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A bigger bang for your buck
01 April 2006
Pick the right bomb. Detonate it at the right airport. And, bang, you close down entire airlines as well as huge chunks of the aviation finance industry. The trouble is, it's less to do with devastation than it is with insurance.
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It's no secret but nobody wants to talk about it. In April last year the insurance market announced that it was going to specifically exclude damage from the detonation of a dirty bomb as part of aircraft hull cover.
And airline and air financiers' reaction? Not a lot. Since then most airlines have meekly arranged insurance policies that no longer cover aircraft in the event of the nuclear, chemical and biological weapons and electro-magnetic devices.
And, because the importance of this exclusion has been largely understated, many aircraft financiers and owners do not realise the extent of its implications — their aircraft are no longer insured from terrorism.
Put it another way. One major attack at a hub airport like Charles de Gaulle, Dubai or Kuala Lumpur could wipe out several airlines at a stroke — and, quite conceivably, the banks that finance them.
"The market could survive a single aircraft disaster,...
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