Economics of Air/Aviation Safety

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When it comes to air travel, safety is certainly the most determining factor in the airline industry. If the risk of travelling by plane was high, few would venture out to take a flight. However, we know that aviation safety has always been taken very seriously, and it is with no wonder that flying safety has reached high levels. This was built at the expense of every accident and serious incidents that occurred in the past, resulting in numerous corrections and improvements in products and processes over several years.

This article focuses on the MRO market, which, depending on their lAviation safety is an ongoing process and each sector within aviation be it in aircraft operation, maintenance, manufacturing, airport processes or air traffic control, need to have procedures in place to be constantly evaluating the hazards and risks. Necessary actions need to be then taken so that risks are within acceptable limits without jeopardizing the safety of people and property.

This drop in demand for maintenance was observed across planes of all segments, but smaller planes had a slightly It leads us to wonder, how can safety and aviation economics be related? The aviation industry is very sensitive, and numerous factors can affect it. Safety is one of the important factors which will necessarily impact aviation economics

Boeing 737 Max

A recent example that affected several Operators around the world and the aircraft manufacturer Boeing was when two of the new Boeing 737 Max aircraft suddenly suffered catastrophic accidents resulting in the grounding of this aircraft model for almost two years. This caused enormous damage to Boeing and Operators that were already operating this aircraft model. The situation was so serious that Boeing was forced to recertify the aircraft, correct the pertinent problems and also providing more training. In addition, it saw numerous orders for this Boeing 737 Max cancelled or postponed, not to mention the insecurities and concerns of passengers flying on this model in the future. This was the case even after Boeing and the FAA re-authorized flights with the Boeing 737 Max.

Figure 1 – Boeing 737 Max Impacts – Deliveries
Figure 2 – Boeing 737 Max Impacts – Financial

Production & Safety

The Boeing 737 Max is a classic example that demonstrate when production (sales, deliveries, billing, profit, fame, etc.) and safety are out of balance. This led to a negative impact on the aeronautical industry. Safety and production levels must be levelled. Investments need to ensure production growth as well as growth in safety standards, ensuring that safety levels are also always maintained at a high level. This is to make sure that production growth does not adversely affect safety. In summary, this balance meant that the industry should not only invest in production and profit to the detriment of safety, as this can lead to a catastrophic accident and affect the industry. However, it is also not recommended to over-invest in safety without a care for finances. The main thing is to maintain acceptable safety levels set out by the industry.

Figure 3 – Safety and Production Balance

New technologies – 5G

New technologies appear all the time to facilitate and improve people’s lives and generate positive impacts on the economy. One of the technologies that has been discussed for a few years now is the one related to mobile internet: 5G. The 5G has no direct relationship with aviation, but it has been causing furore as soon as it was put into practice in the USA.

There is great concern from airlines and aircraft manufacturers, such as Boeing and Airbus, that this new technology may affect the operation of aircraft flight instruments, especially the altimeters. This could result in inaccurate reading or even no reading for pilots flying the aircraft, which can put the flight at serious risk especially in adverse weather conditions. This 5G situation seem more serious in the USA because the frequency used is close to the frequency used by the altimeters. This has limited application of 5G in proximity to airports and even aircraft tend not to operate in these locations to ensure aviation safety. It is a matter still under evaluation and the real risks are being monitored. Nevertheless, flight cancellations happened. For example, Emirates suspended flights to some American cities, and airlines from India and Japan have taken similar action. Other airlines have also changed the aircraft type operating in some USA airports.

Covid-19 Pandemic

It is not new that Covid-19 has severely affected aviation throughout the world, with countless aircraft grounded due to Covid-19 restrictions in several countries for months as well as pilots and maintenance staff losing their livelihoods.

Many airlines were in dire financial straits and a push to reduce cost was necessary. Many planes that stopped flying still needed constant maintenance to fly again in the future, which meant a race for MROs and also ensuring quality and safety of MRO services rendered were still within industry standards.

Pilots who stayed at home for a long time and returned return to fly after long periods of more than a year lacked the current and posed new difficulties. It is believed that pilots who have not flown for a long time may take some time to adapt again to stressful conditions that may happen during flying, impeding their judgement and compromising on safety. The act of piloting is no doubt one of the fundamental points in flight safety and that is why pilots need stay relevant and attend training to reassess their ability to fly. This is to make sure that their flying proficiency is still maintained.

Figure 4 – Safety Incidents attributed to “lack of flying”

International Conflicts

International conflicts directly affect the local economy and often affect the global economy as well. A recent case is the build-up of tensions between Ukraine and Russia as well as several other countries. Many airlines, for safety reasons, reduced flights to Ukraine and others simply stopped flying over Ukrainian airspace. This could make trips sometimes longer and more expensive. This is not helped by the fact that airlines also no longer fly over Ukraine since 2014 since Malaysian Airlines aircraft MH17 was shot down in the air while flying over a conflict zone in the country. Ukraine has been added to a list where flying is avoided, such as Iraq, North Korea, Ethiopia and Libya.

Aviation safety will always have an impact on the economy, directly or indirectly, and vice versa. Sometimes, to ensure safety, investment and immediate actions are needed at a high cost. In other times, they can be programmed with more time and alternative solutions put in place to mitigate the economic impact and at the same time guarantee that safety is maintained. Flight Safety is not and will never be negotiable as any situation that jeopardizes the safety of a flight can bring bad consequences and must be dealt with immediately.

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