How much is the life of a passenger worth to the airline industry?
About $200,000, if you consult the Montreal Convention, the legal document that binds the aviation industry to minimum compensation payouts to loved ones of airline crash victims. But legal proceedings can mean a very different outcome.
The Montreal Convention requires airlines to provide compensation of about US$175,000 (NZ$201,000) for passengers suffering injury or death as a result of an airline accident.
The damages payment is made automatically, without relatives or the injured having to prove negligence or fault on the airline's behalf. The convention wording, put together by the International Civil Aviation Organisation (ICAO) says the automatic payment "avoids the situation where passengers need to pursue long and onerous legal claims".
ICAO says "proven damages beyond this amount can be claimed and the burden of proof lies with the air carrier to show that it was not negligent".
But the reality is that airlines can face enormous liabilities, particularly if anyone on the ground is injured.
When terrorists flew aircraft into New York's World Trade Centre in 2001, airlines were slapped with a string of lawsuits, some of which took years to settle.
Financial services firm Cantor Fitzgerald, which lost more than 600 employees from its Twin Towers office, settled out of court with American Airlines at the end of last year for business and property losses from the airline. The settlement wasn't published but the firm was seeking close to US$500 million in compensation.
Families of those on board Pan Am Flight 103, which exploded in a terrorist attack above Lockerbie in Scotland in 1988, received an estimated US$8 million each, from which legal fees of about US$2.5 million were deducted.
Geoffrey Thomas, editor of the Airline Ratings website, said anything other than an "act of god" would spark lawsuits against an airline and/or the manufacturer of an aircraft.
He said airlines or manufacturers were found to be liable more often than not.
"Typically, when a plane crashes, there is a problem somewhere with either the airline's procedures and security, or the manufacturer," he said.
He said airlines were obliged to provide a timely payment to cover expenses of passengers' relatives in the short term.
"Usually there is an initial payment and this helps out with expenses; then there is a longer-term ICAO payment; and then major legal payouts can take years to settle," he said.
Malaysia Airlines said on Tuesday it had already made US$5000 available to passengers.
The airline is believed to be preparing to increase the financial and other assistance to the families of passengers, as well as continuing to pay the hotel accommodation for up to five family members for each passenger, plus transportation, meals and other expenses.
Ahmad Jauhari Yahya, Malaysia Airlines chief executive officer, said the prolonged search is "naturally placing strain on the relatives"
"We are therefore preparing to offer additional payments as the search continues," he said.
The initial compensation payouts are not linked to any insurance contracts taken out by passengers, which remain to be determined.
The airline has said it will not consider compensation payouts until it is known what happened aboard the flight which authorities say inexplicably turned back from its scheduled flight path from Kuala Lumpur to Beijing on March 8 and crashed into the southern Indian Ocean almost eight hours later.
Ahmad Jauhari has promised relatives that Malaysia Airlines will fly them to Perth if any wreckage from the plane is recovered in the southern Indian Ocean. The airline is also providing counselling.
"Malaysia Airlines' overwhelming focus will be the same as it has been from the outset - to provide the families with a comprehensive support program," Ahmad Jauhari said.
"Through a network of over 700 dedicated caregivers, the loved ones of those on board have been provided with two dedicated caregivers for each family, providing care, support and counsel," he said.
"We are now supporting over 900 people under this program and in the last 72 hours, we have trained an additional 40 caregivers to ensure the families have access to round-the-clock support."
Malaysia Airlines' lead insurer Allianz said last week it had made initial payments under a policy covering the plane's hull and other liabilities.
German business daily Handelsblatt said payments would total more than US$140 million.
However, Malaysia Airlines has a separate policy for an act of terrorism, meaning Lloyd's insurer Atrium could have to cover any loss.
Terry Rolfe, leader of the aviation practice at Integro Insurance Brokers, told CNBC that any MH370 claim brought in the US court system would be of significantly more value than if it was heard in another court.
Rolfe estimated that an American court could pay out between US$8 million to US$10 million per passenger, but compensation would be a fraction of this outside the US. In China, she estimated relatives would receive less than US$1 million per passenger.
Lloyd's of London, the world's oldest insurance market, said it was far too early to speculate about the cost of the MH370 disaster, which would depend in part on what happened to the plane.
Lloyd's chairman John Nelson said it took two to three years to learn what led to the crash of an Air France plane in 2009. Compensation claims in that case have not yet been finalised.
Meantime, a Chicago-based law firm already has filed a petition on behalf of Januari Siregar, whose son was on the Malaysia Airlines flight, according to CNN.
Monica Kelly, an attorney at Ribbeck Law, asked an Illinois state judge on Tuesday to order the airline and manufacturer of the missing plane to provide an extensive list of information.
The firm is seeking the names of people familiar with the airline's batteries, oxygen systems and records related to the fuselage. The petition also inquired about the airline's crew training and screening, security practices and emergency procedures.
Boeing declined to comment and Malaysia Airlines officials were not available to comment, CNN reported.
- Sydney Morning Herald