How much money do your survivors stand to gain if you are killed in the crash of a commercial airliner? An average of $363,000, a RAND Corp. study of recent aviation disasters has found.
But while that figure may seem substantial to some, it represents less than half of the average $749,000 in economic losses that victims’ survivors ultimately suffer from having lost someone to an air crash, according to the study, released today.
That figure does not include compensation for such intangibles as mental anguish or lost companionship.
Moreover, RAND researchers discovered that payments to survivors are often arbitrary and vary dramatically, not only from crash to crash, but from victim to victim.
For example, the survivors of least-affluent victims received the highest awards relative to their projected monetary loss, the study found. Money loss is based largely on how much in wages a victim could have earned and contributed to his survivors had he not been killed in a crash.
“There is a discrepancy between payments (made to victims’ families) and their losses,” said Kevin McCarthy, director of RAND’s Institute for Civil Justice. " It appears that people with very similar losses often get very different compensation.”
The 3 1/2-year study, based on 25 major air crashes that occurred in the United States between 1970-1984, was initiated and partly financed by the Aerospace Industries Assn. and the Air Transport Assn. of America, which represents major U.S. aircraft manufacturers and airlines, respectively.
The airlines, aircraft makers and their insurance companies paid out a total of $798 million to the families of 2,198 victims, both passengers and those killed on the ground, as a result of the crashes studied by RAND. That is an average of $32 million per accident.
LeRoy Haugh, vice president of procurement and finance for the Aerospace Industries Assn., in Washington, said his organization sought the study in the hope that it would support a proposal which would have precluded victims’ survivors from suing after a crash--a sort of “no-fault” law for the aerospace industry.
Lawsuits, he pointed out, often take years to resolve, lessen the amount of compensation to victims because they must pay legal fees in the process, and often subject the airlines and aircraft makers to “extraordinarily high settlements.”
By creating a collective fund into which the airlines and aircraft makers would contribute monies from passenger ticket surcharges, the aerospace industry could “do away with the uncertainty of litigation,” while speeding claims to survivors, Haugh said.
He added that his organization was “disappointed” with RAND’s findings.
“We feel that their economic analysis is flawed and that, in fact, the compensation per victim is much higher than what they cited,” Haugh said.
The study by RAND, a private, nonprofit think tank based in Santa Monica, found that people who died in air crashes were predominantly male, middle-aged and enjoyed an income twice the national average.
Among other findings:
When a woman died in an airline accident, her beneficiaries received a mean compensation of $218,395--less than half the mean, $458,792, paid to the beneficiaries of men.
Eight percent of the cases produced payments in excess of $1 million each, accounting for close to one-third of the nearly $800 million paid for all deaths combined.