safety2011 volaris enrique beltranena

7/30/2019 SAFETY2011 Volaris Enrique Beltranena

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VolarisALTA Safety Summit

J une 2011

Investment in Safety



The information ("Confidential Information") contained in this presentation is strictly confidential and is provided byControladora Vuela Compañía de Aviación, S.A.P.I de C.V., (d/b/a Volaris, the "Company"), to you solely for your referenceand may not be retransmitted or distributed to any other persons for anypurpose whatsoever. The Confidential Informationis subject to change without notice, its accuracy is not guaranteed, has not been independently verified and it may notcontain all material information concerning the Company. The Company, nor any of their respective directors makes anyrepresentation or warranty (express or implied) regarding, and assumes any responsibility or liability for, the accuracy orcompleteness of, or any errors or omissions in, any information or opinions contained herein. None of the Company, or anyof their respective directors, officers, employees, stockholders or affiliates nor any other person accepts any liability (innegligence, or otherwise) whatsoever for any loss howsoever arising from any use of this presentation or its contents orotherwise arising in connectiontherewith. No reliance may be placed for any purposes whatsoever on the information setforth in this presentationor on its completeness.

Disclaimer

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Flight Plan

• Fleet Size and Fleet Value

• Hull Rates and Liability Rates

• LATAM Operating Costs and Insurance Costs

Key airlines in LATAM

• Selectivity Increases

• Exposure change over prior year

• Rate change over prior year

• Pressures on underwriter's income

• Aviation Insurance Market overview

• Analysis and 2011 Year to Date

Aviation Insurance

Overview

The Investment inSafety

• Safety Management – Operational System

• Predictive, Proactive and Reactive

• Global Safety Initiatives – ICAO, IATA & FAA

• Common causes of Accidents in LATAM

• World Class Safety Profile

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Aviation Insurance Market Cycle

4Source: JLT



Global Aviation Insurance Market Overview

Claims figures based on reported losses and reserves, with an attritional estimate.

Premium based on London Lead Prices.

Excluding Specific War Related Premium and Claims Source: JLT5




Source: JLT6




Source: JLT7



Western: Built J et Hull Losses (per million sectors)

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Regional Safety Performance: 30 J une 2010

Source: IATA website




A slow start

•As discussed, renewals are treated very differently, making it difficult to find atrend amongst a small sample

•So far in 2011, rates are looking soft

• This is largely driven by increased exposure and the largest renewal of

the year by far, the new BA/Iberia merger. The benefits of theirincreased size is gaining substantial buying power.

What next?

•Q4 2010 suggested we might be heading back towards a hardeningmarket

•A number of factors support this direction, but the renewals so far in 2011 arenot supporting this pattern.

•Poor risks will still have difficulty achieving favorable renewals but thoselarger risks with greater buying power and good loss records may keep themarket in check

2011 Year to date

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2010 -11 Hull Rates LATAM Analysis

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Summary of Hull Rates:

•Airlines: I picked the top 7 players in

LATAM with a total of approx. 657 aircraft

•Hull Premiums depend on:

•Average Fleet Value

•Average Number of Aircraft

•Fleet Age

Conclusions:

• The higher the fleet value the higher the

Charge per Aircraft, depending on fleet

types

•Fleet Age is a heavy driver for higher

rates

•Airlines with recent catastrophic events

have incremental hits that at the least

double their hull premium

•When within the same country/region the

hull rate % is similar for all carriers, but

watch out for governmental surveillance

and catastrophic events – they are

contagious

• The younger the airline the higher the rates:

experience and cero events may take you

to a better position

• Today, underwriters penalize this even

more than airlines that have had

catastrophic accidents/incidents

We all have to be smart about:•Negotiating our fleets•Preserving young fleets•Having good country-region surveillance•Improving our safety record

Source: JLT



2010-11 Liability Rates LATAM Analysis

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Summary of Liability Rates:

•Airlines: I picked the top 7 players in

LATAM with a total of approx. 657 aircraft

•Liability Premiums depend on:

•Number of Passengers (Int’l)

•Number of Departures

•Avg. Number of Seats

Conclusions:

•In airlines with no catastrophic events:

• There is no correlation between

Number of Passengers vs. per

passenger cost

• There is no correlation between

Number of Departures vs. per

passenger cost

•Airlines with recent catastrophic events

have incremental hits to both Number of

Passengers and Number of Departures

•When within the same country/region the

hull rate % is similar for all carriers, but

watch out for governmental surveillance

and catastrophic events – they are

contagious

• The younger the airline the higher the rates:

experience and cero events may take you

to a better position

We all have to be smart about:•Having good country-region surveillance•Improving our safety record•Changing our mindset: bigger or greaterdoes not mean cheaper•It is always about safety

Source: JLT



Flight Plan






• Exposure change over prior year• Rate change over prior year

• Pressure on underwriter's income

• Aviation Insurance Market Overview


Aviation Insurance

Overview




• Global Safety initiatives – ICAO, IATA & FAA

• Common Causes of Accidents in LATAM


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LATAM Facts

• Total : 35+

Foreign Airlines

Operating in theRegion

• Total: 70 airlines

• Total with International Operations: 55 airlines

• Total IATA: 25 active members

• Total ALTA: 26 active members

LATAM Airlines

Major Airports • IATA-ALTA Airlines + Foreign Airlines operating in: 55 Airports

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Major Airports • Population in LATAM: 500 Million people

Source: JLT



Flight Plan






• Exposure change over prior year• Rate change over prior year

• Pressure on underwriter's income

• Aviation Insurance Market Overview


Aviation Insurance

Overview




• Global Safety initiatives – ICAO, IATA & FAA

• Common Causes of Accidents in LATAM


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FrameworkPrinciples

MeasuresProcesses

ImplementationDesign

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Safety Management Operational System

=

+

+

=

+

•Predict systems deficiencies before errorsoccur

•Identify and correct system´s deficiencies byanalysis of safety occurrences



Investment in Safety:Predictive, Proactive, Reactive

Predictive Proactive Reactive

A business- like

management approach tothe Safety of Flight Operations

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ICAO: Safety Program Key Objectives

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RASG-PA

Flight Safety

and Human Factors

Aerodromes, Air Routes

and Ground Aids (AGA) section

Flight Safety (FLS) SectionFlight Safety Information

Exchange (FISX)

Aviation Medicine (MED) SectionIntegrated Safety

Management (ISM)

Source: ICAO website

http://www.polscott.com/portal/wp-content/uploads/2011/02/international-civil-aviation-organisation-icao-logo-bg.jpg



FAA: Safety Initiatives

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Aviation Safety Action Program

FAA’s major responsibilities:under the broad umbrella of safety

and efficiency we have several major roles:

Researching and developingthe National Airspace System

and civil aeronautics

Regulating civil aviation topromote safety

Encouraging and developingcivil aeronautics, includingnew aviation technology

Regulating U.S. commercialspace transportation

Developing and operatinga system of air traffic

control and navigation for

both civil and military aircraft

Developing and carrying outprograms to control aircraft noiseand other environmental effects

of civil aviation

Safety: The Foundation of

Everything We Do

Source: FAA website



IATA: Six-Point Safety Program

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IATA represents, leads and serves the airline industry

The IATA Six-Point Safety Programis a comprehensive approach to

enhancing operational safety

Maintenance

Safety in Infrastructure

Safety in Data Managementand Analysis

Operations

Auditing

Safety Management System

Source: IATA website



Eight Most Common Causes of Accidents in LATAM

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Ground Damage Undershooting

Runway Excursion Gear-up Landing/ Gear Collapse

Control Flight into

Terrain

Loss of Control

In-flight

In-flight Damage Hard Landing

68% of Hull losses happen in these phases

Source: IATA Safety report



Governmental Investment Needs in LATAM

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Communications

• Radio coverage VHF/HF

• Radio communications

Infrastructure

• Runway markings

• Navigation aids

• Runway surface

ATS

• Standard phraseology

• Lack of Procedures(PBN/RNAV)

• ATC/ACC coordination

AIS

• NOTAM & AIP publications

• Flight Plan filing

Other

• Runway surface• Radar coverage

Source: IATA



Top of descent

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Aviation Insurance

Key Airlines in LATAM

The investment in Safety Pressure onunderwriters'

income is

coming

Improve our

Government Agencies

and their capabili tiesto produce real

surveillance

Spend our money in a

smart way: on

operations and not on

insurance



World Class Safety Performance Profile

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Integrated AirlineManagement

System (i-AMS)

RunwaySafety ProgramUse of

technology toenhance safety:

FOQA, AQD,STEADES

Controlled FlightInto Terrain (CFIT)

Program

IOSACertification

Line OperationsSafety Audit

(LOSA)

Foreign ObjectDamage (FOD)

Program

Crew ResourceManagement (CRM)

Program

Bird StrikeProgram and

ISAGO Program

Loss of Control In-flight(LOC) Program

Note: FOQA: Flight Operations Quality Assurance; AQD: Aviation Quality Database; STEADES: Safety Trend

Evaluation Analysis and Data Exchange System; IOSA: International Operational Safety Audit;ISAGO: IATA Safety Audit Program for Ground Operations



The Volaris Way


•A stated commitment to safety is necessary!

• The commitment must be supported by

appropriate resources:

• Technology and Equipment,• Training and Expertise,•Policies and Systems

World Class Safety Profile

•

• The commitment must be supported by

appropriate resources:

•ICAO safety programs•FAA - DGAC compliance•IATA / ALTA initiatives•Industry best practices

Above the wing Belowthe wing

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•A stated commitment to a World ClassSafety Performance Profile!



.

Thank you!

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safety2011 volaris enrique beltranena

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