The risks of ‘New Business Models’ in aviation

Today’s European airlines look very different to the traditional ‘flag carrier’ operations of the past. In the 1970s it was said of BOAC (one of the companies that became British Airways) that if they wanted a pint of milk they’d buy a dairy farm. In order to thrive in today’s commercial environment companies need to concentrate on their core capabilities and manage commercial risks. This means that airlines today make extensive use of outsourcing and different types of employment contract. EASA has been evaluating the impact of these ‘new business models’.

Risk Assessment

EASA has developed a ‘practical guide’ that suggests some of the hazards that should be risk-assessed in relation to these new business models. There is no suggestion that the risks are greater, they’re just different. When an airline outsources a particular function then it needs to conduct audits to assess whether the service is provided in accordance with the necessary standards and regulations. Some airlines struggle to do this because they don’t have the qualified people to make that assessment (which is the whole point of outsourcing) but this assessment can also be subcontracted. McKechnie Aviation has expertise in all aspects of flight operations and can conduct objective, independent audits of all types of service provider including training organisations, performance data providers and ground handlers (to name a few).

Leasing

When an operator leases in capacity there is again a regulatory requirement, and a sound commercial need, to audit the lessor. The lessee will check that the lessor has the necessary approvals but the scope of an audit should extend beyond a documentation check and look at how procedures are implemented and whether the lessor has effective safety management. McKechnie Aviation can provide a cost-effective solution by conducting pre-lease audits or by helping an airline develop a ‘whitelist’, a pre-approved list of potential lessors. Where a lease is to be a long term arrangement there should be a close relationship between the safety risk assessment processes of the two operators. Hazards in one organisation can easily result in risks within the other. This sharing of safety needs to be managed carefully to protect the interests of both parties so the Safety Managers need to be involved at an early stage and procedures for sharing safety data should be part of the leasing agreement.

The customers

An airline’s customers aren’t interested in whether a particular task is conducted by an employee or a service provider. What they notice is the standard of service they receive. If there’s an incident or accident then the press won’t identify the sub-contractor responsible, they’ll publish pictures of a bent aeroplane with the airline’s logo clearly visible. Outsourced functions need to be managed just as much as internal functions and that management requires good information. An audit programme provides that information. To discuss how McKechnie Aviation can help please get in touch.