Airlines and Risk

airlines

In less than an hour, I am off to the airport to pickup my daughter who is flying in for a visit from Wyoming where she attends college.  Since I was a young boy, I have been fascinated by airplanes and the entire notion of air travel.  At times, I considered a career as a pilot or perhaps some other management capacity within the industry.  Today, all of this has me thinking about the risks that are inherent in the airline business.

Being late to pickup my daughter is not an option, so this will be a brief, top-of-consciousness type of blog post.  As always, I welcome your comments to continue the conversation.

No one who lived through the horrors of the 9/11 attacks back in 2001 will ever forget the images of that day.  Airplanes used as weapons of mass destruction, with no regard for the lives on board or within the targets.  Aside from large public venues that attract crowds of people, there are few items of property with such significant risk for terrorism-related losses than commercial airplanes.  And yet, this is just one of many risks faced by the airline industry.

The missing Malaysian Airlines flight from several months ago, and the tragic landing accident of Asiana flight 214 one year ago both illustrate the risk of mishaps that have catastrophic effects on the affected passengers and their families.  Statistically speaking, these tragic airplane mishaps are rare and we’re all familiar with oft-cited fact that air travel is actually safer than highway travel.  Still, many people have a fear of flying primarily because of the horrors of these rare but tragic events.

The airlines face many other less dramatic risks such as less serious injuries to passengers who thump their head on airplane overhead bins and employees who are injured as they coordinate the massive logistical dance that takes place at the gates and on the ramps of airports everywhere daily.  And then there are all of those little carts, tractors, and trucks darting in and out between airplane gates that must avoid collisions and mishaps to person and property while still hustling to keep the airlines on schedule.

It’s not just property and liability risk either.  There are business and strategic risks associated with the hedging of fuel prices which is perhaps the most significant driver of airline profitability.  Brand/reputation risks can be affected by any number of factors, including the catastrophic occurrences such as those described above.

I’m sure that I’m just scratching the surface, and I have to get going to the airport to meet my daughter.  Let me know what you think about the risks associated with the airline industry.  My hat is off to airline and airport risk managers.

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