Brought to earth

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Air shows are no longer flying so high in the UK, explains Edward Murray, with many priced out by increasing costs, not least of which being increasingly prohibitive insurance

Between May and October this year, Britain's skies will play host to over 80 air shows, celebrating both the modern and ancient pioneers of aviation and their fabulous flying machines.

Maybe the nation has become a bit blase about flying, which is now an everyday rather than once-in-a-lifetime experience, and certainly the aircraft themselves are less varied. But whatever the reason, it seems no one has either the appetite to organise or the enthusiasm to attend the 500 or so shows that used to take place every year.

The insurance underpinning these events has also become a major factor, and increasing requirements and costs have had their part to play. The very biggest air shows still attract huge crowds and the annual event in Sunderland sees around one million people turn up over the two days. Despite the number of spectators involved, the UK has not seen a fatal accident involving a civilian since 1952, although there have been a number of incidents in which pilots have been killed.

Internationally there was a crash at an event in Bangalore, India, as recently as February of this year, while in July 2002 83 people died in the Ukraine at the world's worst airshow disaster to date.

A premium event

Safety and insurance are clearly issues of the utmost importance when it comes to organising an airshow. Ian Whybrow is the finance director at Farnborough International, which organises the show of the same name, and he comments: "We have specific policies to cover our airshow activities. They cover us for loss or damage to third parties, however it arises, and we are mostly thinking about public liability. We also have policies that cover us for war and terrorism threats."

When considering that Farnborough International's total premiums for the airshow run to hundreds of thousands of pounds, it is easy to see why the costs involved may be prohibitive for some.

However, the insurance costs involved for the third parties demonstrating at events, also affect the show organisers. And while it is the responsibility of aircraft operators to have their planes and pilots adequately insured, the premiums are becoming prohibitive. Indeed, regulation has come into place governing the amount of liability required for planes of a certain weight and passenger capacity and this has created problems.

Simon Clarke, managing director of Towergate Underwriting Cherished Car and Aviation, feels the introduction of the 2004 European legislation, EC785, has directly affected the number and type of aircraft displaying at air shows.

He says: "Many events have been downgraded in terms of heavy aircraft, which are those in excess of 12,000Kgs, Maximum Take Off Mass." This represents the weight of the aircraft and the legislation has increased the liability required for such planes from £15m to £66m.

As Mr Clarke says: "This makes the bigger planes more expensive to insure and so more expensive to own and rent out to air shows."

While this insurance may not be something the event organiser has to deal with directly, it can adversely affect an event if aircraft cannot be insured at rates that make it viable for them to take part.

On top of their liability cover, the major insurance event organisers have to worry about is in respect to cancellation. Given the nature of an air show, there are a certain number of risks that can make the risk of cancellation significant.

Alan Norris, entertainment underwriting specialist at Chubb, certainly believes it is something organisers should be looking at. "Weather and low cloud would have an effect, and denial of access to the venue can be common. It may also be that there is a safety issue at an event the week before and you find that all air shows are looked at and health and safety licenses and permissions are withdrawn."

Paying for cancellation

The scope of the cancellation cover is for virtually anything outside the control of the insured, although there are some key exclusions such as a lack of support or insufficient finance for the event, and war and terrorism.

However, Mr Norris says it is possible to buy cover for war and terrorism as part of an individually negotiated package, and this is of particular interest to organisers such as the Royal Air Force when putting on events at their air bases.

Nonetheless, cancellation policies are not always the priority and often suffer at the hands of fluctuating liability rates. Mr Norris explains: "We do find that in a hard market the liability premiums may be four or five times what they were the year before and so there is no money in the budget to pay the cancellation policy."

But if organisers cannot afford to pay for a cancellation policy, Mr Norris questions how they would cope with the cancellation itself. The number of air shows has decreased significantly and it is unlikely this trend will be reversed in the future. Indeed it may be that major air shows almost become a thing of the past as enthusiasts converge at smaller events across the country, which carry less administrative and financial demands.

Certainly this may be the way to lower insurance costs and Mr Clarke concludes: "Small jets can be insured at a reasonable cost, but seeking cover for heavy aircraft is very difficult, unless you have a major sponsor. Most airfields have a policy called Airfield Owners and Operators, and there is usually an automatic extension for fly-ins meets and small air shows."

This may negate some of the issues for smaller events, but it may also mean Brits have to say goodbye to some of the aviation spectaculars of the past and hope those remaining events can afford to keep up the good work into the future.

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