Insurer Allianz has published a new report from its Allianz Global Corporate & Specialty (AGCS) team that highlights some of the unique challenges airlines and airports face as they restart operations – ranging from “rusty” pilots to insect infestations. It also identifies a number of ways in which Covid-19 is reshaping the sector, driving long-term changes in fleet composition, flight routes and passenger demand
“The grounding of worldwide fleets during the pandemic has represented an unprecedented event for the aviation industry,” says Dave Warfel, a Regional Head of Aviation at AGCS. “Airlines have worked tirelessly to maintain their fleets and train their crews during this long period of inactivity and, as insurers, we take a keen interest in working with them to understand their plans to return to service. Challenges will no doubt emerge as the industry readies for takeoff again. Although it is hard to predict in exactly what shape the aviation industry will return, one thing is for certain – it will have changed.”
The nine trends include: “rusty” pilots and the return of sightseeing flights, an increase in air rage incidents, the perils from parked fleets, such as damaged fleets due to weather events and on-ground collisions as well as insect infestations that may impact instrument accuracy, pilot shortage, higher costs of new generation aircraft – related to the higher cost of repair for new materials such as composites and alloys. The insurer also expected the robust performance by air cargo and trend to continue, airlines to experiment with new routes in Europe and Asia Pacific, and questions whether business travel will return to pre-Covid levels.
The report also notes the aviation industry has seen relatively few claims directly related to the pandemic to date. In a small number of liability notifications, passengers have sued airlines for cancellations/disruptions.
“Covid-19 has not been a direct driver of aviation claims over the past year,” says Cristina Schoen, Global Head of Aviation Claims at AGCS. “As a result of the significant reduction in commercial airline travel during the pandemic we saw fewer attritional claims than we would during a typical year. However, the insurance sector was not immune to larger losses during the course of the pandemic, with different regions seeing tragic accidents, emergency landings and hull losses to name a few. As air travel begins to return to pre-pandemic levels we expect claims volume to rise accordingly.”
AGCS analysis of more than 46,000 aviation insurance claims from 2016 to year-end 2020 worth more than EUR 14.5bn (US$17.3bn) shows collision/crash incidents account for over half the value of all claims. Other expensive causes of loss include faulty workmanship/maintenance and machinery breakdown.