How long it takes to pay off accident costs

* From Safety Management Systems in a Civil Environment, AHS International Helicopter Safety Symposium, September 26, 2005.

primarily reactive. As envisioned byTransport Canada, SMS is intendedto take safety management to thenext level by providing an organiza-tion with the ability to anticipate andaddress safety issues before they leadto an incident or accident.

What Is Required for an SMSprogram?

To its credit, Transport Canadaconsistently emphasizes the factthat it recognizes that aviationorganizations vary tremendously insize, type of operation, and com-plexity, and that a "one-size-fits-all"approach to safety management sys-tems will not work. It envisions eachorganization developing its own cus-tomized SMS to suit its operation.

However, Transport Canada alsoinsists there are certain componentsthat must be included in any SMS,including:a Designation of an accountableexecutive, b A safety policy which demon-strates senior management's com-mitment to safety, establishes safetyas a core value, sets safety objec-tives, establishes responsibility andaccountability for the safety pro-gram, and includes a non-punitivereporting policy;c A process for planning and meas-uring safety performance,d A process for identifying hazards,and evaluating and managing risks,

4 WINTER 2005-2006

hroughout the industrial worldin general, and in the aviation

industry specifically, much attentionhas been focused in recent years onthe concept of safety managementsystems (SMS). Australia has imple-mented an SMS program for civilaviation, the U.S. Federal AviationAdministration has incorporatedSMS into the operations of its AirTraffic Organization and there is agreat deal of activity on SMS in theUnited Kingdom, the InternationalCivil Aviation Organization andthroughout Europe. Right now,however, the SMS spotlight is focus-ing on Canada as it rolls out its ownmajor SMS initiative for its civil avi-ation industry.

Transport Canada is in theprocess of establishing new regula-tions, which will require allCanadian-regulated civil aviationorganizations to develop and utilizesafety management systems withintheir operations.

What is a Safety ManagementSystem?

The term "safety management sys-tems" can mean a lot of differentthings to different people. Accordingto Transport Canada, "A safety man-agement system is a businesslikeapproach to safety. It is a systematic,explicit, and comprehensive processfor managing safety risks." An SMS isdesigned to make safety part of theorganization's culture; the way peopledo their jobs. SMS takes the tradi-tional safety management program astep further by integrating safety intothe entire fabric of the organizationand making it part of the normalbusiness management process.

The theory behind safety manage-ment systems is based on the con-cept of "organizational accidents"that emerged from research in the1990s indicating that even thoughmost accidents are a result ofhuman factors, the conditions thatallowed those human errors to occur

are generally under the control ofthe organization rather than theindividuals involved.

The goal of a systems approach tosafety is to further reduce accidentsand incidents by making safety"behavior driven," and to develop anenvironment where all employeesare involved in the safety process.By making it clear that the top exec-utives are committed to safety, byarticulating clear safety goals andsafety responsibilities for all staffpersonnel, and by ensuring that allemployees are trained to do theirjob in a safe manner and proactivelylook for potential problems, a com-pany can improve its defenses andbuild an organization that is moreresistant to human error.

SMS is also intended to be a proac-tive process. Traditionally, aviationsafety has been reactive. When some-thing was broken, it was fixed. If therewas an accident, a change was madeto prevent the accident from reoccur-ring. In the 1980s, the aviation indus-try moved to a team-driven approachto safety. This approach continued toreduce the accident rate by creatingsafety awareness through programssuch as Crew Resource Managementand human factors training. Doc-umented SOPs allowed the training ofconsistent, repeatable procedures withthe emphasis on individuals acting asa team. This approach continued toimprove aviation safety, but was still

FLIGHT OPS by David York

Transport Canada Rolls Out Safety Management Systems Plan For Civil Aviation

T1% 2% 3%

$1,000 $100,000 $50,000 $33,000

$10,000 $1,000,000 $500,000 $333,000

$50,000 $5,000,000 $2,500,000 $1,667,000

$100,000 $10,000,000 $5,000,000 $3,333,000

Yearly Incident

Costs Profit Margin

SalesRequired toCoverLosses

e A process for ensuring that per-sonnel are trained and competent toperform their duties,f A process for proactive internalreporting and analysis of hazards,incidents, and accidents, and fortaking corrective measures to pre-vent their recurrence;g Documentation of all the safetymanagement system processes, anda process for ensuring that person-nel are aware of their responsibili-ties in regards to them;h A process for conducting reviewsor audits of the safety managementsystem process on a regular basis.

Phased In ImplementationTransport Canada's schedule calls

for phasing in the SMS regulationsfor different segments of the industryover the next two years. Regulationshave already been published forscheduled carriers and largeapproved maintenance organizations.The SMS regulations for most heli-copter operations are scheduled to bepublished in March 2007.

After regulations are publishedfor each sector, there will be aphased, three-year implementationperiod. Within three months, certifi-cate holders must apply for initialcertification, providing TransportCanada the name of the account-able executive, and the personresponsible for implementing SMS,a statement of commitment toimplementing the plan (signed bythe accountable executive), and animplementation plan. At one andtwo year intervals after the regula-tions are published, certificate hold-ers must demonstrate specificprogress, and by the third year, allrequired SMS components must bein place and running.

Alex Holliday, Safety Officer forAlpine Helicopters and member ofthe HAI Safety Committee, hasbeen impressed with the wayTransport Canada has been prepar-ing for implementation of the newrules. "Transport Canada has beenactively consulting with theHelicopter Association of Canadaand working closely with small oper-ators and maintenance organiza-tions to make sure the regulationsare workable. If they pay attentionto what they're hearing from the

6 WINTER 2005-2006

operators, it should be a good plan."Some 16 small operators across

Canada are participating in whatcould be characterized as a pilotprogram to determine what, if any,problems small organizations mightencounter complying with the regu-lations that are now in force for thescheduled carriers. These organiza-tions have volunteered to moveahead and implement SMS in theiroperations ahead of schedule to seeif modifications in the regulations,or the guidance material, or theimplementation time-lines might benecessary before the final regula-tions for smaller organizations offi-cially go into force.

What's In It For Operators? Transport Canada insists that the

costs of implementing a safety man-agement systems program need notbe excessive, and that much of what

is being required by the new regu-lations is probably already in placein many aviation organizations.The goal of SMS is not to replaceeverything aviation professionalsare already doing in terms of safe-ty, it is simply designed to makethe process more systematic, andintegrate it more thoroughly in themanagement process. TransportCanada suggests that many compa-nies are already doing as much as85 percent of what will be requiredunder its safety management sys-tems regulations. That is why oneof the first steps in the process isfor each company to perform a"gap analysis" to determine justwhat changes need to be made inexisting safety programs to meetthe new standards.

Transport Canada also empha-sizes that the costs of implementingSMS should be offset or exceeded

This does not even take into account the indirect costs of an accident. If youadd on the loss of business and reputation, legal fees and damage claims,medical costs not covered by workplace insurance, and the costs of lost useof equipment, time lost by injured personnel or replacement workers,increased insurance premiums, aircraft recovery and clean-up or fines, thecost of an accident really soars. According to Transport Canada, "[accident ]costs can be 5 or 6 times the insurable claim." It goes on to say, "As you cansee, the costs of implementing and maintaining a safety management sys-tem becomes less significant and well worth the investment when contrastedwith the cost of doing nothing."

Once you incur the costs of an accident, it takes a while to pay them off.

* From SMS for Small Aviation Operations

Direct Costs of an Accident*

Claim

Forced Landing $150,000 $300,000 $900,000l Aircraft Destroyed

Damage to propeller $20,000 $30,000 $150,000from contact with object on groundl Overhaul propeller and

engine tear downl Sudden Stoppage inspection

Hanger Rash $5,000 $10,000 $35,000l Replacement of rudder

or rotorblade

Flight Cancellation $500-1,400 $3-5,000 $8-10,000l Cost per day

Insurable Portion of Claim

Flight TrainingOperation

Fixed Wing AirTaxi Operation

Helicopter Air Taxi

7WINTER 2005-2006

by gains in efficiency, and reduc-tions in the costs of accidents andincidents. It points to the fact that,by implementing SMS, Air Transathas reduced irregular operatingcosts 72 percent, saving over $1million a month. Moncton FlightCollege has saved $22,000, andConair has reduced occupationalhealth and safety costs by some$140,000 a year ($1000 per eachemployee). An effective safetymanagement system could alsoreduce the potential for lawsuitsand fines, by providing a companythe ability to demonstrate "due dili-gence" related to unexpected lossor accidents or compliance withworkplace safety regulations.

In the introduction to its publica-tion Safety Mangement Systems forSmall Aviation Operations,Transport Canada illustrates howsafety makes economic sense, andhow costly a single accident or inci-dent can be.

HAI certainly agrees thatimproved safety makes sense, not just

David York is vice president ofoperations for HAI.

in terms of economics, but on manyother grounds as well. Our associationhas long advocated voluntary imple-mentation of many of the compo-nents included in Canada's SMS ini-tiative. In fact, the HAI SafetyCommittee's Platinum Program ofSafety, established four years ago, is asafety management system. It has def-initely proven that a strong leadershipcommitment combined with a system-atic approach to safety can make areal difference. HAI has also been aleader in the development of toolsdesigned to improve hazard and inci-dent reporting, and information shar-ing, such as its MMIR program andits new Incident Reporting Module.So, all of us here at HAI will bewatching the developments in Canadawith considerable interest asTransport Canada continues to rollout its version of safety managementsystems.

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