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Air-India and Indian Airlines to fly with war insurance cap

State-run Air-India and Indian Airlines will operate with a capped war risk insurance cover of $50 million which comes into effect from midnight GMT on Monday, but are negotiating with the government for an insurance lifeline.

"Air-India and Indian Airlines will continue to operate as normal," a government official said on Monday.

Insurance companies, bracing for potentially record payouts following the hijacked plane attacks in the United states, want to cap airlines' third-party war and terrorism insurance from Monday.

Airlines around the world have said the $50 million cap was insufficient for them to continue flying, forcing several governments on Monday to step forward to bridge the insurance gap for their airlines.

A spokesman for Air-India, which has a fleet of 27 aircraft, said the airline was negotiating with the government for supplemental insurance cover for third-party war risk liability but said this would take two or three days.

"The cap of $50 million is inadequate for any airline. Our insurance company is working on a solution which includes discussions with the government for additional cover," the spokesman said.

Privately-owned Jet Airways, India's second largest domestic airline, declined to comment on its insurance situation.

Air-India flies predominantly to the Gulf countries and South East Asia. It also operates a daily flight to London and 10 flights a week to the United States. Indian Airlines flies largely on domestic routes.

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