Global estimates of aircraft damage incidents have more than doubled over the past ten years, costing airlines $4 billion in 2003 and $10 billion in 2013. Aircraft damage incidents cause the longest and most costly disruptions for individual airlines. The total costs of damaged aircraft, including disruption costs, are usually underestimated and can be much higher. Years-long attempts across the industry to create a standardized model for calculating disruption costs have failed due to the difficulties in identifying and measuring all of the true costs involved.

2. Total global estimates
put
at
They more
than doubled over the
past ten years.
Aircraft damage
incidents cause longest
and most costly
disruptions to
individual airlines.
$4b
$10b
2003 2013
(Flight Safety Foundation)
2023
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3. of
damaged aircraft that
includes disruption
costs is usually
, and in some
cases much more.
(Flight Safety Foundation)
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4. An increasingly busy operational environment
and growing number of make
airlines more and more susceptible to rise in
hidden costs of disruptions, jeopardising their
already thin profit margins.
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5. This can incur
to
airlines
ripple effects of
disruptions.
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6. So, who is paying
the bill?
Airlines Ground Service
Providers
Carriers have
been asked to
provide
quantifiable
evidence of their
damages and they
have found it
difficult if not
impossible.
ASA-Airport Service
Association
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7. Astute Aviation

8. Years-long attempts
across the industry to
create a recognised
disruption costing
model have failed
because
to identify and
measure the true costs
of disrupted operation.
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9. At the
lies the
to cost management
manifested through
which
are multidimensional by
nature, and their
like flight
delays, cancellations,
diversions, additional
flights, and aircraft
replacements.
'What stops airlines from
recovering uninsured disruption
losses caused by third parties'
Click on the
screen to read
my blog article
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10. The same applies to
missing information
about 'direct'
,
including additional
handling, loss of
revenue and passenger
compensation, which
.
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11. Another obstacle
to identifying full
impact of
damages caused
by third parties is
related to
.
It is based in parts
of an organisation
necessary to
successfully complete this complex task
(job usually delegated to Engineering,
Insurance, Ground Operations, Flight
Safety or some other departments).
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12. That's why
are
for use
in loss recovery or
decisions related to
investment in incident
prevention.
A
B
C
DISRUPTION LOSS
ESTIMATES
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13. Astute Aviation

14. Improvement is possible
even for the most
complex organisations.
This could be achieved
by following the
principles of Event-
Based Management.
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15. The next step is
to provide
relevant
departmental
cost information
by cutting
through
information and
organisational
boundaries.
Event needs to
be observed as
close to real
time as
possible to be
able to identify
the true costs
and causes of
disruptions.
All it takes then is
to create a
system that
provides links
between these
costs, initial and
reactionary
schedule
changes, and
their root causes.
In addition,
numbers have to
be accompanied
with stories of
those directly and
indirectly involved
in events, so that
otherwise
invisible
interconnections
and dependencies
could be fully
understood.
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16. Designing and
implementing this relatively
simple and inexpensive
method for loss recovery
requires a good system
knowledge, support at
highest organisational level,
and cross-system
cooperation
and ensures
that
.
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17. The results spread
for
the purpose of
, with
.
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18. This example shows the benefits of Event-
Based Costing used for recovery of disruption
losses caused by aircraft damaged on ground.
Example from 'Managing Costs
We Don't Understand'
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19. THE INCIDENT
The fuselage of a
B747 was damaged
by a catering truck
at an outstation on
a long-haul route.
The aircraft was
temporarily
repaired and
ferried back to
home base where it
remained out of
service for 5 days.
AIRCRAFT OUT OF SERVICE
DISRUPTED PASSENGERS
Full effects of 5 days’ long passenger disruptions
included in calculation
EXAMPLE 2 – Part 1
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20. After thorough analysis
based on principles of
Event Based Costing, the
full cost impact of knock-
on effects came to
in losses caused
by the third party, ready to
support claims for loss
recovery.
INDIRECT COSTS OF
AIRCRAFT DAMAGE
Disruption Diagnostics
INDIRECT COSTS OF
AIRCRAFT DAMAGE
Airline estimate
The value of indirect losses
was estimated at
based on the average,
generic values normally
used to perform the loss-
of-aircraft-use analysis.
(The airline spent
on direct cost of
aircraft repair).
EXAMPLE 2 – Part 2
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21. Astute Aviation

22. We apply principles of
Event Based Costing to
provide
related to aircraft
damage, essential for
successful recovery of
losses from third parties.
WELCOME
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23. We also
to
to support the
process of loss
recovery and
minimise legal costs.
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24. Jasenka Rapajic
Astute Aviation
To find out more on
how we can help you
recover losses caused
by third parties,
http://uk.linkedin.com/in/jasenkarapajic
http://beyonddisruptions.blogspot.co.uk/
jasenka@astuteaviation.com
www.astuteaviation.com
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