Plane Conversations

You know that feeling in the pit of your stomach when you just know something bad is about to happen?  You don’t know when, you don’t know where - you just know it’s coming.  I call that the “wet sneaker” feeling.  Recent airport security breaches have resulted in some serious wet sneaker feelings for me.

I blogged about air mass-transit security issues on 27 December and 2 January.  I no longer work in air mass-transit.  However, their reality affects mine; so, I pay attention.  Airline security failures have resulted in enormous losses for private aviation in the past and I am concerned that they will again.

We all remember the September 11 attacks with sickening clarity.  Even typing the words, I find myself feeling nauseated.  At 9:30 AM that morning, the FAA issued a nationwide ground stop followed by instructions to airborne aircraft to land at the nearest airport.  On September 12, the ground stop was slowly lifted, allowing air carriers, both scheduled and unscheduled, back in the sky.  That same day, aviation insurance underwriters began canceling all War Risk coverage.  At 4:00 PM on September 14, the ground stop was lifted for general aviation flights operating under Instrument Flight Rules (IFR).  Although no general aviation aircraft were involved in the attacks, they were grounded for 78.5 hours.   War Risk coverage was eventually offered again at an increased rate.  In the case some of our aircraft, the rate increased by about 100%.  Many small operators closed their doors.

I’m sure I’m not the only person who saw a causal relationship there.  To be honest, I started this article with the angle of “air mass-transit security failure = loss of life and property = higher insurance premiums = business closures.” Recently, I spoke with our insurance agent, Tom Chappell of CS&A Insurance, who destroyed my theory with facts.  With 35 years of experience, Tom has forgotten more about aviation insurance than I’ll ever know.  Even before the attacks, he noted an aviation underwriting trend towards a hardening market.  The market was already moving towards to higher premiums.  The attacks just accelerated the process which was, in Tom’s words, “like hitting a slice into the wind – it just exacerbates the slice.”    But, insurance premiums weren’t the only costs that went through the roof- fuel prices also soared.  Adequately capitalized operators with good business plans had a tough time of it; but, under capitalized operators and those with poor business plans shut down.  It’s industrial evolution, I suppose: The survival of the fittest.  (Somehow this process doesn’t apply to air mass-transit, but Allen Howell addressed that on Friday.)  Time passed.  Fuel costs decreased to near pre-attack rates.  Aviation insurance  underwriters calmed down and reversed some of the drastic rate increases that were knee-jerk reactions to the attacks.  The market softened.  

The last 18 months have been very difficult for private aviation.  Charter operations and corporate flight departments have disappeared.  Many previously strong operations are foundering.  Extremists are exploiting gaps in security for air mass-transit and, according to Tom Chappell, the insurance market is beginning to harden again.  Enter the wet sneaker feeling.

Aviation as a whole is a fluid and volatile industry.  There are cycles of highs and lows that sometimes change with little warning.  The industry is vulnerable to outside changes over which it has little or no control – things like fuel costs, insurance, employee benefits, government policy and regulation.  Private aviation accidents and incidents have an inconsequential effect on air mass-transit.  However, in stark contrast, air mass-transit accidents and incidents can have catastrophic effects on private aviation.

I seriously doubt that any general aviation contingent will be invited to participate in the decision-making process concerning new airport security procedures, even though our livelihoods may depend on it.  So, until we effectively band together, we eat our Tums, write our legislators and live with wet sneakers.