Hong Kong 2007 1

Simplifying the Business of

Integrated Airline Safety
Management Systems
David Mawdsley
Senior Safety Advisor IATA
Hong Kong – 16/17 October 2007
The Complexity of Aviation Safety Management
- Putting Ideas into Practice

Hong Kong 2007 2

 The Complexity of Aviation Safety Management –
Putting Ideas into Practice

Scope of Presentation
• IATA’s Safety Management Support System i.e. its Six Point Safety
Programme
• IATA’s Operational Safety Audit programme (IOSA)
• ICAO and the Global Aviation Safety Roadmap from SMS Viewpoint
• SMS towards integrated Airline Management Systems (iAMS)
implementation
• Questions and discussion

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 Aviation System Is Complex,
Industry and Governments Must Work Together

800+ airlines 200+ languages

1,350+ major
airports 200+ countries

21,000+ aircraft
150,000+ flight crew
(Western built)

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 Six Point Safety Plan
“IATA’s Safety Management Support System”

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 Safety Data Analysis

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 Safety Auditing

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 IOSA Programme
¸ Global programme, built on ICAO standards and
industry best practices;

¸ Internationally recognized and accepted evaluation

system implemented consistently

Goal :
¸ Improve Safety worldwide
¸ Reduce Number of audits

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 Where does IOSA fit?

STATES

AIRLINES

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 Audit Sharing Model

One Audit
per Airline
(24-month
Interval)

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 Audit Scope
¸ Organization & Management System

¸ Flight Operations

¸ Operational Control/Flight Dispatch

¸ Engineering & Maintenance

¸ Cabin Operations

¸ Ground Handling

¸ Cargo Operations

¸ Operational Security

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 What are the IOSA Audit Standards?
¸ Approximately 900 published operational standards and
recommended practices in the ISM E2 (up from 735 in E1)

¸ Focus: operational quality/safety management and oversight

¸ Applicable to audits only; not regulations

¸ Include requirements from ICAO and industry best practices

¸ Bottom line: A well managed airline will meet IOSA Standards

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 Audits Completed & Saved

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 IATA Board Decision
¸ IATA must become a Quality Association -
¸ Any airline wanting to join IATA must pass an IOSA audit first

¸ All existing Members must:

¸ Have committed to an IOSA audit by end 2006
¸ 6 IATA members did not meet this deadline

¸ Carry out their IOSA audit by end 2007

¸ Complete any corrective action and be Registered by end

2008

¸ Maintain IOSA Registration by being successfully audited

biennially

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 Benefits from IOSA - Airlines
¸ Capability for safer operations

¸ Improved internal efficiency

¸ Reduced numbers of audits

¸ Codeshare and wet-lease opportunities

¸ Reduced Insurance Premiums

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 Benefits from IOSA - States
¸ States can access IOSA Audit Reports
¸ enhance and focus their own oversight activities
¸ use IOSA in Foreign AOC and wet-lease determinations

¸ Some States are mandating IOSA

¸ Turkey, Chile, Egypt, Madagascar, and the Arab Civil Aviation
Commission
¸ Nigeria, Jordan, Tunis, Mexico, Hungary and others are actively planning

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 Summary of IATA Support For
Airline Safety Management Systems
¸ IATA supports SMS implementation through:
¸ Safety Data & Analysis Services
¸ IOSA Standards & Best Practices
¸ IATA Governance Committees play key role in
ensuring system is airline driven (OPC, Safety
Group and IRM) and information sharing.
¸ Leading cooperative SMS efforts between industry,
ICAO and regulators
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 ICAO and SMS
¸ ICAO calls for a systematic approach to
managing safety
¸ Providers are responsible for
establishing an SMS.
¸ States are responsible for the
acceptance and oversight of providers’
SMS.
¸ Guidance on safety management
systems is contained in the ICAO
Safety Management Manual (Doc
9859).
¸ IATA takes the Doc 9859 approach to
SMS.

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 The ICAO Global Aviation Safety Plan
Objectives:
1. Reduce the number of accidents and fatalities worldwide irrespective of the volumes
of air traffic;
2. Achieve a significant decrease in accident rates, particularly in regions where these
remain high; and
3. No single ICAO Region shall have an accident rate* more than twice the worldwide
rate by the end of 2010
* Based on a five year sliding average

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Global Aviation Safety Roadmap
 Global Aviation Safety Roadmap – the
ICAO Global Aviation Safety Plan
Contents:
• Sets out a rationale and describes a general approach, based on
metrics and risk measurement.
• Establishes 12 key focus areas
• Objectives are described for each focus area for near and mid-term
accomplishment.
• Emphasizes aviation safety enablers (measures already in progress)
in developing regions.

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 GASR’s 12 Focus Areas: “The Roads”
Focus Areas
¸ States
¸ Consistent implementation of international standards
¸ Consistent regulatory oversight
¸ No impediments to reporting errors/ incidents
¸ Effective incident and accident investigation
¸ Regions
¸ Consistent coordination of regional programmes
¸ Industry
¸ No impediments to reporting and analyzing errors/ incidents
¸ Consistent use of Safety Management Systems
¸ Consistent compliance with regulatory requirements
¸ Consistent adoption of industry best practices
¸ Alignment of global industry safety strategies
¸ Sufficient number of qualified personnel
¸ No gaps in use of technology to enhance safety

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 Developing a
Global Best
Practice Approach
NB. Global Aviation Safety Roadmap

now available on ICAO & IATA,website

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 Focus Area 7 Objectives
Focus Area 7 – Inconsistent use of safety management systems
(SMS)
• Objective 7a – ICAO SMS standards published. Confirm need for formal
(mandated) SMS across all sectors and disciplines of the industry.
• Objective 7b – Develop a plan for incorporation of SMS into audit process.
• Objective 7c – Develop audit processes to assess operation of SMS function
• Objective 7d – Implement review of SMS during audits.
• Objective 7e – Define interface points between industry focus areas and develop a
plan for SMS programme integration across all interfaces.

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 Best Practices: Objective 7 - SMS
Best Practices Metrics
BP 7a – Organizations within all sectors and disciplines of the aviation industry have their own a. Existence of organisation’s
formal SMS. SMS as per ICAO requirement.

BP 7b – Audit processes drive consistency in use of SMS both within and across industry sectors
and disciplines.
a. The ICAO USOAP audits implementation and application of SMS to drive consistency a. Modified USOAP
and application amongst states.
b. The IOSA process audits implementation and application of SMS to drive b. IOSA standards Manual 2nd
consistency within and across industry sectors and regions. edition Effective march 2007
c. Other recognized programs audit implementation and application of SMS to drive
consistency within and across industry sectors and regions. c. Tailored audit processes in
place

BP 7c – An organization’s SMS recognizes external interfaces and contains the necessary

procedures to manage them effectively.
a. Processes should be established within the SMS to ensure that regular a. Communication processes in
communications take place between different sectors and disciplines to address place
safety issues across the interface.
b. Procedures should be established within the SMS to ensure that risk assessment of b. Procedures in place
change takes place in an integrated manner.

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Maturity Model to Guide Gap Analysis
 Maturity Table: Focus Area 7 - SMS
Use of Safety Management Systems
Maturity Level Capability
Level 4 – Highly Evolved • States
o ICAO USOAP audit process covers the topic of SMS
o SMS is regulated according to ICAO provisions and industry best practices
o States and Regulatory authorities facilitate the sharing of SMS best practice as it evolves
• Industry
o Organizations within all sectors and disciplines of the aviation industry including suppliers of goods and
services that impact upon aviation safety have their own formal SMS
o Both internal and independent audits of the SMS take place
o All sectors and disciplines work together effectively in an integrated manner to manage risk across
boundaries.
o SMS best practice is shared across sectors as it evolves

Level 3 – Evolving – • States – National legislation/regulations require all sectors and disciplines to implement an SMS.
Changes in work • Industry – SMS implementation programs developed for sectors and disciplines not previously covered by
SMS requirements
Level 2 – Areas Identified • States – current ICAO SMS requirements are communicated to industry sectors/disciplines
for Improvement • Industry – SMS implemented in those sectors and disciplines for which it is currently mandated

Level 1 – Developing • States – Current ICAO SMS requirements not implemented and not communicated to the industry
• Industry – SMS Systems not implemented

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 Is your SMS this mature in Hong
Kong? Is there a GAP?
Maturity Level Capability
Level 4
– Highly Evolved • States
o ICAO USOAP audit process covers the topic of SMS
o SMS is regulated according to ICAO provisions and industry best practices
o States and Regulatory authorities facilitate the sharing of SMS best practice
as it evolves
• Industry
o Organizations within all sectors and disciplines of the aviation industry
including suppliers of goods and services that impact upon aviation safety
have their own formal SMS
o Both internal and independent audits of the SMS take place
o All sectors and disciplines work together effectively in an integrated manner
to manage risk across boundaries.
o SMS best practice is shared across sectors as it evolves

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 Introducing the “integrated”
Airline Management Systems Guide
¸ IATA Safety Group and its SMS task force
recognise complexity of current airline
organisations.

¸ Air Carrier organisation is composed of a

system of systems

¸ Hence IOSA and GASR requires

implementation of SMS for each operational
function

¸ Challenge more complex than introducing

SMS

¸ Numerous departments within each airline

organization whose activities must be closely
coordinated in order to realize the full potential
of an SMS.
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 Introducing “integrated” Airline
Management Systems
(integrated AMS) Guide

¸ Integrated-AMS (Corporate Governance)

¸ Enterprise Risk (ERM) System

¸ Safety Management System (SMS)

¸ Quality Management System (QMS)

¸ Security Management System (SEMS)

¸ Supplier Management System (SUMS)

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Executive Team - “integrated’’ AMS
Corporate Conceptual Diagram ‘Operational’
Governance
Business
Unit e.g.
Maintenance
Management
System
Culture
Culture

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 Some Airline Characteristics for
Senior Management to Understand
¸ Functional
¸ Includes Safety, Security, and Quality activities that are independent of operational functions
but support the whole enterprise.

¸ Organisational
¸ The SMS, QMS, ESMS, and SEMS are organisational in nature

¸ Cultural
¸ The cultural characteristics separates these four management systems from the other
systems.
¸ They are cultural in that each employee must demonstrate healthy attitudes, behaviours, and
self discipline that form the foundation for consistent personal performance.

¸ “Dimensions”.
¸ Several management systems within the iAMS are three dimensional i.e. they are functional,
organisational and cultural.

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 How Complex is an Airline?
¸ Multiple management systems
¸ At least 15 that support operations
¸ Dispersed operations
¸ Proportional with number of destinations
¸ May be 150 locations for large international carrier
¸ Many technical functions
¸ Licensed employee groups
¸ Diverse skills required
¸ Highly regulated--overlapping State jurisdiction
¸ Civil Aviation Authority (CAA)
¸ Authority for Aviation Security
¸ Occupational Safety & Health (OSH)
¸ Environmental Protection Agency (EPA)
¸ Securities & Exchange Commission (SEC)

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 What’s Our Challenge?

¸ ICAO & Civil Aviation Authorities say “what” to do—but not “how” to organize
the work!
¸ CAA’s take a functional approach

¸ So, what must we do?

¸ Understand the relationships between internal management systems – each airline
is different
¸ Organize required work activities
¸ Document “how” these systems operate
¸ Communicate to management team & employees

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 Airline Management Systems
Operational Systems Support Systems
¸ Flight ¸ Personnel
¸ Cabin ¸ Supplier
¸ Maintenance ¸ Financial
¸ Dispatch ¸ Marketing
¸ Ground Handling ¸ Communications
¸ Cargo ¸ Legal
¸ Documentation ¸ Other Systems

These Systems are Two-Dimensional

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 Operational Divisions are
Two Dimensional
¸ Organizational Dimension
¸ Leadership team & management staff
¸ Operational control and supervision
¸ Resource allocation—people, finance

¸ Functional Dimension
¸ Work process design and documentation
¸ Technical training
¸ Control of process & service quality

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 SMS / QMS / SEMS / ESMS
Three Dimensional Systems
¸ Organizational Vice President
¸ Corporate support structure Corporate Safety
Security
¸ Report to “Accountable Executive”
& Quality
¸ Functional Assurance
¸ Safety, Quality, Security, &
Environmental responsibilities
Managing Managing Managing Managing
¸ Cultural – Multiple Components Director Director Director Director
Safety Quality Security Environment
¸ Safety Culture
¸ Quality Culture
¸ Security Culture
¸ “Green” Culture

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 Four Trans-Organizational Systems
¸ Safety Management System (SMS)
¸ Organized approach to managing safety (ICAO)
¸ Tools: Flt Data Analysis, Safety Reports, Investigations
¸ Quality Management System (QMS)
¸ Organizational structure, responsibilities, processes, procedures, resources
¸ Tools: Auditing, Voluntary Disclosure, Systems Coaching
¸ Security Management System (SEMS)
¸ Organized approach to implement & manage security processes
¸ Tools: Security Reports, Investigations, Training
¸ Environmental Safety Management System (ESMS)
¸ Organized system to identify and manage environmental risks
¸ Tools: Auditing, Investigations, Training, Coaching

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 Risk Management - Two Levels
¸ Operational Risk Management
¸ A primary concern of State Civil Aviation Authority
¸ Majority of employees deal with operational risk
¸ SMS, SEMS, QMS, & ESMS are vehicles to identify, analyze, and resolve operational issues

¸ Enterprise Risk Management

¸ Operational
¸ Strategic
¸ Financial Usually does not
¸ Compliance involve State Civil
¸ Environmental
¸ Corporate Governance / ethics Aviation Authority
¸ Projects

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 Operational Risk Management
SMS / QMS
SEMS / ESMS Airline Operations
Maintenance Operations
Auditing Ground Handling
Internal Implement Plan
Departmental QC & Re-evaluate
Independent QA
People Reports
External Flight / Maintenance
Civil Aviation Dispatch / Cabin Data
Environment Ground Handling / Security FOQA/FDA/FDM
Security Field Investigations Ops Analysis
OSH Safety Statistics
IOSA
Operational Risk Analysis Board
Risk Analysis (Dashboard) Recommend Action
Output to ERM Everyone sees safety status Plan
model i.e. Input Management
into Enterprise Regulators
Employees / Unions
Risk Model

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 Operational Risk Management
Who are the Players?

¸ Safety, Security, Quality & Environmental Teams

¸ Collect and analyze data, consult, assess risk, interface with regulatory agencies
¸ Develop dashboards to communicate key levels of risk exposure

¸ Senior Leadership Team (Operations)

¸ Cascade risk management techniques throughout the operation
¸ Develop and implement interventions to manage risk - four Options: Accept, Share,
Mitigate, Transfer).
¸ Manage continuous improvement process

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 Enterprise Risk
Management

An IATA Perspective

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 Enterprise Risk Management
What does it really mean?
¸ Managing risk of the entire company

¸ An integrated approach . . . connecting the dots

¸ Also referred to as “Integrated Risk Management”

¸ Cross functional, not vertical approach

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 ERM - A Cross Functional Approach
¸ Minimizes exposure to risk

¸ Enables Corporate Officers to see the big picture

¸ Breaks down silos in the decision-making process

¸ Enables transition from “reactive” to “proactive” environment and culture

¸ Improves risk profile for insurance purposes

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 ERM - Why?
¸ Board has an obligation to manage risk

¸ Laws require it for publicly traded companies

¸ Australia
¸ United States
¸ Europe
¸ Canada
¸ Thailand
¸ UK

¸ In general: it is good governance

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 ERM - Senior Management
Requirements

¸ CEO and CFO required to state whether annual report

accurately reflects the company’s financial picture

¸ Cannot make this statement if you do not know what your

operational risk is

¸ Operational risk is a component of enterprise risk

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 ERM Organisational Chart
BOARD OF DIRECTORS

Risk Mgmt Audit Committee

Committee Operational
CEO Risk

DIR FINANCE DIR LEGAL DIR HR DIR SECURITY DIR IT DIR OPERATIONS DIR RISK MGMT

Terminal

Airside

Cargo

Systems/Organiza

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 An Example of ERM Operational
Risk

¸ Operational risk input is derived

from Operational Risk
assessment process

*Taken from COSO – Committee of Sponsoring

Organizations of the Treadway Commission

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 Next Steps
¸ Adopt the integrated - AMS approach
¸ Use ERM to accomplish it
¸ IATA has developed ERM guidance for CEOs

¸ Refine operational risk assessment tools

¸ Increase use of metrics & modeling
¸ Educate on the use of root cause analysis tools
¸ Transition from compliance to systems mentality

¸ Implement a Supplier Management System (SUMS)

¸ Framework for managing supplier products & services
¸ Two dimensional – Organizational & Functional

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 Next Steps
¸ Take a “big picture” view of risk

¸ Make sure you comply with corporate governance laws

¸ Create a risk management culture in every single employee

¸ Show employees how they fit into the “big picture”

¸ Know exactly what the impact of your operational risk is on overall financial
performance

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 Summary

ERM is essential because it will help you:

¸ Achieve an integrated – Airline Management System

¸ Improve efficiency
¸ Reduce operational cost, including insurance premiums
¸ Reduce exposure to risk
¸ Improve your bottom line

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 How will IATA Support iAMS
implementation?
¸ Launched at IATA Ops Forum in April 2007 (multidisciplinary
event)
¸ IATA training and workshops are launching iAMS.
¸ Together with ICAO/Governments/Regulators per GASR/GASP.
¸ Joint efforts with IATA regional offices / country managers.
¸ IATA Training & Development Institute has developed the SMS
training course (based on the ICAO SMS Manual for States) but has
moved forward into (iAMS).
¸ IATA integrated-Airline Managent System (integrated-AMS) Manual
for Air Transport Operations Edition 2007. (Order through the IATA
website).

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 Distribution of the “integrated” Airline
Management Systems
(integrated AMS) Guide for this
Conference)

¸ IATA has authorized special distribution

of 20 copies of the iAMS CD-ROM
toolkit for this conference – this will be
done on a one per “enterprise” basis.

¸ Additional copies can be ordered through

the IATA website
www.iata.org.whatwedo/safety_security/safety

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iAMS Implementation operational
management systems –

IOSA Standard excellent for specific

requirements of following two dimensional
systems:

¸ Flight Operations
¸ Aircraft Engineering and Maintenance
¸ Operational Control/Flight Dispatch
¸ Cabin Operations
¸ Ground Handling
¸ Cargo Operations

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 Integrated – iAMS Corporate
Governance Guidelines
¸ Senior management commitment to safety, security and quality
(policy)
¸ Functional organisational structure (organisation chart & senior
management job responsibilities)
¸ Function and authority of Safety, Quality and Security managers
¸ Enterprise Risk Management System
¸ Operational Risk Management System
¸ Communication responsibilities and tools
¸ Organisational documentation policy

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 Integrated – iAMS
Implementation Guidelines

1. Implementation of an integrated – AMS is a

straightforward process and easily co-ordinated by
the Chief Operating Officer or his designee per
Corporate Governance Guidelines.

2. CAA will require specific operational management

systems to be established and documented.

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 iAMS ImplementationTools
¸ Integrated - AMS (Corporate Governance)

¸ Enterprise Risk management (ERM) System

¸ Safety Management System (SMS).

¸ Quality Management System (QMS)

¸ Security Management System (SEMS)

¸ Supplier Management system (SUMS)

¸ Environment Safety Management System

(ESMS) – to be developed

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 A Phased Approach to iAMS Implementation

¸ A four Phased approach to iAMS implementation is proposed to

manage the workload of introduction.
¸ Build on the best but identify the gaps.
¸ Phase 1. Identify accountable people. Conduct gap analysis and
prepare implementation plan.
¸ Phase 2. Focus on training and documentation requirements.
¸ Phase 3. Implementation. Safety hazard identification and risk
management component. Proactive and predictive processes and
tools for the (iAMS).
¸ Phase 4. Operational Safety assurance. Development of Acceptable
levels of safety. Performance Indicators and targets. iAMS continuing
improvement measures and emergency response plan

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 ¸ Airline iAMS Implementation - Summary
¸ Prepare airline wide action plan. Share experience
with other airlines e.g. Air Canada and United airlines
currently implementing iAMS, but beware of
complexity.

¸ Look down the “Roads” of the ICAO Global aviation

Safety Plan and the Global Aviation Safety Roadmap
– SMS in particular.

¸ Establish and document in consultation with State

Civil Aviation Authority. Harmonize with Regulatory
Authority Safety Plan
e.g. UK CAA Safety Regulation Group.

¸ Follow IATA SMS/iAMS guidelines, phased approach

recommended.

¸ Resource and Implement, Implement, Implement

¸ And simplify the business of safety management!

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 IATA – Leading Governments, Authorities
and Airlines in Safety Initiatives
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 Questions
&
Discussion

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