Article
People often say that the most dangerous part of flying is the drive to the airport. On the face of it, racing 100 tons of metal along a narrow runway at up to 300 kmh with over 300 people and 50 tons of flammable fuel on board doesn't sound terribly safe.
April 9, 2020
Nor does landing a metal tube on a narrow tarmac strip in all weathers with just enough space to brake on. But as we all know, it works amazingly well in practice: It does not matter whether there is fog in London, air traffic congestion in New York, or searing heat in Dubai, civil aviation has developed an impressive list of procedures to deal with the day-to-day risks it faces. Safety always comes first in aviation.
"Hundreds killed in air disaster": Looking back, it feels as if the media used to be full of headlines like this every few weeks. Fortunately they have now become extremely rare and flying has been safer than ever before over the last decade. The Aviation Safety Network recorded 20 accidents with a total of 283 deaths in 2019, making it the third-safest year ever in terms of number of passengers killed.1 According to the UN aviation organization ICAO, airlines carried over 4.5 billion air passengers globally and thus 14 times as many as in 1970. As figure 1 shows, even though passenger numbers have grown exponentially, the number of deaths has fallen significantly. The German Aviation Association (BDL) calculates that there was one death per 265,000 starts in 1970. Today the equivalent figure is one death in 16 million starts. In other words, flying is around 61 times safer than it was in 1970.2
Figure 1: No. of deaths in civil aviation and growth in worldwide passenger numbers3
Source: BDL (2020): Wie sicher war Luftverkehr im Jahr 2019 [How safe was air travel in 2019]? (available in German only), URL: https://www.bdl.aero/de/publikation/wie-sicher-war-luftverkehr-im-jahr-2019/, accessed January 31, 2020.
The aviation industry reports and investigates every accident, near-miss, and irregularity. After determining the causes, appropriate conclusions are drawn. The belief that learning is a continuous and never-ending process is an important part of the safety culture in aviation. As conclusions are drawn after every incident, the result of this approach is that air travel becomes safer day by day.
"Flying is around 61 times safer than it was in 1970."
Alongside the redundancy and maintenance of the systems (more on these in the next section), the main drivers of greatly improved aviation safety include more reliable aircraft technology, developments in airport infrastructure and air traffic control, and the perfecting of luggage, passenger and freight controls.4
Air safety is the connecting theme running through all areas of aircraft construction. The construction standards specify the requirements that need to be met down to the last detail. Redundancy is a key part of this. This means that all important components, from complex electronic systems and navigation instruments to individual nuts and bolts, are built at least in duplicate, in some cases even in triplicate. If a component fails, the remaining functioning systems need to be able to ensure that the aircraft can still fly. Each individual nut and bolt, however small, is specified precisely for its particular application and must be certified by the regulatory authorities. If a part fails or is damaged, it can only be replaced with the same identical part. A quick replacement from the local wholesaler is strictly prohibited and the thought would not even cross anyone's mind.
Aircraft maintenance is highly complex and time-consuming. Every airline is required to submit a maintenance plan to the regulator based on the manufacturer's recommendations and their own usage patterns. If the plan is approved, it becomes the basis for scheduling all maintenance events. The component parts of a plane are monitored in two ways5:
The new challenges facing commercial aviation include unmanned craft. Drone technology has huge potential and many benefits, but in order to realize these benefits, drones need to be integrated into existing airspace safely. This was clearly demonstrated in London at the end of 2018, when Gatwick airport was brought to a standstill for hours as a result of the malicious flying of drones. Around 1,000 flights were cancelled or diverted for safety reasons and tens of thousands of passengers were stuck or forced to travel via other destinations7.
One of the biggest concerns is what happens if a drone malfunctions. In January 2019 a drone operated by Swiss Post short-circuited and plunged into Lake Zurich from a height of around 60 meters. A few months later another drone from the same operator plummeted into a forest in a Zurich suburb close to where children were playing outdoors. The emergency parachute designed to break the fall of the drone – which weighs around 10 kg – to protect pedestrians below snapped and floated uselessly into the trees, while no one heard the drone's alarm. The accident report uncovered serious failings and negligence with regard to safety issues. The cable connecting the parachute to the drone was damaged by a sharp edge on the drone. The jolt caused by the opening of the parachute then led the cable to snap. Nobody had noticed this design fault. So the drones had been whizzing above the heads of the people of Zurich for months with faulty safety features.8
It is one of the great successes of civil aviation history that the accident rate has fallen steeply in recent decades. As mentioned at the beginning of this article, the most dangerous part of flying is the drive to the airport. Statistically, 0.3 people are injured per billion kilometers in air travel, compared with 2.7 people on the railways and 276 people in cars, according to Handelsblatt. Admittedly, aircraft accidents are mostly fatal. But even in terms of deaths airplanes are the safest option: There are zero deaths per 1 billion kilometers of air travel, compared with 0.04 in rail travel. The sad leader of the pack is once again the car with 2.9 deaths per billion kilometers.9
Air travel is therefore statistically the safest form of transport. According to the International Air Transport Association (IATA), a passenger would have to get on an airplane every day for 241 years before they experienced an accident with one fatal victim on board.10
Aviation safety has improved hugely thanks to stricter regulatory requirements and the use of new technologies. We believe that technological change in the whole area of mobility is set to continue in the coming decades. Safety will be central, because without it the technology will lose the support of both regulators and society. As long-term investors, we see appealing investment opportunities in the protection and safety segment, particularly in anti-collision systems, radar, and navigation systems.
Source:
1 2019 was dominated by a single air disaster: the crash of an Ethiopian Airlines Boeing 737 Max in which all 157 passengers on board lost their lives. It was the second crash for this new Boeing model. Just a few months before, in October 2018, another Boeing 737 Max had crashed in Indonesia. In response the plane was grounded worldwide, which remains in force today.
2 Source: German Aviation Association (2020): Luftfahrt aktuell: Fakten und Hintergründe zum deutschen Luftverkehr [Facts and background on the German aviation industry], 1/2020, p. 1 (available in German only).
3 Aircraft with a capacity of over 14 passengers, including kidnappings and acts of sabotage, data as of January 1, 2020.
4 Source: Neue Zürcher Zeitung (2018): Noch nie war das Fliegen so sicher wie 2017 [Flying has its safest year ever in 2017] (available in German only), in: NZZ, January 3, 2018.
5 Source: Airliners.de (2017): So sicher ist Fliegen [How safe is flying?] (available in German only), October 5, 2017, URL: https://www.airliners.de/so-fly-answers-Cockpit-18/37718, accessed January 31, 2020.
6 Aircraft are maintained and serviced using a system of rolling "letter checks" (also known as A, B, C and D checks). A checks are performed most frequently, typically every 250-650 flying hours. For a plane in normal usage, this means a detailed check every six to eight weeks, taking around 50 to 80 working hours. It focuses primarily on regular service checks, combined with engine and functional checks. B checks are carried out every three to four months and C checks about every two years. The D check is a thorough overhaul and takes place approximately every six to ten years. This is the longest, most detailed, and most expensive maintenance event: The aircraft is dismantled, all its parts are checked and the paint is taken off to inspect the aircraft hull for possible damage (Source: Focus (2009): Flugzeugwartung: Teure Checks für alte Kisten [Aircraft maintenance: expensive checks for old machines] (available in German only), July 1, 2009, URL: https://www.focus.de/reisen/flug/airline-sicherheit/tid-14743/flugzeugwartung-teure-checks-fuer-alte-kisten_aid_413162.html), accessed January 31, 2020.
7 Source: Neue Zürcher Zeitung (2018): Drohne legt Londoner Flughafen Gatwick lahm [Drone brings Gatwick airport to a standstill] (available in German only), in: NZZ, December 20, 2018.
8 Source: Neue Zürcher Zeitung (2019): Drohnenabsturz: Mit ihrer Fahrlässigkeit gefährdet die Post eine grosse Innovation [Drone crash: Swiss Post negligence endangers an important innovation] (available in German only), in: NZZ, June 28, 2019.
9 Source: Handelsblatt (2013): Welches Verkehrsmittel ist das sicherste [Which form of transport is the safest]? (available in German only), in: Handelsblatt, July 11, 2013.
10 Source: IATA (2019): IATA Releases 2018 Airline Safety Performance, February 21, 2019, URL: https://www.iata.org/en/pressroom/pr/2019-02-21-01/, accessed January 31, 2020.
IMPORTANT INFORMATION
Fee Disclosure
Where permitted by law, we may receive fees, commissions or other monetary benefits in connection with this product from third parties. For details please refer to your Fee Schedule or contact your Relationship Manager.
If you are not a client of Credit Suisse UK Ltd
If you are not a client of Credit Suisse, please note that this document has been provided to you for information purposes only as an example of the type of products we are able to offer to you should you become a client of Credit Suisse. The provision to you of this document does not constitute an invitation or inducement to buy or sell any security or other financial investment, nor does it constitute an advice or personal recommendation. Should you wish to invest in any products, you will have to go through our account opening process which involves providing us with details of your personal and financial circumstances, risk appetite and investment objectives as well as selecting the most appropriate portfolio mandate for you. We can thereafter work with you to determine which investments are suitable or appropriate for you.
Marketing Disclaimer
This document is provided to you for your information and discussion only. It is not a solicitation or an offer to buy or sell any security or other financial instrument. Any information including facts, opinions or quotations, may be condensed or summarised and is expressed as of the date of writing. The information may change without notice and Credit Suisse (UK) Limited (“Credit Suisse”) is under no obligation to ensure that such updates are brought to your attention. The price and value of investments mentioned and any income that might accrue could fall or rise or fluctuate. Past performance is not a guide to future performance. If an investment is denominated in a currency other than your base currency consult with such advisor(s) as you consider necessary to assist you in making these determinations. Nothing in this document constitutes legal, accounting or tax advice. Credit Suisse does not advise on the tax consequences of investments and you are advised to contact a tax advisor should you have any questions in this regard. The levels and basis of taxation are dependent on individual circumstances and are subject to change. This document has been prepared from sources Credit Suisse believes to be reliable but we do not guarantee its accuracy or completeness and do not accept liability for any loss arising from its use. Credit Suisse reserves the right to remedy any errors that may be present in this document. Credit Suisse its affiliates and/or their employees may have a position or holding, or other material interest or effect transactions in any securities mentioned or options thereon, or other investments related thereto and from time to time may add to or dispose of such investments. Credit Suisse may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment to any company or issuer mentioned. Some investments referred to in this document will be offered by a single entity or an associate of Credit Suisse or Credit Suisse may be the only market maker in such investments. This document is intended only for the person to whom it is issued by Credit Suisse. It may not be reproduced either in whole, or in part, without our written permission. The distribution of this document and the offer and sale of the investment in certain jurisdictions may be forbidden or restricted by law or regulation. Investments may have no public market or only a restricted secondary market. Where a secondary market exists, it is not possible to predict the price at which investments will trade in the market or whether such market will be liquid or illiquid. Where such investments will not be listed or traded on any exchange, pricing information may be more difficult to obtain and the liquidity of the investments may be adversely affected. A holder may be able to realise value prior to an investment’s maturity date only at a price in an available secondary market. The Issuer of the investment may have entered into contracts with third parties to create the indicated returns and/or any applicable capital protection (in part or in full). The investment instrument's retention of value is dependent not only on the development of the value of the underlying asset, but also on the creditworthiness of the Issuer and/or Guarantor (as applicable), which may change over the term of the investment instrument. In the event of default by the Issuer and/or Guarantor of the investment and/or any third party, the investment or any income derived from such contracts is not guaranteed and you may get back none of, or less than, what was originally invested. Parties other than the Issuer or Guarantor (as appropriate) mentioned in this document (for instance the Lead Manager, Co-structurer, Calculation Agent or Paying Agent) do neither guarantee repayment of the invested capital nor financial return on the investment product, if nothing is indicated to the contrary. You may have to accept smaller returns on an investment relative to a direct investment in the underlying index, basket, etc. because of the costs involved in providing the capital protection. Such capital protection normally only applies if the investment is held until maturity. The amount of initial capital to be repaid may be geared, which means that a fall in the underlying index or securities may result in a larger reduction in the amount repaid to investors. Where this document relates to packaged products (such as regulated collective investment schemes), any advice offered to retail clients is based on a selection of products from the whole of the market. Where this document relates to emerging markets you should refer to the Risk Disclosures section of the Credit Suisse Terms of Business. Additional information is, subject to duties of confidentiality, available from Credit Suisse upon request. Hedge Fund strategies may include the use of leverage (borrowing) and derivative instruments resulting in certain risks, some of which are as follows: leveraged investments, by their nature, increase the potential loss to investors resulting from any depreciation in the value of such investments. Consequently, a relatively small price movement in a leveraged instrument may result in a substantially greater loss to the Hedge Fund. The market in some of the investments made as part of a Fund’s strategy may be relatively illiquid, giving rise to potential difficulties in valuing and disposing of such investments. Information for determining the value of investments held by a Fund may not be readily available which has corresponding implications for the overall valuation of a Fund. Accurate risk profiling of the Fund holdings may also not be readily available. Always refer to the Fund’s Prospectus and/or the Key Investor Information Document before making an investment. Your personal data will be processed in accordance with the Credit Suisse Privacy Policy published at https://www.credit-suisse.com/uk/en/private-banking/important-disclaimer.html. Credit Suisse (UK) Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority for the conduct of investment business in the United Kingdom. The registered address of Credit Suisse (UK) Limited is Five Cabot Square, London, E14 4QR. If you have any questions regarding the document, please contact your Relationship Manager.
© Credit Suisse (UK) Limited 2020.