Air India Invites Bids for Insurance of 105-Aircraft Fleet: Report
Air India on Wednesday invited bids from Indian companies for renewal of insurance for its entire 105-aircraft fleet worth a whopping $9 billion (Rs 54,000 crore at 1 dollar = 60 rupees), even as it is in the process of acquiring the remaining 13 of the 27 Dreamliners it has ordered.
The bids, invited from Indian insurance firms on standalone or consortium basis, would have to be submitted by 4 June, officials of the national carrier said in Delhi.
The process has begun now in order to firm up the companies which would provide the insurance cover for the fleet which is due for renewal from October one, they said.
Two years ago, two consortia had bid for the insurance coverage of the airline's fleet. One was a grouping of New India Assurance (lead insurer), Oriental Insurance, National Insurance and United India Insurance, while the other one was the consortium of HDFC Ergo General Insurance, SBI General Insurance and ICICI Lombard.
The Finance Ministry has made it clear that there would be no purchase preference support given to public sector insurance companies in order to provide a level-playing field to their private counterparts who bid for Air India's fleet.
The 105-aircraft fleet would be covered by insurance for aviation risk, hull all risk and hull war risk among other areas, they said.
Aviation insurance coverage is geared specifically for operation of aircraft and the risks involved in the sector. Such policies are distinctly different from those for other areas of transportation on various counts. Hull risk insurance deals with any damage to the body of the aircraft caused by an accident.
War risk insurance covers damage due to acts of war, like invasion, insurrection, rebellion and hijacking. Some policies also cover damage due to weapons of mass destruction, which is most commonly used in shipping and aviation industries.
War risk insurance policies for aircraft were cancelled in the US after the September 11, 2001 terror strikes but later reinstated. In the wake of this cancellation, the US government set up a terror insurance programme to cover commercial airlines.
Global airlines' body International Air Transport Association (IATA) has also opined that airlines operating in countries which do not provide war risk insurance were at a competitive disadvantage.
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