Your next airline flight: worth the risk?

Risk Management, April, 1995 by Vernon L. Grose

Public. Growing acceptance and stimulus for air travel, demand for long-distance transport (rapid, readily available), expectations (accident-free, on-time, economical), news media (accident coverage, exposes, news stories, documentaries), attitude (increasingly litigious, exploitation of unmet expectations) and expanding punitive damage awards.

This extensive "risk rubric" - a multitude of factors that are constantly evaluated and controlled for airline travel - should explain why those who are knowledgeable are convinced that its risk is extremely low.

Airline Risk Education

The public currently has no rational basis for estimating commercial airline risk, not having been exposed to this panoramic perspective. Thus, alarmists, naysayers and self-appointed experts promote their prejudice as precept. Risk managers, on the other hand, have a golden opportunity to apply their professional skills to this pressing problem.

First, risk shall be defined simply as "the magnitude of a loss times its likelihood," One's own death defines the maximum magnitude of loss. It is that risk that people are interested in knowing when they board a scheduled airline. Everyone recognizes that death is inevitable, but people still want to control its time, place and conditions. The public needs new insight and communication about risk that allows it to make informed, rational and timely decisions - balancing their subconscious intuition with the vast effort to control airline risk.

What is the first response given by both private and public officials after an airline accident? A statistical statement about that aircraft and the airline. True, the crash can be described as a probabilistic event. And many risk managers are actuaries well-versed in statistics.

But the public gains little comfort by learning that 2,500 Boeing 737's make 17,000 flights a day - one taking off every five seconds. Or that 737 accidents occur only once in two million flights. A one-in-a-million event can happen right now to you! When it is the pilot's time to die - it is also the passengers'. So when do passengers decide that the risk of flying is not worth it?

Research has shown that the average person will accept roughly 1,000 times as much risk voluntarily as he or she will involuntarily. Therefore, the root of passenger concern is not that commercial flying is perceived as a high risk event - but that any airline risk, however minuscule, is unacceptable because it is imposed on them involuntarily.

Is government regulation the answer to airline risk? If so, how much regulation is enough? What can regulators not do? When does regulation become part of the problem, instead of the answer?

The stakes are too high for passengers to blindly believe that airlines will reduce their profits voluntarily by investing in risk control. So legislation - and its offspring regulation - steps in to protect the public interest. But public expectation of a regulatory agency like the FAA is sometimes fraught with misconception. The citizenry often acts as though the FAA is the fountainhead of airline risk control. After a crash, their cry will be for more inspectors or tighter regulations.