NATA/SH&E Charter SMS Audit Partnership Raises Questions

NATA/SH&E Charter SMS Audit Partnership Raises Questions

By Karen Di Piazza

National Air Transportation Association President James K. Coyne believes NATA’s air charter Safety Management System, developed by audit partner SH&E Inc., will make for safer operations.

National Air Transportation Association President James K. Coyne believes NATA’s air charter Safety Management System, developed by audit partner SH&E Inc., will make for safer operations.

On July 11, approximately 50 aviation businesses attended a town hall meeting held at Teterboro Airport, where James K. Coyne, president of the National Air Transportation Association, explained the benefits of NATA’s new “Safety 1st” air charter Safety Management System.

The SMS is part of NATA’s overall industry-wide risk management initiative, developed by New York City-based Simat Helliesen & Eichner, Inc. The aviation services company performs industry analysis/forecasting, asset management and appraisals, safety and security/operations, and has primarily been recognized in the past for performing audits of FAR Part 121 commercial airlines.

SH&E, a NATA member company, is a paid consultant that NATA retained over eight months ago to develop its SMS programs that serve the air charter community. NATA is a nonprofit trade association that depends upon dues from its 2,000 member companies in the Part 135 air charter, fuel and ground services, aircraft maintenance and pilot training segments of general aviation.

A week after the meeting, some NATA member companies, such as Wyvern Consulting Ltd., weren’t enthusiastically expressing support for the NATA/SH&E SMS partnership. Wyvern has performed significantly more on-site audits of FAR Part 135 operations than any other aviation services firm and consults for Fortune 100 companies worldwide.

Non-NATA member aviation services company iviation LLC, which conducts human-factors seminars throughout the U.S., specializes in asset management, appraisals and acquisitions, and performs occasional audits of Part 135 operators, said it wouldn’t support the program, because it’s set up to generate audit/consulting business solely for SH&E.

NATA/SH&E partnership

The first NATA SMS program, developed by SH&E and begun in January of this year, aims to reduce ground-related accidents by 50 percent over the next five years. SH&E has a working relationship with insurance companies to collect accident/incident data that they’ll share with NATA member participants who purchase the SMS, which is a manual.

Coyne explained he envisioned that the program would create a “zero tolerance” culture where safety on the ground equals that in the air.

“The foundation of our new initiative is the creation of a Safety Management System for FBOs, air charter operators, maintenance, flight-training providers and airline service companies,” he said. “NATA will create a Web-based program whereby any company can securely manage its internal safety reporting and analysis without needing to create its own software.”

Amy Koranda, NATA’s director of safety, said that this feature, which SH&E will also be paid to develop, isn’t available online yet.

“Right now we’re collecting accident/incident data on paper from each ground-handling operator,” she said. “The Web-based version could take a year, maybe longer to develop. Data we’re collecting right now is strictly data coming from operators on a voluntary basis; we aren’t pulling accident/incident data from FAA or NTSB databases. That’s not part of our plan.”

The SMS manual, Koranda explained, isn’t a “template.”

“The SMS manual is literally a manual to read; it’s not a usable, Web-based template that you can plug in information and start using,” she said. “The manual is a how-to-guide that teaches you how to create your own in-house, customized SMS program. That becomes a self-audit tool for charter operators, after they have implemented all of the information; the manual is broken into modules.”

She said that depending on the size of the Part 135 operation, the cost to purchase the SMS manual, which participants could acquire directly from NATA, ranges from $600 to $2,400. The cost to purchase a ground handling or FBO SMS manual is similar in cost.

Koranda explained that although the air charter SMS was built upon the ground service SMS, it uses the same principles: senior management commitment, Web-based continuing education, operator-specific safety manual, independent third-party audits, and data collection and analysis.

The Web-based continuing education portion of the SMS program isn’t available yet, but is expected to be online in August (by September at the latest). This segment of the SMS doesn’t involve input from SH&E, according to Koranda.

Coyne said one of the first priorities of the SMS program is to create a mechanism for benchmarking accidents and incidents.

“The only way to know where we’re going is to know where we’ve been,” he said. “For the first time, major aviation insurers have indicated a willingness to work with the association to create a standard, sanitized database to track claims and benchmark progress.”

Claims information collected by SH&E will be gathered quarterly, and analysis will be disseminated to the participants that purchase the program without additional charge. Coyne said that if charter operators embrace the SMS program fully, it could lower the number of accidents, and that air charter operators would see significant savings in insurance deductibles, hence a decline in insurance rates over time.

Thus far, insurers Air BP, Chevron Texaco, ExxonMobil, Phillips 66 Aviation, Global Aerospace, Phoenix Aviation Managers, USAIG, XL Insurance and W. Brown Associates have agreed to underwrite NATA’s SMS.

Coyne said that in addition to insurance companies underwriting the program, charter operators such as Executive Jet Management, Priester Aviation, New World Jet, Frederick Aviation and Million Air Salt Lake City wholeheartedly supported the SMS initiative.

Part 135 NATA/SH&E audits

Coyne said that the NATA SMS provides FBOs and charter operators with the skills to deal effectively with incidents and near misses on the ground and in the air.

“By better understanding the cause and effect of actions on the ramp or within the hangar, valuable lessons can be applied to improve safety and efficiency,” he said.

However, NATA has stipulated different requirements for its SMS participants. For instance, FBOs and other ground-service participants aren’t required to undergo an SMS certification audit; Part 135 operators are required to have an SMS certification audit.

Koranda says that policy could change.

“That’s the way it is today, but that’s not to say we won’t require SMS certification audits from other participants in the future; we haven’t even completed our SMS for training providers,” she said. “And we haven’t had any 135 participants yet; however, 135 operators will be required to have an SMS certification audit every 24 months.”

Koranda confirmed that since January, several ground-handling participants have requested certification audits, which thus far have all been referred to SH&E to conduct the audits. That’s not part of the consultancy fee NATA pays SH&E monthly; it’s additional revenue for SH&E.

“The cost for the air charter SMS certification audit is $2,000; however, that fee won’t go to NATA,” she said. “We’re not in the audit business. The money paid for any SMS manual is a fee that NATA charges and keeps; we pay SH&E as a consultant, so we aren’t paying them any percent of monies received for SMS manuals.”

Koranda confirmed that until NATA could begin offering SMS auditor workshops, which will be developed by SH&E, 135 participants would be audited by SH&E. Lou Sorrentino, SH&E vice president and managing director of the company’s safety, security and operations, said they would develop a comprehensive auditor training program, but he couldn’t forecast a date to begin training.

“We’re working on the program with NATA and its board, but I can tell you the auditor training program will be more than a one-day workshop,” he said.

Sorrentino, who is NATA’s risk management services program developer, also represents the Flight Safety Foundation as managing director of air transport safety services.

“The SMS certification audit isn’t a full operational audit,” he said. “The purpose is to verify that operators have correctly implemented the SMS manual, and that they’re practicing industry best practices and protocols effectively. This type of audit will only require one auditor for one day.”

Has SH&E and NATA developed a protocol to revoke an SMS certification, and have they developed audit criteria for SMS accredited auditors?

“We haven’t developed a revocation policy yet and we haven’t finalized auditor criteria,” Sorrentino said.

He did confirm that any auditor accepted into the workshop would first have to have practical aviation experience.

“All requests for certification audits will go through NATA,” Sorrentino said. “SH&E will, for the most part, decide which accredited SMS auditor will be assigned.”

He said once they have accredited auditors, SH&E would assign auditors to go out and perform SMS certification audits of Part 135 operations. Koranda confirmed Sorrentino’s auditor selection process, but added assignment of audits would also have some of NATA’s board input.

Sorrentino said operators who requested “full operational audits” could hire SH&E independently from NATA, but first they would have to undergo the mandated NATA SMS certification audit.

“Full operational audits, with a two-auditor team, for a two- to three-day period, cost $8,000 to $25,000 depending upon the size of the fleet,” he said.

Sorrentino said that since 1995, SH&E had performed 50 Part 135 audits. SH&E has been in business for 42 years and has offices in Boston, Washington, D.C. and London.

Koranda said that NATA doesn’t require any SMS participant to have a full operational audit; however, she was unsure if NATA would recommend SH&E online to its members for full operational audits.

Questioning the NATA/SH&E partnership

Walter D. Lamon, president and CEO of New Jersey-based Wyvern Consulting Ltd., with offices in London and Russia, responded to the NATA/SH&E partnership with a lukewarm response.

“It seems that all of the nonprofit aviation trade associations are getting in the audit business—in one form or another,” Lamon said. “While I don’t understand all of the components of this specific program, it strikes me as strange that a trade association would align with a single member company.

“We support anything that helps raise the bar for safe flight in any area of aviation; if this accomplishes that, we’ll support it. If this is just another attempt to repackage existing ideas and become a revenue source, then we won’t support it.”

Lamon said that the Wyvern Standard is industry’s benchmark for safety.

“Since 1991, over 800 fatalities have occurred on FAR Part 135 flights; since that same period, there have been zero fatalities on 135 flights which comply with the Wyvern Standard,” he said. “In fact, there have only been five accidents in that same 14-year period on Wyvern compliant flights, and with over 800 U.S. domestic aircraft and 2,700 pilots recommended by Wyvern—as of today—we set the bar.”

He validated Wyvern setting the safety bar, saying that all Wyvern compliant flights are backed by on-site, full operational audits.

“We’ve performed over 1,200 Part 135 audits worldwide; it’s critical that corrective actions are implemented after audits, when discrepancies are discovered,” he said. “The SMS might be useful for self-assessment, but leaving it there won’t insure that operators are performing at the highest levels of safety. I think all 135 operators should practice standards that far exceed minimum FAA requirements.”

He added that self-assessment doesn’t identify all inherent risk factors.

David Perdue, president and CEO of iviation LLC, a Memphis, Tenn.-based aviation services company, described the NATA/SH&E partnership as “unprofessional and unethical.”

“So-called trade associations should act as an advocate for its members, not become a competitor to its members, which is how I see this NATA/SH&E program,” Perdue said. “Trade organizations shouldn’t use members’ dues against them or without consent—funneling business, in this case, to a selected member audit company. All FBOs and other members should be very concerned that NATA will align with a company and compete against them, too. Do you think your ‘competitor’ will ‘give’ you business? No!

“NATA has the biggest chair and biggest ear before government, namely the FAA; acting as an advocate in the best interests of the aviation community is what they’re supposed to do. It’s disappointing to see that NATA uses its political prowess to try and establish an audit duopoly. Just nine months ago, Coyne said in an interview with Airport Journals he didn’t support third-party audits because he believed the FAA was enough! And it’s disturbing that SH&E would resort to such low ethics; I used to have such respect for them.”

Mark R. Fischer, executive vice president of Cincinnati, Ohio-based Aviation Research Group/US Inc., which performs Part 135 audits and provides historical aviation data/analysis for general aviation, said they haven’t decided whether to support or not support the NATA/SH&E partnership.

In mid-July, Koranda confirmed that independent auditing firms had not requested to become SMS accredited auditors, and said that NATA wasn’t in competition against its members.