Audits : Plugging the Loopholes

On January 7, 2007, two pilots and two emergency medical technicians of Trans West Air were aboard a King Air aircraft en route to pick up a patient from the Sandy Bay Health Centre in Saskatchewan, Canada, when it crashed into trees near the runway after an aborted landing attempt. While the 52-year-old pilot succumbed to injuries, the others escaped with bruises and cuts. Investigation by the Transportation Safety Board revealed that Transport Canada had flouted its own rules when it cancelled an audit programme just months before the fatal plane crash during its transition to a self-policing civil aviation system.

The report observed: Although Transport Canada safety oversight processes identified the existence of supervisory deficiencies within TWA, the extent of the deficiencies was not fully appreciated, apparently because of the limitations of the current inspection/audit oversight system. The report also found problems with Transport Canada’s auditing system inasmuch as it failed to include a key finding in its January 2006 compliance audit—a concern that the company had less control of its La Ronge base, where the crew involved in the crash was based, than its other bases. The incident highlights the criticality of audits in aviation, particularly operational safety audits.

Essentially, an audit implies the evaluation of an organisation, a system, a process, a project, a product and, occasionally, a person. Audits of organisations are carried out to provide an assessment or an evaluation of how they are functioning by performing some tests and/or validating process related information provided by the organisation. In the context of commercial aviation, every airline is required to have in place an internal audit system which consists of auditors on the employ of the airline reporting directly to the top management. Occasionally, airlines commission professional auditing companies, referred to as external audits (so are audits by the Director General Civil Aviation). The DGCA recently circulated a draft Civil Aviation Requirement (CAR) (to be listed under Section 3 Air Transport, Series X Part I) aimed at approving some Accredited Audit Organisations (AAOs). The CAR also makes audits by these AAOs, termed Third Party Audits, a mandatory requirement for airlines once in two years.

Measure of Operational Safety
Commonly, the term audit relates to finance. In the aviation industry, however, audits related to operations are equally important. Airlines are forever keen to know where they stand with regard to operational safety. The interest is fuelled every time an airline’s aircraft is involved in an accident that makes a dent in its customer base, even if temporarily. Of course, a single major accident (say a fatal accident or a hull loss accident) could mean curtains for a small or medium airline. Thus, an operation safety audit is used by airlines as a significant risk management tool in addition to its being an exercise in assessing operational efficiency and identifying weak areas.

Decidedly, the mother of all operational safety audits is the International Air Transport Association’s (IATA) Operational Safety Audit (IOSA). IOSA uses internationally recognised quality audit principles and is designed to conduct audits to assess the operational management and control systems of an airline in a standardised and consistent manner. The programme was launched in 2003 as the industry’s first global standard for airline safety management and a year later, the US Federal Aviation Administration (FAA) approved it. Many governments, including the US Department of Transportation, require their flag airlines to audit foreign code-share partners. The FAA’s recognition of IOSA meant that US carriers could use the programme’s accredited audit organisations to comply with the US audit requirement rather than perform an individual audit.

In March 2006, Chile broke new ground when it became the first state to regulate that IOSA was a pre-condition of its airline certification process. Egypt followed suit in May 2006. In June 2006, IATA approved a resolution at its annual meeting that required all IATA members to be IOSA registered as a condition of membership. For existing members to retain membership, they needed to contract for an IOSA audit by the end of 2006 and complete an audit by the end of 2007. According to IATA, 189 member airlines and 57 non-members are in the IOSA process; this represents more than 80 per cent of scheduled international traffic. The fact that IATA members are preoccupied with the IOSA audit is reflected in the accident statistics for the last year. While the air transport industry’s accident rate was 0.76 per million sectors, the corresponding figure for IATA members was 0.35 per million sectors. We could rest the case in favour of IOSA audit there.

ICAO has been involved with IOSA from the very beginning, is fully supportive and considers IOSA as fully complementary to the ICAO Universal Safety Oversight Audit programme. So what is the scope of an IOSA audit? It looks at Corporate Organisation & Management, Flight Operations, Operational Control/Flight Dispatch, Aircraft Engineering & Maintenance, Cabin Operations, Aircraft Ground Handling, Cargo Operations and Operational Security. In short, it addresses every area that affects safe and efficacious operations. Any airline can seek an IOSA audit, it does not have to be a member of the IATA to subject itself to the audit. Not only does a successful audit make a clear positive statement about the integrity of its operations and its ability to manage associated risks, but also it opens up shared commercial opportunities (code-share, wet lease, aircraft leasing and so on) as consenting airlines are agreeable to dispensing with their own audits of prospective partners provided they have undergone an IOSA audit successfully. IATA has accredited Audit Organisations (AOs) to conduct audits on its behalf. The AOs engage experienced aviation auditors that have undergone a stringent training and qualification process and have been approved as IOSA Auditors.