1. Nicosia, May 15th, 2014 5 th International Conference Challenges facing aviation safety - An airlines’ perspective

2. Improved net profits are being forecasted but still on a moderate level CY_FSFD_Challenges in Flight Safety_14- 2 - Source: IATA 2014

3. The challenges of the airline industry that impact safety management CY_FSFD_Challenges in Flight Safety_14- 3 - Cost pressure in all airline departments resulting in cost saving initiatives (e.g. reducing training initiatives) As the world commercial fleet expands to more than 39,500 airplanes over the next 20 years, the world's airlines will need to add 460,000 pilots and 650,000 maintenance technicians  Fight for Talents! The growing diversity of pilots and maintenance technicians in training will require instructors to have cross-cultural and cross-generational skills The role of human beings in airline operations is more important than ever, since technology is developing fast and adding complexity to operational systems Implementation and monitoring of the safety management system requires suitable qualified resources, tools and time Safety management system goes far beyond flight safety and is required to be rolled-out through the entire organization

4. The management dilemma CY_FSFD_Challenges in Flight Safety_14- 4 - Production Protection Management Levels Ressources Maximum Risk Mitigation Zero Failure Tolerance Lower On-Time-Performance Not profitable operatons

5. The greatest threats to improvements in airline safety CY_FSFD_Challenges in Flight Safety_14- 5 - Source: ASCEND Safety Study 2009

6. Creating a positive culture within the entire organization is the only way to achieve the desired results CY_FSFD_Challenges in Flight Safety_14- 6 - Positive culture Flexible culture People can adapt organizational processes when facing high temporary operations or certain kinds of danger, shifting from the conventional hierarchical mode to a flatter mode. Learning culture People have the willingness and the competence to draw conclusions from safety information systems and the will to implement major reforms. Informed culture People are knowledgeable about the human, technical, organizational and environmental factors that determine the safety of the system as a whole. Reporting culture People are prepared to report their errors and experiences Just culture People are encouraged (even rewarded) for providing essential safety-related information. However, there is a clear line that differentiates between acceptable and unacceptable behaviour.

7. Today‘s airline safety management systems are capturing the system performance to identify potential future problems CY_FSFD_Challenges in Flight Safety_14- 7 - Reactive method The reactive method responds to the events that already happened, such as incidents and accidents Reactive method The reactive method responds to the events that already happened, such as incidents and accidents Proactive method The proactive method looks actively for the identification of safety risks through the analysis of the organization’s activities Proactive method The proactive method looks actively for the identification of safety risks through the analysis of the organization’s activities Predictive method The predictive method captures system performance as it happens in real-time normal operations to identify potential future problems Predictive method The predictive method captures system performance as it happens in real-time normal operations to identify potential future problems

8. Safety management levels from an airline operations‘ point of view CY_FSFD_Economic Impact of Flight Safety_13- 8 - Desirable management levels Predictive Highly efficient FDA Direct observation system Very efficient Proactive ASR Surveys Audits Efficient Reactive Air safety mandatory reports Insufficient Reactive Accident and incident reports High Middle Low Safety management levels

9. Within Lufthansa the integrated approach of Quality and Safety Management is being practiced CY_FSFD_Challenges in Flight Safety_14- 9 - QMS FODA SMS The connection between quality and safety is obvious, although the systems are independent and can be implemented separately safety quality

10. The overall objective is to deploy a corporate wide operational risk assessment and risk monitoring system

11. Conclusion SMS is about changing a culture. It’s a business decision that requires a new mindset about approaching safety and risk. The goal is to be forward-looking in accident prevention Human resources play a vital role in the company wide implementation of SMS. Talents will become rare in the future Post accident and incident investigation is a reactive method and does not lead to predicting negative events Creating a positive culture that promotes safety within the organization is a major challenge The predictive methodology requires an operational risk management system which is constantly provides a current overview and evaluation of the operational risks CY_FSFD_Challenges in Flight Safety_14- 11 -

12. Contact - 12 -CY_FSFD_Challenges in Flight Safety_14 Lufthansa Consulting GmbH Unterschweinstiege 14 60549 Frankfurt Germany Tel.: +49 (0) 69 696 20849 Fax: +49 (0) 69 696 20830 Panagiotis.Poligenis@LHConsulting.com www.LHConsulting.com Panagiotis Poligenis Associate Partner