Safety Pays
We think we know what we’re doing / We don’t know a thing / It’s all in the past now / Money changes everything.
Cyndi Lauper
When trying to increase profits, many companies often chant the same old mantra, “Let’s cut costs.”
Aerospace is not immune to such cries. Recent events at The Boeing Company have highlighted how hurrying planes out the door led to a door bolting off a plane. The no-door idea works for Jeep but is a bad look on an airliner. Many see safety requirements as just another hurdle to jump on the way to making money. It’s a cost once sunk, never to be seen again.
But data analysis tells a different story.
All the excellent work Boeing (before Max) and others did to reduce loss rates increased airliner Value (sustainable prices). Below, the Boeing 737-800 had a hull loss rate of 0.2 per million flights. At less than 1/31st of the Tupolev Tu-204 loss rate, it explains how the Boeing 737 series commanded a higher price and sold over 100 times as many as its Russian counterpart with less capacity, range, and speed.
Diligent workers want to put out the best possible products. Keeping their established quality helps the brand’s Value and bottom line.
Take 52 turboprop and jet airliners (19 shown here) and determine their Value (sustainable price) based on their Payload and Maximum speed in MPH. You’ll get a nicely correlated answer. But add their loss rates into the mix, and you’ll get a better one (its p-value 1.47E-05). Being 10X safer costs time and money but adds over 50% to airliner Value.