Outsourcing by airlines could tighten

Washington —- For years, U.S. airlines have been moving aircraft maintenance work to Asia, Mexico, Central America and other locations with low labor costs.

Now, with the incoming Obama administration and a more Democratic Congress preparing a new aviation agenda, efforts to slow the outsourcing trend may intensify. At the least, Congress likely will order the Federal Aviation Administration to more closely track how and where maintenance is done on U.S.-owned aircraft.

“Foreign repair station reform is going to be a priority,” said Maria Speiser, a spokeswoman for Sen. Claire McCaskill (D-Mo.). This year, McCaskill introduced the Safe Aviation Facilities Ensure Aircraft Integrity and Reliability Act of 2008 to ensure that all certified foreign repair stations receive FAA inspections twice a year.

As a senator from Illinois, President-elect Barack Obama co-sponsored the bill. He also sent the Teamsters Union a letter in March that said, “The practice of outsourcing aircraft maintenance overseas raises security concerns and pits our skilled mechanics making a middle-class living against less skilled, less well-protected workers abroad.”

Unions representing airline mechanics are eager to get government to tamp down on the growing shift of aircraft maintenance work overseas. They already have some key supporters in Congress.

In February at a Teamsters-sponsored conference in Washington on outsourcing, House Transportation Committee Chairman James Oberstar (D-Minn.) said in videotaped remarks that he opposes foreign outsourcing because “these are good-paying jobs.”

His committee asked the Transportation Department’s inspector general to study the issue. On Sept. 30, the department reported that the FAA had certified 709 foreign repair stations to work on U.S. aircraft.

“Foreign repair stations performed 27 percent of outsourced heavy airframe maintenance checks in 2007, up from 21 percent in 2003,” it said.

The inspector general’s report found that at many repair stations “problems existed” such as “untrained mechanics, lack of required tools, and unsafe storage of aircraft parts.”

Investigators said most of the problems were “not immediate safety-of-flight issues,” but they could “affect aircraft safety over time if left uncorrected.”

They concluded the FAA “relies too heavily on air carriers’ oversight procedures, which are not always sufficient.”

Safety advocates such as the Business Travel Coalition urge Congress to pass legislation that would increase the frequency and depth of FAA inspections at domestic and foreign repair stations, require foreign contractors to do criminal background checks and drug and alcohol screenings, and create consistent standards for all repair stations.

Robert Mann, head of the airline consulting firm R.W. Mann and Co. Inc., said that while the FAA should do a better job of overseeing maintenance work wherever it’s done, global outsourcing will continue.

“It’s been going on for 20 years, and there’s no evidence it will stop,” he said. That’s because most carriers find that “the work is top-notch and the costs are better” at many foreign facilities.

Unlike other industries, the airline industry is particularly well positioned to take advantage of global cost savings. They own “portable assets that can move all over the world,” he said. “You go where there is the best price point.”

As part of organized labor’s battle against foreign outsourcing, the Teamsters this month won a partial victory in a bankruptcy court case. The judge overseeing the restructuring of Denver-based Frontier Airlines ruled that the company could outsource its aircraft maintenance to El Salvador only after exhausting every option for performing the work in Denver.

Matthew Fazakas, president of the Teamsters’ local representing Denver mechanics, condemned any outsourcing. “Why on Earth does Congress allow laws to encourage the foreign outsourcing of good, skilled, middle-class and critically important jobs?” he said in a statement.

In an interview this year, Teamsters President James Hoffa said he was particularly worried about Delta Air Lines’ merger with Northwest Airlines, noting that “Northwest does an extensive amount of outsourcing overseas.”

The airlines recently completed their merger. But Delta said that rather than sending work overseas, it plans to earn money by expanding its in-house maintenance business, known as Delta TechOps.

Last year, Delta TechOps generated more than $377 million in revenue. In just the first three quarters of this year, revenues have jumped to $405 million, Delta spokesman Kent Landers said. “It continues to grow” at a quick pace, he said.

Defenders of global outsourcing say Delta TechOps’ growth reflects another trend: More foreign carriers are sending their work to the United States. The Transportation Department’s inspector general found that indeed, “foreign companies are also sending work to the United States. There are approximately 1,200 FAA-certificated repair stations in the United States that also have European Aviation Safety Agency certifications, which allow them to perform repairs for foreign companies.”

The investigators did not report how much such work is done in the United States.