Air NZ's $76m crash cash

Air New Zealand has received a $76 million payout after the Airbus tragedy in France - but families of the New Zealand victims are likely to wait much longer to find out how much compensation they will receive.

Whatever the amount, it is unlikely to approach the multi-million-dollar settlements traditionally awarded by American courts after air crashes.

Last month insurers for Air NZ - which owned the Airbus A320 but had leased it to the German airline XL Airways - paid out $76m on the two-year-old aircraft.

An Air NZ spokesman said the company had yet to decide if it would replace the Airbus.

But compensation for the families of the five New Zealanders who died - pilot Brian Horrell, 52, aircraft engineers Noel Marsh, 35, Michael Gyles, 49 and Murray White 37, and Civil Aviation Authority inspector Jeremy Cook, 58 - is likely to be a more complex issue.

The 1999 Montreal Convention, included in New Zealand's Civil Aviation Act, makes the operator of the aircraft - in this case XL Airways - automatically liable for death or injury.

The convention, which replaced the 1929 Warsaw Convention, put the onus on the airline to pay up to avoid putting victims' families through gruelling and expensive court battles to prove culpability. It allows for claims relating to "international carriage" - where a flight goes from one country to another.

Lawyers acting for the victims will argue the Montreal Convention applies in this case because the flight took off from Perpignan, France, was about to do a touch-and-go landing at Perpignan and then fly to Frankfurt, Germany. From there, the Airbus would have been handed back to Air NZ ready for a flight back to Auckland.

The convention makes it clear the airline should make advance payments "without delay" to those entitled to compensation to meet "immediate economic needs".

It goes on to say: "Such advance payments shall not constitute a recognition of liability and may be offset against any amounts subsequently paid as damages by the carrier."

While compensation is theoretically unlimited, a clause in the convention limits damages to 100,000 Special Drawing Rights (SDRs) - a cluster of international currencies equal to about $280,000 - for each victim if the airline can prove it was not negligent or a third party was negligent.

New Zealand lawyers specialising in aviation law say if a third party is found to be at fault - for example an aircraft manufacturer or a maintenance company - the families would need to take an action against those parties to get additional compensation.
Any court hearing is most likely to occur in Germany and would occur after the final accident report, thought to be at least a year away, is released by French investigators.

In the meantime the families can apply to ACC for help with things such as funeral costs, loss of income, a survivor's grant for a spouse or partner and a child survivor's grant, including for an unborn child.

However, if the families of victims receive compensation from other sources they may be asked to repay the amounts to ACC.

Most of the crew would have had personal life insurance but Air NZ colleagues of pilot Brian Horrell are worried that the Perpignan flight might be deemed to be a "test flight", in which case there would be no life insurance cover. They argue the flight was an acceptance flight.

Apart from private life insurance, the Air NZ employees are insured under their employment contracts because the accident happened while they were at work.

Air NZ refused to answer questions on the issue or allow an interview, but the Herald on Sunday has learned that the company has appointed Auckland barrister Nathan Gedye, an expert in aviation law, to act for it. Wellington barrister Kim Murray, another aviation law expert, has been appointed to act for the CAA, which employed Cook.

One Australian aviation law specialist said generally speaking, most plaintiffs wanted to sue in the United States, preferably Illinois where Boeing [Airbus' rival manufacturer] was now registered and which was a "notorious plaintiffs' jurisdiction".

The payouts there were "much, much higher" than in New Zealand, Australia, Britain or Europe.

Compensation would be based on economic loss and would depend on each claimant's circumstances, the income of the victim and how many dependent children there were.