• Insurance cover for damages on international flights to increase substantially
• Airlines likely to hike airfare to pass on the cost to passengers

Kathmandu, December 14

The government will formally implement the much-awaited Montreal Convention on Saturday. It will be applicable to all 28 international airlines that are registered in Nepal and flying to and from the country.

The Montreal Convention, formally called the Convention for the Unification of Certain Rules for International Carriage by Air, which is a multilateral treaty adopted by a diplomatic meeting of International Civil Aviation Organisation member states in 1999 and being implemented by Nepal, will raise the insurance cover of passengers and also the compensation for loss of baggage and cargo significantly.

Buddhi Sagar Lamichhane, joint secretary at the Ministry of Culture, Tourism and Civil Aviation, said if air passengers flying via airlines registered in Nepal lost their lives or got injured on board due to an accident, they would get 113,100 special drawing rights or $156,586.95 or nearly Rs 18 million.

The previous insurance cover was worth $20,000.

According to MoCTCA, insurance cover per passenger in the international sector was worth 100,000 SDR in 1999, which was revised up to 113,100 SDR in 2009, but since Nepal had not adopted the convention it was worth just 14,445 SDR in the country. SDR is an international reserve asset, which was created by the International Monetary Fund. One SDR is worth around $1.38, as per today’s rate.

According to the Montreal Convention, if the registered baggage of a passenger is delayed, lost or damaged, the carrier will be liable to pay 1,131 SDR or $1,565, up from $1,384.

Moreover, during the carriage of cargo, the liability of the carrier in case of destruction, loss, damage or delay has also been increased to 19 SDR or $26.22 per kg, up from $20 per kg.

Carriers will also be liable to pay 4,694 SDR or $6,498 per passenger for loss, damage or destruction due to flight delay, up from $400 per passenger.

The government had registered the Montreal Convention at the Parliament Secretariat for approval on August 8 and the Cabinet endorsed it on October 16.

According to Lamichhane, Nepal must stand by the provisions of the convention after it is ratified.

In view of the country’s aim to draw in more international tourists and the plans of Nepali carriers to expand to more international destinations, ratification of the Montreal Convention is crucial, adds the ministry.

Till now the premiums for the insurance cover of passengers were being paid by the respective airline companies.

However, since the insured amount will increase substantially, there are chances that airline companies will pass on the cost of the premiums to passengers in the form of increased airfare.