If you think safety’s expensive….lessons from the Spanair crash

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A tired old line, but the cliche “if you think safety’s expensive, try having an accident” occasionally gets some supporting data. In this case it comes in the prospectus for a newly launched rights issue from SAS, which puts a price on the loss of revenue from the Spanair Boeing MD-82 crash in August last year.

SAS, which at the time wholly owned Spanair, says the accident cost”approximately SEK400-500 million ($50-60 million) based on asignificant reduction in Spanair bookings on a year-on-yearcomparison”. That’s about 5% of annual revenues for Spanair – ouch!

Onthe other hand, here’s a question. If an airliner crashes in horrificcircumstances, with its operating practices and personnel behaviourbeing called into question, and gets saturation media coverage, howlong does it take for its bookings to return to normal?

Answer,in Spanair’s case anyway, one month. Again according to the prospectus.In other words, people behave surprisingly rationally with theirwallets, whatever they may say.

The affair’s not over yet of course. Lots of litigation still going on, and there’s not even a report out yet.

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2 Responses to If you think safety’s expensive….lessons from the Spanair crash

  1. Branden April 8, 2009 at 8:39 pm #

    Kieran,

    Who provided the quotes and figures?

    These are crippling. To answer your question, in my opinion, I don’t believe the bookings will return to normal. This isn’t Hollywood where “any publicity is good publicity.”

  2. mutuelle September 24, 2010 at 2:35 pm #

    If an airliner crashes in horrific circumstances, with its operating practices and personnel behaviour being called into question, and gets saturation media coverage, it takes quite a long time fot its bookings to return normal.The goodwill of the company is in question here.

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