Air India to go in for fog risk cover

For the first time in the Indian aviation history, an airline company is going to cover its losses occurred due to foggy conditions during the upcoming winter season.

National flag carrier Air India has floated a tender for fog insurance seeking coverage from leading insurance companies, which underwrite similar weather-related risks. Sources said, including public sector and private companies, over a dozen insurance majors had submitted their bid to Air India.

Confirming the development, Air India executive director (finance) S Venkat said this is as part of its corporate strategy to minimise the risk from poor weather conditions.

"We are planning to extend this weather-related risk cover to airports of Europe and the US, where the fog and snow impact operations. The risk over may include re-routing of flights, hotel accommodation and other losses. We will award the fog insurance contract shortly," Venkat said.

Fog results in low visibility conditions disrupting the take-off and landing of aircraft, which causes huge losses for airline companies. Industry analysts pointed out losses for domestic airlines due to fog-related flight disruptions is estimated at Rs 150 crore (Rs 1.5 billion) to Rs 200 crore (Rs 2 billion).

"Generally in India, 18 to 20 days in a year are affected badly by low visibility problems due to fog. January is the most-affected month," Airport Authority of India sources said.

"The loss for cancelling an Airbus A320 aircraft, that is flying one-hour, is estimated at Rs 75,000 to Rs 80,000. Therefore, a loss for cancelling a two and half hour flight due to fog is at Rs 187,000 to Rs 200,000," said an airline executive.

Under the fog insurance cover, Air-India has sought risk coverage of Rs 1 crore (Rs 10 million) to Rs 1.5 crore (Rs 15 million) with average daily losses to the tune of Rs 2 crore (Rs 20 million).  When contacted, a senior executive of Indian Airlines said: "We did consider a fog insurance cover, but the terms and conditions of insurers were too costly."

For the first time, Indian Airlines has engaged the services of a consulting meteorologist in Delhi, to help in speedy forecast of weather conditions.