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Domestic Airlines Increase Compensation
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China's airlines are to raise their maximum compensation for injury or death of passengers on domestic airlines from 70,000 yuan (US$8,750) to 400,000 yuan (US$50,000) per individual according to a newly revised regulation issued by the General Administration of Civil Aviation of China (CAAC) -- China's top aviation authority -- on February 28.


Approved by the State Council the newly revised regulation on the liability limit of domestic airlines for air passengers was announced by the CAAC on Monday. The new regulation will come into effect on March 28 this year, according to CAAC official, Yuan Yaohui.


Yuan Yaohui emphasized that the increased compensation limit only applied to domestic flights.


Previously China's air carriers were required to compensate passenger's families 70,000 yuan (US$8,750) for aircraft accidents resulting in injury or death to those on board. A previous regulation was issued in 1989 and a later amendment was made in 1993.


Insurance compensation for passengers, who purchased personal travel insurance or other types of cover, would be independent of the liability the carriers were responsible for, the new rule reads.


The newly revised regulation also raises the compensation sum on each passenger's "carry-on baggage" to 3,000 yuan (US$375) and 100 yuan (US$12.5) per kilogram of checked luggage. 


When asked why the new limit was still considerably lower than international standards, Yuan Yaohui said that the increased compensation limit took into account rises in the income of Chinese citizens and financial resources of airlines.


The per capita disposable income of urban residents reached 10,450 yuan (US$1,300) in 2005, he said. The compensation limit of 400,000 yuan (US$50,000) was set to take into account a victim's accumulated income over 30 years, funeral costs and travel expenses of relatives, he added.


Yuan Yaohui said a balance had to be struck when making the rules. If the compensation limit was too low the interests of passengers would be violated. If limits were too high then airlines could find them an excessive burden.


Yuan also said the new liability limit might require adjustments in future as economic development continued and the CAAC would make further amendments taking this into account.


Market analysts say the raised levels of compensation could increase the insurance costs of domestic airlines.


( by Wang Zhiyong, March 1, 2006)

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