Air India plane crash compensation: What Indian law says about payouts, rights and legal options

As the investigation into the Air India Flight AI171 tragedy unfolds, families of the 242 passengers and crew aboard the ill-fated Boeing 787-8 Dreamliner are facing not just grief but a complex legal and financial process. The flight, which crashed shortly after taking off from Ahmedabad en route to London, has triggered international aviation compensation protocols.

Air India’s Rs 1 crore payout isn’t the final word

Soon after the crash, Air India’s parent, Tata Group, announced an interim ex gratia compensation of ₹1 crore for the families of those who lost their lives, and medical coverage for those injured. But under international law, this is only the beginning.

The crash falls squarely under the Montreal Convention of 1999, a global treaty India ratified in 2009. Incorporated into Indian law via the Carriage by Air Act, the Convention mandates minimum compensation levels and sets the legal framework for determining damages in international air disasters.

How much is the airline legally bound to pay?

Under Article 21 of the Montreal Convention, the airline is strictly liable, regardless of fault, up to 151,880 Special Drawing Rights (SDRs) per deceased passenger. As per current exchange rates, this translates to around ₹1.85 crore per victim. Some interpretations put the minimum compensation slightly lower at 128,821 SDRs (~₹1.5 crore).

Consumer law offers a parallel route

Besides the Montreal Convention, victims’ families in India may also file claims under the Consumer Protection Act, 2019. This opens a path for seeking damages through consumer fora, particularly if service deficiencies such as pilot error, mechanical failure, or poor maintenance are suspected.

How is compensation paid? Who bears the cost?

Although it may appear the airline pays out of pocket, the financial burden is covered through aviation insurance, as required under Article 50 of the Montreal Convention and enforced by India’s Directorate General of Civil Aviation (DGCA). Reinsurers typically bear the brunt of these payouts. However, if gross negligence or technical fault is proven—either by Air India or by aircraft manufacturer Boeing—legal exposure could widen.

What about passengers from other countries?

Citizenship plays no role in determining compensation. All passengers—whether Indian, British, Portuguese or otherwise- are treated equally under the Convention. The treaty ensures uniform liability, removing nationality-based discrimination in death or injury payouts.

Third-party liability: Ground victims have rights too

The AI171 crash also impacted civilians in the Meghaninagar locality. Under third-party insurance rules, Air India could be held liable for property damage or deaths on the ground—an additional layer of financial and legal exposure.

Where can families file claims?

Families can pursue claims in multiple jurisdictions:

• India (place of departure and Air India’s principal place of business)

• United Kingdom (destination)

• Country of the passenger’s residence

This flexibility ensures that families can seek justice in the most convenient or favourable forum, though compensation amounts remain consistent across jurisdictions due to the Montreal Convention's uniformity clause.

How courts calculate final payouts

Final compensation depends on various factors:

• Age and earning capacity of the deceased

• Number of dependents

• Educational background

• Nature of employment

The court will use the IMF's official SDR exchange rate at the time of judgment, as per Article 23 of the Convention. Precedents like the 2020 Kozhikode Air India Express crash, where payouts reached ₹1.19 crore per victim, show that courts may award more than initial airline offers.