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How the 9/11 events turned out to be a setback for Indian Airlines

The worst terror attack in history had repercussions around the world, including India, where the dominant domestic airline faced an unexpected crisis.

September 11, 2021 / 07:33 AM IST
In 2011, 9/11 Memorial, a somber tribute to victims of the attack came into fruition at the WTC site. (Reuters)

In 2011, 9/11 Memorial, a somber tribute to victims of the attack came into fruition at the WTC site. (Reuters)

On September 11, 2001, four coordinated terrorist attacks in the US carried out by Islamist extremist group al-Qaeda shook the world. The terrorists hijacked four commercial flights and flew two of the aircraft into the Twin Towers of the World Trade Center in New York.

American Airlines Flight 11 crashed into floors 93 to 99 of the North Tower (1 WTC) at 8:46 am. United Airlines Flight 175 struck floors 77 to 85 of the South Tower (2 WTC) 17 minutes later, at 9:03 am.

When the towers were hit, between 16,400 and 18,000 people were in the WTC complex. A vast majority of them rushed out to safety as first responders went in to save those still trapped or injured.

American Airlines Flight 77 crashed into the Pentagon at 9:37 am. According to the 911 Memorial website, the Pentagon, as the headquarters of the US Department of Defense, serves as the symbol of American military power.

United Airlines Flight 93 crashed in a field near Shanksville in Somerset County of Pennsylvania at 10:03 am.

Close

“It is thought that Flight 93 was headed to the Capitol building, the center of American legislative government,” the website says.

The most immediate effect of the terror attacks was the closure of US airspace even as the country tried to come to terms with the loss of lives and property.

According to the International Air Transport Association, the two-day US airspace closure led the operating revenue of airlines globally to drop to $307.5 billion in 2001 and $306 billion in 2002 from $328.5 billion in 2000.

Revenue did not exceed 2000 levels till 2004 ($378.8 billion). IATA said globally, airlines lost $13 billion in 2001 after earning $3.7 billion in 2000 and the losses continued through 2005.

The events in the US on that fateful Tuesday morning 20 years ago changed the face of global aviation. India also was affected, as V Subramanian, then joint secretary and financial advisor in the Ministry of Civil Aviation, recalls:

“In about August 2001, an initial team of Indian Airlines and New India Insurance went to London to meet with Lloyd’s and managed to successfully extend the insurance cover of Indian Airlines’ entire fleet. This was an era when the merger of Air India and Indian Airlines had not taken place. Air India and Indian Airlines existed as separate standalone entities.

“The new insurance cover (for IA) was to come into effect from October 2001. Globally, no airline can fly its fleet unless it has insurance cover. The team had to travel to London to meet with Lloyd’s as they are the underwriters for renewing the entire global fleet of civilian aircraft owned by various airlines. The insurance cover was obtained and there was relief all around that Indian Airlines would be able to continue flying its planes.

“But history had something else in store. Our joy was short-lived. Hardly had the team reached home when the news broke about the 9/11 terrorist attacks in the US. The US and the insurers went back on the agreed terms and conditions and cancelled all insurance contracts.

“IATA, in a statement, said on September 17, 2001, all aviation insurers issued a seven-day notice of cancellation of the air transport industry’s third-party war risk insurance. The statement added that this action was unprecedented and threatened the shutdown of the entire aviation industry.

“When we heard about the September 17 notification, we went into crisis mode, held innumerable discussions and decided to get back to the insurers. It was also decided that the Indian side should be represented at a higher level and be capable of deciding on the spot instead of going through the process of seeking further approvals. That is when Arora (Sunil Arora, who was then chairman and managing director of Indian Airlines and who recently retired as Chief Election Commissioner) and I stepped in, along with the chairman and managing director of New India Insurance (Mr. Beri, if my memory serves me right). In normal times, it would be the director-finance of IA, other senior officials of IA and senior officials of New India Insurance who would carry out the negotiations for the insurance cover.

“After a few days, we (Arora, Beri and I) were again able to successfully renew the insurance for the entire Indian Airlines fleet by meeting the Lloyd’s team in London. The insurance was renewed after two trips to London and at a higher premium as the 9/11 events meant that the premium pay-out was higher. But that was a small price to pay for keeping Indians flying again.

“At that time, Indian Airlines was the only major domestic operator in India. Air India operated a few domestic flights, which were basically an extension of their flights from abroad coming in to or going out of India.”

As told by V Subramanian, former joint secretary and financial advisor in the Ministry of Civil Aviation who retired as secretary in the Ministry of New and Renewable Energy.
Ashwini Phadnis Senior journalist based in New Delhi
first published: Sep 11, 2021 07:33 am

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