Direct and indirect cost of general aviation crashes

There have been few well-designed studies which estimate the costs inflicted on society from injuries, fatalities, and property damage caused by aviation crashes. Furthermore, indirect cost estimates from the human capital (HC) approach tend to be substantially smaller than those obtained from the willingness-to-pay (WTP) approach.

To estimate the direct and indirect costs of general aviation crashes in New Zealand, and to contrast the HC and WTP approaches used to estimate indirect costs.

The incidence, morbidity, and mortality from aviation crashes between 1988 and 1997 were estimated from national health and aviation records. Direct costs included medical treatment, damage to aircraft and property, and the cost of crash investigation. For the HC approach, we valued losses to society as the value of lost production from both employed work and household activity. For the WTP approach, we used the Land Transport Safety Authority's estimated values of society's willingness to pay to avoid a fatality or injury.

The annual average direct cost of aviation crashes was $9.1 m (range: $8.0 m to $11.4 m). The annual average indirect cost using the HC approach was $13.6 m ($5.6 m to $32.2 m). Using the WTP approach the annual average indirect costs was $49.3 m ($20.6 m to $106.5 m). Indirect costs from premature deaths were the key cost drivers. A sensitivity analysis showed that these values were relatively robust to changes in parameters.

The annual average cost of general aviation crashes in New Zealand was between $22.6 m and $58.4 m. Indirect costs using the WTP approach were 3.5 times greater than those estimated using the HC approach.