Airline liability increases

The maximum liability of airlines for lost or damaged cargo and baggage increased on Dec 28, 2019.

Whether they are transporting cargo, baggage or persons, commercial airlines issue air waybills or tickets incorporating well-defined terms and conditions of carriage, including maximum amounts that they will compensate customers should something go wrong.

As most countries around the world have signed the “Convention for the Unification of Certain Rules for International Carriage by Air”, also known as the Montréal Convention MC1999, produced by the International Civil Aviation Organization (ICAO), these amounts are uniform around the world. ICAO announced last September that these amounts were increasing effective as follows:

• Injury/death: From 113,100 SDRs to 128,821 SDRs per occurrence
• Delay: From 4,694 SDRs to 5,346 SDRs per occurrence
• Baggage: From 1,131 SDRs to 1,288 SDRs per occurrence
• Cargo: From 19 SDRs to 22 SDRs per kilogram

SDR is the abbreviation for Special Drawing Rights, an international unit of measure created by the International Monetary Fund made up of five currencies (US dollar, Euro, Japanese Yen, British Pound and Chinese Yuan) often used in supranational agreements. Its value fluctuates according to the fluctuations of these five currencies. On January 3rd, one SDR was equal to C$1.80.

For air cargo, if your shipment is lost or damaged, the maximum amount of compensation you will obtain from the airline has gone up from about C$34 to about C$40 per kilogram. Although this is excellent news, some shippers may feel that this is too low and does not adequately compensate for the loss of high-value merchandise.

The answer to this is to contract comprehensive cargo insurance in order to fully protect your shipments in transit. And when a loss occurs, your insurance company pays you for the full insured value. And in a separate step, it chases the airline for compensation.