Wyvern changes course with new policy

The early days were a little less than noble for Wyvern, the Palmyra, New Jersey–based charter auditing firm. The company took its name from a mythical, winged dragon that was said to be so large it preyed upon elephants. Armed with this mascot in the early nineties—and the attitude that prompted its selection—Wyvern began to frighten corporate risk managers about the hazards of flying a chartered airplane and the need for Wyvern audits of charter operators. Though the Air Charter Guide and the National Air Transportation Association at first railed against the firm, eventually Wyvern made the industry pay attention to its institutionalized version of what had previously been ad hoc due diligence by corporate charter buyers.

Wyvern was trying to create an objective standard. The only way an operator could get audited by Wyvern was if a third party (presumably a prospective customer) requested and paid Wyvern to do it. Much was made of the fact that Wyvern wouldn't accept any compensation from operators and the company's ever-changing roster of audit subscribers who changed their checklists of priorities almost as fast as you can say, "Wyvern approved." Many operators initially couldn't see the results of their on-site audit, and some were "blacklisted" for their refusal to participate.

Much has changed. Competitors sprang up, most notably ARG/US, which uses the slightly different approach of compiling existing government data and is less oriented to field audits. (ARG/US's Platinum rating, however, results from an on-site audit similar to Wyvern's.) The dozen oil companies that first dictated inspection standards for principally overseas operators have gradually been replaced by a "subscriber board" of Fortune 500 blue chips. Where before audited charter companies served esoteric markets, passenger trade is now the norm. An operator "board" of charter companies sits in on this process, to ensure that in the quest for perfection, the users don't prescribe something altogether unattainable.

Last June, Wyvern was bought by CharterX, a company that specializes in providing industry operators with a quoting tool for their Web sites and with data about things like aircraft availability. [The Air Charter Guide, which the author founded and previously owned, operated as a joint venture with CharterX between 2000 and 2004. The Air Charter Guide is now owned by Prism Business Media and has no relationship with either CharterX or Wyvern.-Ed.]

The Wyvern purchase stirred up some criticism. CharterX describes itself as a marketing company for the industry. Wyvern describes itself as the gold standard for independent safety evaluation of charter operations.

Was this a conflict of interest? Many operators thought so. And then Walt Lamon, founder of Wyvern, announced the intention to permit charter operators to request—and pay for—their own audits. Industry writers and others questioned the propriety of this. I think the real reason it caused a fuss, however, was simply that for years Lamon refused to do it.

But most readers of this magazine shouldn't be shocked. After all, every company on Wall Street gets its annual statements audited by a CPA firm that lives by GAAP; and after the Arthur Anderson meltdown, most CEOs would sooner bungee jump the Chrysler building than bend the rules. Who requests the audit and pays the bill? The target of the audit, of course. In fact, you could make a good argument that this current move by Wyvern is fairer than the prior policy.

Previously, an operator wanting to stand with its peers had no recourse but to wait until a customer "sponsored" an audit. But now that charter audits have become the norm, an industry participant ought to be able to step up to the plate if it wants to. Show me a situation where a conflict of interest has poisoned the well, and we can always find another where business integrity prevented it. CharterX and Wyvern are trying to broaden their business with shared information, albeit with constraints and permissions on who gets to see what.

The real question, I think, is what has the charter audit become? Is it about demonstrable safety issues, or is it a consumer check for peace of mind? Is it an operator marketing/branding exercise? Is it an effort by corporate risk managers to shift liability to a third party? Probably a little of each to the industry as a whole, and one or the other to each participant or charter buyer.

I'll confess a prejudice: I don't like charter audits—they're intrusive and shouldn't even be necessary. It's the FAA's job. But then Marion Blakey's gang is too busy wasting its time and our tax dollars whining about their budget and hoping to get user fees. They should be doing Wyvern's job.