BY MITCHELL SCHNURMAN
With all its red ink and union problems, American Airlines doesn’t have a lot to brag about. But in one category, it’s far and away the industry leader: doing its own maintenance on airplanes.
This sounds so fundamental to running an airline that customers may be surprised to learn that carriers outsource much of their maintenance. Most of the work goes to contractors in the United States, but a rising share goes to repair stations in other countries, including El Salvador, China and Mexico.
This trend has raised concerns about safety, regulatory oversight, even the potential for sabotage. The inspector general for the Transportation Department has sounded several alarms, including an anecdote about visiting two U.S. facilities that consisted of a single mechanic with just a truck and tools. National news stories have highlighted mistakes abroad that included installing a door-sealing device backward.
Airlines have been desperately cutting costs in the past decade after being slammed by 9-11, recessions and soaring fuel prices. Outsourcing accelerates the potential savings, and bankruptcy filings made it easier to break union contracts and slash the maintenance operation.
In 2007, nine major carriers outsourced 71 percent of heavy airframe maintenance — twice the share of four years earlier, the inspector general reported.
American has stood apart on this score, and it employs 11,000 mechanics. That’s two to three times more than Delta, United and Continental, and five times more than Southwest. Management has said that its repair facilities in Tulsa, Fort Worth’s Alliance Airport and Dallas/Fort Worth Airport represent a strategic advantage.
Still, after a hole ripped open atop the fuselage of a Southwest Airlines flight on April 1, American didn’t publicly tout its maintenance investment.
It didn’t point out that American did almost 89 percent of its maintenance in-house in 2009, compared with 38 percent at Southwest. Nor did it publicize the fact that American has almost 21 in-house maintenance workers per aircraft, compared with three at Southwest.
These are significant differences. Yet CEO Gerard Arpey, speaking at a journalism conference in Dallas last week, passed on the chance to draw any distinction when it comes to safety.
Asked why he didn’t promote American’s advantage on maintenance, he said there were many ways for airlines to handle safety in a competent manner.
His diplomacy illustrates an unstated gentlemen’s agreement. Airlines beat up each other over ticket prices, schedules, customer service, bag fees and more. But nobody talks trash about safety.
It’s simply wiser to promote the perception that all air travel is safe. Raising doubts among the flying public is more apt to harm everyone’s business than to help an individual carrier.
So American is in a box. It spends far more on maintenance and believes that the investment matters, but there’s only so much that it dares say about it.
It doesn’t want to attract even more attention in the event of a future incident. If it elects to outsource more work eventually, it would have to answer safety questions then. And it has been in contract negotiations with the Transport Workers Union for more than three years; heaping too much credit on the TWU could make those talks even tougher.
Most important, there’s no proof that outsourcing compromises safety. But anecdotes abound, and the inspector general says that oversight of repair stations in the U.S. and abroad hasn’t been robust enough to ensure that the work meets federal standards.
In 2002, the inspector general said, one airline had 400 in-house inspections by the Federal Aviation Administration, compared with seven inspections at its outsourced repair shops.
Still, outsourcing has worked just fine for some.
“Southwest has been outsourcing most of its maintenance from the beginning, and its safety history is pretty great,” said William Swelbar, a research engineer at MIT.
According to MIT’s airline data project, Southwest outsourced almost 69 percent of its maintenance in 1995, an even greater share than today. Southwest says that it assigns an employee to every contractor, including Aeroman, the heavy-maintenance repair company in El Salvador.
The Southwest plane with the roof tear was serviced at Southwest’s own facility in Dallas about a year ago. Its problem was attributed to metal fatigue, and the manufacturer, Boeing, has been leading the review.
Southwest began shipping work to El Salvador in 2009. According to a report by National Public Radio, airlines can trim heavy-maintenance costs by two-thirds by going to a developing country.
Last week, the TWU issued a report titled “Who’s Fixing My Plane?” Based on government audits and industry data, it chronicles the rise in maintenance outsourcing and makes this key assertion: It’s not just about cutting costs.
“The plain truth is that many airlines now prefer to contract-out these functions, precisely to avoid the routine and rigorous FAA inspections that take place in their own facilities,” the report states.
Airlines and the FAA insist there are many checks and balances at third-party shops, and they point to the industry’s safety record. Swelbar adds that the FAA has been ratcheting up oversight and increasing fines for violations.
But the FAA may face a $4 billion budget cut. In an article last week in The New York Times, William McGee wrote that dozens of FAA inspectors had told him that they already don’t have enough money to inspect repair stations in China, Singapore, the Philippines and elsewhere.
American can talk up its maintenance spending to some audiences, including Congress, regulators and employees. But it gets about as much traction as it does for its pension. While its legacy competitors dumped their pensions in bankruptcy, American continues to pump hundreds of millions of dollars into the plan every year.
It’s doing the right thing, living up to its promises. But American doesn’t get a lot of credit for it, not even from employees.
Mitchell Schnurman’s column appears Sundays and Wednesdays.
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