Thursday, September 2, 2010

The Cost of Non Compliance in Aviation

Aviation is a very regulated industry and regulatory authorities keep a close eye on how operators, repair agencies and manufacturers conduct their business.

The FAA has the capability under the law to levy fines from organisations that do not comply and this includes foreign organisations operating in the USA. Airlines in the USA are very aware of the cost of non compliance; just a few days ago AA was slapped with a USD 24.2 million fine for not handling an Airworthiness Directive on the MD80 two years ago. The FAA actions are not limited to fines but will follow the same course of action outlined below.

Airlines operating under different regulatory regimes tend to forget that their actions or usually inactions carry a cost, maybe not in the shape of a fine but it can be massive. The wrap on the knuckles is what everyone expects, but it may go way beyond that. .
  • It starts from the suspension of a license of a technician or a pilot, which may cause a hiccup in a schedule; or
  • The grounding of an aircraft or more or the withdrawal of equipment which really disrupts a daily schedule; or
  • The suspension of an Air Operator Certificate (AOC) or an Aircraft Maintenance Organisation (AMO) certificate for a period until rectifications are made; or
  • Ultimately the AOC or AMO is revoked.
The cost is massive and it goes up to the point of going out of business.

So the next time a request for manpower or for funding for maintenance or operations comes up, it should not be rejected or reduced out of hand, based on the direct cost, but take the time and run a risk assessment based on the cost of non compliance and then make up your mind.


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