aviation audits

The value of Aviation Audits

The pursuit of safety has created new rules and regulations imposed by governments around the world. However, improvements in the safety record all start and stem from how an operation is managed.

Aviation Audits

Written By: Scott Liston and Bill YantissARGUS International, Inc.

April 12, 2011

The Need for an AuditAs private air travel continues to grow and gain popularity, so do the concerns for aviation safety. The demand for safety is not unreasonable; however, the requests have forced operators to have numerous audits performed to various standards causing economic problems for each operator. How did we get to this point in the aviation industry and how do we stop burdening operators with multiple audits without sacrificing safe and quality air travel? To answer these questions, we must first look back at the basics.

An audit is an evaluation of an organization, system, process or product relative to an accepted standard. Many are familiar with a financial audit, which is an established process, commonly performed by a qualified third party, to confirm the integrity of an organization’s accounting procedures and accuracy of financial reports. Aside from financial audits, one of the most commonly performed audits is the quality audit. A quality audit is performed to specifically verify conformance to set standards through a review of objective evidence. Many aircraft service providers operate under a comprehensive quality management system that may require an array of quality audits to:

• Verifytheexistenceofobjectiveevidenceshowingconformancetorequired processes

• Assesshowsuccessfullyestablishedprocesseshavebeenimplemented

• Judgetheeffectivenessofachievinganyandalldefinedtargetlevels

• Provideevidenceconcerningthereductionoreliminationofproblemareas

• Beahands-onmanagementtoolforachievingcontinualimprovementintheiroperation

ManyknowqualitymanagementsystemsastheyrelatetotheISO-9000standards.Intheaviationindustry,themanufacturingsideofthebusinessembracedtheideaofqualitymanagementsystems.However,itwasn’tuntilthe1990’swhenthevariousaircraftoperatingsegments began utilizing these types of quality management systems in an effort to create increased efficiencies, drive up customer satisfaction, improve employee morale and satisfaction, increase international awareness, enhance marketing messages and often times increase profitability.

Thebusinessaviationsector,definedhereinprimarilyasthoseoperationsutilizingturbine-poweredaircraftinanunscheduled,

4240AirportRd.Suite300,Cincinnati,OH45226//513.852.1010//[email protected]//www.argus.aero-2-

on-demandcommercialoperation,havelongsufferedfromnumerousauditsduetotheabsenceofan accepted global standard. It has become commonplace for aircraft operators to proactively seek out an audit, by a respected auditing firm, against a standard that has been developed over time with the participation of the industry. These audits should identify areas of improvement and provide some positive recognition for the operator. This recognition allows the operator to market their operation in a way that would differentiate them in a crowded and competitive landscape. Aside from this elective audit, many operators also undergo numerous additional audits, at the request of specific customers. The buyers of charter usually retain their own auditor to ensure that their specific requirements are being met, making that operator eligible to receive charter service requests.

Commercial business aircraft operators have long been concerned with the number of audits they must undergo.Auditsarefinanciallyexpensiveforabusinessandtakeemployeesawayfromperformingtheir normal tasks. In recent years, some industry organizations have attempted to improve this

situationwiththedevelopmentofanauditprogramthatwouldyieldrespectandbuy-infromthemarketplace.Unfortunately,thisonlymuddied the waters with the creation of yet another audit standard that some aircraft operators would have to endure.

Globalization of AviationThe business aviation industry has marked significant growth around the globe since the 1990's.WhatwasonceanindustrydominatedbyNorthAmericaandWesternEurope,isnowfilled with aircraft being sold and delivered to customers throughout the world including the developing markets of:

• TheMiddleEast

• SouthAmerica

• EasternEurope

• China

• India

• TheAfricanContinent

TheInternationalCivilAviationOrganization(ICAO)waspermanentlyestablishedin1947asameansto


secure international cooperation at the highest degrees of uniformity in regulations and standards, procedures, and organization regarding civil aviation matters. As civil aviation around the world changes andmatures,ICAOhasfacilitatedmuchofit.Eventheirmissionhasevolved over the years focusing on three strategic objectives:

1.Safety–Enhanceglobalcivilaviationsafety

2.Security–Enhanceglobalcivilaviationsecurity

3.EnvironmentalProtectionandSustainableDevelopmentof Air Transport – Foster harmonized and economically viable development of international civil aviation that does not unduly harm the environment

ICAO’s Safety objective has resulted in the responsibility to develop standards, recommended practices, procedures and guidance material related to the operation, certification and airworthiness of aircraft. One of the major safety initiatives in recent years is known as Integrated Safety Management. The ICAO Integrated Safety Management initiative is dedicated to the development and implementation of safety management principles, policies and related

activities. Such activities are intended to cover prescriptive as well as performance based safety oversight processes and tools. These processes and tools are implemented as part of an overall continuous

monitoring approach to safety management. An integrated safety management function will provide ICAO with a focused and consistent framework to guide strategic decisions to assure continuous safety improvements within the global air transportation system.

This initiative is rolling out in a large and visible way throughout all aspects of the international aviation community. Integrated Safety Management is now more commonly referred to as Safety

Management Systems (SMS) and ICAO has developed standards, practices, and guidance material for both the operational and regulatory side of this initiative. Although the ICAO compliance date for

commercialaircraftoperatorswasNovember2010,somecountriesaroundtheworldhaveimplementedSMS regulatory requirements while others have not. However, there is tremendous activity occurring in this

arena and it is believed that SMS will become a regulatory requirement around the world in the near future.

Business Aviation Integrated Safety Management


As the aviation community began to focus on safety initiatives, the business aviation operators needed their own standard that met their unique needs. The business aviation specific organization

International Business Aviation Council (IBAC) occupies a seat at the ICAO table and has been tasked with the responsibility of encouraging and promoting the development and implementation of SMS around the world for the business aviation community. IBAC, in cooperation with the business aviation industry, developed a standard entitled the International Standard for Business Aircraft Operations(IS-BAO).IS-BAOiscenteredaroundtheneedforIntegratedSystemManagementandwas introduced to the industry in May, 2002.

Asofmid-2011therehavebeennearly1,400businessaircraftoperatorswhohavetakenthefirststeptowardsIS-BAOcompliancebypurchasingtheIS-BAOTool-kit.Thetoolkitisdesignedtoassist

business aircraft operators with developing and implementing Safety Management Systems that meet theICAOStandardsandRecommendedPractices(SARPS).Manyflightdepartmentsimplementing

IS-BAOmaywishtoobtainaCertificateofRegistrationfromIBAC,thusdemonstratingcompliancewitharecognizedinternationalstandard.IS-BAORegistrationoccurswiththesuccessfulcompletionofanauditperformedbyanIS-BAOaccredited third party audit organization. The audit progresses in three distinct stages of registration for the operators, with each stage requiring the operators to demonstrate a more active and fully functioning SMS.

TheIS-BAOstandardwasdesignedforallbusinessaircraftoperatorsaroundtheworld,includingfullydevelopedanddevelopingaviationmarketsandoperatorsofallsizesandoperationalcomplexities.ItisanticipatedthatmanycountrieswillconsiderIS-BAOimplementation and registration to be one of several ways by which an operator can achieve compliance with current and eventual SMS regulatory requirements. Some countries, like Bermuda, have already announced this and many others have included similar language in their published SMS guidance materials.

IS-BAOisprovingtobeanacceptablewayofintroducingtheoperatingandregulatorycommunitiesaroundtheworldtotheconceptofSMS.Infact,IS-BAOregistrationshouldbeviewedasanexcellentglobalminimumstandardforbuyersofcommercialoperationsbeingflown on business aircraft.

Utilizing Charter ServicesIn the early days of commercial operations for turbine powered business aircraft, there were basically two ways by which an individual orcorporationcouldutilizetheseservices,1)Purchaseandoperatetheirownaircraft,or2)Arrangeforachartertripfromadulyauthorized service provider and pay on a trip by trip basis.

What has occurred over the years is the global development of these two options as well as additional possibilities coming in the form


of fractional aircraft ownership and card programs. Fractional ownership occurs when one purchases a portion of an entire aircraft and shares theexpensesandusagewithotherowners,whilecardprogramsareprepaid charter commitments between customers and charter brokers and operators whereby the customer is guaranteed certain service expectationsinexchangefortheircommitmentofdollarsand/orhours.Card programs are ultimately flights carried out under commercial regulations by certificated charter operators.

Duringthissametimeperiodmanyoftheprivatelyownedflightoperations, fractional programs, and charter operators have developed world-classsafetyandserviceprogramsfeaturinghighlytrainedflightcrew members, flying modern aircraft with advanced avionics systems, and customer entertainment/business packages. This widespread “raising of the bar” has forced commercial providers to emulate if they were to be successful competing for this same client base. Many flight departments, fractional companies, charter brokers and card companies have developed specific criteria requiring these same characteristics for any charter services utilized in support of their specific needs.

WhiletheIS-BAOstandardhasdoneanexcellentjobfocusingonoperationalSMSrequirementsfoundatthecoreofthestandard,thereisaneedforacharterstandardthatgoesaboveandbeyondtheIS-BAO.Thischarterstandardwoulddeterminethatnotonlytheoperationalrequirementsarebeingmetorexceeded,butthatotherrequirementsoftheentireoperationarebeingsatisfied.Thisincludeshigherpilotexperienceandtrainingminimums,safetyhistory,insurancedocumentationandmanyotherindustrybestpractices

relatedtotheoverallcustomerexperience,werebeingsatisfied.

Tomeetthisneed,ARGUSInternational,Inc.developedtheARGUSPlatinumStandardin2000.ThePlatinumStandardwascreatedfromtheinputofcharterbuyersandoperatorscarryingtherequirementsforextremelyhighlevelsofoperationalexcellenceaswellasthoseotherfactorsmostsoughtafterbytheexperiencedcharterconsumer.ARGUS’PlatinumstandardworksinconjunctionwithARGUS’proprietaryCharterEvaluationandQualification(CHEQ)program.CHEQnotonlyconsiderstheoutcomeofadetailedauditperformedagainstthePlatinumstandard,butitalsofactors in the accident and incident history of the operator, its flight crew and charter aircraft. The CHEQprogramadditionallyreceivesasteadystreamofinputfromchartercompaniesregardingtheir operation such as changes in pilot flight times, training accomplishments and certifications,


aircraft additions and deletions, and liability insurance documentation. The ARGUS Platinumstandardthereforeexceedstherequirementsofotherauditprograms,asitistheonlyonetoworkwithpastandon-goinginformation.Thisensuresthe“momentintime”perspectivedevelopedfromanon-siteauditremainsconsistentwiththeauditoutcome.Moreimportantly,ARGUSCHEQwillnotifythecharterbuyerwhencertainchanges have occurred with an operator that would not be consistent with maintaining a positive reflection of a particular operation or aircraft/flight crew assignment to a specific flight.

Confidence in the Audit: Auditor Selection, Certification, and StandardizationThe value of an audit report to a customer or civil aviation regulatory authority is based on two important factors: 1) The content of the audit standard includes both regulatory requirements and industry best practices, and 2) The rigor and consistency in which the audit was conducted. Simply stated, the users of the audit report must have absolute confidence in both the integrity of the standard, as well as the competency of the audit team that performed the audit.

Industry and regulatory acceptance of an audit report for any service provider is dependent upon a number of aspects:

• HighestPerformanceStandard:Theuseofacomprehensiveauditstandardappropriateforthespecificaviationsector

• AuditorSelection:Astringentauditorselectionandinitialtrainingprogram

• QualityControl:Anindependentreviewofeachauditreporttoensureadherencetoestablishedauditingstandardsandprotocols

• AuditorStandardization:Periodicassessmentandcritiqueofeachauditortovalidateauditorperformanceduringallphasesof the audit—audit planning through audit closure

ThefirstrequirementofacomprehensivestandardisachievedthroughthecombinedapplicationoftheIS-BAOandARGUSPlatinumstandards.IS-BAOwasdevelopedtoassesstheoverallhealthoftheorganization’smanagementsystemwithanemphasisonSafetyManagementasthecornerstoneofthestandard.Similarly,theARGUSPlatinumStandardinconjunction


withCHEQprovidesreal-timeassessmentoftheoperationalriskassociatedwitheachflight.IntegrationoftheIS-BAOandARGUSPlatinumStandardsintoasingleon-siteauditprovidesthecustomer and regulatory authority with an objective operational assessment.

The second factor for consideration is the careful screening of auditors to ensure they possess the personal traits to complement a strong skill base. To that end, auditor candidates must beethical,systematic,open-minded,mature,tactful,analytical,logical,discreetinmanaginginformation, and open to alternative ideas and methods. In addition to these personal traits,

auditorsareselectedonthebasisofpossessingageneralknowledgeofICAOAnnexesandStateregulatory requirements, quality and safety audit principles, procedures and techniques, and technical expertiseintheareasofflightoperationsoraircraftmaintenancemanagement.IS-BAOandARGUS’Platinumaccreditedauditorshaveextensiveoperationalandmanagementexperience,thusprovidingtheexpertiserequiredtomakecriticaljudgmentsontheoperationalhealthofanorganization.Followingselection,theseauditorsareprovidedbothinitialclassroomandon-sitetrainingtoensureaconsistentapplicationoftheauditstandardandpreparationofthefinalwrittenauditreport.Awell-trainedanddisciplinedauditorwillproduceconsistentandthoroughassessmentsasreflectedinafactualaudit report.

The third critical factor provided by these audit programs are the inherent high standards associated with report preparation and review.Thestructureandcontentofeachauditreportisbasedonyearsofoperationalexperience,anunderstandingofStateregulatoryrequirements,industrybestpractices,andtheuniqueneedsoftheenduser.Oncetheon-siteauditorscomplete

an audit report, each report undergoes at least two independent quality control reviews to ensure conformance to audit protocols and reportcontent.Ambiguitiesorerrorsareaddresseddirectlywiththeon-siteauditortoensuretheenduserisprovidedwithadetailed,useful, and accurate assessment.

The fourth and final factor of importance to all stakeholders is auditor recurrent training, checking, and standardization. Recurrent auditor training provides auditors with an update on interpretation of new standards, a review of potential audit report deficiencies, and reminders of best auditing practices. Auditor standardization provides the user with assurance that the audit

was thorough, objective, and consistent.


TheauditdivisionofARGUS,knownasARGUSPROS,hasdevelopedandimplementedabenchmark for a professional auditing firm utilizing all of the factors described above. The ARGUSPROSauditprogramisstrengthenedthroughtherequirementthatauditteamsare composed of two auditors who specialize in the areas of flight operations and aircraft maintenance.Duringtheon-sitephaseoftheaudit,eachauditorisdedicatedtoconductinga “deep dive” into these respective disciplines, thus enhancing the customer’s confidence that theauditisproperlyresourcedandthorough.Withmorethan1,000on-siteauditsperformedoverthelastdecade,ARGUSPROShasdefinedthestandardbywhichotherauditingfirmsaspire to obtain.

The Need for a Single AuditAuditsareavaluabletoolforcompaniesaroundtheworld.Organizationsneedandwanttostriveforexcellence;auditsprovidethefeedback for continuous improvement enabling them to reach their goals. However, with the growing aviation industry we see new audit standards being requested by charter buyers every day. This puts financial and employee stress on the flight departments as they try to keep up with the various requested standards.

With the development of IS-BAO combined with the ARGUS Platinum audit, operators can have two audits performed during one single visit. This

alleviates the need for multiple visit audits from auditing organizations and saves the operator a significant amount of time and money.

ARGUS International, Inc. (ARGUS) istheindustryleaderinprovidingspecializedaviationservicestocompaniesthatmanufacture,finance,operate,maintain, and market commercial and business aircraft, as well as providing products and services to end user consumers worldwide. ARGUS is the worldwideleaderinperformingon-sitesafetyauditsforcorporateflightdepartments,charteroperators,andcommercialairlines.KeyservicesincludeCharterEvaluation&Qualification(CHEQ)andCHEQPoint,ProfessionalResourcesInSystemManagement(PRISM),TRAQPakmarketintelligencedataservice, aircraft operating cost reports, market research, and aviation and travel consulting. ARGUS is headquartered in Cincinnati, OH, with additional officesinDenver,CO,Philadelphia,PA,andColumbus,OH.

4240 Airport Rd. Suite 300, Cincinnati, OH 45226 // 513.852.1010 // [email protected] // www.argus.aero