Aon Expert: Aviators Should Take Second Look at Introduction of the 747

January 24, 2005

With the introduction last week of the 555-passenger Airbus A380 aircraft, an Aon aviation expert said the world’s aviation industry must now look to the past to accommodate what may be its future.

Wayne Wignes, president of Aon’s Aviation Group, said the A380, with a tail assembly nearly 80 feet high and a fuselage measuring nearly 240 feet, poses significant insurance challenges for the airlines. He predicted insurance liability limits will rise for the entire industry, regardless of whether a given airline places an order for the A380.

“An airline doesn’t have to own the aircraft to be affected by the increased liability limits,” Wignes commented. “There will likely be a need for an alternative capital market for this airplane. Airlines will probably have to carry $3 billion in liability limits to indemnify themselves. That pushes the edge of the financial capabilities of the traditional aviation insurance market, which usually works with liability limits in the $1.5 to $1.75 billion range. That is simply a bridge too far for a small community with finite resources. So the airlines will have to depart from their traditional approaches.”

Wignes said that is what happened some 35 years ago when Pam Am introduced the 747. In 1969 a new financial model was developed to accommodate the liability demands posed by the jumbo jet. Wignes suggested the industry should refer to that model as the basis for creating a new financial facility.

The introduction of the Airbus also reportedly poses some equally daunting operational challenges.

“Some taxiways simply aren’t long enough,” Wignes said. “In other cases, airport gates may have to be spaced farther apart to contend with an airplane with a 262-foot long wingspan.”

Was this article valuable?

Here are more articles you may enjoy.