Private Aviation: The VLJ Arrival
May 2006
Whether we put our heads in the sand or not,
the VLJs (that is Very Light Jet) will arrive. The debate is strong as to whether
these aircraft will become ubiquitous or not, but one thing is for sure: These
new aerial hot rods will open up a kettle of worms for the risk manager.
by Adam
Webster
RSVPair"The
Air Charter Directory"
The debate around whether the air taxi business will blossom or not is rife
with data supporting both sides. On the one hand the U.S. Federal Aviation Administration
(FAA) claims that the skies will be dark with these new light jets and that
National Aeronautics and Space Administration's (NASA's) vaunted Small Aircraft
Transportation System R&D will spawn entrepreneurial pursuits that will truly
cheapen ad hoc air taxi use.
The dissenters focus on one primary factor: demographics. The cost to buy,
operate, and maintain a fleet of super efficient air taxis is large, never mind
the viability of manufacturing these new fangled toys at a profit. The cost
to be attractive and the cost to break even may yet prove to be the dissenters
winning argument, but either way, the risk manager will face this call: "Hey,
can I take the management team for a ride in our new jet? It's fully insured,
etc. etc."
First: The Bad News
Now is the time I suggest you bookmark this page in order to get easy reference
to the arguments you'll need.
- Lawn darts: Most new jets, especially
more affordable ones that fall into the hands of those who are not professional
full-time pilots, invariably go through this phase. This is the phase that
scares insurers the most.
- New equipment: New equipment typically
has a period of getting the kinks out. Hence the term "shakedown" cruise
for new craft. With aircraft, this can take years. While not necessarily
an issue that automatically raises danger, it sure is nice to get those
"boy that was nice to know" things out of the way before you become an owner/user.
- "Type A" personalities: These types
are the most successful in corporations, and usually live at the top of
the corporate hierarchy. They also are the most prone to cause accidents
since they have a "can do" attitude whereby nothing gets in their way—not
a little mechanical irregularity, inclement weather, or a really tough flight
at the end of a long day.
While it may seem absurd to caution the risk manager today about an issue
that is coming tomorrow, the reality is this: The manufacturer's marketing message
is that these jets will be plentiful, they will be inexpensive compared with
their industry predecessors (A range of $0.9MM to $1.4.MM U.S.), and they will
fall into hands of those who are more accident prone.
General aviation already faces accident rates (and corresponding insurance
premiums) that reflect a category of more risk. The owner flown private jet
is certainly something that is getting a hard look from underwriters.
Second: The Good News
The good news is that most pilots are quite intelligent, and owner-flown
high performance aircraft do not need to be the source of the greatest exposure
at your firm. Follow some basic guidelines that your underwriter will give you
and be sure that you comb through the policy in force on the aircraft to be
sure that it covers all eventualities that the pilot is likely to encounter.
Here are some classic trouble spots that can easily be mitigated in advance
by open and frank conversations:
- Too much on mind and too much packed in: If the pilot must operate this aircraft, try to structure it so that the
time is less compressed. For example, flying in the morning and then having
a long day on site? Spend the night. If he or she does not want to spend
the night, talk to them about the reality of getting a professional pilot
to ride along. Nothing is worse on a pilot's mind and body than the long
day followed by the night (potentially inclement weather) flight home. When
a day is compressed (due to the wonderful convenience of this new toy!)
nothing is more tempting than the "get home-it is," which is very common
in accident post-mortems. The convenience of the aircraft should not be
mistaken for just using the extra time it affords to get more done on site
and to relax and rest before coming home.
- Training: Just because they are not
professional pilots (rarely do CEOs have such a fantasy) does not mean they
should not act like one. Obtain the most certification and obtain the most
training possible. While getting a commercial or airline transport pilot
license might sound like a big chore, it will seem quite minor when you
see the savings on the insurance bill. Also, conducting oneself professionally
allows the pilot to begin to learn what life is really like for those who
fly daily for a living. The training that goes with professional life, if
followed properly, is a risk mitigation specialist's dream, since every
flight is approached with the forethought of how important each and every
aspect of flight preparation is.
- Policy: Be crystal clear on who and who cannot blindly jump in the aircraft, no matter how convenient,
simple, or benign the situation may appear. While many corporations have
well defined rules of who can get into what private aircraft, the perspective
may change once "private" begins to include small jets—i.e., seemingly more
safe and serious than piston/propeller engine planes. Just remember, it
is still an airplane, it is just now a bit faster and a bit more expensive
than others from the past. The lure of the turbine engines and pressurization
may cause many to say, "It is different this time," but the good risk manager
will see that it is not. It is still an owner-flown aircraft, and it still
carries all the related risks.
Timing
So what is the timing on all of this? The first light jets will, in theory,
be delivered to customers by the end of the 2006. Whether the air charter or
air taxi dreams pan out or not for the manufacturers, you can be rest assured
that many a private operator will feed these manufacturers with initial sales,
since nothing is more appealing than saying "you now have your own jet."
Just remember, those future proud new owners are walking the hallways of
your company today. As their fantasy becomes reality, be sure you are ready
to with the basics of aviation risk mitigation. Traditionally, going higher
and faster has translated into "safer," but to ensure this remains constant
with the new breed of aircraft. The pilots need to step up and understand that
all aircraft command substantial respect.
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