For damaged or lost luggage, where your travel is wholly within Australia with no international sectors, airlines are liable to compensate you under the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (limited to a maximum of $3,000 for registered (checked) baggage and $300 for unchecked baggage).

For those travelling internationally, the rights of passengers for most airlines (carriers) are governed by the Montreal Convention, 1999 (Montreal Convention).

For the Montreal Convention to apply, both the country of departure and country of final destination must both be members. There are 136 countries that are parties.

The Warsaw Convention will generally apply where the Montreal Convention does not, but it is considered less favourable to passengers, especially when it comes to compensation and is based on a $/Kg calculation. This article assumes the Montreal Convention will apply.

Article 17 of the Montreal Convention provides:

“The carrier is liable for damage sustained in case of destruction or loss of, or of damage to, checked baggage upon condition only that the event which caused the destruction, loss or damage took place on board the aircraft or during any period within which the checked baggage was in the charge of the carrier…”

Article 22 of the Montreal Convention states:

“In the carriage of baggage, the liability of the carrier in the case of destruction, loss, damage or delay is limited to 1,000* Special Drawing Rights for each passenger unless the passenger has made, at the time when the checked baggage was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless it proves that the sum is greater than the passenger’s actual interest in delivery at the destination.”

* adjusted to 1,131 SDR for inflation

So if you are travelling with something worth more than liability limit, you have the option to declare a higher value for your luggage and items when you check your bags at the airport. The carrier can provide you with a higher coverage amount for a fee (as per Article 22). The carrier will be liable to pay that higher amount unless it is proved that the declared amount is greater than the actual value of your baggage.

What is a Special Drawing Right?

A Special Drawing Right (SDR) is a fluctuating index based on a basket of international currencies as determined by the International Monetary Fund.

The SDR rate (as at the date of this article) is 1 SDR : AUD$2.01, so that entitles you to a maximum compensation of $2,273, but that is a maximum only – you will usually only get the replacement value.

If you keep every receipt you ever get, this is the time for you to shine as without receipts, it is difficult to get too much compensation!

What to do if your luggage is lost or damaged

If your luggage is damaged or does not arrive, ideally do not leave the airport. Rather, you should go to the baggage claim office at the destination airport and lodge a Property Irregularity Report (PIR) with the carrier that operated your final flight. Some carriers have time limits on reporting in their conditions of carriage (the terms you agree to when getting your ticket)

Most major airlines are relatively helpful when it comes to lost or damaged luggage, but even if they aren’t and you need to enforce your rights, note that Article 29 of the Montreal Convention provides:

“In … any action for damages … punitive, exemplary or any other non-compensatory damages shall not be recoverable.”

Travel insurance

If there is a shortfall between what the carrier pays you as compensation and what the item is worth, you can lodge a claim for the difference, subject of course to the terms of your travel cover, assuming you took it out.

For those that may not know, many credit card providers offer complimentary travel insurance if you pay an amount towards the costs of the trip on your card.