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Friday, April 2, 2010


"An accident waiting to happen? Outsourcing raises air-safety concerns", an old article published in the March 2007 edition of Consumer Reports illuminates again. In August 2008, CR further reported in that major airlines had all engaged in the same practices: outsourcing maintenance in the USA and overseas to save money with disregard for the concerns raised in CR’s article. The article never mentions the countless unionized American Airlines employees who were axed in order to accomplish this. One would think that maintenance of aircraft should be at the top of any corporation whose business it is to fly airplanes. Quality in maintenance used to be part of the instilled pride of any Airline Corporation.

Except that flying airplanes is only incidental to the real business of the airline corporation today. “Airline” is part of the Brand, and the real business of the corporation is to produce a return on the investment of shareholders (i.e., to make money). For example, the top ten shareholders of American Airlines – well over 50% - are all investment firms or one sort or another. These owners of American Airlines and their predecessors have been directing the outsourcing of labor to cheaper alternatives to the relatively well-paid union employees.

The CR 2007 article states, “Contract repair facilities, especially those overseas, are subject to less oversight than in-house shops, with fewer screening programs for workers, fewer inspections, and loopholes that allow even more subcontracting”. The FAA discloses that they “…do not restrict the amount of outsourced maintenance if the carrier has a maintenance audit program in place.” The foxes both guard and own the henhouse. The maintenance work by a casual worker hired by a subcontractor of a subcontractor to work on critical airframe systems is fine, as long as there is a proper e-paperwork trail.

The CR article describes what I would label systemic consumer problems generated by outsourcing airline maintenance:

Substandard work
Unlicensed mechanics
Passenger inconvenience
Passenger deaths

The FAA has lost most of its investigative staff, and is now using statistical analysis to direct what few investigators it still has. The airlines self-report to the FAA on almost all matters, and the FAA uses these data to compile reports. Some are cited to show that outsourcing causes no big problems. But I’ve not seen a report that touches upon the all the data voluntarily furnished and stored in its Aviation Safety Information Analysis and Sharing (ASIAS) system.

Since the airlines are not forthcoming about reporting on substandard work, unlicensed mechanics, security breaches  – and due to the proliferation of these on and offshore “sweat-hangars” – the occasional fine here or there is just considered part of the cost of doing business by the airlines.

Tell that to the passengers trapped on the tarmac for twenty hours due to avoidable mechanical failure. Or worse. According to the NTSB, 28% of fatalities can be attributed to mechanical failure in the 2000’s, up from 21% in the 1990’s. Nobody could argue that the boards of these outsourcing airlines had the best interests of consumers on its mind when these decisions were made.

Perhaps a blip in the Stock Market due to ongoing public concerns about airline safety and outsourcing as recently reported in the February 18, 2010 article by Christopher Hinton, entitled "Airline Stocks Decline 2009 Accident Rate Falls" indicates that consumers and investors are more savvy than those old men in the boardrooms realize.

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