safety2011 volaris enrique beltranena
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VolarisALTA Safety Summit
J une 2011
Investment in Safety
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The information ("Confidential Information") contained in this presentation is strictly confidential and is provided byControladora Vuela Compañía de Aviación, S.A.P.I de C.V., (d/b/a Volaris, the "Company"), to you solely for your referenceand may not be retransmitted or distributed to any other persons for anypurpose whatsoever. The Confidential Informationis subject to change without notice, its accuracy is not guaranteed, has not been independently verified and it may notcontain all material information concerning the Company. The Company, nor any of their respective directors makes anyrepresentation or warranty (express or implied) regarding, and assumes any responsibility or liability for, the accuracy orcompleteness of, or any errors or omissions in, any information or opinions contained herein. None of the Company, or anyof their respective directors, officers, employees, stockholders or affiliates nor any other person accepts any liability (innegligence, or otherwise) whatsoever for any loss howsoever arising from any use of this presentation or its contents orotherwise arising in connectiontherewith. No reliance may be placed for any purposes whatsoever on the information setforth in this presentationor on its completeness.
Disclaimer
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Flight Plan
• Fleet Size and Fleet Value
• Hull Rates and Liability Rates
• LATAM Operating Costs and Insurance Costs
Key airlines in LATAM
• Selectivity Increases
• Exposure change over prior year
• Rate change over prior year
• Pressures on underwriter's income
• Aviation Insurance Market overview
• Analysis and 2011 Year to Date
Aviation Insurance
Overview
The Investment inSafety
• Safety Management – Operational System
• Predictive, Proactive and Reactive
• Global Safety Initiatives – ICAO, IATA & FAA
• Common causes of Accidents in LATAM
• World Class Safety Profile
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Aviation Insurance Market Cycle
4Source: JLT
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Global Aviation Insurance Market Overview
Claims figures based on reported losses and reserves, with an attritional estimate.
Premium based on London Lead Prices.
Excluding Specific War Related Premium and Claims Source: JLT5
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Global Aviation Insurance Market Overview
Source: JLT6
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Global Aviation Insurance Market Overview
Source: JLT7
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Western: Built J et Hull Losses (per million sectors)
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Regional Safety Performance: 30 J une 2010
Source: IATA website
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Global Aviation Insurance Market Overview
A slow start
•As discussed, renewals are treated very differently, making it difficult to find atrend amongst a small sample
•So far in 2011, rates are looking soft
• This is largely driven by increased exposure and the largest renewal of
the year by far, the new BA/Iberia merger. The benefits of theirincreased size is gaining substantial buying power.
What next?
•Q4 2010 suggested we might be heading back towards a hardeningmarket
•A number of factors support this direction, but the renewals so far in 2011 arenot supporting this pattern.
•Poor risks will still have difficulty achieving favorable renewals but thoselarger risks with greater buying power and good loss records may keep themarket in check
2011 Year to date
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2010 -11 Hull Rates LATAM Analysis
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Summary of Hull Rates:
•Airlines: I picked the top 7 players in
LATAM with a total of approx. 657 aircraft
•Hull Premiums depend on:
•Average Fleet Value
•Average Number of Aircraft
•Fleet Age
Conclusions:
• The higher the fleet value the higher the
Charge per Aircraft, depending on fleet
types
•Fleet Age is a heavy driver for higher
rates
•Airlines with recent catastrophic events
have incremental hits that at the least
double their hull premium
•When within the same country/region the
hull rate % is similar for all carriers, but
watch out for governmental surveillance
and catastrophic events – they are
contagious
• The younger the airline the higher the rates:
experience and cero events may take you
to a better position
• Today, underwriters penalize this even
more than airlines that have had
catastrophic accidents/incidents
We all have to be smart about:•Negotiating our fleets•Preserving young fleets•Having good country-region surveillance•Improving our safety record
Source: JLT
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2010-11 Liability Rates LATAM Analysis
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Summary of Liability Rates:
•Airlines: I picked the top 7 players in
LATAM with a total of approx. 657 aircraft
•Liability Premiums depend on:
•Number of Passengers (Int’l)
•Number of Departures
•Avg. Number of Seats
Conclusions:
•In airlines with no catastrophic events:
• There is no correlation between
Number of Passengers vs. per
passenger cost
• There is no correlation between
Number of Departures vs. per
passenger cost
•Airlines with recent catastrophic events
have incremental hits to both Number of
Passengers and Number of Departures
•When within the same country/region the
hull rate % is similar for all carriers, but
watch out for governmental surveillance
and catastrophic events – they are
contagious
• The younger the airline the higher the rates:
experience and cero events may take you
to a better position
We all have to be smart about:•Having good country-region surveillance•Improving our safety record•Changing our mindset: bigger or greaterdoes not mean cheaper•It is always about safety
Source: JLT
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Flight Plan
• Fleet Size and Fleet Value
• Hull Rates and Liability Rates
• LATAM Operating Costs and Insurance Costs
Key airlines in LATAM
• Selectivity Increases
• Exposure change over prior year• Rate change over prior year
• Pressure on underwriter's income
• Aviation Insurance Market Overview
• Analysis and 2011 Year to Date
Aviation Insurance
Overview
The Investment inSafety
• Safety Management – Operational System
• Predictive, Proactive and Reactive
• Global Safety initiatives – ICAO, IATA & FAA
• Common Causes of Accidents in LATAM
• World Class Safety Profile
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LATAM Facts
• Total : 35+
Foreign Airlines
Operating in theRegion
• Total: 70 airlines
• Total with International Operations: 55 airlines
• Total IATA: 25 active members
• Total ALTA: 26 active members
LATAM Airlines
Major Airports • IATA-ALTA Airlines + Foreign Airlines operating in: 55 Airports
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Major Airports • Population in LATAM: 500 Million people
Source: JLT
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Flight Plan
• Fleet Size and Fleet Value
• Hull Rates and Liability Rates
• LATAM Operating Costs and Insurance Costs
Key airlines in LATAM
• Selectivity Increases
• Exposure change over prior year• Rate change over prior year
• Pressure on underwriter's income
• Aviation Insurance Market Overview
• Analysis and 2011 Year to Date
Aviation Insurance
Overview
The Investment inSafety
• Safety Management – Operational System
• Predictive, Proactive and Reactive
• Global Safety initiatives – ICAO, IATA & FAA
• Common Causes of Accidents in LATAM
• World Class Safety Profile
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Investment in Safety
FrameworkPrinciples
MeasuresProcesses
ImplementationDesign
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Safety Management Operational System
=
+
+
=
+
•Predict systems deficiencies before errorsoccur
•Identify and correct system´s deficiencies byanalysis of safety occurrences
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Investment in Safety:Predictive, Proactive, Reactive
Predictive Proactive Reactive
A business- like
management approach tothe Safety of Flight Operations
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ICAO: Safety Program Key Objectives
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RASG-PA
Flight Safety
and Human Factors
Aerodromes, Air Routes
and Ground Aids (AGA) section
Flight Safety (FLS) SectionFlight Safety Information
Exchange (FISX)
Aviation Medicine (MED) SectionIntegrated Safety
Management (ISM)
Source: ICAO website
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FAA: Safety Initiatives
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Aviation Safety Action Program
FAA’s major responsibilities:under the broad umbrella of safety
and efficiency we have several major roles:
Researching and developingthe National Airspace System
and civil aeronautics
Regulating civil aviation topromote safety
Encouraging and developingcivil aeronautics, includingnew aviation technology
Regulating U.S. commercialspace transportation
Developing and operatinga system of air traffic
control and navigation for
both civil and military aircraft
Developing and carrying outprograms to control aircraft noiseand other environmental effects
of civil aviation
Safety: The Foundation of
Everything We Do
Source: FAA website
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IATA: Six-Point Safety Program
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IATA represents, leads and serves the airline industry
The IATA Six-Point Safety Programis a comprehensive approach to
enhancing operational safety
Maintenance
Safety in Infrastructure
Safety in Data Managementand Analysis
Operations
Auditing
Safety Management System
Source: IATA website
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Eight Most Common Causes of Accidents in LATAM
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Ground Damage Undershooting
Runway Excursion Gear-up Landing/ Gear Collapse
Control Flight into
Terrain
Loss of Control
In-flight
In-flight Damage Hard Landing
68% of Hull losses happen in these phases
Source: IATA Safety report
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Governmental Investment Needs in LATAM
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Communications
• Radio coverage VHF/HF
• Radio communications
Infrastructure
• Runway markings
• Navigation aids
• Runway surface
ATS
• Standard phraseology
• Lack of Procedures(PBN/RNAV)
• ATC/ACC coordination
AIS
• NOTAM & AIP publications
• Flight Plan filing
Other
• Runway surface• Radar coverage
Source: IATA
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Top of descent
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Aviation Insurance
Key Airlines in LATAM
The investment in Safety Pressure onunderwriters'
income is
coming
Improve our
Government Agencies
and their capabili tiesto produce real
surveillance
Spend our money in a
smart way: on
operations and not on
insurance
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World Class Safety Performance Profile
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Integrated AirlineManagement
System (i-AMS)
RunwaySafety ProgramUse of
technology toenhance safety:
FOQA, AQD,STEADES
Controlled FlightInto Terrain (CFIT)
Program
IOSACertification
Line OperationsSafety Audit
(LOSA)
Foreign ObjectDamage (FOD)
Program
Crew ResourceManagement (CRM)
Program
Bird StrikeProgram and
ISAGO Program
Loss of Control In-flight(LOC) Program
Note: FOQA: Flight Operations Quality Assurance; AQD: Aviation Quality Database; STEADES: Safety Trend
Evaluation Analysis and Data Exchange System; IOSA: International Operational Safety Audit;ISAGO: IATA Safety Audit Program for Ground Operations
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The Volaris Way
Investment in Safety
•A stated commitment to safety is necessary!
• The commitment must be supported by
appropriate resources:
• Technology and Equipment,• Training and Expertise,•Policies and Systems
World Class Safety Profile
•
• The commitment must be supported by
appropriate resources:
•ICAO safety programs•FAA - DGAC compliance•IATA / ALTA initiatives•Industry best practices
Above the wing Belowthe wing
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•A stated commitment to a World ClassSafety Performance Profile!
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.
Thank you!
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