Air Carriers' Liability and Insurance

Australia's carriers' liability and insurance arrangements are outlined in the Civil Aviation (Carriers' Liability) Act 1959 (the CACL Act).

The Act gives the force of law to a number of passenger liability frameworks, including those arising under the ‘Warsaw System’, the Montreal Convention, and a separate system of liability for domestic travel.

The liability framework for domestic passenger travel is created under Part IV of the Act, and is complemented by state government legislation to create a national uniform scheme.

Arrangements for compulsory passenger insurance are outlined in Part IVA of the Act.

Liability arrangements for third party (surface) victims are outlined in the Damage by Aircraft Act 1999 (the DBA Act).

Montreal Convention

The 1999 Montreal Convention came into effect for Australia on 24 January 2009.

The Montreal Convention is an international agreement which updates laws relating to carriers' liability. It is designed to replace the complicated and outdated ‘Warsaw System’ of carriers' liability.

The Montreal Convention was implemented in Australia by the Civil Aviation Legislation Amendment (1999 Montreal Convention and Other Measures) Act 2008. This legislation followed extensive consultation with interested industries.

Updates to the Montreal Convention's liability limits have been proposed by the International Civil Aviation Organization (ICAO). ICAO has proposed a 13.9% increase to the Montreal Convention's liability limits following completion of a recent review.

The increase is based on the accumulated rate of inflation since the previous revision in 2008. The limits were reviewed with reference to an inflation factor which is determined by the weighted average of the annual change in the Consumer Price Indices of the United States, Japan, China, the European Union and the United Kingdom.

The current limits of liability are proposed to be adjusted as follows:

Montreal Convention 1999Current Limit*
SDR
Revised limit
SDR
Injury / death 113,100 128,821
Delay 4,694 5,346
Baggage 1,131 1,288
Cargo 19 22

* as of 30 December 2009

The revised liability limits will take effect from 28 December 2019 unless a majority of the States party to the Convention notify their disapproval to ICAO prior to 30 September 2019.

Airlines should review their current liability and insurance arrangements in anticipation of the revised liability limits coming into effect.

Warsaw Convention

The Warsaw Convention was signed in 1929 and deals with the rules of liability governing international carriage of persons, baggage and cargo by aircraft. The Convention has been amended on a piecemeal basis over succeeding years by a number of protocols and conventions.

The Warsaw Conventions and the various amending instruments to which Australia is a party are given the force of law in Australia by the Civil Aviation (Carriers' Liability) Act 1959.

Civil Aviation (Carriers' Liability) Review

The Department is in the process of updating key aspects of Australia's aviation insurance and liability framework under the Civil Aviation (Carriers' Liability) Act 1959 (CACL Act). This work commenced through the discussion paper process in April 2018 PDF: 665 KB ReadSpeaker to gather stakeholder views and feedback. The main focus of the discussion paper was on:

  • updating liability thresholds under the CACL Act.
  • reviewing the Civil Aviation (Carriers' Liability) Regulations 1991.
  • reviewing current insurance exclusions, particularly War Risk.

Following consideration of the responses to the discussion paper and with the current iteration of regulations due to sunset in October 2019, it was proposed the regulations be remade largely in the same form, with updates to liability limits and reflecting modern drafting language and structure.

Following an exposure draft process, the updated liability limits are due to come into effect on 1 October 2019 in the Civil Aviation (Carriers' Liability) Regulations 2019. The liability limits are:

  • passengers on a domestic carrier under Part IV of the Act, by reason of injury or death resulting from an accident, to $925,000;
  • passengers on a carrier other than domestic carrier under Part IV of the Act, by reason of injury or death resulting from an accident, to 480,000 SDRs;
  • baggage of passengers under Part IV of the Act that is registered in respect of its destruction, loss or injury, to $3,000; and
  • baggage that is not registered baggage of passengers under Part IV of the Act in respect of its destruction, loss or injury, to $300.

Operators should review their insurance policies in anticipation of the 1 October changes.

It is important to note that there have been no changes to section 41C of the Civil Aviation (Carriers' Liability) Act 1959, which specifies the minimum levels of mandatory insurance that operators are required to purchase. The legislation does not include a provision to increase these amounts by regulation.

Updates to the CALC Act remain under consideration and it is expected the Government will address this legislative anomaly as part of a package of amendments to the Act. The government expects to finalise this Bill in the first quarter of 2020.

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Last Updated: 24 September, 2019