Airline Maintenance Outsourcing

As airlines' profits running scarce, the industry pushes to cut cost by outsourcing its aircraft maintenance.

For quite some time, airlines insist on reducing in-house maintenance work, slashing the number of mechanics on its payroll, and sending maintenance tasks to lower-priced contractors in the U.S. and abroad. Outsourcing of aircraft maintenance has surged in recent years, raising concerns about the experience and background of the aircraft mechanics performing routine maintenance on our commercial airline fleets.

Government statistics show two-thirds of all maintenance on U.S. carriers is done by contractors, up from 30 percent in 1997.

Northwest Airlines and Continental Airlines use repair stations in Hong Kong and Singapore. JetBlue Airways, US Airways and America West Airlines have their aircrafts serviced in El Salvador. Labor costs for mechanics are often lower overseas, and hangar space is more readily available. Other carriers send their maintenance work to third parties in the U.S., many located in the South, where labor rates are lower.

As aircraft maintenance becomes a $42 billion-a-year business, countries such as Dubai, China, Korea, and Singapore are making enormous investments to attract airline maintenance contracts.

In light of recent negative publicity about airline safety, new alarms are being raised about U.S. airlines’ growing reliance on foreign repair stations for everything from simple routine maintenance to major overhauls. Trade unions, business-travel groups, and some members of Congress maintain that quality and regulatory oversight suffer when maintenance is sent offshore. Opposition, driven in part by trade union leaders who have seen good-paying maintenance jobs shipped overseas, feels lax oversight of such repair shops is a gaping hole in airline safety and national security.

While repair stations are closely regulated and monitored by the Federal Aviation Administration (FAA), the agency requires airlines to ensure that their contract maintenance and training programs, and the contractors themselves, fully comply with federal regulations. The FAA certifies the foreign repair stations that it monitors through its international field offices in London, Frankfurt, Singapore, New York, Miami, Dallas and San Francisco.

Foreign repair stations are certified annually by the FAA, and a certified repair station may lose its certificate if it fails to comply with federal requirements. In practice, a FAA inspector is not required to give advanced notice prior to an on-site inspection, which also includes reviewing air carrier audits.

Both the air carrier and the FAA inspect work done at repair stations. Airline conducts oversight through its Continuing Analysis and Surveillance System, which requires routine audits of the facilities working on aircrafts in its fleet. FAA inspection requirements are based on risk analysis of results from the previous year’s surveillance. Using risk analysis tools, FAA inspectors identify potential safety hazards, target inspection efforts on areas of greatest risk and develop the following year’s inspection program.

United States has country-to-country Bilateral Aviation Safety Agreements with France, Germany and Ireland. These agreements eliminate duplicate efforts by the FAA and the national aviation authorities, and specify that each authority perform certification and surveillance activities on behalf of the other. Under these agreements, the FAA conducts sample inspections of repair stations located in these countries.

While there's some concerns about the 4,187 domestic maintenance operators, the real problem lies with the 700-plus foreign FAA-certified repair stations. Beyond those, there are other non-certified repair shops that provide airlines with various maintenance services.

Critics maintain airlines are entrusting major maintenance works to offshore repair shops that the FAA doesn't have the resources to monitor effectively.

With fuel costs keep rising, airlines are left with few choices and doing everything possible, including maintenance outsourcing, to stay afloat. Meanwhile, law makers on Capital Hill are not far behind and are busy to introduce aviation regulations, ensuring that the safety of the flying public is addressed adequately and these repair stations are properly regulated and monitored.

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