The government today discussed the possibility of setting up a catastrophe reserve fund by imposing a surcharge apart from the $1.25 levy already imposed on air passengers. Aviation companies will be allowed to dip into the fund whenever global reinsurance markets stiffen.
Sources said the corpus of the fund would be available only after a certain period of time following the levy of the surcharge. A group comprising officials from the civil aviation ministry, finance ministry and insurance companies will dwell into the details of the surcharge and approach the Cabinet for a formal approval.
In the short run, the government is considering the possibility of extending a comfort letter to the airlines.
While Air India and Indian Airlines have already been issued comfort letters by the expenditure department, a similar request was made by Jet Airways on Friday. Air Sahara is yet to approach the government for a comfort letter, sources said.
The civil aviation ministry and insurance companies have approached the government for a comfort letter, following a decision to cap third party liability arising from a single incident at $50 million.
New India Assurance chairman and managing director KN Bhandari said after the meeting that Air India's third party liability is estimated at about $1.5 billion, while it is $500 million for Indian Airlines, $300 million for Jet Airways and $150 million for Air Sahara.
The proposal for an additional surcharge was discussed at a meeting convened by SK Purkayastha, additional secretary in the financial sector division of the finance ministry. The meeting was also attended by officials from the civil aviation ministry, Insurance Regulatory and Development Authority chairman N Rangachary, Oriental Insurance chairman and managing director BD Banerjee, New India
