Flying Cheaper

The Making of This Report

by Catherine Rentz, reporter/producer for FRONTLINE documentaries out of the American University School of Communication's Investigative Reporting Workshop

Catherine Rentz

Catherine Rentz

It all began with viewers' response several months ago to our team's FRONTLINE investigation, Flying Cheap.

That February 2010 report looked into the explosive growth of major airlines' outsourcing of flights to obscure regional carriers, raising serious safety questions. Following the broadcast, viewers wrote telling us to look next at the outsourcing of airline maintenance.

We thought it was an interesting idea.

But unlike that 2010 investigation, which focused on a 2009 Buffalo commuter plane crash (Continental Flight 3407) that triggered attention to airlines' outsourcing flights to regionals, the outsourcing of heavy aircraft repair work had no such signal event. Indeed, industry and government officials were telling us that maintenance outsourcing wasn't a story at all. They pointed out, "the safety record is better than ever."

Reporting Challenges

Our team had no idea how difficult it would be obtaining basic information about maintenance providers.

We knew major carriers increasingly were using independent repair facilities. One-third of heavy maintenance was outsourced in 2003; that number grew to roughly three-quarters by 2007. But finding a list of the top contract maintenance providers for each airline proved impossible -- at least when it came to the Federal Aviation Administration.

One of our first efforts had been to file a Freedom of Information request for an FAA-mandated form showing each airline's essential maintenance providers. The FAA rejected our request, saying such a list was the custody of the airlines, not the FAA.

It seemed a bit improbable that the government regulator wouldn't have the list of who maintains the planes it oversees. Yet this was a problem noted back in 2008 in a report by the Department of Transportation's Inspector General. It stated the FAA:

"... still faces challenges in determining where the most critical maintenance occurs and ensuring sufficient oversight."

Looking For the List

Did the maintenance industry have better information? We located a "Top 10" list of maintenance, repair and overhaul operations (MROs) from Aviation Week. But we still couldn't find a public list matching up which independent repair operations serviced which major airlines.

Flag saying 'Ameco Beijing'

So last April we went to the MRO industry's major conference in Phoenix where we met with several MRO representatives. Many were quite open, allowing us to interview them at their booths. One was AMECO, a large repair facility in Beijing, which industry experts say represents the more global direction the industry is taking in outsourcing.

From AMECO press releases, we knew United Airlines is now sending its wide-bodied planes (747s and 777s) to Beijing for scheduled overhaul repair -- what's called heavy maintenance. AMECO is a joint venture of Air China and Lufthansa, and United's then-president, John Tague, whom we met at the conference, assured us the work at AMECO is first-class. "We have to get past this view that any work that's done in the U.S. is de facto done better," Tague told us. And Tague invited us to visit AMECO in Beijing.

We thought that was a great idea. So did AMECO, initially, in its invitation. For weeks we worked with the company planning the visit, securing journalists' visas and getting approval by the Chinese government.

We wanted to see AMECO's facilities and talk with workers about the quality of their workforce, the competitiveness of the industry and their regulatory compliance records, which we had obtained from the FAA. (Note: These are public records, but the FAA allowed the company to redact the documents. We don't know what was taken out, but we noted that one FAA inspector in 2006 refused to renew AMECO's certificate for a year because of "systemic non-compliance" with FAA regulations. In the end, the FAA renewed certification for four months, and the company has since taken corrective action and is again fully certified.)

Then, about one week before the scheduled trip, AMECO canceled our visit.

ST Aerospace Mobile

But we kept at it. We uncovered information through independent MRO operations who sometimes publicly touted new contracts with major airlines, and kept pursuing interviews.

TIMCO's Ron Utecht, president of the biggest independent repair operation in the U.S. for heavy maintenance, declined our request to visit. As did ST Aerospace Mobile in Alabama, another large repair facility in the country that works on planes for United, Delta and US Airways, among others. (Its parent, Singapore Technologies Aerospace, tops Aviation Week's MRO list as the largest in the world.)

Maintenance Forms

We'd heard of concerns about competitive pressures and the quality of work at ST Mobile. So we decided to take a closer look. But it was tough finding inside sources and mechanics willing to talk. We learned from dozens of interviews across the industry that mechanics at major airlines and MROs feared going public. But through visits to mechanic hangouts in Mobile and countless telephone interviews, we started gaining traction across ST, talking to supervisors and mechanics working in various departments.

What you see in our report are highlights from three workers who agreed to an interview only if we protected their identity. What they told us -- including the quality of work performed -- was confirmed by more than a dozen others we spoke with at ST Mobile, and by internal company documents that we obtained, some discussing instances of mechanical failures that could have led to "serious aircraft mishaps."

We also heard many concerns about the quality of the workforce, including workers having trouble understanding English and too few company supervisors available to oversee workers who weren't FAA licensed. And we discovered that many of the mechanics' complaints were backed up by the FAA.

Inspection reports on ST Mobile dating back to 2003 showed patterns of maintenance problems that led one veteran FAA inspector, Linda Goodrich, to question the company's ability to hold an FAA certificate.

Here are some of the conclusions from the latest FAA reports we received in 2010:

  • "A shortage of qualified maintenance personnel across all maintenance programs"
  • "Your production department continually fails to adhere to your quality system, thus allowing for repeated findings and quality escapes."
  • Numerous failures of senior management, including, "A failure of senior management to ensure that proper work techniques and procedures are adhered to, thus allowing for 'work arounds' to become a standard procedure in your organization."

One of the more serious issues concerned ST's handling of airplane parts. More than a dozen FAA inspection reports cited problems with inconsistent parts identification, including a December 2009 report that cited parts identification problems as a "Repeat Finding."

ST Mobile workers we spoke with described a parts system fraught with untraceable parts, rotting parts stored in outside trailers and an effort to move thousands of questionable parts off the facility before an announced FAA inspection last spring.

Workforce Concerns

Again and again -- from MRO managers to hands-on mechanics -- we heard about increasing worries that there weren't enough qualified aircraft mechanics in the U.S. With the MRO market going global, the competitive pressures on airlines and MROs have intensified, creating tight margins and contract bidding wars against companies like AMECO or ST Aerospace.

And since labor costs are a huge part of heavy maintenance operations, competitive outsourcing puts downward pressure on mechanics' wages -- and further propels the shift to independent lower-cost MROs, both here in the U.S., where the majority of mechanics are typically not FAA licensed, and abroad, where labor costs are cheaper and few mechanics are FAA licensed.

See a map highlighting the trend, produced by the Investigative Reporting Workshop.


All of this is possible through a clause in Federal Aviation Regulations (43.3 (d)), which allows repair stations to hire unlicensed mechanics as long as they are properly supervised.

"The way it was put to me by FAA inspectors is you used to have 10 guys with licenses working on an airplane and one guy signing off on them," says Bill McGee, a consumer advocate on the Department of Transportation's Future of Aviation Advisory Panel. "Now you have 10 guys without licenses working on an airplane and one guy with a license signing off on it. So I think a reasonable question is, 'Is the work being done to the same standards?'"

Sarah MacLeod, executive director of the MRO industry's Aeronautical Repair Station Association, points out there are plenty of good mechanics without licenses. "Just because I have a certificate doesn't mean I know how to work on that particular aircraft," she says. "The air carrier and the repair station both have the responsibility of ensuring that knowledgeable, experienced persons perform their tasks."

And Peggy Gilligan, FAA associate administrator for aviation safety, notes that the airline industry's safety record over the last 10 to 12 years has improved as outsourcing has exploded. Fatal accidents have declined by 80 percent, she says. "So if anything, we have expanded the safety margins."

But could the airline industry be eating away at those safety margins? The numerous insiders we spoke with -- from mechanics to pilots to airline managers -- remain concerned about emerging warning signs in the new outsourced maintenance system, especially the mounting cost pressures that can lead to safety shortcuts.


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Posted January 18, 2011

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