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Corporate Aviation

Private Aviation: Developing a Corporate Policy

Adam Webster | December 13, 2003

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Most firms don't have an internal policy, oversight, or any method of tracking the use of private aircraft by staff members. It is important for risk managers to recognize the exposures and understand key features of such policies in order to develop their own.

As increased spending starts to trickle into various corporate travel budgets, inevitably, a few firms without any professional air charter experience will find themselves asking their travel coordinator, "Isn't there any way I can get to the meeting in Cleveland in time and also make the dinner in New York?" To which he or she shall answer, "Well, I could get a quote for a charter."

As the risk manager at your firm, it is important to note the following points.

  • The travel agent probably knows little if anything about the relative safety of private charter operations.
  • There is no internal procedure for dealing with "this type" of travel request.
  • You'll never know about this event—unless, of course, there is an accident.

What Your "Nonowned" Aircraft Policy Never Taught You

Even if your firm has such a policy, it is important to note what the policy may not teach you—the stark reality of how unsafe private aircraft operations can be. "On demand" air carriers, air taxis, and private charter companies are essentially all the same creatures. They operate small twin-engine, piston aircraft that carry engineering firms into remote locations, up through the iconoclastic Gulfstream V, which carries key executives to transoceanic meetings.

The Federal Aviation Administration (FAA) regulates these air carriers under 14 CFR Part 135, a distinct and separate set of regulations, that is modeled somewhat after Part 121, the rules that govern the large scheduled carriers such as Delta, United, and American. Despite their own set of regulations and inspectors, Part 135 flights remain one of the most dangerous point-to-point forms of transportation known to the business community. The fact is, that even if piston aircraft are removed from the calculus of safety, turbine (only jet engines involved) Part 135 aircraft have an 11.2 percent higher incidence of fatalities than their pure corporate brethren (private flight departments for large firms—according to the National Business Aviation Association).

The fact that most firms don't have an internal policy, oversight, or any method of tracking this type of aircraft utilization is startling. However, it is perfectly understandable when one realizes that:

  • The flights happen infrequently.
  • They usually happen away from the central location of the firm.
  • The executive ordering the flight may already be familiar with the operator or aircraft owner.

What the Risk Manager Should Know and Do

A pilot once quipped, "Pilots are really just risk mitigation specialists." And, when speaking of the pilots you want flying your firm, he was right. The fact is that the allure, drama, and romance of operating a large machine that flies through the air draws a unique crowd. Flying is by its very nature a dangerous activity (on a per-trip basis, airplanes are much more dangerous than automobiles, not so "per mile"), and the extent to which one can control and qualify the minimization of exposure to risk is a barometer of how safe your flight will be.

Insurance companies that write policies for aircraft operators have already begun leading the way for safe operating practices by establishing requirements for training or simply refusing to write the requested coverage. The irony is that not all nonowned policies and certainly few if any travel managers realize the following key facts.

Piston-Engine Aircraft. While romantic and nostalgic, these should not be used for corporate transportation. Piston aircraft are, on average, more susceptible to failures, accidents, and poorly trained crews. Although the reciprocating aircraft engine has seen little major development since the 1940s, piston Part 135 operators still dot the country. Whether it is a single- or twin-engine piston aircraft, your firm should develop a methodology for preventing any employee from setting foot in one while on company business, especially (note: especially) if they are flying themselves. (Working and flying professionals constitute one of the highest risk categories for underwriters.)

Single Pilot Operations. While there are arguably some flights that are better off with one well-trained captain rather than a tired and annoyed captain with a meddlesome, unqualified copilot (or worse yet, a meddlesome, unqualified captain with a tired and annoyed copilot!), the statistics compiled by the National Transportation and Safety Bureau (NTSB) and Robert E. Breiling Associates reveal one key fact: aircraft with two well trained (and harmonious) crew are far less likely to end up in any type of adverse situation. This holds even more true when operating in high-density air space such as New York or Los Angeles.

Cumulative Accident Factors. While it is perfectly legal to fly at night, in foul weather, to a remote rural airport and conduct a circling approach (whereby you get below the clouds and then skirt the airport to align with the appropriate runway, in the dark, while avoiding hard-to-see obstacles), it is an example of a type of flight operation that your firm should prevent from happening—without exception. The simplest analogy used by seasoned pilots is the game of baseball:

  1. It is night (strike one)
  2. The weather is low (strike two), and
  3. We are going to an unfamiliar airport for a circling approach (strike three).

"Striking out" in this case means the lives of your colleagues were potentially spared. If you sense that your aviation provider lacks a qualitative or quantitative method of discussing safety, then it is time to seek alternative methods of transportation, a different air carrier, or a frank conversation with the principles of the air carrier in question.

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