CASE ANALYSIS 3
Case analysis three will be due on Thursday, September 26, at midnight. The topic of this case analysis should be related to Chapter 6 Aviation Insurance. It is essential that the subject matter of chapter six is apparent in your analysis. Once you have found an issue/problem related to Aviation Insurance, let Hamilton and Nilsson assist with your analysis.
Send your analysis to me as a Word document attached to an email message. Send it to me through Canvas.
You are limited to no more than four pages: The first page should be the Title page (page 1), the second and third pages should be the analysis (pages 2 and 3), and the fourth page should be the reference list (page 4).
Be sure to submit your analysis as a Word document.
I recommend three to five sentences for each section, with exception of section four, Alternative Actions. That typically requires more than five sentences. The table format that I provided is a very useful approach to alternative actions. Several students have used it with good success.
Chapter 6
Aviation Insurance
Chapter Six
Aviation Insurance
In law and economics, insurance is an essential component of risk management
Hedge against risks of uncertain loss
Equitable transfer of risk or loss,
From one entity to another,
In exchange for payment
Aviation Insurance
Determine insurance needs
Acquire appropriate coverage
Ensure insurance meets your needs
Does not set you up for failure
Changing circumstances: update coverage
Aviation Insurance
Fundamentals
Sales
Agents:
represent companies, and
receive commission on sales
Broker:
not bound to one company,
represents the buyer,
receives commission on sales
Aviation Insurance
Fundamentals
Insuring and Underwriting the Risk
Insurance Companies
In GA,
Most policies issued from a single insurance company
Covers entire risk
Aviation Insurance
Fundamentals
Insuring and Underwriting the Risk
Underwriters
Airlines spread the risk over several underwriters
Clearing house offers a “package” deal made up of several underwriters
Aviation Insurance
Fundamentals
Insuring and Underwriting the Risk
Aviation Managers- insurance company employee
Review applications
Decide whether customer is insurable
Determine price of coverage
Aviation Insurance
Fundamentals
Claims
Report immediately to your insurance company
Insurance adjuster will be assigned
Works for the insurance company
Investigates claims
Makes settlement offer
Aviation Insurance
Fundamentals
Principles of insurance
Spread the risk and/or minimize the risk
Insurance spreads the risk
Use several underwriters
Diversify coverages
Reinsurance, insurance for insurers
Aviation Insurance
Fundamentals
Principles of insurance
Insurance minimizes the risk
Selective coverage
Incentive for safe operations
Assist safety programs
Policies may be cancelled
Aviation Insurance
Coverage
Aircraft insurance
Liability coverage
Passengers, persons and property on the ground,
Other aircraft and their occupants
Does not cover crewmembers
Aviation Insurance
Coverage
Aircraft insurance
Policy limits
Single limit
Per person
Aviation Insurance
Coverage
Liability insurance
Single limit
$1M policy
Covers up to $1M
Total paid for all injuries
Aviation Insurance
Coverage
Liability insurance
Per person
$1M policy, total limit
Sublimit of $100,000
Per person, passenger
Aviation Insurance
Coverage
Aircraft insurance
Hull Coverage
May not include engines
All risks, operable aircraft
While not in flight, non-operable aircraft
While not in motion, non-operable aircraft
While rotors are in motion/not in motion (helicopters)
Aviation Insurance
Coverage
Aircraft insurance
Valuation
Stated value, the amount the insurance will pay
Careful consideration
Cost of a comparable aircraft
Re-evaluate on an annual basis
Aviation Insurance
Coverage
Aircraft insurance
Valuation
Current market value
Based upon aircraft market
Condition of the aircraft prior to an accident
Complicated, rarely used
Lenders require hull insurance
Aviation Insurance
Coverage
Purpose of use, flight operations covered
Pleasure and business
Personal, pleasure flying incidental to or in direct connection with a business
Excludes “for hire or compensation”
Does not cover any commercial operation
Aviation Insurance
Coverage
Purpose of use, flight operations covered
Industrial Aid
Personal and pleasure flying, as well as
Transportation of executives, employees, guest, and customers
Excluding any commercial operation
Aviation Insurance
Coverage
Purpose of use, flight operations covered
Commercial, excludes Instructional or Rental
Pleasure and business
Industrial aid
Transportation of passengers/cargo for hire
Does not include flight instruction/rental
Aviation Insurance
Coverage
Purpose of use, flight operations covered
Limited commercial
Pleasure and business
Industrial aid
Commercial flight instruction/Rental
Excludes carrying passengers/cargo for hire
Aviation Insurance
Coverage
Purpose of use, flight operations covered
Commercial
Full commercial
Every kind of operation
Excludes “special use”
Aviation Insurance
Coverage
Purpose of use, flight operations covered
Special use
Agriculture, operations requiring waiver,
Aerial firefighting, helicopter external load
Helicopter flight instruction
Banner towing
Fish spotting
Powerline/pipeline patrol
EMS
Aviation Insurance
Coverage
Pilot qualification
Do not allow unqualified pilots operate aircraft
Review insurance policy whenever a company change occurs
Logbooks should carefully record all flying time
Aviation Insurance
Coverage
Murphy’s Law: an accident will occur:
Before insurance is effective
After insurance has expired
Within a policy exclusion or endorsement
During a purpose that is not covered
When an unqualified pilot is in command
Aviation Insurance
Coverage
Endorsements and exclusions
Fine tune the policy
May require additional premiums
May be used by the insurer to deny coverage
Aviation Insurance
Coverage
Endorsements and exclusions
Lienholder’s interest endorsement
Loss payee=the bank
Breach of warranty endorsement
Ensures the lienholder is paid
Even if the owner-operator would not be paid due to circumstances of the loss
May require continued payment to insurance company
Aviation Insurance
Coverage
Endorsements and exclusions
Waiver of Subrogation endorsement
Allows insurance company to
Sue anyone other than the insured
That has contributed to the accident
Proximate cause
Aviation Insurance
Coverage
Endorsements and exclusions
War Risk Exclusion and Insurance
Relieves insurer from making restitution as a result of:
Aviation Insurance
Coverage
Endorsements and exclusions
FAR Violation Exclusion Clause
Operations in violation of an FAR
Excluded from coverage
Carte Blanc to insurance companies
“14 CFR §91.13-careless operation” is a catch-all
Avoid policies with this endorsement
Aviation Insurance
Coverage
Ordering the Policy
Agent/broker with authority to “bind” coverage
If so, a binder locks in your insurance
If not, your policy will undergo a review by the insurance company before it goes into effect
Aviation Insurance
Coverage
Reviewing the Policy
Sit down and read it, cover to cover
Verify you got what you paid for
Get clarification on anything you don’t understand
What will be covered
How much will be paid
Aviation Insurance
Coverage
Your policy is dynamic, things change:
Are special flight permits covered?
Geo-political, flights into foreign countries, riot zones, natural disasters
Warning of Policy Expiration, don’t let your policy lapse because you forgot
Aviation Insurance
Coverage
Unmanned Aircraft Insurance
Aircraft in the eyes of the law and insurers
Insurance companies are prepared to serve
sUAS may be covered through membership in Academy of Model Aeronautics, et al.
Some homeowner’s insurance covers UAS
For commercial UAS operations liability and hull insurance is available
Aviation Insurance
Coverage
Spacecraft Insurance
Required by Commercial Space Launch Act 14 CFR §440.9
Cover injuries to persons or property on the ground
U.S. Government indemnifies launch operations
Provides up to $1.5 Billion for claims above and beyond the amount covered by insurance
Aviation Insurance
Coverage
Airport Liability Insurance
Premises Liability covers:
Injuries to nonemployees at your place of business
Slips, trips, and falls
Hangarkeeper’s Liability covers:
Damage to aircraft while they are in your care
Flight check, ground handling, etc.
Aviation Insurance
Coverage
Product Liability-maintenance performed
Repair, overhaul, paint, inspections
Supplemental Type Certificates (STCs)
Supplies/parts
Petroleum, oils, lubricants
Products and completed operations
Aviation Insurance
Coverage
Aircraft Title Insurance
Protects against discrepancies in the title
Defects that were not discovered in title search
Typical in sale/purchase of business aircraft
Aviation Insurance
Coverage
Prepaid Legal Services/Lost License Insurance
Memberships include or offer legal services
Covers part of legal expenses
Pay part of monetary fines
Provides income during suspension/revocation
Cost of learning another trade
Aviation Insurance
Coverage
Excess liability insurance
Purchase enough insurance to cover worst case scenario
Excessive cost may require supplemental coverage
Applied after all other liability policies are exhausted
Aspect of Risk Management
Aviation Insurance
Claims
Duties of the Insured to insurance companies
Pay premiums on time
Truthful in all circumstances
Cooperative
Aviation Insurance
Claims
Insurance Companies duties for liability claims
Indemnify (compensation/cover) the insured
Court defense (except negligent or strictly liable)
Pay resulting judgements
Settle the claim
Aviation Insurance
Claims
Insurance Companies duties for hull damage
Pay for repairs
Pay off the aircraft
Pay for replacement or some part of it
Insurance companies may take possession of the wreckage
Aviation Insurance
Claims
Investigation and determination of coverage
Insurance adjuster
Purpose of use
Pilot qualifications, endorsements, exclusions, et al.
Facts and circumstances of the accident
Determine if the claim is covered
Aviation Insurance
Claims
Subrogation
An insurance company pays a claim, and
Assumes the role of the insured, then
Has the right to pursue claims, against
Any person the insured may have a claim against
Waiver of subrogation endorsement may protect those that rent aircraft
Aviation Insurance
Uninsured Risks
Skydiving
Hot Air Balloon Bungee Jumping
Exculpatory contracts may offer some relief
However, why tempt nature
Could be time to clean the gene pool
Running head: CASE ANALYSIS EXAMPLE
1
CASE ANALYSIS EXAMPLE
2
Case Analysis
Robust Airline Schedule Planning
Your Name
Section Number
College of Aeronautics
Florida Institute of Technology
Submitted in partial fulfillment of the requirements of
AVM 4302 Aviation Law
Introduction
The construction of timetables for an airline is composed of aircraft and crew. Crew cost is the biggest controllable expenditure for an airline and effective crew assignment is a very important aspect of planning (Gopalakrishnan & Johnson, 2005). Wensveen (2016) defines: “airline scheduling as the art of designing systemwide [sic] flight patterns that provide optimum public service, in both quantity and quality, consistent with the financial health of the carrier” (p. 388). An airline’s decision to offer certain flights is dependent on market demand forecasts, available aircraft operating characteristics, available work force, regulations, and the behavior of competing airlines (Bazargan, 2010, p. 31).
Problem
The problem is that the airline scheduling process in its entirety is very complex. Flight scheduling is the starting point for all other airline planning and operations (Bazargan, 2010, p. 31). Airlines are faced with a number of issues that they have no control over (e.g., illness, weather, volcanoes, earthquakes, etc.). Adding to the complexity are human factors, cultural issues, political issues, and more. Vast numbers of rules and regulations associated with airports, aircraft, and flight crews combined with the global expanse of air traffic networks has a direct impact on the scheduling process.
Significance of the Problem
When a problem arises that has an impact on the schedule that impact can ripple throughout the airline’s network (Hamilton & Nilsson, 2010a). In some cases, a delay at a hub airport can have an impact on travelers around the globe. In 2006, the North American airline industry experienced a total of 116.5 million minutes of delay, totaling a $7.7 billion increase in operating costs. Passengers are typically unsympathetic to delays, as far as a passenger is concerned it is the airline’s fault. With advancements in internet ticketing, travelers readily avoid an airline with poor on-time performance.
Development of Alternative Actions
Alternative Action 1
Airline and railway modes of transportation should form an intermodal alliance (Iatrou & Oretti, 2007, p. 88). This would enable travelers an option to continue with their travel plans.
Advantages. Access to airports through dedicated public transport could reduce problems associated with road traffic delays around airports. Iatrou and Oretti (2007) suggest an intermodal alliance near airports for quicker access to and from the airport (p. 89).
Disadvantages. The absence of interconnectivity, where air and rail industries have different infrastructures without common rules and facilities (Iatrou & Oretti, 2007, p. 89). High-speed rail links to airports are not profitable in the short-term.
Alternative Action 2
Extend flight schedules by extra minutes to boost on-time performance (McCartney, 2012).
Advantages. Passengers would spend less time on aircraft (McCartney, 2012). Airlines will have fewer planes sitting at terminal gates awaiting connecting passengers.
Disadvantages. An aircraft departing late for a flight will run late for the rest of its flight pattern for that day, and delays can grow exponentially (McCartney, 2012). A flight off the gate late may find a long line of planes waiting to take off or may find that the gate is no longer available at its destination resulting in an extended wait period (McCartney, 2012). The alternative actions may be presented in table form (see Table 1).
Recommendation
Sequential airline schedule planning of aircraft routing and flight crew-pairing decisions are made simultaneously to minimize flight crew and aircraft operating costs (Hamilton & Nilsson, 2010b). The advantage would be quicker turnaround time increasing aircraft utilization. The disadvantage would be flight crews and passengers with less time to connect between their flight legs (Wensveen, 2016). 3
References
Bazargan, M. (2010). Flight scheduling. In Airline operations and scheduling (2nd ed., pp. 31-40). Burlington, VT: Ashgate.
Gopalakrishnan, B., & Johnson, E. L. (2005). Airline crew scheduling: State-of-the-art. Annals of Operations Research, 140(1), 305-305. doi: 10.1007/s10479-005-3975-3
Hamilton, J. S., & Nilsson, S. (2020a). Practical aviation & aerospace law (7th ed.). Newcastle, WA: Aviation Supplies & Academics.
Hamilton, J. S., & Nilsson, S. (2020b). Practical aviation & aerospace law: Workbook (7th ed.). Newcastle, WA: Aviation Supplies & Academics.
Iatrou, K., & Oretti, M. (2007). Once rivals, now partners; how? In Airline choices for the future: From alliances to mergers (pp. 59-90). Burlington, VT: Ashgate.
McCartney, S. (2012, June 14). The middle seat: Reality check: Why airlines are shrinking flight times. Wall Street Journal. Retrieved from the Embry-Riddle Aeronautical University, Hunt Library website:
http://search.proquest.com.ezproxy.libproxy.db.erau.edu/docview/1020180498?accountid=27203
Wensveen, J. G. (2016). Principles of airline scheduling. In Air transportation: A management perspective (8th ed., pp. 387-416). Burlington, VT: Ashgate.
Expectations of the Case Analysis Assignment
The introduction should set the stage, establish the environment, set out the nature of the problem. You should consider that you are establishing the context within which your problem exists. You must have in-text citation to substantiate your introduction.
The case analysis assignment requires you to identify and isolate just one problem. This problem should be well developed, where did it come from, why is it able to exist? What conditions and/or factors caused it or contributed to it? Your problem statement is the common thread that you weave throughout your analysis, everything must be connected to your problem. You must have in-text citation to substantiate your problem statement.
The significance of the problem is the result of the problem not being solved. You need to indicate what will happen if your problem is not addressed or fixed. This is your opportunity to tell management they need to do dedicate appropriate resources to fix the problem. You need in-text citation to substantiate the significance of your problem.
Alternative actions are corrective actions based upon the textbook and/or magazine/journal article and/or other sources you are using. You need two alternative actions, each much have reason or rationale, and two advantages and two disadvantages. Here again in-text citation must be used to substantiate your alternative courses of action.
The recommendation must be separate and distinctly different than either alternative action. You should consider what you would do to correct the problem if you had unlimited resources. The recommendation must have reason or rationale, one advantage and one disadvantage. And, in-text citation must be used to substantiate your recommendation.
A reference list (in accordance with the Publication Manual of the American Psychological Association) must be compiled based solely upon the sources you used to substantiate your analyses.
Table 1
Matrix Format for Alternative Actions
Alternative Actions
Rationale
Advantages
Disadvantages
1. Meet existing
Existing
a. Reduces cost.
a. Additional
requirements as
requirements meet
b. No layoffs.
oversight.
Specified in Jacobs and
or exceed FAA
b. Government
Chase (2011).
safety standards.
waste.
2. Change existing
Safety can always be
a. Reflects a
a. Takes a lot
requirement.
improved upon.
positive approach
time to make
to safety.
changes.
b. Projects a
b. Results are
“safety first”
readily
philosophy.
available.
Note. This example is intended to demonstrate how a table can be used. This example includes an in-text and proper APA table formatting.