Air France Crash: Aviation Market Impact

Sighting of debris in the Atlantic Ocean 400 miles off the coast of Brazil yesterday appeared to confirm the crash of the Airbus A330-200 operated by Air France with 228 passengers and crew on board. The plane was en route from Rio de Janeiro to Paris when it went missing in the early hours of June 1 while flying through thunderstorms and heavy turbulence. According to latest reports, automatic messages indicating an electrical fault were sent some four hours into the flight and Brazilian authorities also reported that messages indicated a loss of cabin pressure. As the investigation into the cause of crash gets underway, industry commentators say it is too soon to say how the  incident would impact the aviation insurance market. A June 1 Business Insurance article by Zack Phillips reports that the hull of the aircraft is insured for around $100 million. A May 2009 aviation market update from Aon noted that a few major losses can completely change the loss profile of a year. Aon said major losses have cost aviation insurers $597 million so far in 2009, compared to $351 million in the same period of 2008. It added that the value of losses so far this year continues to be very high in comparison with long term industry trends. A Guy Carpenter brief notes that this would be the first time an A330 has been lost during an operational flight. It would also be the worst loss of life involving an Air France plane. The last major incident for Air France was the July 2000 crash of a Concorde aircraft in which 109 people on board and at least four on the ground were killed. Check out I.I.I. facts on aviation.

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