As an aviation consultant, I sometimes assist entities to start aviation businesses.  During my initial discussions, I stress the importance of a robust financial business plan.  I believe that sound planning is an important attribute to a safe operation.

I try to impress on them the importance of cash; not assets – cash good hard cash – the folding stuff!

Anyone who has been involved with aviation for a reasonable period of time will know what I am talking about.  Cash and sometimes big loads of cash is required to pay for fuel, salaries, scheduled and unscheduled maintenance.  It is important because it may take a start up operator some time before a profit is realised.

If there is not enough money for start ups, unless they are very lucky, they will fail and leave behind a trail of debts.  I try to avoid being one of those debtors!  If there is not enough for ongoing operations, something will have to give.  Let’s look at it; not paying for fuel is a sure-fire recipe for things grinding to a sharp halt (those guys do not procrastinate – no pay = no play!)  You can skimp on staff salaries and staff training and unfortunately this often happens.  It is a sure fire method to a fast track to a poor compliance and safety record.  The most common way to ease financial pressure is to skimp on maintenance; it can be done by simply not fully recording every flight.  As an aviation safety regulator, I saw this frequently and actually it is not hard to discover evidence and prove a case even though I have seen some elaborate cover up schemes in my time.

In Australia, there is a small provision in the Civil Aviation Act which essentially calls upon the Civil Aviation Safety Authority (CASA) to assess a business’s financial status but only when the financial position can be linked to non-compliance with the statutory requirements.  The assessment is rudimentary and in my view tells the Regulator little and takes them nowhere.  It does however make an applicant for an Air Operator Certificate sit down and develop a financial business plan.  When I was a member of the CASA Executive, the peak industry Forum sought a review of the financial viability assessment (FVA) process.  Although it was found that the FVA did not achieve all of the intended objectives, the exercise accounted for about 8% of applicants who withdrew their application, after they did the plan presumably because they realised that margins were very fine or non-existent.  In my view, this was a result which had a significant safety value.

As I get older, I become more emphatic about having sufficient cash to start an aviation business or to run one.  I do not like to see good people with a starry eyed dream become a key actor in a living nightmare. 

I talk about the relationship between corporate planning and safety in my book.  See my book, "Safety Management Without the Mumbo Jumbo" available in e-book and paperback from Palmer Higgs www.palmerhiggs.com.au or AMAZON www.amazon.com (E-Book).