As airlines contract out work, safety issues rise

In 1996, the ValuJet crash sparked one of the most intense debates about the safety and appropriateness of outsourcing. The accident was caused by a fire, which was ultimately blamed on a contractor that improperly loaded oxygen canisters into the hold. One hundred ten people were killed and the airline nearly went bankrupt, although it did emerge later as AirTran.

As a result of that investigation, the FAA instituted a new system of overseeing airline maintenance in 1998, called the Air Transportation Oversight System. But as of last year, the inspector general found that it wasn't yet fully operational. And in the new report, it found the FAA continues to focus too much on the major airlines' in-house maintenance operations.

"In FY 2002, certificate management inspectors completed an average of 220 inspections of in-house maintenance procedures for the major carriers," the report states. "For the same year, they completed an average of only 7 inspections of outsourced maintenance facilities used by these carriers."

The FAA is quick to note that it does have inspectors assigned only to repair stations. Of its 1,745 maintenance inspectors, 708 oversee the repair stations. But the union that represents the inspectors insists there are still not enough people to oversee the 5,250 repair stations properly, particularly since 650 of them are overseas. Union officials who represent mechanics at the nation's major airlines also contend that a lot of sloppy work slips through at the repair stations.

'It's alarming because the FAA usually doesn't go very deep into anything when they do their inspections, so the things they did find must be pretty superficial," says Frank Bokfanske, safety and standards director for the Aircraft Mechanics Fraternal Association in Hanover, N.H.

The mechanics union has surveyed supervisors at the major airlines who report that it's routine to see crossed cables, improperly tightened bolts, and other such errors when planes return from contractors. But supporters of outsourcing argue that in-house mechanics can make errors as well. They say outsourcing may even be safer because another layer of safety is built into the system: Work done in repair shops is usually double-checked by the carriers' own mechanics.

But arguments aside, even union members acknowledge that outsourcing is here to stay. It can save carriers as much as 40 percent in maintenance costs and allows them to build flexibility into their high fixed costs, according to Frank Werner, an aviation finance expert at Fordham Business School in New York.

Indeed, most of the low-cost carriers, which have set the benchmark for cost savings in the industry, outsource as many of their services as they can, according to Steven Casley of Back Aviation Solutions. "US Airways and United were able to secure concessions [from unions to allow more outsourcing] in bankruptcy," he says. "That has put pressure on other unions to give concessions to allow their carriers to compete effectively."

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