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Recovering disruption losses caused by third parties

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Recovering disruption losses caused by third parties

  1. 1. 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 Astute Aviation
  2. 2. of damaged aircraft that includes disruption costs is usually , and in some cases much more. (Flight Safety Foundation) Astute Aviation
  3. 3. 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. Astute Aviation
  4. 4. This can incur to airlines ripple effects of disruptions. Astute Aviation
  5. 5. 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 Astute Aviation
  6. 6. Astute Aviation
  7. 7. 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. Astute Aviation
  8. 8. 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 Astute Aviation
  9. 9. The same applies to missing information about 'direct' , including additional handling, loss of revenue and passenger compensation, which . Astute Aviation
  10. 10. 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). Astute Aviation
  11. 11. That's why are for use in loss recovery or decisions related to investment in incident prevention. A B C DISRUPTION LOSS ESTIMATES Astute Aviation
  12. 12. Astute Aviation
  13. 13. Improvement is possible even for the most complex organisations. This could be achieved by following the principles of Event- Based Management. Astute Aviation
  14. 14. 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. Astute Aviation
  15. 15. 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 . Astute Aviation
  16. 16. The results spread for the purpose of , with . Astute Aviation
  17. 17. 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' Astute Aviation
  18. 18. 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 Astute Aviation
  19. 19. 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 Astute Aviation
  20. 20. Astute Aviation
  21. 21. We apply principles of Event Based Costing to provide related to aircraft damage, essential for successful recovery of losses from third parties. WELCOME Astute Aviation
  22. 22. We also to to support the process of loss recovery and minimise legal costs. Astute Aviation
  23. 23. 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 Astute Aviation

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