MC EXCLUSIVE Tata Sons board approves Rs 500-crore trust for families of flight AI 171 victims

The London-bound Boeing 787-8 aircraft carrying 242 passengers and crew members crashed shortly after take-off from the Sardar Vallabhbhai Patel International Airport in Ahmedabad on June 12. (PTI photo)

The board of Tata Sons has approved the setting up of a Rs 500-crore trust that will extend financial support to the families of the victims of the June 12 Air India crash in Ahmedabad. The board has asked Air India to reach out to the families of the crash victims to start collecting valid documentation, multiple sources aware of the developments told Moneycontrol.

"Air India has been asked to start reaching out to the affected families of the flight AI 171 crash, including both families of individuals who lost their lives and others who were injured to become a part of the newly formed trust," a senior Air India executive told Moneycontrol.

The aircraft was carrying 230 passengers and 12 crew members; all but one passenger were killed. The crash killed 241 people aboard the aircraft and 19 on the ground. The sole survivor was hospitalised for five days. At least 60 were injured on the ground. Among the casualties was Vijay Rupani, the former Chief Minister of Gujarat whose body was identified through DNA identification. The intense heat of the crash, which had reached an estimated 1,500 °C (2,700 °F), hindered DNA collection and testing.

This was Air India's first fatal crash or hull loss since the bombing of Flight 182 in 1985, and the first fatal crash and first hull loss of the Boeing 787 since its introduction in 2011. It was also the deadliest aviation accident in India since the 1996 Charkhi Dadri mid-air collision.

Executives from Air India added that Tata Sons had asked Air India to try and onboard victims’ families as soon as possible.

Of the Rs 500 crore, around Rs 300 crore will be distributed to the families who lost loved ones, including passengers of flight AI 171 and doctors of B. J. Medical College.  Another Rs 50 crore will be used for the treatment of individuals who were injured in the crash ---largely doctors and staff of BJ Medical College --- Rs 50 crore will be used to rebuild the hostel block of B. J. Medical College. The remaining Rs 100 will be earmarked for long-term needs of the affected families, according to the sources cited.

Executives aware of the matter indicated that Tata Sons expects to complete the registration of the public charitable trust and create the board of trustees by the end of July. Tata Sons chairman N Chandrasekaran is expected to lead the AI171 Trust, which will also include non-Tata members.

Air India and Tata Sons did not respond to an email seeking comment on the story till the time of publishing.

The initiative is being led by P B Balaji, group CFO of Tata Motors, who has extensive experience in regulatory, financial, and corporate governance matters.

Tata Sons and Air India had previously announced joint financial assistance of Rs 1.25 crore to the families of the deceased. The funds allocated under the new trust will be used to provide the Rs 1.25 crore to the families of those who lost their lives.

This initiative mirrors Indian Hotels' (Taj chain) response to the 26/11 Mumbai terror attacks. The company established the Taj Public Service Welfare Trust in December 2008 to assist families of victims of the attacks,  security forces, and affected employees. The Taj Mahal Palace hotel lost 36 individuals, including staff members, during the attacks.

The Taj Public Service Welfare Trust subsequently broadened its scope beyond the 26/11 victims, extending support to injured and specially-abled soldiers and to migrant workers, frontline staff and healthcare professionals during the pandemic.

Total compensation claims arising from the Air India crash could reach $475 million, driven by liability payouts estimated at $350 million, due to the fact 50 of the passengers were citizens of foreign countries.

Tata Sons, which holds a majority stake in Air India, also owns a controlling interest in Tata AIG General Insurance—one of the insurers in the consortium that provided coverage for the airline. However, as most of the risk was reinsured with international insurance companies, the losses for the Tata company in terms of insurance payout are expected to be limited.