Rep. Peter DeFazio and US News & World Report
comment on GAO report
FAA’s Risk-Based Oversight for Repair Stations Could Benefit from Additional Airline Data and Performance Metrics
Dr. Gerald Dillingham of the GAO authored a 65 page report entitled FAA’s Risk-Based Oversight for Repair Stations Could Benefit from Additional Airline Data and Performance Metrics. It was issued in response to a request by Rep. Peter DeFazio (D-OR), who has a 100% rating from the AFL-CIO. As a longtime member of the House Transportation & Infrastructure Committee, he has been a dogged advocate against independent repair stations.
In response to the GAO detailed analysis, US News & World Report made the following summary conclusion:
“U.S. safety inspectors are generally unable to conduct unannounced inspections of foreign repair stations where most airlines send their planes for major repair work, and sometimes must cancel inspections for lack of funds, according to a government watchdog.
Federal Aviation Administration inspectors are required to give countries where the repairs stations are located advance notice of their plans, and often notice to the repair stations and the country’s aviation safety agency as well, according to a report released Thursday by the Government Accountability Office.
While FAA inspectors complained that they’ve had to cancel inspections because of the agency’s tight travel budget, the GAO said it couldn’t confirm the assertions because the FAA said doesn’t keep separate data on travel expenditures for oversight of foreign repair stations.”
Rep. De Fazio interpreted the GAO’s findings as follows:
“Yet again, the GAO confirms that there are weaknesses and gaps in the FAA’s oversight of foreign repair stations,” said Rep. Peter DeFazio (D-OR), who requested the report. “How many watchdog reports do we need before the federal government will act to ensure that work done at low-cost foreign repair stations is up to our standards?”
It is a lengthy report with both criticisms and compliments on the FAA performance; here are few of the representative comments:
→ “In 2014, there were approximately 24,600 commercial aircraft in the world fleet, and U.S. airlines operated nearly 6,800 aircraft. These aircraft must be maintained, repaired, and overhauled in compliance with operational and safety standards. Aircraft maintenance is a global enterprise, and airlines worldwide spent about $62 billion on maintenance in 2014, representing around 9 percent of total operational costs.”
→ “Ensuring the U.S. airline industry maintains its unprecedented safety record depends, in part, on the roughly 4,800 repair stations located in the United States (domestic) and in foreign countries that are certificated by the Federal Aviation Administration (FAA).”
? “However, questions have been raised in the media and in congressional hearings in recent years over whether U.S. airlines’ maintenance contracting practices have adversely affected aviation safety.”
→ As of October 2015, FAA was overseeing 4,030 domestic and 716 foreign FAA-certificated repair stations (see fig. 1). A repair station’s certificate specifies the ratings associated with types of maintenance FAA has authorized the repair station to perform. About 2,200 repair stations perform various types of maintenance work on U.S. airlines’ aircraft.
+ “Foreign CAAs serve a critical role in the oversight of FAA-certificated foreign repair stations because the authorities perform similar oversight activities as FAA for their countries’ respective repair stations. In addition, like FAA, many of these foreign CAAs conduct oversight of repair stations that hold their repair-station certification in their own countries and in other countries as well (including the United States), and these foreign CAAs have set up their oversight programs to help ensure compliance with their own national standards. FAA-certificated repair stations, both domestic and foreign, are potentially inspected numerous times in a given year from FAA, foreign CAAs, U.S. and foreign airlines, and IATA.”
+ “In fiscal year 2015, as part of Flight Standards’ operating budget of $851.8 million, FAA utilized slightly more than 2,900 aviation safety inspectors in its 80 flight standards district offices (FSDO), 25 certificate management offices (CMO), and 4 international field offices (IFO) to conduct oversight of repair stations.22 These inspectors perform periodic and unannounced, on-site inspections of repair station operations (see fig. 2).23 Under reciprocal bilateral aviation safety agreements,24 FAA delegates some of its routine surveillance functions to foreign CAAs for FAA-certificated repair stations in their countries. FAA can review a foreign CAA’s audit and inspection findings, and reserves the right to conduct random spot inspections at these foreign repair stations. FAA currently has such agreements with Canada, the European Union, Switzerland, and Singapore.”
+ “We found that amongst our 28 selected U.S. airlines, 61 percent of their aircraft maintenance spending in 2014 was contracted to domestic and foreign repair stations, and the overall level of spending for contracted maintenance remained steady from 2010 through 2014 (see fig. 4).29 Specifically, our analysis of BTS data for the selected 28 selected U.S. passenger airlines showed that U.S. airlines’ spending on contracted maintenance as a percentage of their overall maintenance spending ranged from 58 to 64 percent from 2010 through 2014. BTS data does not provide information on the volume of maintenance work that is conducted in-house versus contracted.”
→ “…a representative for one airline told us that the airline uses approximately 300 domestic repair stations and 100 foreign repair stations in order to meet its contracted maintenance needs—including engine and airframe heavy maintenance. Another U.S. airline representative said that the airline turned to foreign repair stations for maintenance needs after finding limited capacity for airframe heavy maintenance in the United States.”
+ “…representatives for the U.S. airlines told us that the decision to conduct work in-house versus through a repair station is a decision that involves the consideration of many factors, including: (1) the quality of services available at repair stations, (2) the cost considerations, and (3) the use of OEMs for certain maintenance needs.”
→ “On the other hand, representatives from labor unions that represent mechanics who work for these airlines told us that they believe cost considerations have been the driving factor for U.S. airlines to contract maintenance. According to these representatives, repair stations use less experienced and fewer certificated mechanics, and as a result, the quality of maintenance has decreased due to maintenance contracting.”
+ “Representatives for all 10 of our selected U.S airlines told us the quality of repair stations’ maintenance work was a factor in their decision to contract maintenance to domestic or foreign repair stations. Representatives for most of the airlines generally noted that when considering contracting, they looked at repair stations with characteristics such as high-quality workmanship, reputation, and expertise in specific maintenance types and aircraft types. Representatives for one airline told us that the primary factors they consider in selecting a repair station are the quality of the work and the ability to meet their airline’s needed turnaround times. The representatives also considered their past experiences with a repair station and the repair station’s industry reputation, capability, and resources to do their airline’s necessary maintenance work. When selecting and using repair stations, all 10 airline representatives told us their airlines conduct initial and ongoing quality assessments that can include on-site inspections of facilities, training, workforce, and post reliability monitoring of work performed upon return to the airline. A representative for another airline told us that the airline has quality assurance employees on-site to ensure the repair station is following the airline’s maintenance program, and that the work meets the airline’s quality standards.”
+ “…representatives for all 10 airlines told us that it is not cost-effective for them to conduct certain types of maintenance in-house and that contracting is the best way to manage certain elements of their airlines’ aircraft maintenance. Representatives of both the airlines and repair stations we spoke with offered a similar view that cost considerations are a key element in airlines’ decisions about where to perform aircraft maintenance. Labor cost advantages—particularly for contracting certain maintenance to foreign countries—was a factor noted by many we interviewed. Other cost considerations related more to airlines’ decisions regarding the in-house maintenance capacity it was economically feasible for them to build, both in terms of hiring and maintaining a skilled workforce and in maintaining the facility space and equipment needed to perform the maintenance. Airline labor union officials we spoke with also noted that cost considerations are a primary element in contracting decisions.”
→ “Representatives for foreign repair stations in El Salvador and Mexico told us that lower labor costs, relative to U.S. market, are attractive to U.S. airlines when conducting airframe heavy maintenance, as the work is highly labor intensive. For instance, representatives for one foreign repair station related that heavy airframe maintenance had been conducted in Asia for U.S. airlines due to lower labor costs. These officials believe that due, in part, to Asia’s rising labor costs, it may be more practical to have this type of work performed in Latin America.”
+ “While cost factors may help explain why some airline maintenance moved off-shore over the years, a recent industry report suggests that some of that work may be returning to the United States—also due to changes in relative costs of labor in the United States compared to other countries. Specifically, according to a 2014 industry report, contracting airframe heavy maintenance from North American airlines to Asia may no longer be considered the best option for airlines because labor wage differences between the United States and Asia are decreasing, a phenomenon that is reducing the relative cost advantage for airlines to have maintenance performed at repair stations in Asia.”
→ “Regulatory requirements for foreign repair stations differ from those of domestic repair stations, including the certification process, renewal of the repair station certificate, personnel requirements, and drug- and alcohol-testing requirements. A summary of key differences in FAA regulatory requirements for domestic and foreign repair stations is presented in Table 2.
→ “Inspectors from the three IFOs have also encountered travel challenges due to lower staffing levels than their FSDO counterparts and budget cuts for foreign travel. The inspectors told us that foreign trips to conduct oversight are more scrutinized than domestic trips, scrutiny that can make it more difficult to oversee foreign repair stations. However, we could not verify these assertions because FAA could not provide data on traveling expenditures for conducting oversight of domestic and foreign repair stations. FAA officials told us that funds are not appropriated by budget line item for inspector travel and that the process does not include itemizing specific travel expenditures. Officials also told us that inspectors are not restricted from traveling to a foreign repair station when the travel is necessary to mitigate an identified risk. Representatives for airline labor unions told us that foreign repair stations potentially present a higher risk than domestic repair stations due to challenges in overseeing foreign repair stations and the types of critical maintenance and repairs that are performed for U.S. airlines. Thus, the officials said FAA should be conducting more on-site inspections for the foreign repair stations.”
+ “Intergovernmental and other restrictions have generally precluded FAA inspectors from conducting unannounced inspections at foreign locations.”
[NOTE: FRSs are located on foreign sovereign soil. It has ALWAYS been a precondition for any US inspector’s visit to any such facility that the country where it is located must be given prior notice.]
[NOTE: foreign travel for the FAA is not a line item in the budget; if Congress deems that these inspections are requisite, the appropriations language could allocate those dollars—even after the foreign CAA, ICAO and airlines have performed the save review.]
+ Our analysis of FAA’s inspection data from FAA’s Program Tracking Reporting Subsystem database shows that the agency completed at least 98 percent of all required inspections for both domestic and foreign repair stations from fiscal years 2010 through 2014.
→ FAA Has Taken Steps to Enhance Oversight by Implementing SAS
→ SAS Design Fully Meets Three SMS Principles, but Partially Meets Data Collection and Performance Metrics Principles
→ FAA Has Not Established Performance Goals and Metrics for SAS
[apologies for the length of the above material, but a complete set of quotes seemed appropriate.]
The GAO statements stand for themselves and you can decide whether Rep. Fazio’s and USW&WR characterizations are fair or accurate or not representative of the GAO’s complete judgment of the FAA.