Pacific, might therefore benefit from an increase in demand.

SOCIAL

Air India’s reputation is extremely damaged and will not recover in the short term. Some have said they will never fly Air India again. However, it is possible that this mist of distrust and fear will be lifted in the long term as people start to move on. 

Airlines generally become ultra-cautious post-accidents to ensure it does not happen again.

TECHNOLOGICAL

When the cause of the accident is discovered, there are likely to be technological changes in the aviation sector, in particular Air India, to improve the safety of future flights.

However, this will not happen in the short term, as such complex technology will take time to develop.

Technological change might also be caused by the aforementioned legislation by the Indian government.

LEGAL

Law firms will be employed by Air India and Boeing, the aircraft manufacturer of the crashed plane, to deal with compensation payouts, insurance, investigation, and public relations (to repair their reputational damage).

If either Air India or Boeing are sued for their negligence, law firms will also play a large part in defending and prosecuting.

The rebuilding of the damaged residential properties will likely involve construction/property lawyers.

ENVIRONMENTAL

The remains of the plane shall be properly disposed of in an environmentally-friendly fashion.