Australia domestic carriage by air - liability limit increases

Following on from Kennedys’ update on the International Civil Aviation Organisation’s (ICAO) proposed 13.9% increase to the Montreal Convention’s (MC99) liability limits for international carriage by air, the Australian Government has now proposed an increase to the corresponding liability limits under Part IV of the Civil Aviation (Carriers’ Liability) Act 1959 (CACL Act) for domestic air carriage.

The Australian Government released a Discussion Paper in July 2018 on its review of several key aspects of Australia’s aviation insurance and liability framework under the CACL Act and the Damage by Aircraft Act 1999 (Cth) (DBA Act). The main focus of the Discussion Paper was on updating liability thresholds for domestic carriage, reviewing the CACL Act’s corresponding regulations (CACL Regulations) (which prescribes the limits under the CACL Act) and reviewing current insurance exclusions, particularly War Risk.

The Australian domestic regime largely follows MC99 (to which it is a party), and the carrier is strictly liable for damages sustained by reason of the death of the passenger or any bodily injury suffered by the passenger resulting from an ‘accident’ up to a specified limit. However, in terms of the liability limit for passenger personal injury and death, it differs in that the CACL Act provides an unbreakable cap (exclusive of legal costs), whilst under MC99 there is a two tier system and in theory a carrier’s liability is unlimited unless certain circumstances exist whereby the carrier can exonerate itself.

For domestic air carriage, the Discussion Paper proposed either maintaining a capped liability system, with increases to the caps to account for inflation, or to align domestic air carriage with the MC99 regime. In light of the responses received and the current iteration of the CACL Regulations due to sunset in October 2019, they have been regenerated largely in the same form, but with increases to the liability limits.

The Australian Government recently issued an Exposure Draft of the updated CACL Regulations, with submissions closing on 31 July 2019. The liability limit increases for domestic air carriage proposed are as follows:

  • for passenger personal injury and death AU$925,000, up from AU$725,000
  • for checked baggage AU$3,000, up from AU$1,600;
  • for unchecked baggage AU$300, up from AU$160.

The updated CACL Regulations also propose that the amount of mandatory personal injury indemnity insurance that an Australian air carrier must have per passenger increase to approximately AU$970,000 (480,000 SDRs), up from approximately AU$525,000 (260,000 SDRs).

Read more items in London Market Brief - October 2019