June 8 (Bloomberg) -- U.S. government airline-safety inspectors didn't keep pace with industry financial struggles that prompted carriers to farm out maintenance, the Transportation Department's inspector said in a report today.
The Federal Aviation Administration failed to complete 26 percent of planned inspections at five major airlines in the year that ended in September 2003, as the carriers cut costs through steps such as contracting maintenance, said Kenneth Mead, the department's inspector general.
``There have been incidents related to the changes occurring in the industry that may be precursors to potentially more serious incidents,'' said the report, released in Washington.
The FAA increased scrutiny of three airlines in or near bankruptcy while failing to more closely watch two others making similar cost cuts, Mead said, without identifying the carriers. UAL Corp.'s United Airlines and US Airways Group Inc., which are operating in bankruptcy, and AMR Corp.'s American Airlines, Delta Air Lines Inc. and Northwest Airlines Corp. were the major carriers covered in the report.
``We do have a general disagreement with many of the conclusions,'' said Peggy Gilligan, the FAA's deputy associate administrator for aviation safety, in a call with reporters. ``We've just gone through the safest period we've ever had.''
Major U.S. carriers lost a combined $33 billion in the past four years and have been reducing costs by cutting jobs, using airplanes more hours of the day and contracting for maintenance. The FAA, also facing cost pressures, is trying to keep pace with the changes while reducing its 3,400 safety inspectors by about 300 this year.
Contracting for Maintenance
Major airlines now contract out 53 percent of maintenance, an increase from 37 percent in 1996, Mead's report said. The five large carriers cut 13,000 mechanic jobs and closed 42 maintenance facilities from 2001 to 2003, he said.
At one carrier that contracts out more than half its maintenance, 98 percent of inspections in fiscal 2003 were on the airline's in-house operations, Mead said. Inspectors also spent as little as 7 percent of their time on checks during nighttime, when as much as 90 percent of maintenance is performed, his report said.
Inspectors found safety incidents on the ground increased as one air carrier was in bankruptcy, Mead said. United and All Nippon Airways Co. planes with a combined 449 passengers had their right wing tips come together in an October 2003 incident, causing more than $1 million in damage to the United plane, Mead said. There were no injuries.
`Profound Stress and Fatigue'
At one carrier, the FAA determined that ``profound psychological stress and fatigue'' from pay cuts and extra flying hours may have contributed to some 2003 safety problems, including a crew that landed a plane the wrong way on a runway.
Mead said the FAA also is failing to keep pace with the growth of low-cost airlines. Inspectors didn't increase surveillance of an unidentified low-cost carrier whose fleet grew 56 percent between 2000 and 2003, he said. The carrier reduced its mechanics 14 percent in the same period, he said.
His remarks about low-cost carriers were based on a review of JetBlue Airways Corp.; ATA Holdings Corp., which is in Chapter 11 bankruptcy protection; AirTran Holdings Inc.; Frontier Airlines Inc.; and Spirit Airlines Inc.
