US proposals could hit EASA-FAA pact

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Potential US legislation designed to safeguard American jobs could unravel safety pacts that have been agreed with Europe

A stronger protectionist stance in the administration of President Barack Obama could give lawmakers leverage to usher through legislation altering oversight of foreign repair stations. This could jeopardise a safety bilateral between the European Aviation Safety Agency and the US Federal Aviation Administration.

Opponents of the proposal also warn of a massive rise in costs for EASA-certificated stations operating in the USA if the bilateral is dissolved - in some cases a 1,400% hike for initial EASA certification.

The wording in the FAA Reauthorization bill introduced by the US House of Representatives on 11 February suggests foreign repair stations with Part 145 certification would require twice-yearly inspections by the FAA, and mandates drug and alcohol testing for individuals performing safety-sensitive functions at those facilities.

If that language makes its way to final passage, the future of several bilateral agreements the USA has in place with other countries could be jeopardised. A key element in most of the pacts is mutual recognition of standards achieved by aviation authorities participating in the bilaterals, allowing certification of stations in those countries to be recognised by participating governments.

UNION POSTURING

Unions resurrected their campaign against contract maintenance in January as the International Brotherhood of Teamsters circulated a letter to legislators arguing that contracting maintenance to foreign repair stations "has contributed greatly to the loss of skilled American jobs, diminished safety and security for the flying public and to the decline of the American airline industry's historical and technological and innovative edge over its competitors".

The Obama administration was sympathetic to union issues during the presidential campaign and won significant support from organised labour, which could make the difference between the current campaign against contract maintenance and previous attempts to stem the flow of contracted work.

Unions now have a "big political war chest", says Marshall Filler, managing director and general counsel of the US-based Aeronautical Repair Station Association (ARSA), who notes those groups are looking to spend that war chest after being out of power for a long time.

Safety arguments raised by opponents of maintenance performed by non-US contract maintenance providers are weak, says Oliver Wyman partner Chris Spafford. He warns the protectionist sentiment wrapped in the basket of safety "is dangerous behaviour and ultimately makes the industry less competitive".

The effort by the House to mandate twice-yearly inspections is taking place as EASA and the FAA work to firm up a bilateral safety agreement reached in July 2008.

During testimony on 11 February to the House aviation subcommittee, Rockwell Collins chief executive Clay Jones warned that the new inspection requirements would undercut elements of the bilateral that recognise reciprocal maintenance oversight.

Due to changes in European Union laws enacted in 2007, EASA would not be allowed to accept FAA safety certification of an airline, repair station or manufacturer without the bilateral in place. According to a Congressional source, that essentially results in EASA being required to conduct those certifications itself.

Jones stressed that sentiment to Congress during his testimony as he explained that the bilateral also provides for the reciprocal certification of aircraft. "It can take up to five years for a new aircraft to go through the FAA certification process," he says.

The terms of the bilateral allow the EU to accept FAA certification, resulting in instant access to the markets of EU members. "Without this, our manufacturers would have to go through a separate certification process for every European market - an effort that would cost time, money and jeopardise our export base," said Jones.

EU officials are not standing idly by as the potential changes to foreign repair station oversight threaten to implode the safety bilateral. The spokesman for aviation subcommittee chairman Jerry Costello confirms European Commission officials have contacted the committee directly about that specific provision.

German MRO Lufthansa Technik argues that overall operation and maintenance of aircraft is so far developed that "two additional audits - in general - will not support safety". The company says it used to undergo 250 internal audits annually and 150 audits from customers and authorities. To reduce what it deems an inflation of audits, Lufthansa Technik is decreasing those numbers. "A focus on specific areas, and on the sustainable correction of findings, helps a lot more than widespread activity," says the MRO.

While subcommittee chairman Costello "wholeheartedly supports" the changes in foreign repair station oversight, the Congressman's spokesman says Costello is also listening to a "variety of positions".

AT WHAT COST?

Potential dissolution of the EASA-FAA safety bilateral could trigger a huge hike in fees for the 1,236 US repair stations operating with EASA approval, says repair station association ARSA. Using data available in FAA databases, as of 25 February ARSA estimates those stations employ roughly 121,786 people.

Association staff estimate that without the bilateral, US EASA-approved Part 145 repair stations employing 10-49 technicians would pay €11,000 ($14,100) for an initial approval and an annually recurring surveillance fee of €8,000. Currently, initial approvals cost €1,500, with annual renewal of €750.

Of those 1,236 stations, 852 facilities employ 10-49 technicians. Larger US-based EASA-approved repair stations also face stiff cost headwinds if the safety bilateral breaks down. ARSA's overall cost estimate for initial certification for each of the 145 stations employing 50-99 technicians is $28,200 - a 1,400% rise. Annual recurring surveillance fees would jump 2,100% to $20,500.

PRICE RISES

ARSA believes that to withstand the rise in expenses, those repair facilities will be forced to raise prices. "In addition, employees will find themselves out of work," the association argues, adding that customers would ultimately send their work to EASA-certificated stations in other countries.

From a pure manpower standpoint, Jones says that the FAA lacks the resources and personnel to meet those requirements, but Costello's spokesman counters that argument by saying that the bill mandates development of staffing models for FAA inspectors. Once those projections are validated by the FAA administrator, the bill will require authorisation of funds to support staff projections.

As those staffing models move through the regulatory process, Jones believes a better use of resources would be the adoption by the FAA of a risk-based model in regulating foreign repair stations. "It makes more sense to send inspectors to facilities whose safety oversight may be called into question rather than waste these resources carrying out redundant inspections in locations we know have exemplary safety records."

However, it remains to be seen how much of the language specific to foreign repair stations in the House FAA Reauthorization bill will remain intact once negotiations with the Senate have begun.

While ARSA staff note the Senate is typically more "deliberate" than the House, Senator Claire McCaskill is now a member of the aviation subcommittee that is an offshoot of the Commerce Committee.

In 2008 McCaskill introduced a separate bill that required the twice-yearly inspections of foreign stations, and drug and alcohol testing. McCaskill is an ardent supporter of those provisions. Last year during the US/Europe aviation safety conference an FAA staffer from the agency's aircraft maintenance division highlighted that during a meeting with McCaskill's aides those staffers stressed that if the Senator "had her way", all maintenance work done on US aircraft would be performed within the country.