Risk Management (Aviation Project “Aircraft Lease Return”)


heavy maint

People tend to think about risk management as the use of statistical data and probability; well not always! Risk management is a process that we use in every day of our lives  and sometimes without even knowing. For example, before we go to bed, we adjust our alarm to ring at 6:00 a.m. Now, the question, why we did not set it to ring at 7:00 a.m.? The obvious answer is that we will be late for school or work!  The word ‘”risk” may be defined as the likelihood a loss will occur. Risk management is the preventive measures that we take against such  losses.

In the aviation industry, an Aircraft Lease Return Project involves very high risks. The project is about the redelivery of an aircraft back to the lessor (owner) in accordance with the terms and conditions specified in the lease contract. In order to succeed, the risk management plan must be well defined in term of its objective and importance. The preparation of a risk management process is usually started at least six months before the kick start of a project. The reasons are:  these projects may involve substantial an aircraft maintenance check; sending the aircraft engines and some other aircraft components to the overhaul facility; additional aircraft spares may require to be purchased. Such spares may have long lead time. To prepare a risk management plan for the project, first we need to start with reviewing the lease contract to identify the significant risks. For example, what are the consequences if we don’t meet the return conditions on the redelivery date? Or what are the penalties on late redelivery of aircraft? Next is to do the risk assessment by making different scenarios. For example, what if the engines get delayed in the overhaul facility? This could impact the entire timeline of the project severely. After identifying and assessing all risks, the risk responses have to come into the picture. Do we mitigate, transfer, avoid, or retain? Aircraft lease return can have lots of surprises, such as failure of components before the redelivery date, project scope change, change of the project team members or even the project manager, etc. Therefore, a contingency plan should be ready to execute at anytime.

Risk control plays an important part in the project plan. Risk control is a method by which project team members evaluate potential losses and take action to reduce or eliminate such threats. Risk control is a significant action taken by project team members that is intended to identify proactively, manage, and reduce or eliminate risk. All projects should have a well-prepared risk management plan. An aircraft lease return project can be very costly and stressful if the risks are not identified and assessed at the early stage.

Engine Overhaul

If you are assigned to be the project manager of an aircraft leased return project, what could be your action if the aircraft engines are not arriving on time from the overhaul facility as planned?

5 thoughts on “Risk Management (Aviation Project “Aircraft Lease Return”)

  1. Working in the insurance industry, I take particular interest in risk management specially when it comes to aviation as this plays a crucial role. I can only imagine the constraints associated with such projects and the level of details required at the various stages in order to ensure all proceeds well as planned. ultimately, it is the lives of passengers at stake and the risk is not only limited to accomplishment of the particular task and returning the airplane to the lessor! It is possible that the project team can be found liable for losses incurring in the future in case of any shortcoming, this will only add more stress to the team!

    1. In Aviation Safety comes First. The terms & conditions in the lease contract will ensure that when the lessee redeliver the Aircraft back to the lessor it must comply with rules & regulation set by the Aviation Regulatory Authorities. Further, during the lease return, the lessor will review all the records & Tasks accomplished by the lessee during the lease period. This review will also act as a preventive measure against any shortfalls and ensure the Airworthy of the Aircraft.

  2. Most certainly Risk is a high factor in the aviation industry especially that there is only a few suppliers in the world for Commercial Aircraft, which lead to a huge financial impact on the operators and the longevity of an airline in the competing market of commercial aviation. In addition a well executed preventive routine maintenance program thru out the lease period will certainly affect the reduction of risk comes the redelivery time of the aircraft to the owner as well as preventing any catastrophic events from happening during operation. Bottom line its all about accountability and liability to ensure prosperity of a company.

  3. I believe, nothing compares to human lives. Regardless of our degree of skill and experience in “risk management” and because aviation is so vital to today‘s economy, potential flight risks need to be eliminated or minimized to prevent costly and tragic consequences. Safety standards must be applied in all key aspects such as aircraft design, engineering and maintenance, communication systems, and flight safety protocols and procedures.
    In reference to above post and if I was assigned to be the project manager of an aircraft leased return project, I wouldn’t accept any delay in the aircraft engines and would immediately switch to plan ‘B’ which should be well defined in the risk assessment plan or the contingency plan of the project contract, even if takes to return the leased airplane and accept the burden of associated losses.

  4. I believe that safety and risk control are the most critical factors in the aviation industry. I believe that UK Civil Aviation Authority (CAA) has designed a safety plan and identified the most significant risks that might occur in the aviation industry, known as “Significant 7”. When “Significant 7” risks managed, safety can significantly improve. I’m not sure if this will help in the “Aircraft Lease Return project” as I’m not an engineer, but I think it is very important to take this fact into consideration when developing the risk assessment plan.

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