Despite claims, crews and equipment performed well in the main
At the time of writing the first draft for this article, we could state with honesty that major claims had been limited in 2024. There was concern that the two incidents at the start of the year, one for Japan Airlines[1] the other for Alaska Airlines[2], would set a pattern for the aviation sector, particularly with the return to growth after the constrained activity during COVID-19. However, major claims activity remained minimal for most of the year, with the exception of the Voepass loss[3] in August, when their ATR72 crashed in Sao Paulo State, resulting in 62 lives lost.
Unfortunately, as the year came to a close, there were three more major incidents. The first occurred on November 25 when a 31-year-old cargo aircraft operated by Swiftair on behalf of DHL, disintegrated short of the runway while attempting to land at Vilnius Airport, leading to the death of the pilot. The other three members of the crew survived, although one was critically injured. There was initial concern that the loss of a cargo aircraft flying from Germany could have been part of a state-sponsored campaign against civilian infrastructure (see below), but investigators have subsequently reported that there is no evidence of unlawful interference.[4]
The second incident occurred on December 25. More details will come out as the loss investigators continue their painstaking work, but the Azerbaijan Airlines Embraer 190 appears to have been damaged by Russian air defense systems in what could be a case of friendly fire.[5] It should be noted that despite the damage to the aircraft, the valiant efforts of the crew saved 29 of the 67 people on board, the pilots themselves dying in the crash.
The final incident of the year took place on December 29, when a Jeju Air B737-800 attempted to land at South Korea’s Muan International Airport at relatively high speed without deploying its undercarriage. It crashed into a wall at the end of the runway before bursting into flames.[6] Miraculously two people survived, but a further 179 people on board perished. Investigations into the cause of this tragedy are ongoing.
Aside from these significant events at the close of the year, in mid-2024 there was an increased focus on turbulence and its effect on aircraft and their passengers. This focus followed an incident in May when a passenger died of a heart attack, thought to have been related to the Singapore Airlines flight they were on hitting a severe pocket of turbulence mid-flight. There were also several injuries associated with the incident. As we discussed in this article, it is possible that human-made climate change will increase the frequency and severity of turbulence, which is still notoriously difficult to forecast.
The key point to make about major incidents in 2024 is that despite the potential severity of the incidents themselves, most of the aircraft involved performed according to their design parameters and the safety training and protocols appear to have been followed as appropriate. As a result, the claims associated with the incidents are likely to have been relatively constrained.
Minor or attritional losses continue to be a relatively regular occurrence however.
Aircraft getting bumped or scraped can seem relatively minor, but they are an increasingly expensive issue to fix on a modern passenger jet made of composite materials. The environment that these aircraft operate in is unforgiving to say the least, so even minor issues need to be examined in detail and repaired quickly. The cost of settling liability claims is also on the rise.
The aviation industry is good at sharing appropriate data and knowledge about attritional losses, and working to reduce their frequency and severity is a core focus of the insurance and risk management sector. WTW estimates suggest that attritional losses represent about half to two-thirds of the industry’s total global claims annually, so there is a significant incentive to ensure that premium erosion is limited as far as possible.
The challenge is exacerbated by the shortage of aircraft repair teams worldwide and the inflation-driven increase in the cost of spare parts over the last few years. The industry is aware of staffing challenges and is taking steps to improve the situation as far as it can, but training expert maintenance, repair and overhaul (MRO) or airframe and powerplant (AP) teams is a long process.
Exacerbating the issue of the relative lack of MRO teams is the increase in geopolitical tension, with several major crises continuing throughout 2024. From an aviation point of view, airports can be enticing targets in the event of a conflict erupting, and if an aircraft is stuck at an airport awaiting repair when tension boils over, the likelihood of it having to be declared a constructive total loss is increased.
The increased tension with Russia as the Ukraine crisis approaches its third year has led to concern that assets related to the commercial aviation sector could be used for gray zone attacks. There have been suggestions that a spate of incendiary devices discovered on cargo aircraft in the summer could be linked to state-sponsored sabotage[7].
From an air accident and claims perspective, process and protocols are clearly laid out for the aviation industry and the risk is, unfortunately, not a new one, so while gray zone activity is being discussed in both the aviation industry and the insurance sector, vigilance is the main advice at this stage.
With aviation activity starting to exceed pre-COVID 19 levels, there has been an increase in runway incursions during 2024. These appear to have been happening for several reasons including aircraft facing mechanical issues being directed to short runways[8], and signage not being as clear as it should be coupled with poor situational awareness.[9]
Incursions have been widely discussed over the last couple of years, with experts across the industry suggesting that the loss of experienced teams on the ground and in the air as a result of pandemic-related retrenchment and retirement could be a factor.
Regulators are addressing the issue and trying to find ways of reducing the number and frequency of incursions[10]. The International Air Transport Association (IATA) released the second edition of its Global Runway Safety Action Plan (GRSAP) in February 2024.[11]
The aviation industry has the flexibility to adapt to changing risk environments and is willing to share knowledge and data where appropriate to enhance safety. The insurance and risk management sector can support and augment this process, bringing perspective from around the world and across other industries to enhance the development of risk reduction and management plans.
2024 was a more mixed year than 2023 or 2022 for the aviation industry from a claims perspective. Given the challenging environment that aircraft operate in, the complicated geopolitical conditions and the high, and rising, cost of claims when they do occur, active engagement with risk management partners can offer long term operational benefits.