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COVID-19 and the airport industry

Will pandemics change our view of risk?

COVID 19 Coronavirus

By John Rooley | March 18, 2020

As the global disruption caused by pandemics such as COVID-19 increases, airports may need to consider a broader strategy to analyse risk across their operations.

The International Air Transport Association (IATA) on 5 March warned that airlines’ global revenue may decline as much as $113 bn as a result of the COVID-19 pandemic, or roughly 16 times the sector’s losses for 2003’s SARs outbreak.1

Revenue projections for strategic partners to the global airport community will have the attention of board members at most aviation hubs. It is unclear to what extent the shortfall with be fully realized and IATA has provided two forecasts, with the more aggressive model at $113 bn.

The same day, Airports Council International reiterated the need for states and operators to adhere to standards set by ICAO (the International Civil Aviation Organization) and World Health Organization (WHO) to help prevent the global spread of communicable diseases.

On 10 March, ACI EUROPE’s initial assessment2 of the impact of the COVID-19 outbreak on Europe’s airports showed that the first quarter of 2020 saw a loss of 67 million passengers or 13.5% on normal levels. This equates to a financial loss of EUR1,320 million in Q1 due to a combination of lower aeronautical and commercial revenues.

For the world’s airports, the extent of the impact from COVID-19 will depend on two key factors: the depth and duration of travel and flight restrictions imposed by the private and public sectors (they are expected to last longer than for SARs); and the subsequent reduction in aircraft movements by key airline customers.

In the UK there have already been a number of airports hit by the collapse of a regional airline which provided very significant proportions of the local airports’ passengers - losses that cannot be recovered so long as the COVID-related passenger downturn persists.

Aviation liability coverage

While the ultimate global cost this time – in lives and dollars – remains unclear, questions about what more could be done to transfer the risk of the inevitable revenue losses are being asked in preparation for future outbreaks.

Standard airport owners’ and operators’ aviation liability policies are not designed to protect their businesses against pure financial losses from non-damage business interruption.

Most airports have aviation liability insurance policies that are designed specifically for their operations. Those policies tend to offer extremely broad coverage that will respond to a range of incidents, landside or airside, incidental or malicious in intent.

Although there are various terms and conditions, the three key requirements to trigger coverage under the policy are as follows:

  1. The need for an ‘occurrence’, variously defined in individual policies
  2. The occurrence must result in ‘bodily injury’ or ‘property damage’ (as defined within each policy) to a third party
  3. The airport must be fully or partially liable for the property damage or bodily injury sustained by the third party

IATA and health bodies such as WHO set the standards for the required response to pandemics, which cover best practices for the screening of passengers, tracking potentially infected customers and minimum requirements for crew resources and training, etc. While airports do not have a direct contract with the passengers, they still have a duty of care to ensure safety and best practice and, as such, should follow WHO guidelines and those of government and health experts in their jurisdiction.

The speed at which borders are closing and the resultant issues with crowds at airports is clearly a major consideration for airports. The longer that passengers are within the confines of an airport in close proximity to others means that their potential exposure to the virus is increased. It is therefore particularly important that airports endeavour to ensure guidelines are not being breached under these circumstances.

When those guidelines are followed, an airport would only be liable to passengers and third parties if the infection is proven to be the result of an accident that happened on the airport premises and which was caused by a negligent act or omission on the part of the airport - such as a failure to follow mandatory screening or crowd control guidelines. Clearly, any large crowds of delayed and/or stranded passengers also increase the airports exposure to slip and fall claims.

It would be very difficult for a passenger to prove that they contracted the virus at an airport, as opposed to at any other point in their journey, such as in transit to and from an airport or in the confines of an aircraft. Even if they could prove that they contracted the virus at the airport, establishing liability would be difficult if the airport had acted in accordance with procedures. In the event that an airport was found liable for people contracting the virus, insurers would be obliged to defend the insured against these alleged claims, as they would potentially fall within the scope of the policy coverage.

Having said that, there is a standard exclusion on all aviation policies that specifically excludes “claims directly or indirectly occasioned by, happening through or in consequence of… pollution and contamination of any kind whatsoever.”. There is clearly room for dispute as to how this is interpreted in respect to someone becoming infected by a virus.

Under the personal injury section, ‘AVN60A’ in standard aviation liability contracts, a policy holder could be protected against claims for non-physical ‘injury’ stemming from the quarantine or detention of passengers, or having been denied boarding.

This could come into play if an over-zealous airport employee detained someone purely based on their ethnicity but likely would not apply if the decision followed mandated protocols for passenger screening. An airport following mandated guidelines would be in a good position to defend their actions.

Parametric solutions for airports

When a pandemic or epidemic occurs, however, it is natural for operators to start looking at related risks through a slightly different lens and search for solutions that may alleviate the insecurity of shareholders.

Standard airport liability cover is not designed to offer airports protection for non-damage business interruption, as it is a policy for protection against claims from third parties where those third parties have suffered damage or injury due to an act or omission by the airport.

There are however a number of dedicated epidemic/pandemic solutions available from the insurance market which offer cover for non-damage related revenue losses once pre-set triggers have been met. While these solutions have been available for some time they have been taken up by a limited number of airlines and fewer airports, the decisive factor usually being cost.

Pre COVID-19, the interest in these solutions from the airport sector was limited and, understandably, since the outbreak and its continued spread COVID-19 is currently excluded from the cover offered. However, cover is available to companies looking for a long-term solution against future non-COVID-19 epidemics/pandemics.

Other parametric solutions feature a pre-agreed list of primary triggers such as natural perils, terrorism, pandemics, etc. When the trigger occurs, these respond based on a pre-agreed index, which, for airports, could be a drop in passenger footfall, for example.

Does a changing risk landscape call for a new approach?

As the impact of the COVID-19 outbreak on the aviation sector escalates, so too should the interest in exploring parametric solutions to manage the potential impact of future pandemics and other costly business-interruption events, such as volcanic eruptions and extreme weather.

The insurance sector has the capacity to create solutions for these risks, but as each solution is customised to the specific risks and needs of the buyer, the structuring process takes time and requires a high level of commitment and collaboration between the airport, its risk advisor and insurers.

As the world becomes increasingly interconnected and risk, in turn, becomes even more global and complex, airports may require their risk advisors to expand their focus beyond traditional safety and reputational risks to a broader strategy of enterprise risk management across their organisation.


1. IATA Updates COVID-19 Financial Impacts; Scenario 2: Extensive spread

2. COVID-19 turning into crisis of unprecedented proportions for Europe’s airports

Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programmes it is critical to consider all local operations and how policies may or may not include COVID-19 coverage.

The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates.


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