Ref: LEG 110/2C

Purpose

This paper informs Members of the Administration's proposal to enact legislation to require all civil aircraft operating in Hong Kong to carry third party insurance.

Background

Existing requirements

2. Hong Kong is a densely populated city. Third party injuries or damages in the event of air accidents could be serious. It has been the Government's requirement for many years that every aircraft operating flights for hire or reward must carry third party insurance.

3. At present, such a requirement is imposed on an administrative basis on operators of commercial air services which require licence/permit under the Air Transport (Licensing of Air Services) Regulations (Cap. 448 sub. leg. A). The operators are required to provide details of the insurance of the aircraft to be used when they submit applications for the licence/permit.

4. Requirement for third party insurance has not been applied to aircraft not engaged in flights for hire or reward (i.e. non-revenue flights), which mainly include corporate aircraft or aircraft belonging to the Hong Kong Aviation Club and its members, but they have to comply with the safety requirements.

Review

5. Following a review of the existing arrangements, we consider it desirable to make the third party insurance a statutory requirement in order to provide a more solid framework for enforcement. Moreover, since an aircraft, whether engaged in commercial or non-revenue flights, may cause injuries and/or damage to a third party in the event of accident, it is appropriate to extend the third party insurance requirement to cover aircraft engaged in non-revenue flights. At present, it is not feasible to require the operators of aircraft engaged in non-revenue flights to have third party insurance through the issue of the licence/permit since they do not require a licence/permit under the Air Transport (Licensing of Air Services) Regulations. Enactment of legislation would enable the extension of the third party insurance requirement to cover such aircraft.

Proposal

6. It is proposed that the Civil Aviation Ordinance (Cap.448) should be amended and regulations should be made to require owners and operators of all civil aircraft to carry insurance against liability for third party risks. Otherwise, their aircraft will not be allowed to take-off or land in Hong Kong. Officers of CAD will be given the power to require an aircraft owner or operator to produce documentary proof for such insurance.

7. It is also proposed that the current insurance levels based on the maximum ramp weight of aircraft should continue with one minor modification. At present, there is only one weight category covering aircraft of 10,000 kg or below. This means that certain very light aircraft are required to have the same level of third party insurance as that for aircraft up to 10,000 kg. Taking into account the concerns expressed by aircraft operators and owners of private light aircraft about the impact of the proposal on the cost of insurance premium, we consider it appropriate to introduce an additional category for aircraft up to 5,700 kg¹ . The existing and proposed levels of third party insurance cover are as follows -



Practices in Other Places

8. The introduction of a statutory requirement is in line with the arrangements adopted by many aviation partners which have imposed or will impose various mandatory third party insurance requirements on aircraft. Compared with the levels of insurance required by some of them, our purposed insurance levels are higher (see Annex). Our higher insurance levels are considered justified since Hong Kong is a densely populated city and the airspace over the Pearl River Delta area is one of the world's busiest. Moreover, operators of commercial aircraft have all along been able to comply with our requirements.

Consultation

9. The Aviation Advisory Board has been consulted and it supported our proposals.

10. The Hong Kong Aviation Club has stated that it has taken out third party insurance coverage to a value of US$ 5 million for each of its seven aircraft. It has expressed the view that the said level of US$ 5 million should be adopted as the coverage for aircraft below 5,700 kg. However, we consider that this would be too low to ensure adequate coverage for third party in the event of accidents. This is in fact even lower than the standard cover afforded to private motor vehicles in Hong Kong, which is around US$13 million. A level of US$15 million is more appropriate and this is supported by the Aviation Advisory Board.

Way Forward

11. Subject to Members' views, we shall prepare a Bill and a Regulation for effecting the proposal.

Economic Services Bureau/Civil Aviation Department
January 1999


1. ICAO defines a small or light aircraft as one with a maximum take off weight (which is in practice about the same as ramp weight) of less than 5,700 kg.

2. There is currently only one weight group of "10,000 kg or less".


Annex

English version not yet availble
Please refer to Chinese version