Archive for the ‘Aviation Insurance’ Category:
Snow Collapses Hangar at Dulles
This has to be every FBO and aviation insurance carrier’s worst nightmare to deal with. This week at Dulles Airport in Washington D.C., a hangar storing several large cabin business jets collapsed due to the weight of the snow from the blizzard that hit the area over the weekend.
There could easily be $150 million worth of aircraft totaled or damaged to the point they will be out of service for a long time. The hangar, which was a fairly new structure, is worth probably $5 million itself.
Whose insurance covers this one? The aircraft owners or the owner of the hangar?
I have asked our insurance agent Tom Chappell to keep an eye on this and write on the issue of insurance coverages and how this possibly could play out. For those of us in the aviation services businesses it will be an eye opener as to the amount and scope of the insurance coverage we have.
What a mess!
Make sure this doesn’t happen to you: http://www.chappellsmith.com/
Fighting Terrorism with Social Currency?
(Author’s note: The following is meant to engage new ideas rather than promote any specific scheme or ideology)
Given the events of the last few months weeks, it’s time to for the aviation industry to get serious with Social Media. This article demonstrates how an alternate currency can be used to severely reduce or eliminate terrorist risk in commercial aviation. Think I’m kidding, read on.
Obviously an airline will not let you board an airplane if you don’t have the financial currency sufficient to buy ticket. Why should an airline let you board an airplane if you do not have social currency sufficient to fulfill your social obligations while in the air?
People with extreme social currency deficiencies are routinely stripped of their rights by a jury of peers and isolated from society for a period of time (where they would not board an airplane anyway). While there are many systems in place to manage the various degrees of social currency deficiency, none appear to be able to identify a terrorist without also violating the rights of non-terrorists.
Human Writes
However, many people are willing to share information about themselves to associates with whom an economic benefit is shared or exchanged. This happens a billion times per week on Linkedin, Facebook, and Twitter – why not among fellow passengers? After all everyone is already connected by six degrees.
What would a terrorist’s Facebook profile say about them? Do they have a lot of referrals on Linkedin? Do they post great work on Flikr? Is their community orchestra featured on My Space? Are their posts popular on twitter?
Should a social currency credit score become imperative to social transactions as the financial credit score is for financial transactions?
Banks and Insurance companies already rely on a highly invasive “Credit Score” to establish financial risk profile as a means of protecting themselves and their other clients. Why wouldn’t an airline use a social credit score to establish a social risk profile as a means of protecting themselves and the lives of their other clients?
Ruse and lose
Sure, the bad guys can adapt to social media as they have adapted to all other measures. The problem is that the greater the size and scope of their social media ruse, the more difficult it is to maintain the ruse. A threshold score could be set to nearly eliminate this possibility. Those folks can then simply opt into the full body scan.
The Paradigm Shift
As the saying goes, the attacker needs to be successful only once, while the defender needs to be successful every time. The concept of a Social media credit score flips this paradigm on it’s head. The attacker’s social credit score needs to be successful every time. The defender needs to be successful only once.
That Wet Sneaker Feeling
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.
Social Media and Business Aviation: What if?
Part 4 in a Series on Social Media and Business Aviation: Written In Collaboration with Jay Deragon
Over the past few weeks I have posted several articles on social media – the new method of communicating to the market. I am an admitted novice in the world of social media and technology, but my eyes are starting to open to the possibilities created when social technology and business aviation collide.
We have discussed the opportunity social media presents to fight the war the airlines have declared on general aviation by getting our message out in an unfiltered way. We have also discussed social media as a means to increase our visibility to the market as well as to communicate with that market in order to innovate and better meet its needs on its own terms. All of these are game changing strategies.
So now I want to ask some what ifs!
What if there was a social grid or network built for the purpose of becoming the e-marketplace for private and business aviation travel solutions? What if this social network allowed, encouraged and facilitated the market to come together to aggregate a demand that is currently outside of the supply that traditional channels of distribution make available to the market?
What if the market could then go to the suppliers of private aviation and request trips or routes of travel where individual travelers could buy seats, filling the aircraft, driving the price down? Maybe the price would still not be as low as mass transit airline travel, but still would be much lower than today’s pricing of private aircraft flights.
What if travelers could input their travel profiles into the social grid in such a way as to speak to the entire market and to form affinities around common travel patterns? Would travelers be willing to share their travel information with the market in a profile, sharing where they go, when and how often? Would travelers talk to each other about their travel needs if those conversations led to more new, innovative and efficient travel solutions than have ever existed before?
What if all air charter providers and small scheduled airlines (niche airlines) could input supply into the grid, including empty legs? What if on-demand charters were quoted instantly so that the market had real time visibility to the solutions they need? What if all of these suppliers could participate on a level playing field and in a system that costs the users only when a transaction takes place?
What if the other parts of the business travel supply chain were able to participate as well? Would the hotels, resorts, rental car and limousine services have an interest in participating in the grid?
What if private aviation operators could collaborate to create a bigger market? What if we woke up someday and realized that we’ve been monopolized by technology controlled by some organization that isn’t even in our business? What if we all created a new collective “social grid” in which the general market of travelers realized they could use our system rather than the old commercial system?
What if we could collectively reinvent ourselves as an industry with the aim of serving the larger market? What would be required? Who would agree to collaborate? Who would agree that if we don’t, someone else will? And we’ll all lose when we should have been leading all along?
If we could simply start to build a dialog around all of these questions what could we do? Should we do it? If not, then let’s not even try to answer these questions. Let’s keep doing what we’ve been doing. Einstein once said “insanity is doing the same thing over and over and expecting different results.” What happens if we all decide to be sane?
If you think we need to do something else then join me and invite others to join us in creating a new future where we can all win.
Who will jump into the dialog? Who will invite others to do so as well? Is there anyone out there?
Where are the answers to all of these “what ifs”? Could they be out there in the market of conversations that could create the new system that creates the answers?
The answers are out there in the minds of people wanting to create a new future. Are you one of them?