The Political Economy of Volcanic Ash

The Economist has of course a Briefing on the Effects of the Ash Cloud from Eyjafjallajökull on the political economy of flight, which informs its lead commentary in the April 24th 2010 edition, about this incident, entitled Earthly Powers.

Both articles recount that the “safe level” of ash was determined by the CAA (in Britain, but in fact the measure was coordinated across the continent) started out at zero, when the flight restrictions were first imposed on Thursday April 15th. And then it was changed on Wednesday April 21st to 2,000 micrograms per cubic meter. The Economist regards it as “suspicious” that the level was changed “in the face of an affluent cadre of displaced people, airlines feeling the pinch, a looming threat to some supply chains, and (in Britain) an election.” I don’t regard it as “suspicious” – I think, given the evolution of knowledge and experience, the sequence of administrative events was both coherent and justified, with the following caveat. The newspaper suggests, correctly, that how the new level was determined “is not clear”. The CAA apparently says it was set on the basis of data from equipment manufacturers, but no public data has been made available, and I agree with The Economist here that “Regulations without a clear and open argument behind them are worrisome”.

The state of knowledge about the safety of commercial airline operations as the situation evolved is well summarised by David Learmount in his blog entry of Monday, April 19th. I agree with much of what David says, and I think it serves to allay “suspicions” of administrative mismanagement of the event, such as hinted at by The Economist. The amount of uncertainty at that point on Monday of the risks involved, both likelihood and severity, was enormous. [Added 29.04.2010: I find David’s article in Flight International, 27 April – 3 May 2010, pp8-9, largely identical with his 24 April article in Flightglobal on the subject, a careful recounting of the safety aspects of the event.]

By Tuesday, 20nd April, the ash had confined itself to lower flight levels; upper airspace was freed for flight, and by Wednesday 21st April new guidance had been issued and implemented. I still think that shows an exemplary reaction to the situation.

Now let’s look in a little more detail at the political economy involved. I had suggested in a note to the York Safety-Critical Mailing List, probably somewhat arrogantly, that people didn’t seem to be “conversant with probability or decision theory“. A respondent, Chris Hills, eminently confirmed my suggestion with his line of argument.

The Finnish Air Force went on a training sortie on Thursday 15 April and suffered apparent damage to some engines. FlightGlobal doesn’t say how long they were up for, but one might guess it was on the order of an hour. Recall from Learmount’s blog note that, on Monday 19th, it was not yet known what the severity of damage was to the Finnish engines – Learmount suggested they “may never power an aeroplane again“.

Suppose you are the CEO of an airline that wants to fly in closed airspace. Air Berlin, for example, takes in about €90 per passenger per flight from Paderborn to London Stansted if you book shortly before flying, a flight time of about an hour, and they use standard workhorses, which for trips inside Europe are the twin-engine Airbus A320 series and Boeing 737 series, with seats for between 150 and 200 passengers. The engines put out, I think, about three times as much thrust each as the military engines, but they are higher by-pass (meaning cold air which is propelled around and not through the core of the jet engine). Simple arithmetic shows us that the airline is taking in less than €20,000 for the Paderborn-Stansted flight. The cost of an engine rebuild or new engine (and, when one, then both!) lies well in the seven-figure range (I don’t know quite how much it might cost). That is, two orders of magnitude higher than the five-figure sum you are taking in. And until Monday 19th, after the research flights, no one really knew at what flight levels the ash was to be found. So, at a first guess, just to break even in monetary outlays only one flight in a hundred can have such problems. Or, to put it another way, if just one plane on that route has problems, then you have to have another 24 days of problem-free flying that route (two flights a day in each direction) to break even.

And, of course, this doesn’t take into account that, if one airplane has problems, you may well have to mandate the minute inspection of the engines of any other of your planes that flew part of that route around that time frame. And since airlines use a hub system, that means any planes which flew into or out of the hub into which the problem aircraft flew into or out of.

That doesn’t look hugely promising for deciding to fly, does it?

Here is a further way you might then think. Somebody else, associated with government, is telling you you can’t fly. So, whatever your actual evaluation of the risk, you can play grumpy, and argue that the decision-maker is proxy for the government, so the government should be sharing with you the enormous cost of your – forcibly, you say – not being able to do business. Even if you might not have wanted to have tried doing business in those conditions anyway.

So expect discussions about bail-outs.

And, if you are a CEO who read my last post on this topic, you will realise that the uncertainty inevitably led to even a good a priori decision about the risk being more cautious than it is likely that the actual situation warranted. So you could wait for the actual data to accumulate, knowing that you will, in all likelihood, be able to argue “see, it was less dangerous than you said; we told you so”. And you would be right, albeit disingenuously.

So expect to see that argument as the basis of discussions about bail-outs.

Now, about that 2,000 micrograms per cubic meter – we would really like to know where that came from, wouldn’t we?

BTW, it turns out the Finns’ engine problems were not terminal. Flight Global reports that the Finnish engines were healthier than they looked at first – on Friday 23rd April, a week after the ash encounter occurred and after Europe had returned to commercial flying.

Leave a Reply