The emergence of Low Cost Carrier airlines, and the unbundling
of checked baggage by legacy carriers has resulted in more airline
passengers travelling with carry-on baggage only, or using their
full carry-on allowance and minimising their checked baggage.
Similarly, the emergence of smartphone and tablet PC technology has
meant a likely increase in the value of many passengers'
baggage. However, the legislation has not kept pace with these
changes and the liability limits granted to airlines in relation to
domestic travel are viewed as inadequate.
The Civil Aviation (Carriers' Liability) Act 1959
(Cth) (CACL) ratifies the Convention for the
Unification of Certain Rules Relating to International Carriage by
Air opened for signature at Warsaw on 12 October 1929
(the Warsaw Convention) and the Convention for
the Unification of Certain Rules Relating to International Carriage
by Air done at Montreal on 28 May 1999 (the Montreal
Convention) in relation to International air travel, as
well as establishing a liability regime for domestic travel.
The Warsaw Convention was established in order to provide
internationally accepted limits on a carrier's liability for
death, injury or damage. At the time it was opened, the majority of
airlines in the fledgling industry were state-owned and the
liability limits in the Warsaw Convention provided protection to
the vulnerable industry by allowing stakeholders to fully insure
against liability to passengers and reducing the incidence of
litigation against airlines.
The Montreal Convention was an effort to modernise and
consolidate the Warsaw Convention, and lists as one of its guiding
principles the importance of ensuring protection of consumer
interests in international air transport and the need for equitable
While as of 1 August 2012 approximately 103 countries had
ratified the Montreal Convention, a significant number of
destinations for Australian travellers (such as Indonesia, Thailand
and Vietnam) have not, and so travel to these countries is still
governed by the Warsaw Convention.
The Warsaw Convention provides for liability limits based on the
weight of checked baggage and a maximum of 5000 franc poincares
(approximately A$3000) for carry-on baggage. The Montreal
Convention sets a combined limit of 1000 Special Drawing Rights
(around A$2000) for checked and carry-on baggage.
However, these liability caps do not apply if the passenger can
show that the baggage was either intentionally damaged by the
carrier, or due to the carrier's recklessness.
Part IV of the CACL together with the Civil Aviation
(Carriers' Liability) Regulations 1991 (Cth) establish
limits of A$1600 for a domestic passenger's checked baggage,
but only $160 for carry-on baggage. Further, the passenger must
prove that they were not responsible for the damage to their
These liability caps were first implemented in 1991, long before
the first Low Cost Carriers started to appear in Australia, and
despite a review into airline liability being conducted as part of
the Aviation White Paper process in 2009, have not changed for over
Further, there is no circumstance in which the liability caps
for domestic travel do not apply – even in cases of
Liability Insurance Discussion Paper1,the Government
recognised that the domestic system may not appropriately balance
the interests of carriers and passengers. However, this related to
the concept that the liability caps are unbreakable (even in the
case of intentional damage), rather than due to the high likelihood
that a passenger's carry-on baggage will significantly exceed
the value of $160.
With prices for smartphones and tablet PCs start at around $500,
this one item can have a value more than 3 times the total
liability cap for a passenger's entire carry-on baggage.
Passengers should remember that this liability cap applies not
just in the event of a crash, but to any damage to their carry-on
items during flight – including as a result of the actions of
an overzealous crew member, a fellow passenger indelicately shoving
their items into an overhead locker, or from those items falling
from an overhead locker, having moved around during flight.
Until the Government acts to bring the liability limits for
domestic travel in line with those for international travel,
passengers should give extra thought to those items of luggage that
1Review of Carriers' Liability and
Insurance: Discussion Paper, May 2009
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