Mandala asks govt to cover insurance
Mandala asks govt to cover insurance
JAKARTA (JP): Privately owned domestic airline PT Mandala
Airline has asked the Indonesian Air Carriers Association (Inaca)
to petition for a government subsidy on war-coverage insurance,
an Inaca executive said.
Inaca's economic commission executive Yoyok Priyowiwoho said
on Tuesday that the association was currently engaged in
discussions whether or not to make it an association policy.
Mandala was unavailable for comment.
Immediately after the terrorist attacks in the United States
on Sept. 11, insurance companies, facing billions of dollars in
potential claims, notified airlines worldwide that they were
canceling existing war liability policies and limiting coverage
for war and terrorist attacks to US$50 million a year.
Yoyok did not mention the amount of the subsidy asked by
Mandala but he said the usual coverage was between $500 and $1
billion a year.
Many governments in Europe and Asia had agreed to provide
insurance liability payment guarantees for their airlines
reaching up to $2 billion.
Yoyok said that the insurers had reduced the liability
coverage but not the premium, saying that the premium to insure
an aircraft was between 0.8 percent to 1 percent of the total
coverage per year. The liability coverage depends on the type of
aircraft.
"For the same liability coverage, the premium would be greatly
increased," he said, adding that Indonesia's high risk of war
would likely prompt insurers to ask for even higher premiums.
Yoyok said that the airlines would be taking a big risk in
flying their aircraft without adequate insurance coverage, but
that airlines would rather take the risk than be totally
grounded.
"So far no Indonesian plane has ever been destroyed or shot
down because of war or terrorists," Yoyok said.
It was not yet clear whether the government would be asked to
subsidize the premium for a higher liability coverage or to give
a guarantee for the risks not covered by insurance, he said.
Yoyok, who is also manager for marketing analysis at state-
owned PT Merpati Nusantara Airlines, said that Merpati had no
intention to present its own petition to the government.
"With the government's current financial situation, it would
be difficult," he said.
Merpati spends between $3.5 million and $4 million in
insurance premiums each year, Yoyok said, adding that the
company's planes were insured by Lloyd London.
Separately, national flag carrier PT Garuda Indonesia's vice
president for corporate communications Pujobroto said that as of
Oct. 1 the company's premium payment would be increased, but that
it would not affect ticket prices.
Premium on passengers, cargo and baggage will be increased by
$1.25 a passenger, he said, adding that the company spends
between $8 million and $9 million on insurance premiums each
year.
Pujobroto said that he did not know whether Garuda would
follow Mandala's move in asking for a government subsidy on war-
coverage insurance, as he had yet to be informed about the
management's policy on the issue. (tnt)