RISK MANAGEMENT IN AIRPORTS

Cholamandalam MS General Insurance Company Ltd Risk Management of Specific Industries

Airports Version 1

1.

Introduction : All over the world, more and more people are traveling by plane. For this reason, many airports are being enlarged or modernized. Others are being built away from existing airports. The airport operation consists of various activities required to enable a steady flow of air traffic. The flow of persons and objects in general, as well as flight operations can be basically broken down into : Passenger traffic : ticket sales, checking in, processing, support by airlines, emergency etc., Cargo : acceptance, delivery and handling of personal goods but also transportation of bulky items (air cargo) Aeroplane maintenance, repair, preparation for take off, parking Air-traffic control, apron control Organisation : airlines, airport administration, border guard, air traffic control Periphery : retail shops, hotels, meeting centers, restaurants, catering firms, infrastructure, traffic connections.

2.

Processes : We would now examine various airport activities in detail :

2.1

Passenger Handling :

2.1.1 Flight Information : Nowadays not only business travelers demanding a high degree of flexibility, but also the modern, comfort-oriented private travelers are very exigent when it comes to precise and up-to-the minute information about their journey. In todays large airport terminals, orientation is the most crucial factor when it comes to making the travellers journey experience more relaxed and helping them find their way easily. The traveller needs clear and unambiguous information about where he is, where he needs to go, how far he is from a particular point along his route from the terminal entrance to his gate, and how much time he has left. And he wants to know about his next flight, its punctuality, the allocated departure gate, services, boarding time, any possible onward connections,

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Cholamandalam MS General Insurance Company Ltd Risk Management of Specific Industries

Airports Version 1

or the latest news and the weather forecast for his destination. Maybe there is a sudden return of winter when he expected nicer spring weather and he might just want to buy a warm jacket! Only a well-informed traveller is a relaxed traveller who enjoys the airport experience and takes his time to make use of the valuable leisure facilities, which provide large parts of the airport revenue since the potential of non-aeronautical revenues has been tapped at most modern airports. Signposts, a large number of continuously updated flight information screens and appropriate announcements keep the passengers informed. Thus, at any time and from any place within the airport, the travelers can access information about their flight, its status, the time left until boarding, possible gate changes (if unavoidable), as well as directions to the gate and the time required to get there. This calls for intelligent FIDS (Flight Information Display System) and PA (Public Announcement) systems as well as careful terminal resource planning and allocation, and a close integration of systems The Flight Information Display System (FIDS) should be designed to support continuous updating of the information for passengers even while they are on the way between gates or terminals. 2.1.2 Check in Every passengers first physical contact after entering the terminal - with the aviation world is the check-in counter or self-check-in kiosk. At this instant, the first and often most lasting impression is created, which explains why airlines make extensive efforts to enhance the quality of the check-in process. But also the perception of the airport itself is to a great extent determined by the first couple of minutes spent in the terminal. If the check-in counter is easy and quick to find, the queue and waiting time short, the passengers will very much appreciate that. This makes for pleased and relaxed customers, who will actually have the time and be in the mood to shop at the airport, have a drink or take a meal before their flight.

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Cholamandalam MS General Insurance Company Ltd Risk Management of Specific Industries

Airports Version 1

2.1.3 Convenience : Airports are turning into shopping malls with an attached runway for distant access. This commonly quoted impression of many travellers may be a little exaggerated, but it is true that non-aeronautical revenues contribute a substantial and growing part of the annual income of many modern airports in some cases they even surpass the aeronautical business already. Shopping areas, dining experience, lounges and entertainment extravaganzas are created to transform the formerly dull waiting time of travellers into enjoyable - and profitable - quality time. Airlines, on the other hand, are worrying increasingly about mounting departure delays due to the passengers distraction from their original purpose of being at the airport: Some simply forget about the time and are late for boarding, which results in additional work for the ground crew and in delays. These delays, in turn, create an additional problem for the airline and the airport because flights and resource allocations are closely interdependent. Then again, the passengers themselves will feel uncomfortable if they arrive late at the gate, so most will keep a very large time margin for boarding. There is a solution that accommodates the expectations of all parties involved: comprehensive passenger information, which means ease of mind for the passenger, full utilization of airports facilities, and prevention of unnecessary departure delays. 2.1.4 Boarding Once the actual time of departure draws closer, the passenger is asked to board the plane at a gate allocated well in advance after a thorough planning process aimed at optimum resource utilization. Guided by an intelligent and well integrated FIDS (Flight Information Display System), passengers can find their way to the right gate in good time. At most modern airports, this will be a common use gate (as opposed to gates specifically reserved for a particular airlines) in order to utilize capacities to a maximum. These gates are furnished with CUTE (Common Use Terminal Equipment), some gates may even have selfservice boarding facilities to reduce personnel requirements and speed up the boarding process for frequent travellers. Future-oriented concepts

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Cholamandalam MS General Insurance Company Ltd Risk Management of Specific Industries

Airports Version 1

include the introduction of biometrics to further increase security at this crucial point. 2.2 Baggage : The steady growth in passenger traffic is leading to enormous increases in the volume of luggage. Airlines and their hubs are becoming increasingly important as operators - a market moving this fast needs a reliable, competent partner who can cope with the logistics problems arising from this rapid expansion. First-class and business-class customers expect airlines and airports to ensure a high standard of baggage handling service. Check-in of passenger luggage is supported by the check-in system, which in most cases today is a CUTE system (Common Use Terminal Equipment). This system facilitates the communication between the counter and the airline systems, where the luggage identifier for each bag and the so-called BSM (Baggage Sortation Message) for the Baggage Handling Systems (BHS) at all airports along the passengers itinerary is generated. The CUTE system also prints the Bag Tag, which is attached to the bag and used at multiple points in the subsequent journey of each bag. Future-oriented concepts will even do without paper tag. The tag is going to be replaced by small radio frequency chips for quicker and more reliable processing. Sortation, transportation, storage and scanning of bags is supported by a set of IT applications around the baggage handling process. The initial inspection after check-in is fully automated. If there is any doubt regarding the safety of a piece of luggage, its X-ray image is scrutinized by specially trained personnel. This is followed by further automatic inspections. If necessary, the piece of baggage in question is ejected from the material flow and may be subject to visual inspection by authorized personnel in the presence of the passenger. Baggage Reconciliation is an additional security step and IATA recommended practice as it prevents baggage being transported on airliners without the passenger who has checked in the bags being on board. Baggage Tracking and Tracing adds comprehensive search and monitoring capabilities on individual airports or even across networks of airports : knowing exactly the location of each piece of luggage at any time

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reduces mishandled baggage costs and improves customer service and satisfaction. Entire Baggage Management systems provide comprehensive planning, control and decision support elements to the entire airport community dealing with baggage processes from end-to-end. Factors on which baggage design is dependent :

Integrated control and information technologies permit a scalable degree of automation adapted to match the customer's requirements. Appropriate hardware and software solutions that guarantee faultless baggage sorting and tracking is required for this purpose. State-of-the-art, redundant data networks link servers and control units to information terminals and operator stations at all strategic points and ensure a reliable flow of information parallel to the flow of baggage. Automated scanner gates (ATR) read the identification (baggage tag) of each item of baggage and send it to the sorter computer. The computer combines this information with the data received from the airline (BSM) and the current sorting plan and thus determines the destination of the baggage. It also takes into account whether it is an early, late or problematic item of baggage and initiates the procedures specially designed to cater for such cases as and when necessary. Flexible sorting

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Cholamandalam MS General Insurance Company Ltd Risk Management of Specific Industries

Airports Version 1

strategies guarantee effective system utilization matched to the airport's operational requirements. Flight schedule changes, flight delays and cancellations automatically lead to a reassignment of the baggage sorting destinations. Airport operations continue almost free of interruption. 2.3 Air Cargo Land-side freight is delivered as bulk freight or in pre-packed Unit Load Devices (ULDs). The interfaces for both types have to identify, weigh and check the incoming freight reliably. Unlike flight baggage, air freight is based on the 'known shipper' principle freight has to be declared. Contents, weight and information on the consignor and consignee have to be known and correct. But just checking these details is not enough. The increasingly stringent security requirements facing airports and flight operators necessitate a complete check of the freight for any dangerous elements. New systems are needed for supplementary inspections. These include X-ray inspections of prepacked ULDs or low-pressure chambers for simulating flight conditions prior to aircraft loading. These additional security checks constitute a major intervention in the work flow in the terminals, yet at the same time they provide an opportunity to test the entire logistics process. Improving security checks can thus help the operator optimize throughput times and costs. X-raying pre-packed ULDs and using low-pressure chambers and flight simulation chambers reduce the risk of dangerous freight getting on board. Explosives can be found by applying low or high pressures, ultrasound and time-triggered sensors audio signals are also detected. Specially designed simulation programs reproduce the varying external conditions during a flight, thus reducing the risk of attacks in the air. Any hazardous objects in the freight can be dealt with by a controlled explosion in the chambers, thus preventing any further damage. The productive area of a freight terminal is the working area, where the freight is handled. The freight is sorted and consolidated according to destination, time zone, flight number and other criteria at the workstations the build up and break down area. Robust and reliable conveyor systems linking up all operative processes form the backbone of any cargo handling system. All sorts of freight handling requirements have to be met: cold rooms, deep freeze

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Cholamandalam MS General Insurance Company Ltd Risk Management of Specific Industries

Airports Version 1

chambers, transfer zones for perishable goods and open-air apron zones each air cargo center has its own specific requirements. The various systems include : Stationary conveyor systems (transport tracks, turntables, RA decks) Mobile equipment (transfer vehicles, truck docks) Storage systems featuring ETVs, stacker cranes, ULD elevators Working areas for picking and splitting (workstations) High-bay warehouses for boxes, pallets and GLP (BSS) Internal transport systems for loose freight inside the terminal Integrated PLC hardware and software solutions IT management systems: Cargo Compact & Cargo Warehouse Management DART maintenance and service tools Security check, X-Ray and underpressure chambers Moby R localization systems Design of Cargo Handling system : Factors

The main functions of a freight terminal are to accept and transfer freight on the land side (import, export) and to transfer and accept freight on the air side (inbound, outbound). The connecting conveyor systems transport the freight within the terminal.

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Cholamandalam MS General Insurance Company Ltd Risk Management of Specific Industries

Airports Version 1

2.4

Aircraft Handling : One of the most important criteria of the success of an airport and an important goal of all participants is the quick, efficient and on-time turnaround of aircraft of any size.

For the airport, this means optimum utilization of available resources. For the airline, this translates to maximum flying time of their most valuable assets, their aircraft, and thus to maximized earnings. And the passenger enjoys punctual departure, which is the basis of ontime arrival and smooth transit. Thus, the efficient guidance and handling of any aircraft from touch-down to take-off is right in the focus of any airports activities. The airport has to put systems in place, innovate and integrate technologies to support the ground movement and handling processes of aircraft in order to maximize the benefits the customers reap from safe landings, quick taxiing, precise parking, organized ground handling, efficient loading and boarding, and the punctual return to the runway. IT systems play a significant role in keeping to flight schedules, monitoring

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Cholamandalam MS General Insurance Company Ltd Risk Management of Specific Industries

Airports Version 1

ground movements, and planning and co-ordinating the apron and terminal activities of multiple parties. The central goal is to detect and remedy any deviations from plan to make sure that no time is wasted and all resources are used to their intended purposes. VDOCKS Video Docking System is designed to ensure precise guidance of the aircraft over the final few meters en route to its correct stop position. The system relies on passive sensors that process visual data into guidance information for the pilot. Guidance signals are clearly displayed and arranged, and thus easy to read for the pilot and the co-pilot. All information is also clearly presented at the VDOCKS central working position. Video images of a particular gate are accessible by a simple mouse click and can be viewed on the human machine interface (HMI) screen. 2.4.1 Ground Handling Ground Handling on an airport is one of the most complex and time-critical processes in the entire industry. Multiple parties work on the same object, where even only a minute of delay in a single activity can create havoc on the work-schedules of everybody else, leading to a substantial waste of resources and multiplied delay of the entire system. Such interdependencies, the time-criticality and natural factors such as weather highlight the importance of careful planning and flexible management of all activities and resources around an aircraft on ground. 2.4.2 Lighting systems Depending on visibility conditions under which airports have to operate, as well as on available radio navigation equipment, lighting systems should comprise all visual aids needed for clearly marking the approach sector, runways, taxiways and apron, and for routing the landed aircraft safely. The AGL system includes the following equipment: Hazard and obstacle lighting Wind direction equipment Identification beacons Apron floodlighting Signal equipment Docking system

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Airside visual aids are gaining increasing importance for the safe movement of aircraft on the ground. The increase of traffic volume and the need for continuous improvement of traffic safety on runways, taxiways and apron are technical and economic challenges for intelligent airfield lighting and control. 2.4.3 ALCS Airfield Lighting Control and Monitoring Systems Airfield Lighting Control Systems (ALCS) allow air traffic controllers (ATC) to monitor and operate a range of lighting functions from the control tower, at the same time providing them with valuable feedback on the performance status of system lighting equipment. 2.4.4 Surface Movement Guidance and Control System ICAO has specified the provision of (advanced) surface movement guidance and control systems (A-)SMGCS to avoid collisions on the ground. 2.4.5 Power Supply : The airport never sleeps. Non-stop operation demands a power supply with the highest degree of availability and flexibility, because a growing rate of demand fluctuations has to be compensated reliably and without loss in quality. At an airport, all sections and systems need a reliable and consistent power supply at all times and in every respect: from the mains connection to the airfield lighting, from the energy management to the emergency power supply concept. In the event of component failures or other disruptions, it is the job of the power supply system to keep all airport facilities, systems and subsystems supplied with power with a minimum of interruptions. 3. 3.1 Loss Exposures : Passenger Transportation : In and around the airport, passenger transportation involves a low hazard level, since nothing is produced in the strict sense of the word. At the same time, there are fire loads due to office work, suitcases and retail stores. Electrical power, smoke and welding are some, but no all, of the possible sources of ignition. 3.2 Cargo Transportation :

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Cargo transportation in an airport is in principle equivalent to receiving goods at a manufacturing company. A large number of different goods (suitcases) are accepted and fed to various departments (planes) within a short time. This means that fire loads are quite low during quiet times. However, considerable fire loads can accumulate during busy times. The volume of cargo handled is comparable with that of a forwarding company. Here too, the fire loads can be occasionally high. Since valuable materials are only transported by air, extremely high value accumulations can be expected. Here too the sources of ignition include electrical power, smoke and welding among others. 3.3 Maintenance : The greatest hazard specific to airports relates to plane repair. In repair areas, extremely high fire loads can occur (partially fuelled planes) with very high values. Some of the repair works (such as welding or soldering) involves high temperatures. This requires special fire precautions. The situation is similar when airplanes are fuelled on the apron. 3.4 Traffic Control/Apron Control : Air traffic control is equivalent to conventional office work. Take-off and landing clearances, frequentation of routes and similar procedures are processes. Apron control, however uses highly sophisticated electronic equipment which must always be available. Therefore, the fire protection of this equipment must be considered separately. 3.5 Periphery : In addition to the exposure specific to airports, higher exposures related to the general infrastructure should be considered. These include : Hotels Shopping centers at gates and in the outer buildings Railway stations Multi-storey car parks

Needless to say, the airport periphery includes some main hazards such as : Tank farms

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Waste disposal Co-generation plant.

Possible causes of risk and loss prevention measures for this infrastructure would be discussed with the respective occupancies. 4. Probable Maximum Loss Scenarios : In most airport loss scenarios and disaster management plans, the event of an airplane crashing over the airport building has been seen for PMLdetermining scenario. However, such an event occurs so rarely that it must been not as probable but rather as merely possible, so that one could depart from this scenario. Another unlikely scenario is an airplane fire during fuelling that spreads to the building. For the case of a hangar fire, a few points needs to be considered. If the fire breaks out in the maintenance and repair hangar, the airport is usually affected by the damage to the building and not to the plane since the latter could be insured by airline insurance policies. Since the building value of hangar may not be more than US$ 50 Million in most cases, other scenarios should be given preference. The best conventional scenario is the fire in a terminal building (regardless of origin). It must be taken into consideration that very valuable furnishings and complex building facilities can be destroyed. The affected area depends on the number and quality of fire resistant partitions, the size of the building and values at risk. In respect of business interruption, modern airports have complex facilities such as fully automatic luggage transportation and computer supported air-traffic control and hence the re-instatement might take upto 18 months or 24 months. 5. Major Losses : Dusseldorf Airport, Germany, 11th April 1996. The terminal A of the airport was damaged by fire. The loss was caused by hot work at an expansion joint of the approach ramp. Inflammable insulation, lack of partitions and delays in fire fighting helped to spread the fire quickly. The property damage loss was US$ 115 Million and that for business interruption was US$ 63 Million. 17 people lost their lives and another 83 were injured.

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Gatwick Airport, London, 1st November 1991 Storage hall for cabin equipment and engines at the Gatwick airport damaged due to fire. The cause of damage was presumably due to smoking, but not clearly established. The property damage loss was US$ 42 million and Business Interruption loss was put at US$ 3 million. Hullavington Airport, UK, 3rd January 1992 Storage hall for military supplies (eg., parachutes) affected by fire. The total property damage loss was put at US$ 48 Million Orly, France, 5th June 1991 Spare plane parts caught fire at the airport. The exact cause of fire is still unknown. The total property damage loss was put at US$ 19 Million Brussels, Belgium, 3rd October 1997 Central high bay storage rack for spare parts in the airport damaged. The loss was estimated at US$ 53 Million for property damage and US$ 27 Million for business interruption respectively. 6. Risk Management : Airports are characterized by large rooms and large volume of people. Consequently, fire protection must focus on personal safety as well as avoiding and preventing spread of fires. 6.1 Basic Fire Fighting Equipment : In all cases, portable fire extinguishers and hose reel/indoor hydrants must be located throughout an airport. With this equipment, persons without special training can fight any incipient fire. Signs must be provided which are easily recognized and can be seen from far away. 6.2 Fire Service : At airports, the fire service is usually responsible for organizational and preventive fire protection. International aviation treaties regulate the nature of fire protection, equipment, training and time until fire fighters arrive at a fire after an alarm sounds. This ensures optimum fire fighting, should a plane crash. Each airport makes its own arrangements for the fighting of

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fires in buildings. Thus an airport which is safe for passengers could actually be poorly protected from the point of view of property damage. 6.3 Structural Fire Protection : When airports are built or converted, it is a general rule that inflammable building materials should not be used at all. Despite this, fire loads caused by bunches of cables and utility equipment cannot be avoided. Structural partitions are included wherever possible. If fire retardant or fire resisting walls are not feasible, curtains, rolling shutters, doors and gates are used to prevent smoke and heat from spreading. Fire retarding sealing must be employed to prevent fires and smoke from spreading via conveyor belts, tubes or transportation equipment. The fundamental rule is that the more fire resisting the partitions are, the better. 6.4 Fire Detectors and Extinguishing Equipment : The shopping areas of modern airports are built in an atrium design. For this reason, the buildings can be very high. In this part of an airport, areawide sprinkler systems are not worthwhile since it takes too long for a sprinkler at that height to get triggered. Thus at some airports, the inside structures have been roofed over and equipped with sprinklers. This has eliminated the need to place sprinklers in the hall. All other areas, the luggage area in particular should be provided with sprinklers without exception. Particularly exposed rooms, such as communications centres and transformer rooms, must be equipped with gas or foam extinguishing systems. There are special protective strategies for tank farms, large kitchens and hangars. If extinguishing systems are not available, as an absolute minimum area-wide detectors must be available in conjunction with a fire service equipped for fire protection of buildings.

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