A new report for aviation insurer Allianz Global Cor- porate & Specialty SE (AGCS) finds that while the skies are safer, there are a number of emerging risks that could impact carriers and insurers.
Until this year’s unprecedented aviation disasters, the industry’s
safety record had improved to fewer than two passenger deaths for
every 100 million passengers. Over the last 60 years, the industry
has seen a steady decline in accidents as technology and training
have improved. By today’s estimates, there is a greater chance of
dying while riding a bicycle (1 in 340,000) than dying aboard an
airplane in the U.S. (1 in 29 million). Even the odds of being killed
by lightning are higher — 1 in 10. 5 million.
The study says that much of the improvement in airline accident rates is due to advances in the reliability of jet engines,
with manufacturers almost eliminating the chance of engine
failure. The greatest risk still comes from the human factors that
can affect safety. These include: pilot fatigue, pilot training, crew
resource management and other factors. Approximately 70% of
commercial fatal accidents are still due in large part to human
error, despite many technological developments. Crew fatigue
contributes to about 15-20% of the accidents, and a number of
initiatives will continue to improve safety efforts.
While the majority of large aviation insurance claims, those to-
taling more than $1.36 million, are the result
of plane crashes (23%), another 18% of claims
are related to ground handling, and 16% can
be attributed to mechanical failure. Ramp ac-
cidents cost airlines approximately $10 billion
a year and poor communication seems to be at
the root of most incidents.
A ten-year analysis of crashes from 2003-
2012 found that 57% of accidents occur during descent and landing. Twenty-four percent of accidents occurred during takeoff and
climbing to the proper altitude, and only 9%
occurred while cruising.
While the safety numbers are generally
trending well for the airline industry, there
are a number of emerging risks that could be
a concern for aviation insurers. The greatest
risk (35%) involves business interruption and
supply chain risks such as damage to machinery. Other major
risks include market stagnation and increased competition, leg-
islative and regulatory changes, and a growing pilot shortage.
Pilot shortages. The increased demand for air travel means
airlines have to find hundreds of
thousands of new pilots in the
coming years. CTC Aviation, a
major trainer in the industry, es-
timates that the increase in airline
fleets will require hiring more
than 235,000 pilots over the next
seven years. A Boeing report estimates that 498,000 will be needed
over the next 20 years. With training running into six figures, the
cost to airlines will be substantial.
Wild weather. Another emerging risk involves the weather, or
increased turbulence to be more specific. Climate changes will
impact the North Atlantic flight corridor and travelers can expect to encounter more turbulence according to scientists. They
also forecast that transatlantic
flights will encounter turbulence
of greater frequency and intensity
if carbon dioxide emissions continue to increase. The report says
flights across the Atlantic could
see significant turbulence which
could increase between 40 and 170%. Severe turbulence can
cause structural damage to planes and already costs an estimated
$150 million per year.
Lithium-ion batteries. The use of lithium-ion batteries continues to be an issue for the Boeing 787 Dreamliner. Incidents
where the batteries have burned, causing electrical problems and
highlights air safety
and emerging risks
By Patricia L. Harman, PropertyCasualty360.com