Business Management Blog

From 1996 to 2006, U.S. airlines’ outsourced maintenance expenses increased from 26 percent to 64 percent of their maintenance costs. In that period, the number of foreign FAA certificated repair facilities grew from 344 to 698.

At issue are three very critical problems:

• Eroding passenger safety. Airline-owned and FAA certificated contract repair stations must adhere to specific standards. For foreign FAA-certificated repair facilities, however, critical exceptions are made in personnel and security standards such as background checks, workshift time limitations, and alcohol and drug testing.

• Home land security risk. With respect to background checks, drug and alcohol testing, and access to aircraft, there is one standard for airline-owned maintenance facilities and FAA certificated repair stations in the United States but none for foreign repair stations.

• Dwindling skilled work force. Cost-cutting pressures on the industry and government regulation related to aircraft maintenance outsourcing are decimating a vital national infrastructure: highly skilled aircraft and avionics technicians. Once it is so reduced, this missioncritical work force will be virtually impossible to rebuild.

At Stake

As such, our aviation system is vulnerable to accidents and incidents, delays and cancellations and potential attacks. Consequences could be billions of dollars in negative U.S. economic impact, drug smuggling, and pollution from flying empty aircraft to and from foreign repair stations.

The root of the problem: an outdated FAA model for oversight of outsourced maintenance, a dysfunctional FAA culture and a counterproductive budgeting approach.

The Department of Transportation’s Inspector General has documented these problems and Congress has held numerous hearings. Yet, a sense of urgency is missing at the regulatory level proportionate to the growing risk to passengers, citizens and the U.S. economy, should terrorists exploit our increasing vulnerability.

Action Plan

Legislative reforms now are needed based upon the following five principles.

1. A single, high regulatory standard should govern the operations of airlineowned maintenance facilities and U.S. and foreign outsourced repair facilities.

2. FAA inspector oversight of both domestic and foreign repair facilities should be increased to a level commensurate with the volume and complexity of current outsourcing practices.

3. Airlines that choose to outsource to foreign repair facilities should assume the fully burdened costs of FAA inspections and audits.

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

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

To press Congress on these issues, the Business Travel Coalition and the International Brotherhood of Teamsters have joined forces to form the Coalition to Legislate Aircraft Maintenance Outsourcing Reform, or CLAMOR. Clearly, it’s time to make some noise.

Source: T&E 2008 06