Economic Analysis of Airline Safety

Introduction

Air transport has become a major issue of concern in the transport sector. The development of aviation is related to the rate of economic advancement of many countries across the world. This report contains detailed information on the major forms of occurrences, their causes, degree, and the various ways that can be used to curb them coupled with the action plan on the implementation issues.

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Aviation is currently considered as the fastest means of transport in the world. Air transport poses the most hazardous threats in its operations. The different occurrences in this industry arise from a combination of issues that are constituted in the operation of the aircraft. Air crash information obtained from the National Transportation Safety Board entails data regarding incidences such as the airlines involved, the date of the accidents, and some briefs about the number of fatalities [5].

General background

Aviation occurrences may not necessarily take place in the course of flight. They might even take place when the aircraft is stationary. An occurrence may lead to various implications such as the airplane going off the radar before getting lost never to be recovered like the recent Malaysian MH370, which is yet to be discovered after 1 year of search. Occurrences might lead to some slight damages or death and serious injuries. Death arising from a plane may be due to one having boarded the plane, coming into direct contact with the jet fuel, or even coming into direct contact with the plane or parts falling off from the components of the plane.

Some organizations have been formed to monitor the occurrences in the air transport including the International Civil Aviation Organization (ICAO) and the Commercial Aviation Safety (CAS). Information from these organizations shows that incidences may occur from poor facilities such as the state of runways, buildings in major cities that are mainly served by the planes, fire rescue services that are present in a given place, obstacles in the airplanes’ operation base, and the lighting system within the major areas usually served by the planes. The manufacturers of the airlines have come under criticism for not publishing any article about the safety recall of their products, which has led to an increased number of occurrences [3].

On the other side, occurrences may occur due to deficiencies coming from snow, frost, and ice from the operation bases of the aircrafts, construction interferences, and the signals response of the craft computer automated system. Effects coming from the design of an aircraft are also other causes that lead to occurrences. Accidents have been reported to occur due to collision with obstacles near the landing ground like coming into contact with vegetation, collision during landing or taking off from the airport, and collision with obstacles in water. These occurrences usually happen during any phase of flight. There should be a need for quality assurance of the products from various manufacturers and the required penalties imposed on them due to producing products that do not meet the requirements [4].

Purpose statement

The major goal of this report is to analyze the main causes of occurrences in flights coupled with how they happen, their effects, and the most appropriate remedies that can be used to reduce these incidents. The National Transportation Safety Board (NTSB) categorizes the main cause of aviation occurrences into three major categories, which include the personnel, environment, and airplane-based attributes.

The personnel involved in the flight operations include the pilot, the cabin crew, control, and the management officers. Environmental issues include the weather, terrain, and airport facilities at the time of an occurrence. The airplane-based issues entail the structures and equipment’s performance of the aircraft such as the engine. Occurrences leading to loss of lives cannot be compensated, and thus the above-named stakeholders in the aviation department should be held accountable for any accident that occurs [5]. Investigations on the major causes of occurrences showed that in every occurrence, there is at least one major cause of it.

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These results showed that the personnel contributed to 55.5% with 47.2% being due to the pilot and 8.3% due to the other personnel [5]. On the other side, 33.4% was due to aircraft malfunctions and 30.6% due to environmental issues. Therefore, according to these investigations, pilots in most cases are the causes of many occurrences [2].

The various causes of occurrences.
Figure 1: the various causes of occurrences.

Audience statement

With regard to air transport, cooperation from the operators and those on board is the main factor that contributes to its effectiveness in the various operations. In addition, other stakeholders such as lawmakers in a country contribute to occurrences through the passing of regulations that favor some conditions. Spillovers coming from the occurrences affect the airlines according to their degree of overlap wherein the airlines having little overlap have negative spillovers [5]. On the other hand, switching of the customers usually considers the situation with high overlap. Therefore, competition arises between the crash airline and the non-crash airlines because many customers will prefer the non-crash planes with reasonable prices [5].

Content summary

Air transport is one of the modes of transport that portray the level of technology of a given nation. In addition, it shows the economic potential of a certain country. However, it has become a great concern due to the occurrences associated with it. These occurrences cause fears, loss of property, and lives. These accidents occur in various dimensions and the main cause has been found to be the operators, the environment, and lastly the weather condition of the surrounding.

Therefore, many organizations have been formed in various parts of the world to come up with different ways that can be used to reduce these occurrences. They include the Commercial Aviation Safety Team (CAST), the Taiwan Flight Safety, and the International Civil Aviation Organization (ICAO). Various organizations have published information on the impact of occurrences to the stock market such as the New York Stock Exchange (NYSE), the Department of Transportation (DOT), and Ticket Dollar Value Origin and Destination (O &D) Data Bank [5].

In addition, the number of accidents showed a decreasing figure of 13% which was 3.2 per million in 2012 and 2.8 per million in the year after. Due to this pace of occurrences despite the reduction in intensity, the ICAO is trying to put in place strategies that will lead to increased safety in the aviation transport. Thorough training on the emerging issues and formulating easy implementable action plan is actually the best step that is needed to reduce the fatalities in this mode of transport [5].

Statement of readers benefit

This report contains the best recommendation strategies that can be used in one way or another to prevent major occurrences involved in the aviation transport. As stated in the summary, the major cause of occurrences is the personnel involved in the operation of the aircraft such as the pilot, the maintenance, and the control personnel. This report will be a good piece of information to the above-mentioned stakeholders in a bid to increase their standards of competence in their fields of operation. This report contains the analysis and updated recommendations that can be used in the reduction of such occurrences.

The reader of this report will learn the various forms of occurrences that have already happened in this industry; hence, s/he will be in a position to tell its advanced effects, and thus the need to work on the recommendation plan. In this section, the reader will also learn the various remedies that can be used by individuals that have suffered from either of these occurrences.

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Background information

The aviation transport industry started in the late 1700. This form of transport required great inventions to see heavier objects than air take off from the ground. The idea of flying machines to the sky was first used around 2500 years ago in Greece. From thereon, the civil aviation has been of great concern and various methods have been used to achieve a continuous and accurate traffic data flow. The following methods are effective, viz. measuring of the annual traffic flow, obtaining information containing different uses of the airlines, and the different number registered aircrafts [9].

Civil aviation is one of the technology-based modes of transport in the world. The main issue of concern in this report is the aspect of the accidents associated with this industry. Despite the fast growth of this industry, challenges prevail on the best ways needed to curb the inherent problems. Occurrences have led to loss of lives, property, and lack of trust to many people about the safety of the air transport. Currently, many organizations are coming together to solve this problem. Accidents can cause implications like the plane going permanently missing, the death of the occupants or being seriously injured, or the plane may be damaged to a certain degree. As a major issue of concern, the various personnel in the industry should consider ethics. Oderman suggests that ethics should be incorporated into the curriculum of the civil aviation to reduce the rate of occurrences happening [1].

Discussion/analysis

It has been reported that taking off and landing techniques have resulted in the most accidents. Information from the International Civil Aviation Association (ICAO) shows that 35 aircrafts occurrences have taken place, whereby 13 of them took place during the landing phase and 9 in the cruising phase, and the runway conditions contributed to 12 of the occurrences [6]. In addition, it was noted that the conditions of the operator also contributed to the increased rate of occurrences such the age and health condition of the operators. It was concluded that operators aged over 75 years caused more accidents due to their fault [6].

This report aims at providing some of the methods that can be used to curb the issue of occurrence. Various methods are considered depending on the intensity of the occurrence. Due to the worries in the current airline industry, intensive research has been conducted in a bid to reduce these occurrences. According to Rose, various approaches are made in deciding on which of a selected number of methods are considered in curbing these occurrences [7]. These include the requirements that are needed for the tools and methods from the aviation center, the identification of the existing tools and the methods in practice, checking on how the existing tools have been useful to the community, and facilitating the use of new and advanced tools and methods [8].

Conclusion and recommendation

Due to the increased number of occurrences in the air transport, the following recommendations should be considered in a bid to ensure that lives of those on board are protected, which improves the overall safety of the aviation industry. The following are some of the measures that should be used:

  1. Use of the evacuating slides – Evacuation slides have been recommended to be one of the safest exits from an aircraft in case of any impairment from the plane. Every plane should be installed with adequate evacuation slides according to the number of passengers on board [7].
  2. Using automated systems – with the changing technology, systems in the current aircrafts should be updated in such a way that there is an automatic system that immediately identifies any impairment and signals immediately or reports the situation to the operators.
  3. The provision of safe gears for safe landing – planes should be installed with gears such that in case of faulty conditions, the aircraft can be can be lowered to the ground regardless of the power systems and the hydraulic connections within the plane.
  4. Encourage the use of durable turbine engines- engines that are being used in the modern planes should be designed in such a manner that they are capable of containing failures to a degree of not causing an occurrence until the nearest landing station. In addition, research works have been carried out in the current civil aviation institutions aimed at the safety of the transport and how advancement in technology has helped to shape this sector. There are two main purposes of classifying various research methodologies in the aviation sector. They include assessing the progress that has so far been achieved using these methods and evaluating the methods of research that have been used in the various researches [4].

Statistical action plans

Various plans have been considered in the quest to improve the safety of the aviation industry. Upon the implementation of these plans, a supervisory, development, and an evaluation committee are needed. After the consideration plan has been worked out, the process is then usually categorized into three phases, which comprise the accepted phase, under supervision phase, and the evaluation phase. So far, 492 actions have been developed and out of these, 12 were considered as under supervision and 480 as accepted [2]. When presented as percentages, the under supervision phase was 2.4% while the accepted phase was 96.7%.The information is as shown below

The phases of action plan.
Figure 2: the phases of action plan.

Various ways of analyzing accidents have been developed in a bid to come up with some prevention strategies for accidents. This aspect involves the investigation of the various parameters that are used in the airline travel such as planes performing different roles that are involved in a given accident. In this case, the type of the aircraft and the characteristics of the environment under which it operates are considered.

References

  1. D. B. Oderman, “Ethics Education in University Aviation management programs In the US,” J. Air Transporters, vol. 8, no.1, pp. 15-36, 2002.
  2. D.M. Chance and S. P. Ferris, “The Effect of Aviation Disasters on the Air Transport Industry,” J. Transport Economic and Policy, vol. 21, pp.151-165, 1987.
  3. G. Jarrell and S. Peltzman,”The Impact of Product Recalls on the Wealth of Sellers,” J. Political Economy, vol. 93, pp. 512-536, 1985.
  4. I. Kirkland, R. Caves, I. Humphreys and D. Pitfi, “An Improved methodology for Accessing Risk in Aircraft Operation at Airports Applied to Runways,” Safety Science, vol. 42, pp.891-905, 2004.
  5. J. C. Bosch, W. Eckard and V. Signal, “Competitive Impact of Air Crashes -Stock Market Evidence,” Journal of Law and Economics, vol. 41, pp.503-520, 1995.
  6. M. L. Mitchell and G. E. Hoffer, “Crisis in the Cockpit: The Rule of Market forces in Promoting Air Travel Safety”, The Journal of Law and Economics, vol. 32, no. 2, pp.329-356,1989.
  7. N. L. Rose, “Fear of Flying? Economic Analysis of Airline Safety,” Journal of Economic Perceptive, vol. 6, no. 2, pp. 75-94, 1992.
  8. N. Stamatiadis and J. A. Peacon, “Quasi-Induced Exposure Methodology and Insight,” Accident Analysis and Prevention, vol.29, no. 5, pp37-52, 1997.
  9. X. Yan, E. Radwan and M. Abdel-Aty, “Characteristics of rear- end Accidents at Signalized Intersections Using Multiple Logistics Regression Model”, Accident Analysis and Prevention, vol. 37, no. 4, pp.983-995, 2005.

Annotated Bibliography

D. B. Oderman, “Ethics Education in University Aviation management programs in the US,” J. Air Transporters, vol. 8, no.1, pp. 15-36, 2002.

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The author talks about how four universities taking aviation incorporate ethics in their curriculum. This aspect shows that ethics is a core value that is needed in every transport sector. The author provides recommendations to increase ethics such as the incorporation of the relationship between academics and the aviation industry and using a program that is phased and consisting of ethics in its curriculum.

D.M. Chance and S. P. Ferris, “The Effect of Aviation Disasters on the Air Transport Industry,” J. Transport Economic and Policy, vol. 21, pp.151-165, 1987.

The authors of this article base their argument on the issue that any occurrence leading to the loss of human lives cannot be tolerated because such loss cannot be compensated. The authors also claim that companies in the airline industry and their shareholders are responsible for the loss.This article also examines the effects of the disaster on both the manufacturer and the travelers and the best ways to prevent it.

G. Jarrell and S. Peltzman,”The Impact of Product Recalls on the Wealth of Sellers,” J. Political Economy, vol. 93, pp. 512-536, 1985.

The author of this article claims that recalls report increases safety in a given number of transportation media due to the recalled model. The author elaborates that a defect that is caused by any given number or size of a certain carriage in transport needs to be recalled. The author also explains why the manufacturers do not issue a published article or release a public press to tell the public about every safety recall. They always avoid a negative recall being associated with their products. This article is relevant as it shows hidden traits about a product that later cause malfunction, hence accidents.

I. Kirkland, R. Caves, I. Humphreys and D. Pitfi, “An Improved methodology for Accessing Risk in Aircraft Operation at Airports Applied to Runways,” Safety Science, vol. 42, pp.891-905, 2004.

The authors in this article give a number of researches that have been used in the current civil aviation institutions aimed at the safety of the transport. The authors elaborate on the advanced technologies that have helped in shaping the air transport. The authors also highlight the criteria used in evaluating the effectiveness of the various methods.

J. C. Bosch, W. Eckard and V. Signal, “Competitive Impact of Air Crashes -Stock Market Evidence,” Journal of Law and Economics, vol. 41, pp.503-520, 1995.

The authors note that the stock market is directly affected by various occurrences from a given airline. The customers tend to choose the favorable and cheaper prices due to lack of trust on those airlines that are always involved in accidents. This aspect makes the non-crash airlines the direct competitors of the crash airlines. The authors also explain that spillovers affect airlines according to their degree of overlap. Airlines having little overlap have negative spillovers. On the other hand, switching of the customers usually considers the situation with high overlap.

M. L. Mitchell and G. E. Hoffer, “Crisis in the Cockpit: The Rule of Market forces in Promoting Air Travel Safety”, The Journal of Law and Economics, vol. 32, no. 2, pp.329- 356,1989.

The authors of this article base their claims on the circumstances and penalties that fraudulent manufacturers or aircraft operator are expected to face. The degree of this penalty is based on the cost of the crime that is committed. The authors categorize the penalties of fraud in various classes such as quality assurance through reputation where the authors urge that the expected criminal penalties enacted are lower than the cost of the fraud. The authors urge that the manufacturers who fail to meet the quality standards while manufacturing their equipment should be penalized. An increase in the penalties for crimes reduces the customers’ reliance since quality is guaranteed. This article is relevant to the major occurrences in aviation as the enactment of penalties on fraud and lack of quality assurance will ensure that all those aircraft that are being used meet a certain standard of qualification.

N. L. Rose, “Fear of Flying? Economic Analysis of Airline Safety,” Journal of Economic Perceptive, vol. 6, no. 2, pp. 75-94, 1992.

The author explains that due to the worries in the current airline, intensive research has been conducted in a bid to reduce these occurrences. The researches are based on the application of modern technology in reducing occurrences in aviation. Increased fatality rates have been noticed, and thus a solution is needed in a strategic action plan to curb this problem.

N. Stamatiadis and J. A. Peacon, “Quasi-Induced Exposure Methodology and Insight,” Accident Analysis and Prevention, vol.29, no. 5, pp37-52, 1997.

The author talks about the various methods that can be used to achieve a continuous and inaccurate data flow of traffic. The authors emphasize that the following methods are effective, viz. measuring of the annual traffic flow and obtaining information containing different uses of the road and the different number of cars registered. The combination of these three methods leads to achieving the most effective traffic data flow.

X. Yan, E. Radwan and M. Abdel-Aty, “Characteristics of rear- end Accidents at Signalized Intersections Using Multiple Logistics Regression Model”, Accident Analysis and Prevention, vol. 37, no. 4, pp.983-995, 2005.

The authors in this article deal with the various ways of analyzing accidents to come up with some prevention strategies for the accidents. Under this investigation, the authors consider vehicles performing different roles that are involved in a given accident. According to the authors, various aspects can lead to accidents such as environmental factors, type of the plane under operation, the age, and gender of the operator.

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