Aviation SafetyContents The Philosophy of Sa‘ety.... Leaming Objectives: Is Safety a Core business function? 2 2 2 Cost vs. Benefit Considerations. 3 6 Costs of accidents ... There are two basic types of costs associated with an accident or a serious incident: direct and indirect COStS. .......0000 Costs of Incidents. Costs of safety... ‘What is the value of a human life?...... ‘Value of Preventing Injuries eee dud Recognising Uncertainty... Production vs. Protection... Safety Culture... Chapter Questions...The Philosophy of Safety Learning Objectives: Comprehend the fallacy of the statement “Safety is Job One”. Define the term “Tombstone Technology”. Know the dual charter given to the FAA by the United States Congress. Know the current value ofa statistical life (VSL), as identified by the United States Department of Transportation. ‘Understand the variability of the VSL in terms of death and injury. ‘Understand how all United States Government agencies use a different value of a human life. Explain the term “cost/benefit” ratio. Know the elements that explain the “cost” of implementing a safety improvement. Know the elements that explain the “benefit”. Explain why the FAA is required to conduct a cost/benefit ratio analysis before creating new regulations. Identify the ramifications of having an overly aggressive safety programme. Identify the ramifications of having an overly aggressive focus on production. Know the number of aviation air carriers who use safety as an advertising and marketing tool. Is Safety a Core business function? In successful aviation organisations, the management of safety is a core business function —as is, financial management. We often hear aviation professionals tell us that nothing is more important than safety. Can safety really be the number one objective? Probably not. Successful aviation organisations establish an effective safety management that has a realistic balance between safety and production goals. The finite limits of personnel, time, resources, financing, and operational performance must be accepted in any industry. If properly implemented, safety management maximises both safety and the operational effectiveness of an organisation. Safety must co-exist with our production objectives. There is no aviation organisation that has been created to deliver only safety.What is the fundamental objective of a Business Organisation? To achieve its production objectives Figure 1.1, Cost vs. Benefit A misperception has been pervasive in aviation regarding where safety fits, in terms of priority, within the organisation. This misperception has evolved into auniversally accepted stereotype: in aviation, safety is the first priority. While socially, ethically, and morally impeccable; the stereotype and the perspective that it conveys does not hold ground when considered from the perspective that the management of safety is an organisational process. All aviation organisations, regardless of their nature, have a business component with production goals (as shown in Figure 1.1). An Air Traffic Control Facility may have a production goal of 100 aircraft operations per hour. An airport may have a production goal of 100 operations per hour, using parallel runways, under IFR conditions. A military organisation may have a production goal of bombs-on-target anywhere in the world in 24 hours or less. Thus, all aviation organisations can be considered business organisations with production goals. A simple question is then relevant to shed light on the truthfulness, or lack thereof, of the safety stereotype: what is the fundamental objective of a business organisation? The answer to this question is obvious: to deliver the service for which the organisation was ereated in the first place, to achieve production objectives and eventually deliver dividends to stakeholders. Cost vs. Benefit Considerations Operating a profitable, yet safe airline or service provider requires a constant balancing act between the need to fulfil production goals (such as departures that are on time) versus safety goals (such as taking extra time to ensure that a door is properly secured). The aviation workplace is filled with potentially unsafe conditions which will not all be eliminated; yet, operations must continue. 3|Page—_—_ Some operations adopt a goal of “zero accidents” and state that “safety is their number one priority”. The reality is that operators (and other commercial aviation organisations) need to generate a profit to survive. Profit or loss is the immediate indicator of the company’s success in meeting its production goals. However, safety is a prerequisite for a sustainable aviation business, as a company tempted to cut comers will eventually realise. For most companies, safety can best be measured by the absence of accidental losses. Companies may realise they have a safety problem following a major accident or loss, in part because it will impact on the profit/loss statement. However, a company may operate for years with many potentially unsafe conditions without adverse consequence. Without effective safety management to identify and. correct these unsafe conditions, the company may assume that it is meeting its safety objectives, as evidenced by the “absence of losses”. In reality, it has been lucky. 4|PTotal costs / 7 a Risk reduction Costs o” - Protection ———> Figure 1.2, Total costs vs. protection Safety and profit are not mutually exclusive, Indeed, quality organisations realise that expenditures on the correction of unsafe conditions are an investment towards long-term. profitability. Losses cost money. As money is spent on risk reduction measures, costly losses are reduced (as shown in Figure 1.2). However, by spending more and more money on risk reduction, the gains made through reduced losses may not be in proportion to the expenditures. Companies must balance the costs of losses and expenditures on risk reduction measures. Some level of loss may be acceptable from a straight profit and loss point of view; however, few organisations can survive the economic consequences of a major accident. Hence, there is a strong economic case for an effective SMS to manage the risks. 5|PageCosts of accidents There are two basic types of costs associated with an accident or a serious incident: direet and indirect costs. Direct costs These are the obvious costs which are fairly easy to determine. They mostly relate to physical damage and include rectifying, replacing or compensating for injuries, aircraft equipment and property damage. The high costs of an accident can be reduced by insurance coverage. (Some large organisations effectively self-insure by putting funds aside to cover their risks.) Indirect costs While insurance may cover specified accident costs, there are many uninsured costs. An understanding of these uninsured costs (or indirect costs) is fundamental to understanding the economies of safety. Indirect costs include all those items that are not directly covered by insurance and usually total much more than the direct costs resulting from an accident. Such costs are sometimes not obvious and are often delayed. Some examples of uninsured costs that may accrue from an accident include: Loss of business and damage to the reputation of the organisation, Many organisations will not allow their personnel to fly with an operator with a questionable safety record. Loss of use of equipment, This equates to lost revenue. Replacement equipment may have to be purchased or leased. Companies operating a one-of-a-kind aircraft may find that their spares inventory and the people specially trained for such an aireraft become surplus. 6|PageLoss of staff productivity. If people are injured in an accident and are unable to work, many States require that they continue to be paid. Also, these people will need to be replaced at least for the short term, incurring the costs of wages, overtime (and possibly training), as well as imposing an increased workload on the experienced workers. Investigation and clean-up. These are often uninsured costs. Operators may incur costs from the investigation including the costs of their staff involvement in the investigation, as well as the costs of tests and analyses, wreckage recovery, and restoring the accident site. Insurance deductibles. The policyholder’s obligation to cover the first portion of the cost of any accident must be paid. A claim will also puta company into a higher risk category for insurance purposes and therefore may result in increased premiums. (Conversely, the implementationof a comprehensive SMS could help a company to negotiate a lower premium.) Legal action and damage claims. Legal costs can accrue rapidly. While it is possible to insure for public liability and damages, itis virtually impossible to cover the cost of time lost handling legal action and damage claims. Fines and citations, Government authorities may impose fines and citations, including possibly shutting down unsafe operations. Costs of Incidents Serious aviation incidents, which result in minor damage or injuries, can also incur many of these indirect or uninsured costs. Typical cost factors arising from such incidents can include: Flight delays and cancellations; Alternate passenger transportation, accommodation, complaints, etc.; Crew change and positioning; Loss of revenue and reputation; Aircraft recovery, repair and test flight; and Incident investigation. Costs of safety Thecosts of safety are even more difficult to quantify than the full costs of accidents. This is partly because of the difficulty in assessing the value of accidents that have been prevented. Nevertheless, some operators have attempted to quantify the costs and benefits of introducing a Safety Management Systems (SMS). They have found the cost savings to be substantial Performing a cost-benefit analysis is complicated; however, it is an exercise that should be undertaken, as senior management is not inclined to spend money if there is no quantifiable benefit. One way of addressing this issue is to separate the costs of managing safety from the costs of correcting safety deficiencies, by charging the safety management costs to the safety department, and the safety deficiency costs to the line management most responsible. This exercise requires senior management's involvement in considering the costs and benefits of managing safety. 7|PageIn successful aviation organisations, safety management is a core business function — as is financial management. Effective safety management requires a realistic balance between safety and production goals. Thus, a coordinated approach in which the organisation’s goals and. resources are analysed helps to ensure that decisions concerning safety are reelistic and complementary to the operational needs of the organisation. The finite limits of financing and operational performance must be accepted in any industry. Defining acceptable and unacceptable risks is therefore important for cost-effective safety management. If properly implemented, safety management measures not only increase safety but also improve the operational effectiveness of an organisation. What is the value of a human life? The United States government has conducted several studies on the treatment of the economic value of a statistical life (VSL). The FAA is organised under the Department of Transportation (DOT), so we will concentrate our emphasis on the DOT's value of a statistical life The DOT recognised VSL has a major effect on policy for the FAA. Due to federal law established by the United States Congress, the FAA is required to promote safety and air commerce. Ultimately this requires a cost/benefit analysis prior to making a new regulation, Itis good to note that the National Transportation Safety Board (NTSB) does not conduct cost/benefit ratio analysis prior to issuing recommendations to the FAA. The United States Department of Transportation (DOT) guidance on valuing reduction of fatalities and injuries by regulations or investments has been published periodically since [Link] studies published in recent years indicate an average value of a statistical life (VSL) of $9.1 million in current U.S. dollars for analyses. Although the average value of a human life is $9.1 million, the DOT has established a variability of +/- $3.8 million. This ultimately establishes a range between $5.2 million up to $12.9 million. 8|PageValue of Preventing Injuries ‘An accident which results in a loss in quality of life, including both pain and suffering and reduced income, should also be estimated. The dollar value for being injured will be less than the rate for the loss of a life. The fractions shown in Table 1.1 should be multiplied by the current VSL to obtain the values of preventing injuries of the types affected by the government action being analysed. AIS Level Severity Fraction of VSL. AIS 1 Minor 0.003 AIS 2 Moderate 0.047 AIS3 Serious 0.105 Table 1.1: Relative Disutility Factors by Accident Injury Severity Level (AIS) For example, if the analyst were seeking to estimate the value of a “serious” injury (AIS 3), he or she would multiply the Fraction of VSL fora serious injury (0.105) by the VSL ($9.1 million) to calculate the value of the serious injury ($955,000). Values for injuries in the future would be calculated by multiplying these Fractions of VSL by the future values of VSL. Recognising Uncertainty Multiple studies have been conducted to determine the value of a human life. Some studies suggest a reasonable range of values for VSL between $4 million and $12.9 million Additionally, different organisations within the U.S. government use different values. As an example, the Environmental Protection Agency uses a different value for VSL. Because the relative costs and benefits of different provisions of a rule can vary greatly, it is important to disaggregate the provisions of a rule, displaying the expected costs and benefits of each provision, together with estimates of costs and benefits of reasonable alternatives to each provision. 9\PProduction vs. Protection In most organisations, safety is the number one priority, correct? That is what the public expects, and that is what most (if not all) organisations would like you to think. This is especially true in aviation. What organisation is not going to tell you that safety is their number one priority? If there is one, they are probably not going to be in business very long. Nobody is going to want to do business with an organisation that admits that safety is not their number one priority, especially if the customer is going to be a passenger and has to actually fly on them! But, saying that safety is your top priority and actually making it your top priority are two, totally separate items. Is safety really the mumber one priority for an organisation? We would like to think that this is true, but in reality, it probably is not going to work out that way in the Jong run. So, why not? To really answer this question, we have to look at what the fundamental objective of any company or organisation actually is, The fundamental objective of any organisation is o meet their production goals or objectives. If they are a for profit corporation this could be taken one step further to say that that objective is to make a profit. Ineither of those cases, is safety a competing priority? This can depend on the company. A quick definition of safety is: “the absence of risk.” Ifan aviation organisation is going to be completely absent from risk, they must stop flying their aircraft, because flying definitely involves risk. They are probably going to have to go one step further and park the airplanes in a remote area of the airport with a fence around them to prevent people from gaining access to them and having the possibility of injuring themselves. Okay, the last part may be a bit much, but you get the idea, Of course, the problem with this scenario is that itis unrealistic. If we park all our airplanes, we are not going to meet any of our goals or objectives, including making money. So, what can we do about this? One thing we are going to have to do is accept that there will be some risk in our operation. We are going to have to find a way to manage that risk, thereby letting us work on meeting our production objectives. It seems that safety may not be able to be our top priority. But, can it be complimentary? There are plenty of airlines flying today, and the general public does not think twice about flying from point A to point B on them. But airlines do not use safety in their marketing efforts. Why is it that passengers still fly on these airlines? It is because safety is assumed. Passengers expect that they will be safe on any given airline that they fly on. This is probably a realistic expectation, at least in areas of the world that have very robust oversight into airline safety. Ina company where safety is taken seriously it is treated as a core business function, much like accounting or marketing. Proper safety management will be able to properly manage the risk associated with operating aircraft or whatever the organisation is doing. We need to find the “sweet” spot where the right balance is achieved between production and protection, See Figure 1.3 fora visual depiction of this safety zone. 10|PagePROTECTION Bankruptcy uunrocknd ee a WA =u > PRODUCTION Figure 1.3 The Safety Zone If a corporation is to achieve the organisational objectives, but also be a safe organisation, it will have to commit some of its resources into safety management. We will explore safety management systems (SMS) in a later chapter. But just because an organisation commits financial resources to safety, does not mean that the desired level of safety is achieved. The members of the organisation from top to bottom have to believe in the safety objective. How is this achieved? Through a strong safety culture, which will be explored in the next section of Chapter 1 Safety Culture In the United States all airlines have to be certificated under Federal Aviation Regulation (FAR) Part 121 orPart 135. These regulations, enforced by the Federal Aviation Administration, outline the requirements that an airline must have in order to be granted an operating certificate. So, if that is the case, all airlines must meet the same requirements as any other. So, why do some airlines seem to have more safety issues than others? One of the reasons is that these airlines do not have a strong safety culture. What makes a strong safety culture? l1|PageOne perspective is the belief that safety should be a core business function, as described in the earlier section on production vs. protection. But this perspective cannot just be a perception of the safety department. This belief must be a core value throughout an organisation, from top to bottom, A strong safety culture sends a message from the President down to the lowest level of employees that safety is an intrinsic value in the organisation. If an employee does not see the levels of management talking about safety values, then the perception becomes one of not believing it is a core value in the company. This can be bad business in an organisation like a bank or retail establishment. But, for an airline this could have deadly consequences. Think of the pilots, mechanics, ramp agents, or flight attendants. If they do not see (or believe) that ‘management values or promotes safety, the belief may become one of apathy towards safety. One-way airlines and other aviation organisations have come to combat this attitude towards safety is through a system called “Just Culture.” We know that mistakes will happen in an organisation. A system of Just Culture promotes the idea that management will support employees for reporting these mistakes, instead of punishing them. Management teams who embrace this idea encourage the reporting of safety issues through some sort of reporting system. We will explore this type of reporting system ina later chapter. Ina system such as we have described above, employees are going to be much more willing to believe that management does value safety and that it is a core business funetion. Figure 14 shows a how Just Culture fits into an organisation's safety culture. 12|PageSafety Culture Figure 1.4 Just Culture is a part of Safety Culture So, how do we define a safety culture in an organisation? There have to be certain elements in an organisation’s culture to call it a safety culture. These elements are: ‘An informed culture: people understand the hazards and risks involved in their own operations and all employees work continuously to identify and overcome threats to safety; ‘A just culture: errors are understood but willful violations aren’t tolerated; workers know and agree on what’s acceptable and unacceptable; A reporting culture: workers are encouraged to voice safety concerns and when they do so, those concems are analysed and appropriate action is taken; and A leaming culture: workers are encouraged to develop and apply their own skills and knowledge to enhance workplace safety; management updates workers on safety issues; safety reports are given to workers so that everyone learns the lessons. 13|PageTable 1.2 shows how an organisation can figure out where their safety culture actually is. Safety Culture: 3 Poor Bureaucratic Positive Characteristics Hazard information is: | Suppressed —_| Ignored Actively sought Safety messengers are: | Discouragedor | Tolerated Trained and punished encouraged Responsibility for safety | Avoided Fragmented Shared is: Dissemination of safety Discouraged Allowed but Rewarded information is: discouraged Failures lead to: Cover-ups Local fixes Inquiries and systemic reform New ideas are: Crushed Considered asnew | Welcomed problems (not opportunites) Table 1.2, Safety Culture Characteristics 14|Page10. Safety is somewhat of an enigma to a lot of aviation organisations. It is well known that it is a necessity, but how to actually have that safe operation becomes a goal that is economic in nature, and seems to somehow get pushed to the side for other more highly (perceived) important organisational goals. As we have seen in Chapter 1, in order to manage risk and obtain a culture of safety throughout the organisation, it is important to think of safety along the same lines as the finance or human resources department. As we will explore in later chapters, there are many resources and ways for companies and organisations to increase their safety awareness. Chapter Questions How important is a customer’s perception of safety to an airline? Why is it important for safety culture to begin at the top of the organisation structure? Do you think that a company could put too many resources into safety? What could be the result of committing too many resources to safety? Which of the following statements concerning cost/benefit ratio analysis is TRUE? A) The “benefit” portion of cost/benefit ratio analysis includes loss of revenue, installation costs, and maintenance costs. B) The statistical value of a human life is determined by a congressional committee, This, exact same statistical value of a human life is then used for all government agencies. (As an example: The Department of Transportation (DOT), and the Environmental Protection Ageney (EPA) use the same value. C) The Federal Aviation Administration (FAA) is required to conduct a cost/benefit analysis prior to making any new regulations. The term “Tombstone Technology refers to According to the Department of Transportation (DOT), what is the current statistical value of a human life? True/False. ALL United States Governmentagencies forcedto use the same statistical valueof ahuman life, Asan example, the Department of Transportation (DOT) and the Environmental Protection Agency (EPA) both use $8.0 million as the value of a human life. True’False. Safety is widely used as an advertising and marketing tool with most every air carrier. True’False. The FAA is allowed (because of laws passed by congress) to routinely establish new regulations that would result in the bankruptey of most aviation companies Which of the following are the charters given to the FAA by the U.S. Congress? A) Promote a zero-mishap rate B) Implement a “Zero Delay Programme” within the Air Traffic Control System ©) Promote air commerce and air safety D) Provide government oversight of the “Lost Baggage Programme”. 15|P