Aircraft Maintenance Outsourcing Issue Analysis

Deep Background

Introduction
When passengers board a commercial flight today, there is a nearly 50% probability that the maintenance on their U.S. aircraft was performed not by FAA-certificated mechanics employed by an airline, but instead by workers at one of nearly 5,000 domestic and foreign contract repair stations.

As airlines have rushed to slash costs, aircraft maintenance outsourcing has increased significantly from 22.8% of maintenance expenditures for major U.S. airlines in 1995 to 45.9% in 2006.

Aircraft maintenance outsourcing is decimating what will be a hard-to-replace national asset: highly skilled aircraft and avionics technicians. In addition to safety and homeland security concerns, outsourcing is also tied to increased flight delays and cancelations. An examination of flight delay data shows that airlines with higher levels of maintenance outsourcing tend to have more delays blamed on the airline.

Consequences of a Flawed Industry and Government Outsourcing Model:
• On January 8, 2003 twenty-one people were killed when an Air Midwest commuter plane, operating as US Airways Express, crashed after takeoff from Charlotte, NC. The incorrect rigging of the elevator control system led to lack of pitch control as the nose of the aircraft rose uncontrollably despite pilot attempts to restrain it.

• The National Transportation Safety Board (NTSB) determined that the elevator control cable tension had been incorrectly adjusted during the previous maintenance check. The work had been performed by mechanics employed by a firm to whom the work had been subcontracted by the primary repair station Air Midwest outsourced its maintenance work to. The NTSB also faulted Air Midwest for lack of oversight of the maintenance facility.

The Coalition to Legislate Aircraft Maintenance Outsourcing Reform (CLAMOR) has developed five principles to serve as a basis for reform of the aircraft maintenance outsourcing system.

Principle 1. A single, high regulatory standard should be established governing the operations of airline-owned maintenance bases, domestic U.S. repair stations and foreign repair stations.

The Problem
• Currently, there are four tiers to the aircraft maintenance system, each governed by a different regulatory regime, mandating the minimum oversight standards for outsourced airline maintenance, repair, and overhaul:

o Airline-owned maintenance bases are held to the most stringent standards under Part 121 of the Federal Aviation Regulations (FARs).
o Domestic repair stations certificated by the FAA fall under the less stringent FAR Part 145.
o Foreign repair stations certificated by the FAA are also covered by FAR Part 145, but critical exceptions are made in personnel and security standards.
o Non-certificated repair stations, both domestic and foreign, are not regulated or inspected by the FAA, nor are they limited in the types of maintenance they can perform. What’s more, the FAA does not have a complete list of these repair stations.

• Mechanics employed directly by airlines are subject to drug and alcohol testing and criminal background checks as conditions of their employment; their hours of work are regulated by duty-time limitations; and most must hold either an FAA repairman certificate or an Airframe and/or Powerplant (A&P) certificate. No person deemed a threat by the Transportation Security Administration (TSA) may hold any type of certificate.

• Repair station supervisors and inspectors who sign off on maintenance work at foreign repair stations are not required to hold FAA airman certificates, nor are the mechanics working on the aircraft at these facilities.

• Non-certificated mechanics are therefore not vetted by the TSA; and mechanics at foreign repair stations are not subject to drug or alcohol testing requirements.

• Although air carriers are required to submit to the FAA for approval a list of “substantial maintenance providers,” these lists do not necessarily reflect where the largest volume of outsourced maintenance is being performed, nor do they include any non-certificated repair stations used by carriers.

Principle 2. FAA Aviation Safety Inspector oversight of both domestic U.S. and foreign repair stations should be increased to a level that is commensurate with the volume and complexity of current outsourcing practices.

The Problem
• The FAA is tasked with inspecting nearly 5,000 domestic and foreign repair stations that are certificated by the agency, including nearly 700 overseas facilities, 350 of which have been added to the FAA’s inspection roster since 1994.

• The FAA has historically focused its inspections on airline-owned maintenance facilities, and has been slow to change its model and both increase the number of and redeploy aviation safety inspectors, even as maintenance has shifted to domestic and foreign repair stations.

• While the FAA’s mandate does not extend to the inspection of repair stations not certificated by the agency, the DOT Inspector General has stated that:

“FAA permits air carriers to use non-certificated facilities as long as the work is approved by an FAA-certificated mechanic. However, this is not an adequate substitute for an FAA-certificated repair facility because non-certificated facilities do not have the safeguards and controls for maintenance repair and oversight that is required at FAA-certificated facilities.”

• In December of 2005, the DOT Inspector General’s office identified 1,400 non-certificated repair facilities, including 100 in foreign countries, that perform aircraft maintenance for US carriers; 21 of these domestic and foreign non-certificated repair stations were performing maintenance “critical to the airworthiness of the aircraft.” The Inspector General further determined that neither the FAA nor the carriers using these facilities provided adequate oversight of the work being performed.

Principle 3. The fully-burdened costs of FAA inspections and audits should be borne by airlines that choose to outsource to foreign repair stations.

The Problem
• Only 103 FAA inspectors (including management staff) are responsible for inspecting 692 foreign repair stations. Limited staff and travel budgets, and passport and visa controls, make unannounced inspections of these facilities virtually impossible.

• Of the heavy maintenance (such as teardowns and overhauls of aircraft) outsourced by nine major carriers in 2006, 35% was sent to foreign repair stations, up from 21% in 2003.

Principle 4. Both domestic U.S. and foreign repair stations should have adequate safeguards in place regarding personnel background checks, access to aircraft and parts inventories to prevent terrorists from exploiting an opportunity to harm the U.S. or other countries.

The Problem
• As reported to the U.S. Senate by the Department of Transportation’s (DOT) Inspector General, foreign repair stations “are not subject to U.S. security requirements,” but to the existing regulations in that country. This situation has raised concerns regarding the potential for tampering with airline systems or insertion of explosives into U.S. aircraft while they are undergoing maintenance in another country.

• In March of 2005, a major enforcement operation involving the DOT Inspector General, Department of Homeland Security, Social Security Administration and the FBI resulted in the detention of 27 suspected undocumented immigrants. All had been employed by the contract labor firms that supply workers to TIMCO’s FAA-certificated repair station in Greensboro, NC.

• At least five of those detained at TIMCO’s Greensboro facility were later sentenced in federal district court on charges related to immigration document falsification. One, who had obtained an FAA Airframe and Powerplant (A&P) certificate, also admitted to having falsely represented on his A&P application that he met all experience qualifications.

Principle 5. Airlines that outsource to foreign repair stations should hold these facilities to high environmental standards with respect to disposal of toxic wastes and other processes associated with aircraft maintenance.

The Problem
• Aircraft maintenance produces significant quantities of hazardous materials, including waste oil, solvents and toxic heavy metals, which makes proper handling and disposal key to ensuring worker and community health and safety.

• According to John Goglia, former member of the National Transportation Safety Board (NTSB), airlines often fly planes empty to overseas repair stations, thus expending thousands of gallons of jet fuel and creating pollution that could be eradicated if heavy maintenance were done in the U.S. by the carriers themselves.

About CLAMOR
• The International Brotherhood of Teamsters (IBT) and Business Travel Coalition (BTC) are leading the way in the formation of a business-labor partnership that addresses and influences the safety and homeland security issues surrounding critical airline maintenance outsourcing in the absence of a single, high regulatory standard and stringent FAA oversight.

• BTC represents the interests of hundreds of corporations worldwide. Corporations that field millions of business travelers are increasingly alarmed over aircraft maintenance outsourcing and the lack of a modernized and harmonized regulatory regime.

• Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women in the United States, Canada and Puerto Rico, including over 28,000 employees in the airline sector.

• The Coalition to Legislate Aircraft Maintenance Outsourcing Reform was formed following the first Aircraft Maintenance Outsourcing Summit, held in Washington, DC on February 11, 2008 and sponsored by IBT and BTC. Participants included the National Transportation Safety Board (NTSB), the Aeronautical Repair Station Association (ARSA), Professional Aviation Safety Specialists AFL-CIO (PASS), Transport Workers Union of America (TWU), and Congressional staff. Senator Claire McCaskill (D-MO) and Congressman James Oberstar (D-MN) provided pre-recorded remarks.