LESSONS FROM LOCKERBIEReprints
Ten years after what has been described as the United Kingdom's worst peacetime disaster, aviation safety and liability are markedly different.
A decade ago today, Pan American World Airways Flight 103 exploded over the town of Lockerbie, Scotland, killing all 259 aboard and claiming 11 lives on the ground. The disaster, attributed to a bomb, remains one of the costliest insured aviation losses in history.
Liability losses totaled $527 million, according to an estimate by Willis Corroon Aerospace, an aviation brokerage unit of Willis Corroon Group P.L.C. War risk underwriters, led by Lloyd's of London agency Janson Green Ltd., paid out $32 million for the hull loss.
"The disaster itself and the litigation have played an important role in improving safety and security standards," said plaintiffs' attorney Lee Kreindler. "They are now much better and tighter."
Mr. Kreindler, a partner at New York law firm Kreindler & Kreindler, represented about 100 families of Lockerbie victims.
While other acts of terrorism have helped shape the evolution of aviation insurance, since Lockerbie "the industry as a whole has endeavored to be safer with security as well as the general operation of aircraft," said Peter Williams, the current underwriter on Lloyd's Ariel syndicate, one of Pan Am's liability insurers.
But not only safety standards have changed as a result of the disaster.
When Pan Am was found guilty of willful misconduct, plaintiffs' lawyers welcomed the ruling as the start of the end of the Warsaw Convention passenger liability limits.
By summer 1995, the International Air Transport Assn. gathered airlines to discuss whether Warsaw Convention limits should be increased or eliminated, and by the end of last month, 115 airlines had signed IATA's Intercarrier Agreement, which gives airlines the option of waiving all liability limits for international passengers on international flights or strict liability up to 100,000 special drawing rights ($140,580).
Lockerbie was a major force in this change, according to Desmond Barry Jr., a partner in New York law firm Condon & Forsyth who specializes in aviation claims. The expense and time in proving willful misconduct in cases such as Pan Am 103, delaying payments to the victims' families for many years, was a pivotal factor in so many airlines signing the Intercarrier Agreement, he said.
Within days of the Lockerbie crash, accident investigators pinned the explosion on a bomb concealed in an audio-cassette player checked onto the plane inside unaccompanied baggage. Since then, however, the aviation industry has spent untold millions of dollars on security measures to avoid this and other terrorist scenarios.
Immediately after Pan Am 103 was destroyed, the U.S. Federal Aviation Administration implemented increased security checks, including mandatory luggage searches for all Western Europe and Middle Eastern flights operated by U.S. airlines, and a positive match system between passengers and luggage to prevent unaccompanied bags traveling on aircraft.
"There have been enormous changes to baggage screening systems," said a spokesman for the U.K. Civil Aviation Authority. "The primary thrust of post-Lockerbie initiatives have been on improving and mandating aviation security measures at airports."
Last year, a CAA safety project conducted with the Defence Evaluation and Research Agency determined that bombproof baggage containers and hardened liners within the cargo hold may prevent explosions similar to the one that destroyed Pan Am 103.
In a test that culminated five years of research, the CAA set off four explosive devices in an empty Boeing 747. Although the plane was on the ground, the cabin was pressurized to the equivalent of cruising at 30,000 feet and three different blast protection systems were located in different parts of the hold. Full results will not be released until next year, but the initial reports showed that bombproof containers and hardened liner protected the aircraft's fuselage from damage.
But the CAA spokesman said airlines so far are showing little interest in the project because the bombproof systems add about two tons to a plane's payload. "Airlines spend millions to save pounds -- literally," he said. "We need to find ways of maximum protection for minimum weight. It's the interest of the airlines coupled with what may be required of them (by regulators) and what is demanded by insurers."
This experiment is the latest in a line of security and safety tests and controls stemming from Lockerbie. The biggest failure identified in the various reports and investigations into the disaster is that a piece of luggage was loaded, unaccompanied, onto a plane in Malta bound for Frankfurt. At Frankfurt it was transferred to Pan Am 103.
The fateful flight
Pan Am 103 took off Dec. 21, 1988, from London's Heathrow Airport, bound for New York. The Boeing 747 was about half full when it left Heathrow, carrying 243 passengers and 16 crew.
Official reports described Pan Am 103's departure as "unremarkable." Less than 30 minutes after takeoff, Flight 103 did not acknowledge an air traffic control signal providing ocean clearance. Almost immediately, radar screens began showing debris trails. The plane had exploded in mid-air.
The official inquiry by the U.K. Air Accidents Investigation Branch determined that an explosion in the forward cargo bay had punched a hole in the aircraft's structure, tearing the fuselage. The fuselage started breaking away, shearing off an engine and parts of the tail about 19,000 feet above Lockerbie. One of the wings fell on a residential area, exploding into a fireball, obliterating homes and scattering debris for miles. Other debris rained down, setting fires around the town. Road surfaces burst into flames.
Two hundred and seventy people, including 11 on the ground, were dead.
Aviation liability evolves
While Pan Am 103 occurred at a time when the Warsaw Convention limited liability for passenger losses, ensuing litigation led to the current system under which many of the world's airlines now may accept unlimited passenger liability.
The Lockerbie disaster, at the time, was the largest single aviation liability loss. "Total passenger payments reached more than $500 million," said Mr. Kreindler, who is chairman of the plaintiffs' committee. In the first case of its kind, he is helping plaintiffs seek additional damages, including substantial punitive damages, from Libya, which is accused of harboring two terrorist suspects in the Lockerbie bombing.
Liability losses from the as-yet-unexplained crash of Swissair Flight 111 over Nova Scotia earlier this year are an estimated $600 million, said Mr. Kreindler, who also is representing victims' families in that 1998 crash.
Pan Am 103 most likely is the largest willful misconduct case, he added, and the rare finding of willful misconduct makes it "the most important aviation case."
For Mr. Kreindler, "Swissair is a whole new ballgame" now that the Warsaw Convention has been superseded. "The airlines have come to grips with the problem they should not be limiting liability. Nobody else is," he said.
For him, the events 10 years ago at Lockerbie were a major step toward the evolution of a new agreement to replace the Warsaw Convention.
Pan Am's insurance program included $750 million of liability coverage, led by United States Aircraft Insurance Group in New York. Other liability insurers included Associated Aviation Underwriters of Short Hills, N.J.; French insurance pool La Reunion Aerienne; French insurer Compagnie d'Assurances Maritimes, Aeriennes et Terrestres; and 31 London market insurers.
The Warsaw Convention restricted airlines' liability on international flights for death or bodily injury to passengers unless willful misconduct on the part of the airline could be proved. In 1988, the limit on flights to, from or via the United States was $75,000. USAIG used this limit in setting an initial reserve of $60 million, though less than a week after the disaster other insurers were estimating liability exposures closer to $300 million.
By early January 1989, the first suits against Pan Am were filed in U.S. courts, charging Pan Am had been negligent in not warning passengers of bomb threats to that route, despite notification by the Federal Aviation Administration. In total, more than 150 lawsuits were filed, each seeking between $5 million and $25 million of both compensatory and punitive damages.
Two months later, Pan Am's insurers offered each of the victims' families $100,000, a sum plaintiff lawyers described as "woefully inadequate."
In January 1990, Judge Thomas C. Platt of the U.S. District Court for the Eastern District of New York ruled that Warsaw Convention limits prevented plaintiffs from seeking punitive damages from the airline. This, however, only applied to the relatives of the passengers; in May, Pan Am settled out of court with the families of those killed on the ground.
Soon after, a Pan Am internal memo came to light showing the airline had disregarded FAA regulations prohibiting unaccompanied baggage. Later, Pan Am argued it had fulfilled FAA regulations by X-raying the suitcase that turned out to contain the bomb. The FAA eventually fined Pan Am $630,000 for violating safety regulations in London and Frankfurt.
By May 1990, Pan Am Corp. had spent $400 million to bolster its image, but Chairman Thomas Plaskett calculated that the Lockerbie disaster had cost the airline another $250 million. Early in 1991, Pan Am filed for Chapter 11 bankruptcy protection.
But litigation continued, and in July 1992 a federal court jury found Pan Am guilty of willful misconduct, eliminating the Warsaw Convention limits.
Safety going forward
Following the Pan Am 103 disaster, tighter security procedures remain in place throughout the aviation industry.
The British Aviation Transport Assn. has been unable to calculate how much extra security measures have cost its members, but Howard Davies, BATA secretary general, agrees the figure runs into the hundreds of millions. In addition to luggage screening, matching every piece of baggage with a traveling passenger is vital, he said. If a passenger fails to turn up for a flight, his or her luggage is removed from the hold.
As for the explosive-proof containers tested by the CAA, "we genuinely believe it is better to avoid getting the thing on board in the first place," said Mr. Davies.
In the United States, the FAA has worked with a variety of foreign and domestic agencies to improve aviation security standards.
A number of other countries have followed suit. Belgium implemented a full screening process for all baggage, New Zealand passed the Civil Aviation (Security) Regulation 1989 in advance of the Commonwealth Games, and X-ray equipment is used in airports around the world.
In April 1989, the U.S. Department of Transportation took further steps to tighten security, raising detection equipment standards and creating the Aviation Security Advisory Committee. Screening programs implemented over the course of that year included close inspection of electronic items being carried onto flights, and automated explosives detection systems to check baggage on international flights.
Since then, the FAA has implemented a number of procedures aimed at improving passenger safety and security on airlines, as well as at its own facilities. It has issued contingency plans for airport and air carrier security, issued criteria for foreign airlines flying U.S. routes to match the safety standards of U.S. airlines, and implemented passenger screening systems.