[IQP] Copa Airlines: Study of Non-compliance Causes Based on Audit Findings

Executive Summary

Project Introduction
Non-compliance issues are a major problem for the airline industry across the globe. In 2005, a study by the Airline Safety Foundation estimated the cost of on-tarmac non-compliance issues and resulting personal injury to be ten billion dollars (Learmount, 2005). That figure, moreover, does not include costs resulting from non-compliance during flights or maintenance costs. This project is sponsored by the Panamanian company Copa Airlines. The project analyzed non-compliance issues at two airports that Copa Airlines serves, Tocumen International Airport (PTY) and El Dorado International Airport (BOG). Tocumen International Airport is located in Tocumen, Panama just outside of Panama City, and El Dorado International Airport is located in Bogotá, Colombia. A reduction of non-compliance incidents at both of these airports would be beneficial to the airline’s audit department and the company as a whole.

Project Objectives
In analyzing non-compliance issues, we had hoped to understand factors leading to non-compliance with the intent to help Copa reduce their occurrence in the future. We would have liked to examine as far back possible looking at all incidents Copa has recorded. However, due to the time limitations and the wants of our sponsor we only investigated PTY and BOG utilizing data from January of 2017 to early August of 2018. The project goal was to correlate Copa Airlines’ internal audit findings to non-compliance, delay, human resources, and high and low season data. Afterwards, creating an analytical tool capable of recreating the type of higher understandings that our team produced. Our project team, in collaboration with Copa Airlines, developed the following objectives to achieve the project goals:

• To discover trends and develop understandings of the causes of the non-compliance issues based on audit findings
• To determine if personnel rotation affects the compliance of Copa’s standard operating procedures
• To determine if the high and low seasons affect the compliance of Copa’s standard operating procedures
• To determine if delays affect the compliance of Copa’s standard operating procedures
• To understand the correlation between high and low seasons, personnel rotations, delays, and audit findings to discover non-compliance trends in operating areas.

Sponsor Perspective
Our team deemed it imperative to understand the values of Copa Airlines and align ourselves with the issues that the company considered most important. We were able to meet with a number of individuals from Copa who were able to assist us throughout our time in Panama. In addition, we toured Copa’s headquarters receiving the opportunity to look at their war room and operations room. These activities helped us recognize that Copa “supports the integral development of the communities where [Copa] operates” (Copa, 2018) and how they go about fulfilling their pillars of responsibility.

While working with Copa Airlines, we visited Tocumen International Airport to view all the moving parts involved in getting a plane into the air. Our guide gave us a tour of the airport which showed us the operations at a typical airport and walked us through the process of conducting an audit. We met weekly with Copa staff in their Panama City office to shared new information and touch base on the project. We also found it useful to understand the process of how the audit data is collected and then transferred to the Tableau spreadsheets. This gave us tremendous insight into how we should treat and further categorize the data on our own.

The flight data that Copa provided was broken down by our team into High and Low seasons. Months that were less than one standard deviation below the mean were labeled as low volume seasons and months that were greater than one standard deviation above the mean were labeled as high seasons.

We then took the broken-down audit data and put them separate categories in Excel, and looked for trends and percent increase due to different factors. The first two data sets that our team compared was the HR data and audit findings. We considered each HR department and looked at the percent increase in audit findings for months with an above-average turnover rate.
The next correlation that we observed was between the high and low seasons that we had created earlier. We looked at the percentage increase in audit findings in each month, paying specific attention high and low volume seasons.

Our team then used the broken-down data sets to find the Pearson correlation between the percent increase in delays per month and flights per month, delays per month and flights per month, percent increase in delays and turnovers per month, percent increase in delays and audit findings per audit, and flights per month and audit findings per audit. This gave us the necessary background to establish the plan for the analysis tool.

Analysis Tool and Recommendations
Our team developed an analysis tool to help establish a long-term, automatic audit analysis system for Copa Airlines. After performing the necessary data analysis and generating recommendations we began work on the analytical tool. We created a Microsoft Excel document where the audit team can paste in the required data into the proper fields and it will automatically run an analysis on the given data points. We also included instructions with the file on how to use it and what the output values mean.

Our project also revealed minor flaws in Copa’s audit system, including the methods of analysis and the ways that the data points are categorized. We recommended that they standardize and improve their data set, add new data fields, increase and standardize the number of audits, and invest in a tablet/software system to address most of these issues.

Our project was successful in helping Copa Airlines take the first steps towards the higher understanding of non-compliance causes. We designed a system to help them recreate the analysis that what we did while in Panama at any given airport. Our team is confident in the growth of Copa’s auditing system and in the decrease of non-compliance issues.