Cost Consequences

Every change in federal regulations involves cost consequences. Sometimes these will benefit the way you operate due to increased flexibility and reduced burdens. Usually, however, changes will require added costs. Effective and valuable comments to regulatory proposals contain as much information as possible about the financial consequences of a proposal on an individual or a company.

While it’s important to characterize the broader impacts of a proposal on your operation, real value will come from providing real financial numbers that you would use for an analysis in any other part of your business. The government uses federally defined guidelines when it attempts to determine the cost of human lives (in areas where rules will reduce human losses, such as safety improvements), the average hourly wage rate, equipment acquisition and installation costs and other estimates for its analysis. Believe it or not, the government has determined that you are worth about $2.7 million when calculating the cost of preventing human casualties.

Most of the time, these federal guidelines will substantially underestimate the regulatory costs for aviation rulemaking. Often, this will result in the actual cost estimates for a proposed rule being orders of magnitude more expensive than the government estimated. This is why it is important for your comments to include estimates for your company to comply with a proposal. Elements to consider include:

• The hourly rate that you would pay your employees involved in the complying with the rule. For your salaried employees, divide their annual salary by 2,080 (the number of work hours in a calendar year) to determine an hourly wage rate.
• The hourly rate you would pay for service on your aircraft.
• The hourly rate you would pay to have your personnel trained to comply with the new rule.
• The hourly fully allocated operating costs of your aircraft as it relates to changes in how you operate your aircraft.
• The hourly rate you would pay for any external contractors (advisors, legal reviews, experts) to assist with your compliance.

All of these elements and other cost consequences when included in your comments provide the needed evidence to warrant changes to a regulatory proposal.