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Outsourcing of airline maintenance soars Some are concerned that maintenance work isn't being checked thoroughly
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The recent epidemic of airplane groundings because of safety inspections comes even as the major air carriers have sent more and more of their maintenance work to outside shops, a new study by Consumer Reports has found.

Why should it matter? Loopholes in aviation rules means the Federal Aviation Administration, which inspects airplanes, usually has less control over shops that perform the outside work, compared to an airline's own facilities.

That means work probably is not done by a licensed mechanic, although one has to sign off ultimately. It also means that security screening of maintenance workers is less intensive. When we examined this issue in March 2007, mechanics and FAA inspectors—people on the front lines of aviation safety—told us they were concerned that the work wasn't being checked thoroughly.

CR has examined federal financial reports filed by domestic airlines and has found the outsourcing trend continues to grow (see chart below) since our last report. In fact, based on the latest data, 12 of the 14 largest U.S. carriers increased their percentages of outsourced maintenance between 2005 and the third quarter of 2007. In addition, while only two of the 14 airlines outsourced 80 percent or more in 2005, by late last year nine of the 14 were outsourcing between 80 percent and 94 percent.

This trend applies to smaller carriers such as AirTran, as well as larger airlines such as America West, which has since been absorbed into US Airways. The largest increase in that time frame was by ATA, which increased its outsourcing from 18 percent to 87 percent (the airline shut down on April 2).

Even though American Airlines outsources much less maintenance than the other Big Six carriers, it too sent out more than half of its maintenance work for the first time, according to our new numbers.

American Airlines was among the airlines hardest hit by the FAA inspections of commercial aircraft grounded for days in recent weeks. In April, Robert Sturgell, the FAA's Acting Administrator, stated that a recent safety audit had found airlines are in 99 percent compliance with Airworthiness Directives, despite the groundings.

The aircraft groundings also have induced widespread flight delays and cancellations at Southwest Airlines and other carriers, and were attributed to the safety audit completed between March 13 and March 28. The audit's second phase is scheduled for completion by June 30, so experts say further service disruptions are quite likely at any time.

A spokeswoman for the union that represents FAA inspectors was cautious about making a link to the recent spate of groundings right now. "We would need to know a lot more about the problems being found, and right now we aren't hearing much," says spokeswoman Kori Blalock Keller. "Also, the FAA doesn't have a handle on the amount and scope of work being outsourced, which makes it difficult to quantify."

But the International Brotherhood of Teamsters, which represents more than 9,000 mechanics at 11 airlines, claims there is a direct connection in the case of United Airlines Boeing 747s that recently were grounded because improper equipment at an outside facility in Busan, South Korea was used to test the airplanes' gauges.

Jim Hoffa, general president of the Teamsters, issued a statement that said, "This just shows how risky it is to send airplanes offshore to be repaired. Overseas repair stations simply don't meet the same standards as U.S. repair stations. The FAA should no longer allow U.S. airlines to send their repairs overseas."

Megan McCarthy, a spokeswoman for United, says the final inspections of the Boeing 747s found no issues. As for the facility in South Korea, she says, "We addressed this with our partner." McCarthy says United "absolutely" continues to use this vendor and there have been no reported problems since then.

The outsourcing issue was first brought to light in Consumer Report's March
2007 investigation, "An Accident Waiting to Happen?" which detailed criticism of the FAA's oversight. Airline maintenance issues were updated on CRO's Safety Blog on March 31
and again on April 10.

"I would say periodically there are going to be cancellations and delays," says Tom Brantley, national president of PASS. "There won't be any warnings. Travel as flexibly as you can and good luck."

Brantley adds, "Airlines aren't running as many flights so the impact is greater than it would have been a few years ago. I expect the traveling public will pay as this goes forward." Are some carriers more likely than others to pose a threat of disruption? "Anyone in bankruptcy or near bankruptcy deserves extra attention," warns Brantley. "Also, mergers deserve attention. There's a potential for problems there."

In recent weeks several domestic airlines shut down due to bankruptcy, while others, including Frontier Airlines, have filed for Chapter 11 reorganization. In addition, the planned union of Delta and Northwest is likely to trigger additional merger discussions.

Ironically, Brantley says the current inspections are not addressing the bigger issue of overseeing outsourced maintenance, both domestically and abroad. "Actually, those problems have gotten worse, because of all the [internal] attention given to these inspections."

Airline maintenance outsourcing (as percentage of total expenses)
AIRLINE 2005 2006 2007 (through 3Q)
Alaska 92% 80% 81%
Hawaiian 80% 86% 89%
US Airways* 77% 81% 80%
Northwest 76% 83% 81%
America West** 76% 91% 91%
Continental 69% 68% 70%
JetBlue 68% 64% 65%
Southwest 68% 81% 65%
AirTran 66% 93% 94%
Frontier 65% 79% 80%
United 63% 66% 67%
Delta 48% 73% 72%
American 46% 49% 51%
ATA*** 18% 85% 87%
*Merged with America West
**Merged with US Airways
***Ceased operations

Source: U.S. Department of Transportation

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