Airlines face huge bills over UK risk-sharing stance

The UK's isolation over plans to set up international risk-sharing schemes could leave domestic airlines facing huge bills, an aviation insurance expert has warned.

In two crucial meetings this week the UK was left isolated after arguing against plans for international mutual schemes to cover war and terrorism third party liabilities.

Charter airlines could face crippling bills if the UK insists on going it alone.

If the UK fails to extend temporary help before cover expires on 20 March, domestic airlines will have to buy cover at commercial rates far higher than the 50 cents a passenger proposed under the EU scheme.

Bills for large operators could top $120m (£84.3m).

Keith Rimington, insurance manager for British Airways, said: "It's telephone numbers for the bigger airlines."

At the International Civil Aviation Organisation (ICAO) meeting on Monday, only the UK and a handful of African and Latin American states argued against a global company offering guaranteed cover at cheaper rates than the market.

On Tuesday, Chancellor Gordon Brown left early as other EU finance ministers remained to thrash out an interim regional plan over lunch.

One dismayed senior executive from a major UK airline said: "I'm disappointed that no progress was made. We're no further forward at all."

Executive director of the Association of Insurance and Risk Managers David Gamble said the UK's support for the US in its war against terrorism left domestic airlines vulnerable.

"The UK is in the firing line because of government policy.

"More than any other European country, we've put our head above the parapet and it ill behoves the government to say `tough - we're not going to stand behind you'."

ICAO is set to ask governments to extend its help in the next few days.

A Treasury spokesman said of the schemes: "Generally our position is sceptical. Should there be substantial worldwide opinion in favour of joining, we would have to look again."