UNITED STATES OF AMERICA NATIONAL TRANSPORTATION SAFETY BOARD WASHINGTON, D.C. ---------------------------------x ) In the Matter of the Public ) Forum for Oversight of ) Aviation Maintenance ) Repair Facilities ) ---------------------------------x Date: Monday, August 30, 1999 9:00 a. m. Location: Sheraton Chicago Hotel & Towers Sheraton Ballroom 1,2, and 3 301 East North Water Street Chicago, Illinois The above-entitled matter commenced at the hour of 9:00 a.m. BOARD OF INQUIRY: ROBERT T. FRANCIS, II, Chairman JAMES ROSENBERG VERNON S. ELLINGSTAD JACK DRAKE TECHNICAL PANEL: FRANK MC GILL DEBORAH BRUCE PARTIES TO THE PUBLIC FORUM: AIR TRANSPORT ASSOCIATION (ATA) REGIONAL AIRLINE ASSOCIATION (RAA) AERONAUTICAL REPAIR STATION ASSOCIATION (ARSA) FLIGHT SAFETY FOUNDATION (FSF) FEDERAL AVIATION ADMINISTRATION (FAA) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ P R O C E E D I N G S CHAIRMAN FRANCIS: Could we get started please. Those of you in the line in back signing up, we appreciate you doing that. You can do that at any point during the hearing. I think maybe if we start on time, perhaps we'll end up on time. Maybe we can get going. I'm Robert Francis. I'm vice chairman of the NTSB. I'm delighted to be here in Chicago. I have some brief overview remarks, a statement that was prepared and I'll read the statement. You can try to follow along because some of you have copies of it. Let me emphasize first that this is a hearing that is not like any of the hearings that the NTSB holds. This is a hearing not tied to any particular accident, but rather a hearing held in conjunction with a study that we're doing, a safety study on the issue of contracting out of maintenance by the air carriers, both for 121 and 135 carriers. When I say oversight, I mean oversight on behalf of those carriers because they ultimately are responsible for the quality control and the maintenance that's done on their aircraft even if they've contracted it out. And also oversight by the Federal Aviation Administration as the regulatory agency. As a lot of you in this room know, we are in the midst of some very major changes in the industry, particularly over the past 15 years or so, in the way in which particularly maintenance of aircraft is done. And this is really why we're here, because this is a change that is occurring and we want to take a look at this in a dispassionate objective way and see if there are issues that are out there that the community and the industry should be looking at. We're talking about a lot repair stations. We're talking about 2,500 repair stations in the U.S. I might emphasize also that we're not dealing here with the issue of foreign repair stations. We're dealing with the issue of domestic U.S. repair stations. There is an estimate by the repair stations, and I think it's probably pretty accurate, that between 1990 and 1996 this kind of maintenance increased by 30 percent. So we're talking about again this type of maintenance being 50 percent done by other than the carrier itself. And that's obviously a substantial amount of work. We're talking about an industry that's in the $3 million a year range. The FAA is responsible for insuring that the carriers maintain their aircraft in an air-worthy manner. Their oversight programs is something that we'll be discussing here today, in addition to talking about how the carriers themselves are working on maintaining the quality control of the work being done on their aircraft. The NTSB is the National Transportation Safety Board. The NTSB is not the National Transportation Accident Investigation Board. I'm not sure how many people understand that, but it's an important distinction. Certainly most of what people in the world see of the NTSB is accident investigation. But the emphasis is on safety and that's whether we're investigating accidents or whether we're doing what we're doing here today, which is part of the safety setting. This is part of the way in which NTSB can be pro-active and try to pre-empt accidents in this industry. So we're talking about looking at, as I said earlier, which is becoming much more widespread, the contracting out of maintenance. We're not looking at it because it is a horrendous problem in terms of safety in this industry. Over the years '87 to '96, we're looking at something in the range of 85 major air carrier accidents in this country. Of those accidents, we're talking about 18 or so that would be considered to be maintenance related. So is this a huge problem at this point? No, it's not. Is it something, given the dynamic of what's going on, that is worthwhile all of us looking at? Absolutely. So that's why we're here today, is to take a look at this in a constructive way with people that know a lot about what is going on. We're talking about people that do this or manage this and we're very appreciative of their being here to help us out. Let me introduce folks that are here at the table with me. Jack Drake, chief of the aviation engineering division for our aviation safety office. To my immediate right is Vernon Ellingstad who is director of our office of research and engineering. On my left, Jim Rosenberg, chief of the safety -- division working for Vern. He is going to serve as our Hearing Officer. We also have sitting back in the second row and with the press row -- who works in our office of public affairs. Let me just emphasize this is fact gathering. What goes into the record here today will become a part of the permanent record held in Washington. We will publish proceedings of the forum. Having said all that, I know these people are anxious to get started. I think we have some folks here that may have not done a lot of public speaking in the past and we appreciate very much you people coming out and giving us insights into this. This people actually know what's going on. Deborah Bruce also works for our firm in safety studies and Frank McGill works in our office of aviation safety. They are the people who are really running the study for the NTSB. So with that, we'll turn this over to Jim and we'll get started. MR. ROSENBERG: Thank you, Mr. Chairman. Just a couple brief administrative matters. As the Chairman indicated, we will be preparing the proceedings of this hearing. The sign up sheet in the back of the room is for the proceedings. If you'd like to obtain a copy of the transcript of the hearing, sometime during the break or lunch time period, or you can also contact the reporter sitting up here at the front of the room to get a copy of the transcript. The first thing I'd like to do this morning is identify the spokespersons for the parties. As I call out the party name, will you please identify the spokesperson. The Federal Aviation Administration. FAA: David Manno, aviation investigator, Washington. MR. ROSENBERG: Flight Safety Foundation. FSF: Bob Vandel, vice president, Flight Safety Foundation. MR. ROSENBERG: Aeronautical Repair Station Association. ARSA: Sara McCloud, executive director. MR. ROSENBERG: Regional Airline Association. RAA: David Lauterer, vice president, technical services with RAA. MR. ROSENBERG: Air Transport Association. ATA: Don Collier, vice president, engineering, maintenance and material, Air Transport Association. MR. ROSENBERG: The first panel this morning will address oversight of repair stations. Starting on your right, please state your full name. MR. QUILLEN: Tony Quillen, director of heavy maintenance, Southwest Airlines. MS. DAVERIN: I'm Yvonne Daverin. I'm director of quality assurance, United Airlines. MR. BASILE: Frank Basile, senior manager of aircraft conversions, Federal Express. MR. ROSENBERG: Thank you. The questioning this morning will begin with Ms. Bruce. MS. BRUCE: Thank you. I thought a nice way to start would be to get each of you to expand on your job title and sort of explain what the function of those jobs are. You each have different aspects that you perform at your corporate level. So Tony, first, just to explain what the title actually means on a day to day basis. MR. QUILLEN: Our responsibility is to cover the heavy maintenance aspect of the maintenance operation -- making modifications to airplanes. I'm responsible for -- plus the on site contracting work that we do which at the present time -- MS. BRUCE: Yvonne? MS. DAVERIN: As director of quality assurance at United my responsibilities include -- function for the company, just to surveil our operations including any work that we have done at our repair stations. MR. BASILE: My primary functions is to convert aircraft, passenger and freight, to transition heavy maintenance on aircraft in our fleet. MS. BRUCE: And that's done primarily how, out of house, in-house? MR. BASILE: (Inaudible). MS. BRUCE: Maybe we'll take a second pass and change the question just a little and ask who else in the corporate structure is intimately associated with contract decisions, contract repair decisions. MR. QUILLEN: In the Southwest operation, we have on-site teams that oversee all our contract maintenance of different companies. Those teams consist of -- The on-site teams report to me with the exception of a -- who reports to -- MS. DAVERIN: At United we also have on-site teams which include emergency, administrative, inspection, quality assurance -- MR. BASILE: We work mostly from the -- the quality control and -- process and also with contracts. MS. BRUCE: Okay. MR. MC GILL: Tony, how you doing? You don't have 145 authority at Southwest, is that correct? MR. QUILLEN: I do not. MR. MC GILL: What would you think is the advantage of a 145, since you do both in-house and you out-source 145 work? What are some of the advantages that you see in doing it that way? Why would you do it that way? MR. QUILLEN: At Southwest Airlines, we're in the business of carrying passengers. The 145 is -- so it's a good source for us -- From the standpoint of what we do within Southwest -- So it gives us a place to go to have -- MS. BRUCE: Sort of by comparison, United has a 145 in-house operation, so how does that serve your interest to do it as providing a core business of maintenance service to other operators? MS. DAVERIN: It allows us to focus on our competencies. The advantages for us of using 145 maintenance is flexibility to respond to -- It allows us to provide a more stable work flow -- MR. MC GILL: How much out-sourcing do you do for other carries? MS. DAVERIN: I didn't bring any figures with me in terms of the volumes. MR. MC GILL: But it's not very much, is it? MS. DAVERIN: I'd say ball park, it's probably less than 20 percent. MR. MC GILL: Why would you think that's the case? Why don't you do more? Why would it not be more? Are you competitive with other 145's if you want to try to perform work for other carriers? MS. DAVERIN: I'm not sure I understand the question. MR. MC GILL: You say you do very little out- sourcing from other carriers or other airlines, yet you have a 145 certificate, right? MS. DAVERIN: Right. MR. MC GILL: You have the ability to do that, if you wanted to? MS. DAVERIN: We work to focus on what we call our -- they do that work for the carriers. If we don't have the work -- MR. MC GILL: Okay. So you out-source some of your work. You take in some work. MS. DAVERIN: That's correct. MR. MC GILL: And then you have your regular 121 certificate. Frank, you don't have a 145 certificate either, so you out-source what portion of your work? MR. BASILE: I would say greater than 80 percent -- MR. MC GILL: What are the advantages; why would you do that? Do you see any advantages of trying to bring it in-house? MR. BASILE: -- carriers such as United -- started years ago -- undertaking of resources of capital and personnel. It's a business decision. We focus on good packages, the relationship with the 145's -- special expertise, technology capable of performing this work. MR. MC GILL: How many different vendors do you use, do you think? MR. BASILE: We try to keep that to a minimum. We try to use four or five vendors that are strategically located in the system that work well in our flight planning, in our scheduling and provide consistent quality product to us. MS. BRUCE: Tony, take this back. We've now gotten through the management structure and down to how we actually are getting the maintenance work done. You have several ways to go into the market and pick a 145 that would do work for you and set up a business relationship. I'd be interested in each of you commenting on the selection process, the work that you go through to identify and select a repair station that you want to establish a business relationship with. MR. QUILLEN: Southwest for years has concentrated on a very few partnership type of relationships with 145's. We have a selection process in house that goes through a board of review, that makes the approval of the final selection. We're not a one person decision making team -- that's not really the case for maintenance. We have a reliability board that makes the decisions on our maintenance program -- the process or we -- So when we go through the process, we evaluate a repair station based on its capabilities, based on its performance and process -- MS. BRUCE: So who's on the selection board? MR. QUILLEN: It's the maintenance directors - - the director of quality and the four other maintenance directors. MR. MC GILL: You said you did some in-house, some outside. You probably do the C-check inspections in house, is that correct? MR. QUILLEN: We do the C-check level in house within the -- production group. Also we do -- in house which is a portion of our heavy maintenance program. That's a two and a half year program in the area. The five year -- inspection is the next level. But the -- we contract out. MR. MC GILL: How many facilities do you do those C-checks in within Southwest? MR. QUILLEN: C-checks, three in Southwest. MR. MC GILL: When you do component repair for most C-checks, do you out-source that out to those facilities? MR. QUILLEN: No, we do not have -- we do minimal -- Probably 90 percent of the components are contracted out. Over that 90 percent, about 60 percent of it is contracted to OBMs. MR. MC GILL: When you do the heavy maintenance elsewhere, what type of representation do you have for its personnel? MR. QUILLEN: Typically the team consists of - - D-check. We have a team of about seven people; technical production type people to oversee the technical aspects, the same for the quality -- MR. MC GILL: How many airplanes at any one given time are D-checked, for instance? MR. QUILLEN: There's -- of D-checks contracted out. MR. MC GILL: When you do your C-checks, that's a progressive C-check, is that correct? So how many do you normally continue those at any one time? MR. QUILLEN: C-check is done in house. MR. MC GILL: Since they're progressive, you're doing so much of it at one time, and then when an airplane goes back on line, you bring it back in, is that correct? How many airplanes do you have done in any one given time for that? MR. QUILLEN: At Southwest Airlines you have the C-checks -- so at any given time we have four airplanes scheduled -- two for heavy maintenance and two outside contractors. MR. MC GILL: Frank, would you kind of tell us a little bit how you do your checks, differentiate between the C and D and what type of representation you have on those airplanes? MR. BASILE: Sure. We do two C-check -- All the other heavy maintenance, C-check -- Our team is very similar to what Tony was saying. We have three maintenance reps, two or three maintenance reps, depending on the size of the operation, a minimum of one, sometimes as many of three QC reps and we have material personnel also on site. MS. BRUCE: Frank, are you doing fragmented C- checks also? Are you breaking them into pieces and doing them progressively or are you taking them down? MR. BASILE: We do not do D-checks. Our D- check is more C-check. -- certain portions of what we would consider a D-check. MS. BRUCE: Okay. Yvonne, do you want to run through the same sort of how you select them and what, sort of in a general sense, goes on for oversight? MS. DAVERIN: Our selection strategy is to use one or two 145 repair station -- to establish a relationship with those. There's a selection process. Once the decision -- is assembling a team, quality assurance, inspection, production, engineering, purchasing -- get together and do -- The team takes a look at previous audits of those facilities, case audits, shop evaluations and we consider things like the facility's capability, product line, -- experience, the location, labor force, their financial condition to insure that we develop a comprehensive report on that facility. MR. MC GILL: Specifically, Yvonne, how would you check the reliability of an aircraft coming out of an out-sourced 145 facility? MS. DAVERIN: We have a team that are inspection personnel who follow every -- First of all, our on-site personnel understands issues that -- and follow the performance of that aircraft. MS. BRUCE: Speaking of reliability, when you take an airplane into that heavy maintenance process, there's a lot of information you'd like to know to drive a reliability program. How do you get that information from your repair station? MS. DAVERIN: We have a requirement for the repair station to send us that information in terms of - - MR. MC GILL: You do the same thing, Tony? MR. QUILLEN: We have liability input directed from the 145 and then we measure and track their liability. MR. MC GILL: You mentioned earlier that you're normally always using OEM type of component specifications on repairs. Do you occasionally pick up other than that type of -- MR. QUILLEN: Yes, we use some other repair station that's sometimes -- MR. MC GILL: Do you do the same thing, Frank? MR. BASILE: Yes. We use both. MR. MC GILL: You use both. And you have people doing both of that? MR. BASILE: Yes. MR. MC GILL: Let's just talk a second a little bit on the reliability aspect of that. We see that we have an industry where there's still many carriers that want to do all of their maintenance in house and they do it. And then we have some that do nearly 100 percent of out-source. And then we have some you all that do a little bit of both. Just generally speaking here, what are some advantage you can see of doing it one way or the other? Yvonne, say at United I know you have to a vast amount of internal work, so you do very little out-sourcing. What kind of advantage is there? What do you see in a quality control area where you're at, what kind of advantages do you see in that? MS. DAVERIN: Doing work in house? MR. MC GILL: Yes. How you're checking the same thing that is out-sourced to a 145, is there any difference in that? MS. DAVERIN: We insure -- of our process in terms of what we do internally and what we're seeing from -- So we have an inspection process, for instance, -- Why we keep it internally, -- over many years we've developed competencies. We feel it provides us with greater flexibility -- MR. MC GILL: You're a major player in the industry. I'm just going to oppose that to, say, a European organization. We'll just pick somebody. Air France. It doesn't matter. But they do an enormous amount of out-sourcing for other carriers in Europe. We don't do that in America. You stick specifically to your airplanes. You have the authority to. I was just wondering, you never try to go out to competitively try to get FedEx to come to your facility or Southwest Airlines to come to your facility; why is that? MS. DAVERIN: We do again, when we have core competencies and -- we will be available for carriers -- But we don't aggressively go out and ask Southwest. First of all, I think we need to focus on our own air carrier. Secondly, we need to understand our capacity. MR. MC GILL: So you actually think it's a reasonable assumption to -- them and that's why we have 145 facilities to be able to do that, the resources, the usage of your resources is better kept on a core basis. MS. DAVERIN: We look for some -- where we have a -- office. We look for others who can produce -- and utilize it. MR. MC GILL: I'll take it right back to Tony again. You say you out-source both. Do you have anything in the future that would say, well, if we're gathering core competencies, sometime in the future could I do my own D-checks? What advantages would that give you or not give you? MR. QUILLEN: We have taken the position, we have a continuous -- process. We have the in house capabilities -- our maintenance program. We have set that from a business side, looking at resources, capital investments, so on and so forth. That comes under the -- before we go out and do it. What we've come to realize is -- our business is passengers. We maintain airplanes in order to provide that service to the passengers. So we think we are doing our best -- our long range plans would continue on -- with keeping a portion of the D- checks in house and contract the rest -- our reliability. The same reliability, part of the process -- in house D-checks versus the ones we contract. So we have a good measure of balance here, to say we're performing up to the maximum level we see from a reliability standpoint -- MS. BRUCE: I'd be interested for a little more discussion about how that evaluation, how that reliability evaluation is done. When you said you look at in house and out of house by the same group, what are they doing? MR. QUILLEN: We monitor the -- routines. We monitor the -- and how everything performs, from the first flight out of the check, if it's a functional check flight, how that performs. Throughout a period of time, for problems that are associated or -- heavy maintenance. MS. BRUCE: So after the heavy maintenance work, you're sort of monitoring the health of the aircraft and you can go back and track that to who did the last big major overhaul on that one? MR. QUILLEN: Yes. MS. BRUCE: Okay. MR. MC GILL: Frank, on third parties, maybe we should call them fourth parties from a heavy maintenance check which we're now calling third parties, but if they out-source certain components, certain areas, some area of specialty, how do you audit this fourth repair facility that is working on components on your airplane? MR. BASILE: We keep -- available, we make that available and they go to our -- There are times when they are allowed to do special processes outside -- special processes such as -- things like that. They come to us and ask for our permission. It's not uncommon to send someone -- MR. MC GILL: Are you a member of the case organization? MR. BASILE: Absolutely. MR. MC GILL: All three of you are? So you send somebody specifically if some component has to be out-sourced? You're going to do your own audit, is that correct? MR. BASILE: (Inaudible) We do our audit against that and we go through that, look at it, monitor it, and any on-site responsibility -- MS. BRUCE: Who puts the list together? I guess what I'm wondering is do you select the second level service that you're getting from a repair station based on the business relationships they've set up in their area in the local geography and all that or is that list existing prior to you setting up an arrangement with the part 145 to do heavy maintenance? In other words, are you picking their subcontractors or are they? Do you ever run into problems where you'd like to more involved in how they've set up their subcontractors out of that facility? MR. QUILLEN: In our particular case it's their list and we go over that list -- and then we give them the permission to go ahead. MS. BRUCE: Okay. How do they inform you that they've taken -- I think it's a given here that we all know that the air-worthiness responsibility remains with you three for your aircraft. As these airplanes and these systems and parts get worked on, how do you know that your part 145 sent something out to a component shop? In other words, what's the traceability that you get for its going there? MR. QUILLEN: In our particular case, that's handled with the on-site -- They go through a process of notification and it goes through their shipping and receiving process. MS. BRUCE: So on site being you have a representative with every aircraft when it's under heavy maintenance process? MR. QUILLEN: That's part of their responsibility. MR. MC GILL: Who does the engineering? What size of engineering do you have, say, at Southwest? MR. QUILLEN: Southwest has a very small engineering department. What we do is we have a -- we utilize their repair engineering group for actually doing the engineering process up to the point of where we do the final approval of engineering -- so we concentrate primarily on our operational requirements of the airline and the repairs done in the airline. MR. MC GILL: So if you needed some sort of an internal interior mod change on a particular airplane, then you just have their DERs work this up? MR. QUILLEN: -- to perform actually -- the on site people and through coordination of our engineering department. MR. MC GILL: I see. Yvonne, do you work much with engines, the reliability and so forth, are you tracking any sort of the air-worthiness portion in your area on engines? MS. DAVERIN: Yes, we track the reliability of engines. MR. MC GILL: But specifically I was just -- when the engines come through, do you have a very deep base, database on a particular engine that you would know and how you perform the maintenance and inspection and whatever you do to this particular engine, that it would create a more reliable engine than, say, somebody else that used a different program? Do you feel that your program is better? Are you measuring it in any way? MS. DAVERIN: We measure reliability of our air frame engines and components. In terms of better -- in terms of looking at reliability and systems associated with those engines. So I think that's probably the standards used. MR. MC GILL: With the manufacturer, are you working in any conjunction with the manufacturer of the particular engine? Do you work with the reliability on the component portion, let's say, -- or whoever is the manufacturer? MS. DAVERIN: Yes. We work closely with the particular manufacturer when we can on reliability not only our own engines but in terms of the industry so that we can stay aware of a failure at another airline, as well as -- detections within our own system. MR. MC GILL: I'm just curious, since you work with Pratt and you work with G.E. and different other manufacturers, do they relate anything specific that says you are doing a better inspection or that the inspection process is creating better results? I was just curious on that. Frank, do you have anything on the engine area? MR. BASILE: From the engineering perspective we do have a pretty substantial engineering department broken down at the system structure which is power frames, all different major -- and they develop most of the engineering, I would say 95 percent of the engineering that we do on the aircraft. If there is an exception to that, it all comes through our engineering department. It has to. MS. BRUCE: That's pretty much detailed but I think probably everyone in the room knows this but all three programs can be different for you. I mean you could run exactly the same airplane, a 737, and have different aspects to your maintenance program for the same airplane. Maybe that's where we're headed here with when you start asking how your reliability program looks to you. You're actually saying from the maintenance program you're running, are you finding that it is returning to you benefits that are different? I guess the point is to sort of go on the record and realize that there are differences by carrier for the programs you're running. And where I wanted to go with that is to ask how you transmit those requirements for your individual maintenance program to the 145 that is doing the work for you, because as these three airplanes that physically look the same arrive at a repair station, they become a Southwest airplane or a United airplane or a FedEx airplane, that they're treated differently based on the program you're running. MR. QUILLEN: You're exactly right. There are maintenance programs of all basic programming and they are usually tailored to fit the operation using that equipment. For instance, Southwest is -- operated and -- So what fits the airplane and the operation -- That's the first piece of that. The second piece is the 145 repair station, even though they're 145, -- basically have to operate at 121 -- the same they do for everyone here. So that those things that are tuned to your maintenance program that fits your operation that's designed and built into it has to be accomplished just as though they were working -- MS. BRUCE: So that's the logic for why you need a customized maintenance program and then the point may be relevant to the issue here, is how do you transmit those individual program requirements to -- MR. QUILLEN: First of all, I think it's plain the reason we need those different kind of programs is to fit the operation -- so there are unique things in the program that dictate how we maintain the airplane. We provide a work package. We provide work -- working structures in detail for each -- There's nothing left to interpretation. If there is a situation -- or from an inspection question that comes up, that's the purpose of the on site people, to make certain that it's interpreted correctly. MR. ROSENBERG: Let's take a break. Let's take five minutes. (Off the record.) MR. ROSENBERG: We've doubled the number of microphones now. So presumably we'll double the quality of the presentations. I think we ended up with Deborah. MS. BRUCE: Maybe it was a good place to sort of switch gears. I wanted to -- the panels today are the operators and then following that, the second panel are repair stations and the third panel is FAA. So looking ahead to those topics, one of the angles I'd like to cover from your point of view is United and Southwest are both ATOS operators, and that's a new change in the way FAA is doing its maintenance inspection program. So the question begs to be asked, how is that difference in program affecting your maintenance operations? So first, to Yvonne. MS. DAVERIN: To clarify, the question is how is the difference in the ATOS surveillance -- MS. BRUCE: Has ATOS impacted your maintenance program? MS. DAVERIN: Our maintenance program continues before and after whatever type of surveillance is done. So in terms of the inherent characteristics of a maintenance program, it's not revised. MS. BRUCE: Are you providing the same type of information? Were you collecting the same information before? Certainly, how you actually work on the airplane is the same, but is your information process that you need to collect to respond to FAA inspections, has that changed any? Is there any impact from ATOS? MS. DAVERIN: There's an impact to the carrier in terms of a new surveillance system. But in terms of the impact that it has on the maintenance program, I can't say that there's been a large impact to our maintenance program due to ATOS. MR. MC GILL: Do you have FAA inspectors that have changed or come into your office and talked to you about different areas that were different prior when had a regular air safety investigator, PMI? MS. DAVERIN: Certainly again, our maintenance program has stayed the same. However, what has changed in terms of the surveillance team, it includes not only the certificate management office, but also flight standard district offices across the country. So we are bringing some FAA inspectors in who aren't familiar with the carrier's operations and briefing them about how our maintenance program works versus those they may be familiar with in terms of other carriers they've surveilled in the past. MR. MC GILL: By the way, I wanted to apologize. A while ago I kept using the term out- sourcing and at one point you were relating that to in- sourcing. So just to kind of straighten it out a little bit, you do both out-source, you in-source and then you do in-house maintenance. MS. DAVERIN: That's correct. MR. MC GILL: So you've got all three of them. Sorry for the confusion in my question. MR. QUILLEN: Basically, again I have to second Yvonne, our maintenance program has not changed. But the process that we're interfacing with the FAA has changed. We have I think have had a little bit of organizational changes to better interface with the ATOS process. I think our inspection force from the FAA has increased. We've had the same kind of frustrations that some of the other operators have had of bringing additional FAA people into the process that were not familiar with our maintenance program and our processes and we've devoted some attention to that, to try to better educate everyone, FAA for us on the ATOS process and us for them on our process. So that has had some changes there. MR. MC GILL: When exactly did that program start with Southwest? MR. QUILLEN: We were one of the kick off ones. They prototyped some with us and we had several meetings. My particular group was not directly involved. Our quality group was the ones that were interfacing but we held some information type meetings right up at the front with the district offices and so on, putting us together trying to see what would work and what wouldn't work and then we did trial and error on some of it. MR. MC GILL: Is there any guidance that you've received yet in the process of this new switch over that would benefit the safety of Southwest Airlines? MR. QUILLEN: I think it's early to tell, that there's been that many changes. We've gone through basically the same process we've had all along. We have daily interaction with FAA and the on site people from both sides. To say there was a major change, I'd have to say I haven't seen that yet. MR. MC GILL: Have they been to your 145 out- sourced people? MR. QUILLEN: Yes, they have. MR. MC GILL: Have they responded with anything at all that might better the reliability of the Southwest program? MR. QUILLEN: We've processed that information the same as we have always. We've got a system that we take the input from any of the FAA inspectors and we go through a process. The recent years with the FAA has been, at least in our experience, has been one of a working together for the safety of the airplanes. I think we've seen -- the process of that has always been a very good working relationship, even though the design of the system sometimes is kind of contrary to that. But we're able to work this both at the repair station level and at the main base. The only thing that we've come up with, and we'll get into that a little bit later, is standardization process. We haven't seen that improve any. MS. BRUCE: So the ATOS team has been to your part 145 that takes responsibility for the heavy maintenance work. How about the outflow of work from that facility as you send components and other things out? I'm interested in whether the ATOS program has some aspects that can be responsive to contract repair stations in general. MR. QUILLEN: Deborah, I don't know how far down that went. MS. BRUCE: Would you know if -- turning the angle back to just a regular inspection process -- if an FAA geographic inspector went to a component shop and found some quality problems they were concerned about and that shop happened to get work from your part 145 heavy maintenance provider, would you have any way to know that? MR. QUILLEN: We'd know that through our PMI. MS. BRUCE: So the geographic inspector would report to everyone who had used that -- MR. QUILLEN: I know that our PMI gives us periodic updates of reports that he's received from geographics. MS. BRUCE: Okay. MR. MC GILL: Frank, on the FedEx, you still have your PMIs. MR. BASILE: Of course. MR. MC GILL: Do they go out individually to the listing that you have? MR. BASILE: Absolutely. Absolutely. More so in the last few years, they've been -- the oversight of the 145 repair station has increased. MR. MC GILL: I was just going to go back just one little second here. You all out-source and so does Southwest because you said you're core competencies are moving people, or in your case moving cargo. So you out-source to someone that can do this work for you as opposed to United, who feels that they do it better in house, not so much on the other way. Since we have two carriers doing it one way, I just wanted to reiterate the rationale again. What do you specifically see, can you see, can you measure, are the standards that you set, can you actually identify that with your quality assurance program that it's better for you to out-source and you not to out-source? MR. BASILE: You're asking me? MR. MC GILL: I'm asking all three of you. Why is it that some carriers do and some do not? MR. BASILE: Again I think it has to do with the philosophy of the company when they started up. I mean United has been in business a lot longer than Southwest and FedEx and they didn't have an alternative when United Airlines started. They had to do their own work, and that continued. MR. MC GILL: So if we were starting a carrier today, you and I, would it be reasonable that we would not then do our maintenance and we would out-source that maintenance? MR. BASILE: That would be entirely up to you. That would be up to you. MR. MC GILL: Because of money, finances? MR. BASILE: I think that you have to look at the way that the aircraft are being built today. They're highly technical. There's a lot of special processes that have to be done. There's a lot of differences in aircraft, in fleet types. There's new avionics equipment coming out every day. And to set up all of that, when you could go to a already existing facility who is a professional and has the capability of doing that, it sure is a better decision to me. MR. MC GILL: Okay. That's sounds right. But let's just say that your maintenance program, you or someone in your organization, has taken the maintenance planning document or whatever for the carrier and you create an individual program specific to you. And then when you take it to a 145 facility, they're going to have to use your program. MR. BASILE: That's correct. Absolutely. MR. MC GILL: So if they're doing that, using your program, or in your case, Tony, the Southwest program, then it's just a maintenance 145 facility interpreting your program under your supervision to do your standards, is that correct? MR. BASILE: That's correct. MR. MC GILL: Do you have a way of measuring those standards, that you feel is better than doing it in house like United Airlines? MR. QUILLEN: Let me pick up where Frank let off. There are decisions you have to make from a business perspective when you're, let's assume, starting an airline. Southwest did this 28 years ago. We elected to do a level of maintenance up to, at that point in time, line maintenance. We evolved into a level of C-check maintenance because that's what we were best performing, we felt we could perform in a very highly reliable fashion. Now, it reached a level beyond that when you get into some of the things that Frank talked about, facilities' equipment wanted to go to the next level of maintenance where you have to have plating shops, machine shops and what have you, to go on. Now, to make that step was a very big business decision, but also the step of saying do we want to bring this in and try to create a repair station to the level of maybe United. The uniqueness of Southwest coming to be in the early 70's, we were going right through this evolving airline through the process of the 145 repair stations being evaluated to a different level. So the decision to go to the out-sourcing was that we had a professional organization and a 145 that could do a level of maintenance that we felt very confident that they could maintain that airplane in a safe manner. The point of measuring that is, yes, I have a unique situation. My particular responsibilities is I don't want -- I'm responsible for two lines of quarter D and half D and basically for people that don't want a quarter and a half D is they're just moving into your heavy maintenance. If you go to the planning document it's the C-7 level of maintenance. So we're doing very similar maintenance as the repair station. So I have a good measure. When I track the aircraft coming out of the two lines at Southwest, and I track the lines coming out of the repair station, I have some very good measures to make sure that we're doing equal work. We go as far as I rotate supervisors from the in house lines to the on site team, so that we can not only make sure that we're doing it the same way, but we learn. We have repair station people sit on our program review and bring up issues and even the mechanics and inspectors from the floor, to bring up suggestions on our airplanes. We carry those back the same as we take suggestions from our mechanics back to our reliability board and say here are things that we need to do. So we've got a very good interface. So we do have the measures in place in our particular operation to monitor this, and we feel we have the best of both worlds. MS. BRUCE: Is it fair to say that from that original business decision that you factored that decision, to contract out maintenance, into the design of your maintenance program? Should a maintenance program from the get-go focus on whether you're going to be doing it in house or not, and what are those considerations? MR. QUILLEN: I think your maintenance program, Deborah, evolves from your operation and from the business economic environment that you're in. What may have been very good decisions 20 years ago, may not be today. So it's a program that evolves, and it's a dynamic program that goes on continually changing. I mentioned earlier, our process of review, of looking at in house possibilities, that's an ongoing business review that you need to do. MS. BRUCE: So the flip side of that, for United, would you be able to customize your maintenance program more because you do it in house than you would if you contracted it out? MS. DAVERIN: Again, I don't think the place - - the place that you go to get maintenance performed doesn't define the maintenance program. The condition of the airplane defines the maintenance program. How you utilize it, the number of hours and cycles you put on it on a daily basis, and again with a new airplane you start with the maintenance planning document. Based on experience you modify the maintenance program again, aligned to the needs of the airplane itself. Where the maintenance gets done doesn't play into the definition of what needs to be done. MS. BRUCE: Well, yes, except take that logic and bring it all the way down to, say, component repair. Component repair in my mind wouldn't seem to necessarily have to differ too much between airplanes. It's not a program level issue and yet, your maintenance program will trail all the way down to that component repair process and will customize that process equally, right? MS. DAVERIN: That's correct. MS. BRUCE: So that is entirely driven by how you use the airplane, that customization? MS. DAVERIN: How you use the airplane, how you use the component, how you use the engine. Certainly, as you have more complex components, you know, as was mentioned earlier, technologies change and that might drive your decision whether to do work inside or to do work outside your facility. So complexity of the airplane will drive where, but the what that needs to be done remains the same regardless of the where. MR. MC GILL: You made the statement that it shouldn't really matter whether you did it inside or out-sourced it or what, the repair, it's the program of the usage of the airplane and you could get the same results, is that correct? MS. DAVERIN: Well, obviously if you have a 145 repair station doing component work or, in our case, as a 121 operator doing the component work you could end up with a serviceable part that meets the specifications and requirements. MR. MC GILL: Let's just take a little part, for instance, whatever it might be. Let's send it out to a 145 facility. The unit that you send out, is that the unit that you're going to get back? MS. DAVERIN: Unless you have a component exchange program set up with that facility. Let's say yes. MR. MC GILL: Depending upon how we qualify, you may or may not get that same component back, is that correct? MS. DAVERIN: It depends again on the nature of what the agreement is that you have set up with the facility. But it is possible not to get that component back, if you have a component exchange program. MR. MC GILL: Okay. But you would get a tear down something, that would tell what was wrong with that particular unit, but not that specific unit would come back into your possession, is that correct? MS. DAVERIN: Again, looking at what United does, I think most of the components, for those that we out-source, we receive those same components back. MR. MC GILL: So you're able to track that unit with whatever repair was done at a particular 145 facility or even in house. You continue tracking that specific thing. Frank, do you do the same thing if you send component repair out? MR. BASILE: It's a requirement that I get the component tear down report with the part. MR. MC GILL: But obviously there are a lot of components that are not brought back in, they're just exchanged out with, you pull a black box out and you get another black box back in, is that correct? You don't get maybe necessarily the one that was sent out? MR. BASILE: That could happen if you have an exchange program set up. But you have to get the tear down report with that component that you get from that approved station. MR. MC GILL: And you're tracking this type of reliability on this? MR. BASILE: We track to very infinite detail, component reliability, to make determinations of whether or not we should modify that part, to improve the reliability of it based upon our operating condition. So that part would have to meet that specification. MS. BRUCE: Back to that, you are providing detail work cards that go along with the job you're requiring a service provider to do? MR. BASILE: Yes. MS. BRUCE: But reliability data that you need back to run your program can sometimes be very different than just the time on the work card. I'm interested in the reporting back of information to feed your reliability program or even, you know, even if it's at the parts level which is the jump off for Frank's question. What do you receive back from the repair station or from the component shop, back through the repair station in the way of data that drives your reliability program? Are they responsible to send you anything other than just the work card performance, the material back? I'm looking for where special notes, any sort of measures that didn't require work on the component, but that you made note of, some notice that there's a difference -- if you go into a replacement piece, some indication about the nature of why that piece had to be replaced. What's the flow back up the chain of information that you need for your reliability program? MR. BASILE: The last overhaul of the part. MS. BRUCE: So it's really just the time and the occurrence of the event? MR. BASILE: It's not the repair data. It's the last overhaul data. So you have to go back to the last overhaul cycle and then any repairs that took place after that. MS. BRUCE: Okay. Let's run down a real quick one. Tony, how many places, you said three places do heavy maintenance for you? MR. QUILLEN: We've got on our D-91 which is our operating spec, we have two major repair stations listed for air frame plus our engine agencies. MS. BRUCE: When was the last time you made a change to who was listed on your D-91? Have you used the same ones? MR. QUILLEN: We've had a relationship with one substantial supplier for 25 years, and the other one was back in business about four years ago. MS. BRUCE: That was the last change you made? MR. QUILLEN: They're not too frequently changed. MS. BRUCE: Could I run the same question past the others? MS. DAVERIN: Sure. On our op spec we have three providers of heavy air frame maintenance, and the last time the op spec was changed for any one of those was probably -- I'm guessing -- it's probably about a year ago. MS. BRUCE: Frank? MR. BASILE: I don't take care of the D-91. I can't tell you exactly when we made a revision to it. I could tell you the last time we made a request was probably three months ago, when we made a request to have someone added. But you know, our gear overhaul vendors and our heavy maintenance overhaul vendors stay pretty consistent. There are changes from time to time. MS. BRUCE: I think we all recognize there are reasons you want that to be the case. But what I'm trying to set up here is what led you to making a change. In other words, you're evaluating the quality of the service you're getting back. Can you give me any examples of why you've changed service providers? MR. BASILE: Sure. We just had a new addition, fleet addition, so of course, we had to have the transition maintenance package in the past year to freighter conversion done by a vendor who was qualified on that specific type of aircraft. MR. MC GILL: You bid those contracts out? MR. BASILE: Sure. Sure do. CHAIRMAN FRANCIS: We're going to start to run into a time problem pretty soon, if we want to give the parties any time at all to question. We're not trying to answer every question in this particular forum. This is part of the study, so I think we better keep our eye it, to make sure everyone gets a chance to participate. MR. MC GILL: That's fine, if you're ready to start the next panel. Fine. CHAIRMAN FRANCIS: Okay. Joe. FAA: I just have one clarification question. I don't believe it was answered. Anyone on the panel can answer this. Can airlines do work for other air carriers without a 145 repair station certificate? MR. BASILE: Sure. They could use their 121, but they still have to use the other air carrier's maintenance program. Yes, sir. FAA: Thank you. That's it. CHAIRMAN FRANCIS: Mr. Vandel. FSF: No questions, Mr. Chairman. CHAIRMAN FRANCIS: Sara? Sara is sitting there with the regulations in her lap. ARSA: Somebody should bring them. Not that we have to read them, Mr. Chairman. But we should have them available to throw at each other every once in a while. I just have a couple of questions. Honest. I just have a couple of questions. The first question that I have is, United has a 145. Is that also because you do work on JA registered aircraft? And are your 145's JA accepted? MS. DAVERIN: We have a 145 that is used as the basis for JA approval for JA 145. ARSA: Because you fly international and you do work on international aircraft, like line maintenance, etcetera? MS. DAVERIN: We do do that, that's correct. ARSA: And I'm guessing that Southwest doesn't and FedEx doesn't. You have to have a 145 in order to be JA certificated or approved. So I think that's one of your drivers also, maybe. With component maintenance, I got a little confused about whether or not you use, as an air frame, when you send your aircraft into an air frame repair station, do you use their approved list or your approved list or vendors? MR. QUILLEN: They have their approved list which we audit and we concur on the stations that they use. They will have some on their listing that we don't. They're allowed to use their list for special processes, with our oversight of course, but as far as the components are concerned, they use our list. MR. BASILE: That's the same for Southwest. ARSA: Okay. So you hand them your approved vendor list and you say, if there's differences you have to come back to us; that's Southwest. MR. BASILE: Exactly. ARSA: And with FedEx, they use that list and that's it? MR. QUILLEN: Yes. ARSA: Except for special processes like plating. MR. QUILLEN: Then they have to come to us. ARSA: And get your permission. MR. QUILLEN: Yes, absolutely. ARSA: And United? MS. DAVERIN: We'll give them our list and then if they have a change to it they have to use our process and we're involved in the approval of that. ARSA: So your process for picking a vendor. MS. DAVERIN: That's right. ARSA: One other question. When you have an exchange program with a vendor on components, do you get the tear down of the unit going out to them or the tear down of the unit that's coming back to you? This is on an exchange. MR. BASILE: Absolutely the one coming back to you. You must have the last tear down, the last complete overhaul of that component. ARSA: I understand that's a requirement under the record keeping requirements, Frank. I'm just asking for your reliability program, the unit that went out to them, it seems like the tear down information from that unit would be important to feed back to you even though you get another unit back. MR. BASILE: Yes. The fault of the component is normally listed on the tag. Yes, of why it was removed. ARSA: The reason that it went out? MR. BASILE: Sure, sure. ARSA: Okay. And when you have it exchanged, United, do you get the information of the unit that went out as well as the unit that's coming back to you? MS. DAVERIN: I believe in the exchange process that the database is kept by the vendor that indicates all that information. But obviously on the units coming back, you'd have that information. In terms of when we get it for the unit sent out, I guess that would be a question I can't answer, the timing. ARSA: Same, Tony? MR. QUILLEN: Basically the same. We have very few exchange programs. Most of ours are closed loop, where we get back the same unit we send out. But we do have an exception program that we keep operating with the unit, but we get the same data they're talking about. ARSA: And your decision of times to use OEMs, I think out of 80 percent of the maintenance you contract out and 90 percent of the maintenance is contracted out, 60 percent went to OEMs. Is one of the reasons you decided to do it that way because of the -- you don't have quite the variety in your fleet that some of the other air carriers do? MR. QUILLEN: That's a big advantage for any operator that has one type of equipment. But the reason we're using OEMs are several fold. One is the fact that they built the part, they have the expertise, the engineering backing it up, plus they have all the material. If you can negotiate the proper price, you've got the best of all worlds. ARSA: That sure helps on that overhaul. Thank you. CHAIRMAN FRANCIS: Is that it? RAA: Just a couple questions. I want a clarification on reasons why you out-source in terms of capacity, that if you -- in order to enable, let's say, a group of dedicated technicians and AMPs to do a D- check, you have to have a certain number of aircraft of the same type generally to maintain that. Can you elaborate in terms of your decision to do it in house versus out-source? Is there a certain point where if you, say, have two aircraft, would it make sense to set up a line, or what's the deep demarcation point or decision point there that you might employ in terms of capacity, in house capacity to do a job? MR. QUILLEN: I'll start off. We do have peaks, I guess you would call them, in our schedule where we have checks going out. I come back to the long term business relationship with a 145 repair station, where we can be confident that we will have people that are trained and have the capability to do these kinds of checks. It is one advantage, and you've been asking the question about an advantage when you have a flexible work force, that's one thing a repair station can have that we don't have the flexibility sometimes, because I think the next segment, when you talk to a repair station about that, that's some of their attractiveness for that business, is they can run multiple lines and they can start up lines and do away with lines by moving that work force around. The decision to go out with that work is based upon a number of factors and one is does the place we want to take that work have the capability. When we've been dealing with the same repair station and we have consistent lines that we can have qualified and trained people that are familiar with our processes already, it's a big advantage. RAA: Okay. Thank you. The other issue had to do with your communication between your PMI and yourself and your staff with respect to making good decisions on selection of vendors and dealing with them. We got into this issue of the repair station out- sourcing as well, and oversight of those. Can you see -- what can you see in terms of the communication between the FAA and the air carrier that would make that a more efficient process? MS. DAVERIN: Speaking on United's behalf, when we do select a vendor, we accomplish a case audit to approve that vendor and the FAA usually goes along on that audit to answer any questions they may have about the vendor as well. RAA: So they physically accompany your team? MS. DAVERIN: Yes. RAA: To even to, say, third party, if a repair station out-sources parts, they will also go to that house as well? MS. DAVERIN: That I'm not familiar with. I can't speak to that. RAA: Is there -- I guess what I'm getting at is in terms of sharing information between the FAA and the air carrier on repair stations and sources of out- sourcing of the repair stations. Can you see, I guess, better ways of communicating that process? MR. BASILE: We have a pretty open file and really close relationship with our FAA office. It's a hot topic and the information flows pretty freely and they spend a great deal of time with us. So I don't if improvements can be made. I don't know. The information certainly flows. I don't have any ideas to make improvement or any suggestions in that manner. MR. QUILLEN: Dave, I know we get feedback, as I mentioned earlier, through the PMI on regional inspections and so on, but I'm not that familiar with the detail. MS. DAVERIN: In terms of United, we have a very open relationship with our PMI and stay aware of things that are happening, not only at the repair stations that we use but the repair stations others use so that the industry -- I think the industry stays aware of developments. RAA: Thank you. That's it. ATA: I have just one question. On the decision between out-sourcing and doing something in house, does the decision ever come to a basic question of logistics? You may be able to build a capability in your maintenance base. CHAIRMAN FRANCIS: Tom, could you take the microphone? ATA: Sure. The question deals with the decision between out-sourcing a maintenance task versus doing it in house. Does that decision ever come out to be one of pure logistics? For example, you build a capability within house but it would be located at a base that is remote from where your real need is. I heard some airlines talking the other day about a decision on doing wheel and tire maintenance at their base and they found that a commercial source which had a better distribution capability was available, so they decided to go with the source outside. MR. QUILLEN: In that case, the logistics does play a big role in that kind of a decision. Other factors also enter into that. I come back to the specialization of a 145 that they specialize in a particular service and the logistics would figure into that, but it's also a business decision and a number of other factors going into it. But logistics would be one of the criteria used. ATA: That's all. Thank you. CHAIRMAN FRANCIS: Jack. MR. DRAKE: I'm wondering what you do when you find a problem with your internal audit or with your teams that go to the repair stations. MR. QUILLEN: You mean with one we're evaluating or one that we're already working with. MR. DRAKE: One that you're working with, if you find in following your parts or following the repair process at a repair station that there's a quality problem, how do you deal with that problem? MR. QUILLEN: We have a formalized process. This works through our on site team, the QA manager has a process, depending on the degree of the find, whatever it is, that we work right through that and have an official investigation, root cause analysis and a final resolution. MR. DRAKE: Do you report back in the form of audit report or anything like that to your repair stations and do you require them to respond to those sorts of comments? MR. QUILLEN: Yes, we do. We have a formal process. I mentioned earlier in the presentation about the monitoring and measuring. This is a formal process that we set up to get feedback and document it and get it in written form. MR. DRAKE: Yvonne, would you add anything to that? MS. DAVERIN: The same process applies at United, where again we have on site representatives who perform continuous auditing. If something is found during an audit, there is a standardized process that we follow in terms of understanding root cause and factors leading to that. In working with the repair station, that representative will review the plan to address that audit finding and corrective action. And then periodically our senior management will meet with the repair station senior management to go over performance, and part of that performance is compliance obviously. MR. DRAKE: That's all I have. Thank you. MR. ELLINGSTAD: Just real quickly, a clarification from each of you. On your contract maintenance, on your heavy maintenance, what is your oversight investment with respect, say, to a D-check, in terms of your personnel on site? MR. QUILLEN: My team consists of seven people full time. Is that what you're asking? MR. ELLINGSTAD: Yes. For a single aircraft for D-check. MR. QUILLEN: That's for a D-check. A single airplane event, we would always have at least two representatives, one from the production or technical side and one from the quality side and then depending upon the magnitude of that job, whether we need material support and all the other things, but at least a minimum of two. MS. DAVERIN: At United we'd have a quality assurance representative, at least one; quality control representatives, usually two or three; and since it was a D-check, there would be three on the QC side and two on the QA side. On the production side we'd have a representative and also a logistics person. In addition, when the aircraft is re-delivered to the operator, we have our flight test engineering group accept that airplane. MR. BASILE: We are very similar. Quality assurance, minimum is one maintenance, one to two. We also have material and for that level of a check, in all likelihood an engineer, structures engineer on site. MR. ELLINGSTAD: Thank you. I have no further questions. CHAIRMAN FRANCIS: Vern pre-empted by question. This is now per aircraft, you're talking about a D-check. So if you had -- MR. BASILE: Not necessarily. No, we wouldn't increase as the line is increased unless there was a need for it. Probably -- it's hard to say. A facility running two D-checks would probably increase their QC and their production oversight as needed, and the engineer. The material rep pretty much stays constant. CHAIRMAN FRANCIS: But you're all pretty comfortable with the numbers of people. This is something when you get out there and you have seven, three in a D-check situation and obviously you can theoretically and probably practically end up with a maintenance facility doing D-checks on three different 737 carriers, which imposes obviously in terms of the maintenance programs a burden on the station and you remain ultimately responsible for the aircraft and its maintenance and air worthiness. If you send those numbers of people, and say, you have three 737's in one, you still are confident that you can watch what's going on. MR. QUILLEN: I'll answer that from a standpoint of what I do. I mentioned earlier about rotating some supervisory technical folks between the in house lines to the contract lines. What we do is depending on the work scope of that particular airplane or airplanes, as that grows, I will supplement that with additional people as necessary. I thought you were asking the minimum a while ago. There are two facilities at the present time and I have staff at both facilities. But I adjust that depending upon the work scope of the aircraft. CHAIRMAN FRANCIS: I just think that given the scale of the work in that particular case and if you have a diversity of carriers using the same facility then obviously you've got to be pretty sensitive to watching what's happening in some detail. MR. BASILE: You have your peak and off peak times, too, and you supplement that from within, from your core groups. CHAIRMAN FRANCIS: Thank you. Jim. MR. ROSENBERG: Just one quick question. Mr. Basile, I think you indicated in response to one of the questions that there had been an increase in oversight by your PMI. MR. BASILE: Yes, yes. MR. ROSENBERG: Can you just give us some sense of what that increase has been? MR. BASILE: Of the numbers of inspectors, the level of detail that they're going into now. Not that we mind. We have an open relationship. But of course, we had pretty substantial fleet growth, but we also had growth of the -- and actually to be honest with you, I think it was a little bit lacking until probably about two years ago. We added quite a bit, and I think it was due. I think it's at a good level. MR. ROSENBERG: So we're actually talking about frequency, increase in frequency in visits to facilities? MR. BASILE: Yes, more spot checks at a 145, more spot checks of the lines and the operations, in the day to day operation as well as the heavy maintenance vendors, international and domestic. MR. ROSENBERG: Mr. Quillen, have you seen similar things? MR. QUILLEN: I've seen similar increase over the last couple of years, the frequency of inspections and to the detail has increased. MR. ROSENBERG: Thank you. CHAIRMAN FRANCIS: I thank the three of you very much. That was very educative. It is with some horror that I noticed that there is no break through the entire morning. So I'm going to take the dictatorial privileges of the Chairman and we will take a 15 minute break here. We may end up having lunch a little later, but I think we've got some time later on that we will be able to use. So if we could be back here at five after, please. (Whereupon, a recess was had.) CHAIRMAN FRANCIS: The next panel is going to be the repair station folks. If we could ask you -- all related to repair stations. If we could ask each of you, perhaps starting with Mr. Horn, to state your name and your organizational affiliation and title for us for the record, we'd appreciate that. MR. HORN: My name is Dick Horn. I'm the vice president and general manager of TIMCO in Greensboro, North Carolina. TIMCO is a series of four different repair stations, Lake City; Macon; Greensboro; and Oscota, Michigan. We employ roughly 3,500 people and do C and D checks and modifications on large commercial aircraft. CHAIRMAN FRANCIS: Thank you, sir. Mr. Fernandez. MR. FERNANDEZ: My name is Jorge Fernandez. CHAIRMAN FRANCIS: Could you pull that microphone a little closer? MR. FERNANDEZ: My name is Jorge Fernandez. CHAIRMAN FRANCIS: A little closer. MR. FERNANDEZ: My name is Jorge Fernandez. I'm with Caribe Aviation. We're a component repair station. We employ 106 people. We're radio instrument and accessories, radio class 1, 2 and 3; accessories class 1, 2 and 3; and instruments 1, 2, 3 and 4. We have, out of 106 people, there's 54 mechanics. We do work for Federal Express, United and American Airlines. CHAIRMAN FRANCIS: Thank you. Mr. Crotty. MR. CROTTY: My name is Bob Crotty. I'm an independent air worthiness and maintenance consultant. I do work for five or six different larger maintenance consulting companies. I do safety and compliance audits on 121 and 135 operators and quite a few JAR ops. One operator is in Europe and others in South America. From this vantage point I get into repair stations, following up contract work which is sent out from 121, 135 operators. I do have to say that I'm not an advocate of the repair stations but I'm sitting on this panel and hopefully my views of their problems and difficulties as I see them in the future can shed some light on this for them. CHAIRMAN FRANCIS: Mr. Hiles. MR. HILES: Good morning. Jay Hiles. I'm with the International Association of Machinists and Aerospace Workers. I'm the senior air safety investigator, primary oversight with U.S. Airways. I get involved with a lot of incident and accident investigations, human factors issues, deal a lot with the FAA and for the purpose of today, we kind of take a look at some of the problems associated with our aircraft once they come out of the 145 station. CHAIRMAN FRANCIS: Let's start with Frank or Deborah. MS. BRUCE: They got the sort of content introduction on this round. Dick, we understood the size of the business. You are a heavy maintenance provider; in other words, the main line of business at TIMCO would be to do C and D checks? MR. HORN: Yes, mainly C and D's for 121 operators, both cargo and passenger. We also have a DAS, as you may know, and do a lot of modification work and a lot of STCs for foreign operators and U.S. operators. We're located in Greensboro, is the main hub, and we also have a 145 facility in Lake City; in Macon, Georgia; and Oscota, Michigan. MS. BRUCE: Pick just one of those. Your largest facility is in Greensboro? MR. HORN: That's correct. MS. BRUCE: How maintenance lines run at one time there? MR. HORN: We work approximately 12 to 15 airplanes at a time, about 225,000 man hours a month. MS. BRUCE: Okay. I'll switch over to you, Jorge. You're in an entirely different business than that, if you would, though you're both holding 145 certificates. But what would be the nature of your work? MR. FERNANDEZ: Component repair of avionics, electro-mechanical accessories. MS. BRUCE: So not necessarily all your work but, for example, it would come from Dick doing a heavy maintenance check, he would run into some component work that needed overhaul and he would send that to you as his subcontractor and you would repair that work and send it back? MR. FERNANDEZ: That's correct. MR. MC GILL: Jay, let me ask a question. MR. HILES: Yes, sir. MR. MC GILL: How many 145 facilities have union representation? MR. HILES: That's a good question. I don't have a firm answer for that. MR. MC GILL: Do you know of any? MR. HILES: Not off the top of my head, no. MS. BRUCE: To the degree that an airline has a 145 certificate they might. MR. MC GILL: Well, yes. MR. HILES: You're talking strictly independent 145 operators? MR. MC GILL: Yes. MR. HILES: I don't know. MR. MC GILL: Then I want to go back, and we'll ask all three or four. What kind of value or is there a value that an airline can give to the customer, by doing maintenance in house? Can you see any of these advantages? MR. HILES: Yes, I do. We don't farm out a lot of 145 work. Primarily right now our aircraft are repaired so we've seen a fair amount of problems there and we've taken a look at a lot of the issues of why these problems started. In house, we certainly have long gone past these initial problems. So I see the value of doing it in house greater than outside. MR. MC GILL: Do you have statistics that could document that from a quality assurance area? MR. HILES: I could supply the Board with documentation of problems, if you want to say, that we've experienced. MR. MC GILL: Could those same problems occur when you do your own maintenance in house? Or do you track them both? MR. HILES: Yes, we do track them both. MS. BRUCE: Maybe a carry off on the same process. Dick, TIMCO is not unionized, is it or is it? MR. HORN: No, we're not. MS. BRUCE: Are 145's -- can you think of any -- you know what I'd rather know? How many 145's of the size and scope of TIMCO -- I don't mean an exact number -- how many places around the country do substantial D- check work, you know, major repair work? MR. MC GILL: Domestically. MR. HORN: Four that are our size. Four that are the size of TIMCO. MR. MC GILL: They're non-union? MR. HORN: Yes. MS. BRUCE: So there are four places that really can handle work at this volume, major substantial D-checks? MR. HORN: There's more than four, but if you look at the four that are comparable to the size of TIMCO, that's what I was basically saying. MS. BRUCE: I realize we are just sort of scaling this, so it's not an exact number I'm after. So there are four really large ones? MR. HORN: Yes, that's correct. MS. BRUCE: Drop down a level. What's the next sort of grouping that you get a feel for? MR. HORN: I think then you go to a tier where there are probably seven or eight, and then you drop down another tier, still in the substantial maintenance, there's probably four or five. So you're probably dealing with substantial maintenance -- this is really a guess -- about 20 nationally. MS. BRUCE: So when I look at numbers of certificates, if I go to the FAA's register of 145 certificates and look at kinds, I'd get a huge number, 2,500 that do, say, maybe air carrier level work, certainly maybe twice that many that do all phases of aviation maintenance work. So there's a large number of certificates. But what I'm after here is how many actually constitute heavy maintenance work. So that's what I'm after, the scaling issue. MR. HORN: I would guess in total there's probably 21 that are doing substantial maintenance as defined by Mr. Hinson's letter. MS. BRUCE: So Jorge, are the bulk of them in your business? MR. FERNANDEZ: Yes. MS. BRUCE: Are they -- do you want to just give me the same sort of feel? Small component repair stations might generally employ how many people? I realize there's a range and they differ. MR. FERNANDEZ: Small component repair shops are running about ten to 12 people, the small ones. The medium size ones are running about 40 to 50. And then the larger ones are in the hundreds. MS. BRUCE: Does the nature of the work they do really differ? I think I understand that you're by and large doing work directly for airlines or for a large repair station. Will I find smaller component shops that do a mix of business? In other words, they do aviation repair business but they might also do some other things in house that are not necessarily aviation related, but by virtue they have a 145 certificate and they do this work but it's broader than that. MR. FERNANDEZ: Not that I know of, no. MR. MC GILL: Jorge, how many people that work in your facility have A & P certification? MR. FERNANDEZ: 14. MR. MC GILL: 14 of how many? MR. FERNANDEZ: 54 mechanics. MR. MC GILL: What kind of training do you have, recurrent training? MR. FERNANDEZ: We train to OEM specs and we also train to customer specs and their policy sheets. Most of our mechanics are either airline experienced or OEM experienced. A lot of them are factory trained. MR. MC GILL: Bart, when you're doing audits of all of these different facilities like that, what kind of training problems have you observed in different types of facilities? MR. CROTTY: I can probably speak to the medium sized air frame repair stations, 33rd Part maintenance facilities. Generally I see a very shallow maintenance training program. Records are often not complete, inaccurate. New personnel aren't always trained on the inspection procedures manual. Again, I'm speaking about the smaller air frame repair stations that are maybe between 100 to 200 people, not the more larger repair stations. They seem to have enough management and supervisory people and internal procedures that they can deliver quality and includes training of work force as well. MS. BRUCE: Let's back up a minute. Set the stage for me as to why you would be at a facility doing an audit. By what mechanisms are you there, either business mechanisms or what situational causes? MR. CROTTY: I think I maybe explained this before, doing the safety, the compliance audit on the 135 or 121 operator. If they do then have contracted maintenance, have a lot of substantial work sent out, then often I would get into that repair station to look at the quality and to see what the finished product is. That's the mechanism that I have. I'm not doing audits of the repair stations where they're paying me for my evaluation. MS. BRUCE: So you're working on behalf of the operator? MR. CROTTY: Looking at the operator to see whether their maintenance program is carried out properly. MS. BRUCE: So they have decided to do an internal audit? MR. CROTTY: No, they have not hired me. I represent four or five other maintenance consulting organizations who then provide advice to people that are contracting for charter work, using large aircraft. In that sense, then I get into the 121, 135 operators and then in the cascade, then I eventually end up in some 145 operators, 145 repair stations. So I'm not doing the work directly for the repair stations. That's the point that I wanted to make. MS. BRUCE: All right. MR. MC GILL: Dick, let's go back to just on 145. You've been in this business a long time. Tell us, from your perspective, we've heard other people talk about core competencies, different objectives. Tell us why a 145 facility such as yours right now is an advantage to a certificate holder. MR. HORN: I think, first of all, Frank, we have a business and that business is obviously to -- I'd be kidding someone if we didn't have a business to make profit; we do. I think we run it a lot more efficiently than what airlines do. First of all, 145 tends to be a bit of a misnomer. Yes, we have a 145 certificate in all of our facilities. But other than a couple of leasing companies, we operate with 121 certificated carriers. We are required by 145.2 to operate under their GMM, their specifications, their inspection requirements, etcetera. So we are really operating under a 121 situation at all times. However, it's our business. The airlines have a business of transporting people and cargo from point A to point B. When they begin to concentrate on that, they become more profitable. The maintenance comes to providers like ourselves. I will add that most of the upper management of our TIMCO companies are ex-airline retired folks. We learn that way, if you will. So most of the TIMCO operation is run by ex-airline maintenance folks, management. MR. MC GILL: Now, you're saying you've got a 145 certificate but you don't really -- it's there but really you're operating under each individual 121 airline that's in your shop. MR. HORN: I'm required to. MR. MC GILL: Okay. Have you noticed -- let's back this up. We've been hearing a lot about standardization of some of this type of work, general work that is performed on a carrier. Do you have any thoughts on that? MR. HORN: There's differences in the maintenance programs, but the differences are really somewhat subtle. It really depends on how that airline operates their airplanes, short cycles, long hours, short hours, short cycles, etcetera. Some carriers do eight C-checks and then do a D-check. Some carriers with the same type airplane will do a progressive D- check, so that when four C-checks are completed, they ultimately have completed a D-check. Some break it in half, as in HMV, four years for an HMV, an odd HMV and then another four years for an even HMV, constitutes a D-check. The content, however, remains the same through those eight years of maintenance. They're different but the differences in some cases are quite subtle and it really is dependent on how that operator operates his airplanes, both in cycles and hours, what he carries. A heavy cargo carrier will do a lot of different things than a package carrier, simply because of what he carries in the upper deck of that airplane. MR. MC GILL: Are we ever going to see with any of set standardization, certain types of areas of work cards? I know the FAA -- we'll talk a little with them. There's been different people, different groups that's talked about it. Every one of your carriers is bringing a separate -- you have to know those very, very well. MR. HORN: That's correct. They're different but they're subtle differences and it's really how the program is set up. We do some maintenance programs ourselves for small carriers, based on the MPD. What suits them, and we go to their FSDO and help them explain it to their PMI. However, I don't think you're ever going to get everybody to maintain their aircraft identically. I don't think it makes any sense. You have a high cycle 737, for instance, which flies 11 cycles a day, and then you take a carrier that flies non-stop across the country with a 737-300. It wouldn't make any sense for those two airlines to have the exact same maintenance program because in one they'd be over-maintaining and the other way, they're reliability would go sour on them. MS. BRUCE: As I listen to you describe subtle differences and sort of the counter to we won't get standardized, we all agree we run different operations, but the question begs to be asked, is there a need to have individually different programs at every operator or could we look at categories of operations, you know, similar types of operations and somehow work that up from that angle? It's really an open question. Do you think we could standardize it some more so that as we progress through this contract repair process that it might not set up the situation where every airplane is under its own separate, its distinctly different program, distinctly rather than subtle? MR. HORN: That's an argument that's been discussed for a long time. Let me take the cargo carriers, for instance. That's a similarity. They all operate the same type of airplanes, either DC-8 61, 62, 63, 71, 72 and 73. Other than the engines, they're all basically identical, other than some STCs on air conditioning systems and that sort of thing. But if you take a package carrier that flies their airplane four hours a day and puts very light articles in the cabin, all palletized, and doesn't have a cargo door, now you go to the heavy operator who has the same identical airplane that came out of Long Beach and probably about the same year, they're hauling all sorts of heavy equipment, etcetera, long range, trans-continental and trans-ocean. I don't know how you would put those together really and come up with the same program, because one is high cycle, low hours and the other is low cycle, high hours and carrying a totally different product and they just don't come together that easy, even though it's the same aircraft, same engines perhaps. MS. BRUCE: You just set me up. The same aircraft, when it was first manufactured had an MPD, a maintenance planning document that was a generic document. MR. HORN: Correct. MS. BRUCE: So each operator is then customizing this based on what they intend to do in their operations. MR. HORN: And what gives them the greatest reliability. MS. BRUCE: Here's why we've gotten this far because I want to ask this one question. Do you think the maintenance planning document is better conceptualized as a base line or as a full blown goal of maintenance? In other words, is it set at the highest level, a general level or a low level? MR. HORN: I think it's probably set at a general level, with some areas which are at the high level. There's some areas that the OEM believes that maintaining that at a higher frequency or lower frequency is going to provide more reliability. Don't forget, when an MPD comes out -- let's take a DC-8, way back in 1968, an MPD came out. Douglas had no idea, I'm sure, that that airplane was going to be flying today, after 30 years. After those 30 years of operation, we learned an awful lot and we know what we have to do and we know how we have to maintain it to get the reliability out of that piece of machinery that every airline needs. So I think when you look at the MPD, it's when the airplane is manufactured and then as we gain experience with that air frame and its engines and components, there are certain things that we want to do more of and certain things that perhaps we want to do less of. We, as a 145, have nothing to do with that, other than some of the maintenance programs we do. MS. BRUCE: It does in that the program you receive to execute differs based on that. MR. HORN: Yes. MS. BRUCE: Whether the operator has added to that set of requirements and said I need to do more of something or whether they, through a formal change in their maintenance program, requested to take away from that original set of requirements. MR. HORN: Okay. That we have some control of, Deborah. We hold what's called an MPD with four out of the six basic customers. That MPD is held 30 days after re-delivery, 60 and 90. And we review the write ups that that airplane had from the day it came out of our facility through the 90 day period. With the DC-8 operators there's a lot of similarities that we started to see, because it's one way of bringing those airlines together. They're competitors, so they're not really trading all sorts of things. We somewhat brought them together through this MPD process. We get 30, 60 and 90 days, where we go over the write ups of that airplane over that period of time, and we found a lot of things that were failing and one that sticks in my mind, for instance, is one of the brake valves. Lo and behold, we found out that the brake valve was going to the same vendor for all three carriers. And we said you got a vendor problem, but we didn't have a vendor problem. What we finally determined -- and I don't think we could have done this without putting our maintenance review board together and going over it with the three carriers. We found out that the overhaul specs did not match the operational specs. So the unit was not being overhauled to the degree that it was being operated at. That was changed and we don't have any more brake control valve problems with those three carriers. Saved them a lot of money and our maintenance review board is most of the maintenance management of the airline, our maintenance management and the FSDOs for our own FSDO plus the operator's FSDO. So everybody knows what's going on. And we looked at the reliability of that airplane when it left. CHAIRMAN FRANCIS: Can I just interrupt for a minute? Do you have a way -- you mentioned there are a big four here -- if one of the other three does the same kind of work on DC-8's do you have a way of not only comparing the three who you work for, the three airlines, but also comparing with them for the kind of things that they're finding of the DC-8's that they're working on? MR. HORN: To some degree. Not formalized. It's not formalized, but to some degree at various meetings such as this to discuss what's happening with your customer, which is the same as ours. That goes on but in an informal basis. CHAIRMAN FRANCIS: I'm a great proponent of this kind of information sharing. I just wonder if there's a reasonable way of encouraging that. MR. HORN: I think there is and I think it would save the operators some money. We've brought together three cargo carriers in a parts pooling. We've seen one carrier looking for a part with a 20 or 30 day lead time and the other carrier had the part, and we finally said, hey guys, why don't you all get together and look at you stock this, you stock that, particularly some expensive structural parts, like landing gear trunyons. CHAIRMAN FRANCIS: I don't mean to interrupt but I do think that that kind of information sharing certainly is not only advantageous economically to all the carriers involved but there's a safety gain as well. Excuse me. MS. BRUCE: That's fine. You sort of led me in to jump over and ask Jorge a question about component work. Are you mostly working to OEM requirements or are you working to the individual airline program requirements or both, and what guidance are you using at the component level? MR. FERNANDEZ: We work to both OEM and to airline specs, depending on their policy sheets and their JDs. MS. BRUCE: One of the things about information sharing, do you run into cases where the original equipment manufacturer is getting feedback from a variety of component shops and they are serving the same function that Dick just described, where they're providing a crossover of information back? In other words, are they finding out there's a problem? MR. FERNANDEZ: We do cross a lot of information back and forth through the manufacturers and through the airlines. We do work real close together in that area. MS. BRUCE: Do you have trouble as a component shop keeping up with the documentation that you would want to have from those manufacturers? MR. FERNANDEZ: In the components that we're doing, no. If you were to go out there and try to do all the different components for all the manufacturers, you would have a problem. Some of the manufacturers are real tight letting that information out. MS. BRUCE: So you've really specialized, even within the range of radio, instrument, accessory type equipment, you've specialized on certain ones that are manufactured by certain companies. MR. FERNANDEZ: That is correct. We've chosen certain part numbers to work on, to make them part of our core units that we're going to do best. On those, then we go ahead and promote them to different airlines to do the same type of units for the airlines. That way all the airlines are sending the same type of components to us. MS. BRUCE: You do parts pooling? MR. FERNANDEZ: Yes. MS. BRUCE: Explain to me how that works. You have parts -- I'd rather you explain to me. For what customers do you do parts pooling or how many would be a better way to phrase that. MR. FERNANDEZ: We do it in a couple different ways. We have an exchange program, as was talked earlier, for just exchanging units out to customers. Those units are all done in accordance with OEMs. We also, in cases like United Airlines and TIMCO, when we do an exchange or unit replacement, we keep a pool just for United Airlines. Then on the contract we go ahead and move that pool into United and that would be come United's property. That way we could keep the same type of units in the system, especially since some of theirs are done to their joint docks and we can't release them to another operator. MS. BRUCE: How do you track the differences? MR. FERNANDEZ: There's differences in our inventory and they're broken down in consignments and they're segregated in areas within our company. MS. BRUCE: Physically how do you track them? Is it just by tag? MR. FERNANDEZ: Physically they're tracked by a bar coding system we have in place, and they're tagged as the units come in. As you do the swaps, it handles the swaps where it will print you a new bar code for the new component coming in, and it tracks it back to the repair order that we received it under. MR. MC GILL: Bart, when you're doing any of these audits in the other smaller 145 facilities, do you see anything, any problem sometimes with the current specifications of an OEM? Do they have all the data that they need to overhaul the components that they're going to be working on? MR. CROTTY: Probably I don't get down to the component accessory level that often, Frank. I do look at the general documentation, their technical library, other things of that nature. I would say they probably are satisfactory in that area. MS. BRUCE: How often would you find an automated tracking system for parts? MR. CROTTY: How often what? MS. BRUCE: How often would you find a bar coding system for parts tracking? Is that common in the industry? MR. CROTTY: Not with the smaller repair stations, no. It's probably almost non-existent. I'm not speaking for Jorge's shop, of course. MS. BRUCE: Is it likely that the size of Jorge's operation has led him to do this? MR. CROTTY: Yes, that's right. MR. MC GILL: Do you see FAA oversight that is adequate in those type of facilities? Is it adequate? Do you see them in there, do you see where they have come, made suggestions -- MR. CROTTY: In relation to bar coding and that sort of thing? MR. MC GILL: No, not bar coding. In general, just the smaller 145's. MR. CROTTY: I generally find it often not satisfactory. And it even occurs at the same airport where there could be a FSDO and that same repair station co-located where there's just a lot of quality problems and a lot of non-conformities that apparently just go unaddressed. This even happens after NASIP and RASAP inspections of going in and finding just, you know, some serious problems. MR. MC GILL: Do you find that since some of these 145's may be, say, the fourth party type, someone like Dick's 145, would sub out or farm out a small percentage to another 145, is that oversight you see at the airline themselves or the other larger 145 repair facilities comes in and adequately oversees the work that is being done for them? MR. CROTTY: Generally if there is adequate oversight, it's performed by the repair station and, as you had said before, the third party on the fourth party. MR. MC GILL: But not necessarily the airlines? MR. CROTTY: Correct. And again, I'm speaking about airlines that have maybe 15 or 20 or 25 aircraft. I'm not talking about the Southwest and United and FedEx people. MR. MC GILL: Are those members part of some sort of a case audit? Are they members of the organization? MR. CROTTY: Case audits is a very interesting thing. In order to use a case audit, a 121, 135 person has to have an ops specs page that says they can use the case audit. Case audits to me are probably good as a general -- or screening out of people that meet a certain standard. But then even the case audits, I've gone into places that have had case audits three, four months before and found lots of discrepancies of 145 operations as well. Although, FAA allows the case audit to be used as a primary tool for their continuing analysis and surveillance program required by the 121 and 135 people. As I said, again, case is probably good up to a point, but I think certain operators rely on it too heavily. MR. MC GILL: Dick, how do you perform an audit, if you out-source some component that some airline brought an airplane into your shop? MR. HORN: We out-source to various 145's. But we do an audit to put that particular 145 on our approved vendor list. We also prefer the customer to the 121 operator to do an audit and put it on their -- put that particular repair station on their approved vendor list as well. So we have two audits, one that satisfies us or dissatisfies us, whichever way it goes, and one that either satisfies or dissatisfies the customer. So we've got a double audit, we as out- sourcing to a 145 component repair station and the customer as accepting that as his approved vendor. You get a double look at it. MS. BRUCE: How many vendors are on your approved list? MR. HORN: Oh, wow. I don't know, Deborah. I'd say probably 25 to 30. We don't like to keep a lot of them. Boeing is one of them. Douglas used to be one of them. They are required to be on our approved vendor list. But of major, I would say probably 15, including some of the metal suppliers such as Cherny. MS. BRUCE: For a major carrier that might run several different types of aircraft, is that a good -- is a dozen a good ball park number? MR. HORN: I would think so. Mainly our approved vendors are some component and sometimes we don't send it out. The customer decides they're going to send it out to their particular vendor. We do a lot of stuff in house of course, flight controls, composite work, etcetera. So that part is pretty much eliminated. So it boils down to raw stock, fasteners, etcetera, that we do audits and put them on our approved vendor list and encourage the customer to do so as well. Most of the time, with the large mega vendors, they're already on the customer's approved list. MS. BRUCE: We heard earlier, we were talking about how many -- when we were talking to the air carriers -- how many people are rep'ing their airplane when it goes into heavy maintenance. Numbers went from like two to four. My question, comparing you to that, you receive those airplanes from a lot of different clients. What's typically the oversight in terms of manpower that is sent with an airplane? MR. HORN: Of our four major customers, it's six. I added them up when you asked the question before and we've got 26 vendor representatives on our facility. MS. BRUCE: Those are for the four largest. You obviously do work for a whole range of clients. What would be the lowest manpower associated with a heavy rep? MR. HORN: Two. That's mainly some scattered aircraft. The steady lines, there's six people, mostly in the QA and a manager. MS. BRUCE: And you're running probably two shift operations, maybe three. MR. HORN: Three, seven days a week. MS. BRUCE: So those two people, when they come with an airplane are covering three shifts, 24 hours a day? MR. HORN: That's correct. MS. BRUCE: Okay. MR. MC GILL: What kind of training, Dick, do you have to train your people to differentiate between these different maintenance programs? MR. HORN: Each airline has a specific requirement. Obviously you have systems training on their particular aircraft. That's a given. Then each airline has a little different paperwork. So we do paperwork training. We do ETOPS training. We do run up training. And we do maintenance manual familiarization training for each customer and each customer requires that. There's a little difference and they're very subtle between customers as to what they require. One particular customer, for instance, for structures people, requires that the person is well qualified in blueprint reading. It's just something that they've put into their requirement. But the basic need and the basic training we do is very similar for each airline, but their paperwork differs, the subject is pretty much the same. We get some differences in the ETOPS requirement. We get some differences in the RII requirements, the required inspection item training. And we have to do that of course for each carrier. MR. MC GILL: What about training as a 145, not so much 121 different types, but just as a 145 for training systems? MR. HORN: We are continuously doing systems training and it's repetitive training. We have not added an airplane to our customer base I guess within about six months. The last airplane we added with the 767-300. We don't do any 747's or L-1011's. So we stick pretty much to some of the customers' multiple fleets. MS. BRUCE: Let me set something up here. Where I'm going is I want to talk about non-routine work. I am an operator and I send you my airplane, and you and I have been in negotiation to try to figure out what you're going to charge me for doing the work package that I've sent you. We've got some history here but you've priced out the hours and you've sent it over and it's based on what I expect to have done to the airplane. But once you're in and working on the airplane, you run into things that are non-routine. Explain to me how that process is identified and costed out and accepted by the buyer. MR. HORN: Okay. Do you have about ten minutes? It's different for every airline. Some customers, routine work is fixed price; in fact, almost all customers' routine inspection is fixed price, plus the NDT plus X-rays. They're all fixed price. In some cases, we have a rate for time and material for non-routine. In some cases we have a time and material for non-routine which non-routine is a fixed price but we have a cap of perhaps 50 hours or 100 hours. When that gets exceeded we use a system called AWR or additional work request. It may be an additional work request for engineering as well, to do some DER work. We've got DERs and DARs in every discipline because of our DAS requirements. But we come to a price for the routine. We come to a price perhaps for the non-routine. Anything that goes above that price is handled with what we call an additional work request. Perhaps the customer will say, hey, wait a minute, why not change both main landing gears? We've got some green time but let's change them while we're here because we found some corrosion that perhaps is going to extend the visit. It makes some sense to change the gear. The gear was never in the original work scope, so it comes under the AWR, perhaps a fixed price. A lot of our customers, we have fixed prices on various functions, landing gear changes, landing gear trunyon changes, engine changes, flight control replacements, because they've got long lines and the experience has been three and four years with that particular customer and we know what it takes and they know what it takes. So you come at a fixed price, therefore, there's not running back and forth to the rep. MS. BRUCE: So the point there is if you have the history on it, you've got it in the contract mechanism and you've priced it out and it's up front. But otherwise, is it the rep on location that's making the decision? MR. HORN: Yes. He's obviously got a cap that he can approve, and may have to go back to whoever he reports to. MS. BRUCE: Okay. MR. MC GILL: Have you ever had an instance, Dick, or has it ever come up that some customer doesn't agree with your analysis of how to make a fix, agree upon something that they feel should be fixed in a different manner, maybe not to your standards, but to their standards? If that has occurred, how is this resolved? MR. HORN: Frank, we've got happy customers. We have those situations but they're resolved very quickly. We have some things -- the last part of your question is if a customer wants to do something that's contrary to the maintenance manual and is an un-air worthy issue, you write a letter to the CEO, and I haven't found a CEO yet that's going to say, oh, by the way, I want to do it the wrong way. There's a nice stop gap and that I learned at my former airline. MR. MC GILL: It stops it right there then? MR. HORN: Yes, sir. It sure does. Our customers and ourselves, we work things out quite well. We've got a long standing list of customers that have been there for a long time and I think that's part of the reason. MR. MC GILL: Anything with parts, the customer supplying their own parts, for instance, for whatever reason? Have you had any problems there? MR. HORN: Several of our customers supply their own parts. We don't have any problem with that. We don't put a surcharge on it either. MS. BRUCE: I'm thinking more not on your large business but maybe on some stepping down in the scale of size here, some that Bart may have seen more recently. The part supply has to keep up with the maintenance line, and it seems to me that the smaller the shop the more likely those two are going to get out of sync. What does an operator do when they're in need of parts, that they don't have an inventory? Where does the repair station go to get them? How does that slow up the maintenance work? MR. CROTTY: I really don't have an adequate answer for that. MR. HORN: I can help you out there. In one respect, structural parts, a lot of the OEMs will give you a 320 day lead time or 200 day lead time and we simply manufacture the part per our 145 agreement and commercially per our licensing agreement with both -- well, it's one these days. MS. BRUCE: So pretend for a minute with me that you're not the size that you are and you had a longer lead time than the job -- you can't hold that airplane while you wait on a part. What are your options to get that work done? If you can, you make it in house; that's what you just told me. MR. HORN: Yes. MS. BRUCE: If you don't have the capability, you what? MR. HORN: You would have to sub it out to somebody who could, and they would have to be on your approved vendor list. MS. BRUCE: Let's say you wouldn't have been able to foresee that because you thought parts would be available. What do you have to do to get that approved vendor? What do you have to do in a short period of time to get that person on your list? MR. HORN: There's two ways. One, perhaps he's already on our approved vendor list or perhaps he's on the air carrier's approved vendor list. If both of those parts fail, we go inspect, into an audit and get them on our approved vendor list or deny them, one or the other. We've denied a few over the past seven years. MS. BRUCE: Okay. MR. MC GILL: Earlier, Dick, you were talking about the organization TIMCO and I noticed you had some extra names in there, Air Corps and something. What is the effect of all of the -- we keep having these different consolidation plans and different companies and they seem to be, in the last couple years, it's quite a big change. What can you tell me about that of why we're doing this? MR. HORN: The TIMCO family, if you will, is made up of Greensboro, which is the largest of the facilities. All the other facilities are basically controlled from Greensboro by officers of TIMCO at Greensboro. There are four different repair station certificates. They don't all come under the Greensboro TIMCO repair station certification. There is a repair station certificate in Lake City, Florida. There's a repair station certificate in Macon, Georgia, as well in Oscota. MR. MC GILL: Why are all these things consolidating like that? MR. HORN: Well, they all come under a vice president of quality which is based in Greensboro. They all come under a vice president of operations based in Greensboro. And they all come under a purchasing vice president and a planning vice president which is also based in Greensboro. And we move people and we move management into these facilities on a daily basis. In fact, we have three vice presidents on the road today as I speak, two of them in Lake City, one in Macon. We have a very close relationship. We all wear these wonderful little things called pocket computers where we can send messages back and forth. So it's pretty good communication within the four repair stations. MR. MC GILL: So you think that's maybe why the industry overall is kind of doing the same thing now? It's consolidating different repair facilities into one larger one? How far is this going to go? How many of them are we going to have like that? MR. HORN: I think you have to look at -- it's called the beach and the sound, where they got together. You have to look at the airlines and the airline mergers to become mega carriers. I think that the repair station business is probably going the same way; in fact, we see that happening. MS. BRUCE: Would that filter down beyond heavy maintenance repair down into component shop, too? Do you see the same sort of consolidation of businesses at that level? MR. HORN: I'm not so sure I can answer that. I've seen some of it but then it was explained earlier when the air carriers were up here, the tire situation. To do your own tire shops these days, there's experts out there that have tires just rolling out and they're experienced at it. Why put a tire shop, with all its bead breakers and inspection requirements in various stations when you can get some of these mega tire, wheel and brake 145's. MS. BRUCE: It's a related problem, but it's a different subject. Do you run into requirements that have changed in the last few years based on EPA requirements that would tend to motivate you to combine businesses? MR. HORN: Oh, yes, for sure. MS. BRUCE: Can you give me any other example? That's just the one that comes to mind. Are there other sort of government drivers that might be pointing to advantageous combinations of business? MR. HORN: I think so. For instance, we do a lot of our paint work in Lake City right now, simply because in North Carolina we're in what we call the Piedmont Triad area, the VOC count that we can use during a given month is extremely low and it's because of the furniture manufacturing business who uses lacquer and lacquer has got the highest VOC count. And they were there a long time before us so they've got some grandfathered rights. So we really can't paint airplanes to the degree we would like to so we moved that to Lake City. It makes for a good marriage. We also move people back and forth. MS. BRUCE: Is Lake City a supplemental certificate, supplemental 145 to you? MR. HORN: No, they have their own 145 certificate reporting to the Orlando FSDO. MS. BRUCE: Okay. MR. MC GILL: Are there any problems with the training of the mechanics or personnel between the different facilities? MR. HORN: No. We're just starting to get into a combined training issue. We've now moved into combined safety issue, ground safety, where we can handle all of the facilities the same way. So if a customer goes from one to the other, there really isn't any difference. As far as the quality system, that's the same now. We've got that totally under control. In terms of the quality requirements, they're the same throughout all our facilities. We're starting to move into the training throughout all the facilities as well. Some of the training we contract out. A320 systems training we contract out. A300 systems training we contract out. Because our training department, with the multiple fleets, gets a little difficult to keep all that under control, so we contract out some training as well to pretty reputable training organizations. MS. BRUCE: Jorge, do you contract out below you? Do you have vendors? MR. FERNANDEZ: We have a very limited vendor list, for like the plating, that we sub that out. Those lists, before we sub, we get it approved through the airlines. MS. BRUCE: So there would be actually in your case for that, it would be -- would you be a fifth party provider? You're receiving, not literally, but you could be receiving components from TIMCO and you would receive them and then you would send them out for additional work? MR. FERNANDEZ: We're using the same vendors the airlines are using. Like in the plating, we're using the same vendor the manufacturer is using, the OEMs. MS. BRUCE: When they make a change, let's say, an OEM makes a procedural change based on some engineering work they've done and they found a change they'd like to make to practices of repair for their part, how do you get that information? MR. FERNANDEZ: We pass that information onto the airline through a quality control department. MR. MC GILL: Can you tell any difference if a carrier is operating under a cash system versus a reliability program? When you do the work, can you report back anything that would differentiate between a true reliability program? MR. FERNANDEZ: The airlines that we're dealing with, they report numbers to us and as far as reliability reports, they come back and report to us. We also report to them if we see a problem with a unit, that we've seen it a couple times and if it's inherent to the unit. We need to pull it out of the system. We do report back to them. On our incoming repair orders, we log all the information into our computer, TSO times and time since last overhaul. We put all that information in the computer so we do report back to the airlines, too, when we do see a problem. MR. MC GILL: What about you, Dick? Do you see if some carriers got more advancement in reliability, do you have any difference in your reporting back to them one way or the other from your perspective? MR. HORN: Not really, Frank. We, of course, go through the SDR programs, service reliability report. MR. MC GILL: Do you fill out that or do the carrier themselves fill out the MRR? MR. HORN: Some customers, we fill it out and send it in and some customers would prefer to send it in themselves. We fill out the SDR and send it to the customer and then he sends it off to their PMI. MS. BRUCE: Do you think it matters as far as what goes in, what actually gets tracked? MR. HORN: I would hope not. We are giving it to the customer and the customer, if they prefer to send it in themselves, it can only do the whole industry some good if we see some specific components or some specific corrosion developing in a specific air frame. That's how really, in some cases, ADs develop or service bulletins develop. MR. MC GILL: Let's just take a slight oversight of your facility or any 145. Do you know of any changes right now, currently the way you do business, that might improve this oversight in a 145 or safety of the contract work? Is there something we maybe need to be doing that we're not? MR. HORN: Audits have obviously increased since Mr. Hinson sent his letter out regarding substantial maintenance. We had 46 audits last year. MR. MC GILL: What are we auditing here? Are we auditing paper or are we auditing quality, quantity? MR. HORN: Auditing paper. Auditing parts handling, auditing work in process. The FAA has gotten very cozy with our people, and we don't care. They'll go up to the mechanic and say what are you doing, and how are you doing it, and where's your license? We get that every day of the week. We probably have one audit a day either by the customer or a regulatory agency. I think the audits have changed considerably from what they used to be. They used to be a paper exercise. Now the audits are getting right down to the work being accomplished and the work in process. Sometimes it helps us. I can remember one where an inspector stopped the work because we were removing an elevator and a horizontal stabilizer on a DC-8. In that case, we educated the inspector a little bit because the OEM in the Douglas maintenance manual permitted that providing substantial shoring was put on the other side which he didn't realize. But we have a lot of in process work audits. MS. BRUCE: If you're getting audited at that level from the FAA and by the clients, do you still have the same motives or reasons to do internal audits on yourself? MR. HORN: We do every day. We do an audit every day on each hangar. One hangar per day. In three days we've gone through the three main facilities. And then every six months we do about a five day total audit. Last year we had 46 audits, 22 regulatory, four of those were JAA or Bermuda CAA and 25 airline audits. MS. BRUCE: If they're internal, are you doing them with your staff? MR. HORN: Yes, our QA staff. We have two auditors on the payroll. MS. BRUCE: How independent do you feel they are at that point? MR. HORN: Very. MS. BRUCE: By virtue of management reporting cycle? MR. HORN: Yes. I think from what I see come out of those audits, they're very independent. MS. BRUCE: Jorge, do you have internal audits? MR. FERNANDEZ: We do the same thing. We do weekly audits and we do them to the FARs and the case standards. We do monthly audits to JA standards and they're segmented. We go in there and audit a section at a time in great detail. And then we also, from time to time, bring in independent auditors to come and audit our facilities and let us know where our deficiencies are since we're in there every day and we live it, we bring these people in. MS. BRUCE: What would be your motive or reason for doing that? Do you have a schedule that I'm going to do independent audits twice a year or is there something that might tie to that? MR. FERNANDEZ: We do it every couple years as we're growing, let them come in and go through our whole facility for a couple weeks. They're usually there for about two weeks. We've seen that it helps us a lot. Also we use independent consultants. We do our own audits on our sub-vendors when we're subbing plating and we also have independent auditors go every couple years to audit them. MS. BRUCE: Bart, for repair stations that you visit, what is the frequency of internal audits that they would have done on themselves? MR. CROTTY: Well, let me switch back first and answer the question from the part of the 121 audits that are required for their major contractors and so forth. I've looked at quite a few of what we call the continuing analysis and surveillance program which they're required to have. I look at their reports of findings of when they audit their 145 contractors, and again, I'm speaking about the air carriers that are the ten and 15 and 20 aircraft fleet size. They seem to be awfully thin on findings. In other words, they never come out and give good detailed written reports in their CASP program reporting as to what they're actually finding at these repair stations, when they're correcting them and how soon the corrections are being made. This really upsets me quite a bit because if there's anything within a 121 or 135 operator's program that you want to depend on is this CASP continuing analysis and surveillance requirement. This is the over-reaching that looks at the whole maintenance, the quality and everything else. Very often I'm finding out that some of these reports which, they say, if they're program is set up that way, they'll meet once a month, they'll issue a report once a month or every two months, depending on what their volume is and so forth. Sometimes these reports aren't made. The meetings aren't held. They go on for two or three months, no meetings. And often the FAA, the PMI is not aware of this. Now, some PMIs do sit in on the CASP reports and some don't. But within the year, I found two 121 operators that the reports of CASP were not made for six and seven months. Another one, the fellow that ran the program quit and he took all the reports with him for the past year, you know. So I just wanted to get that little piece in about the operator's responsibility. As far as the repair stations themselves, they're really not required, if you look at the regulations, to do auditing. They're required to have a quality control program but not necessarily audits. Now, many repair stations do the audits, but lots of people think that they're required to have an audit program. As of now, they're not required to have an audit program. They do have a responsibility of being aware of what's happening within their repair stations, so those repair stations that do have a periodic audit system set up to look at the quality control or the quality assurance, they seem to be doing fairly well in that area, but I could see lots of areas for improvement within there as far as the detail of their findings. MR. MC GILL: Do you think all of the FAA oversight of all of these different facilities, are they held to the same regulatory standards, between a large carrier, a large 145, small carrier; can you notice any differences in that? MR. CROTTY: It seems that for the larger repair stations, the oversight or the surveillance by the FAA is adequate, because consequently they're the better operators, the better repair stations. If you take the top ten, they're well tuned organizations. They have training. They even have sometimes internal safety programs. They have audit programs. I don't see the problems emanating from them. Again, I keep on repeating back to the smaller repair stations and the component people, but the 100 and 200 people that are doing the spot work for the smaller air carriers that are changing repair station contracts over a period of time, this is where I see the real safety implications are there. MR. MC GILL: Dick, do you see any difference in the standards between certain airlines, certain areas? We have, whatever, nine different regions or whatever, airplanes coming in from different areas, do you notice anything in the way you do business with that, from an oversight? MR. HORN: I think you can pretty much -- I can pretty much parrot that the smaller airlines have lesser staffs, lesser experience and do a lesser audit, the small carriers. They really do. We fortunately deal mostly with mega carriers, mostly large 121's with 350 airplanes or more and the leasing company we do a lot of business with has 1,150 airplanes. So we're dealing with some fairly large carriers for the most part. But we see some things in smaller carriers that aren't the audit that the mega carriers do or ourselves for that matter. I think it's probably because of the size and I think it's probably perhaps the experience. CHAIRMAN FRANCIS: Okay. We'll go to the parties here. I'll keep the same order. Joe will be at the ready. FAA: Thank you, Mr. Chairman. Mr. Crotty, you mentioned case audits. Is that normally 121 issues rather than 145 issues, the case audits? MR. CROTTY: Pardon? Say that again. FAA: The case audits, are they normally 121 issues rather than 145? MR. CROTTY: You're talking about the case audits now? Yes. Of the 121 people using the case system to evaluate the 145 people. FAA: Right. MR. CROTTY: Yes. FAA: Are they looking at more 121 issues or 145 issues? MR. CROTTY: 145. FAA: Does your audits address, your company's audits, do they address 145 or 121 or both? MR. CROTTY: 145. FAA: Okay. Thank you. That's all. CHAIRMAN FRANCIS: Bob. FSF: Bart, in your comments, you talked about some of the repair stations having a safety office, safety officer. How prevalent is that? MR. CROTTY: Repair stations having a formal safety program? FSF: Yes. MR. CROTTY: There's very few of them. I know the larger repair stations do have them and have excellent ones, but it's very, very few. I would say less than one in five. FSF: In your experience, who do the safety officers report to in these cases where they have them? MR. CROTTY: The safety officer? FSF: Yes. MR. CROTTY: Reporting? FSF: In the organization structure, if you have a safety office, you've obviously got somebody in charge of that office. Who does that individual report to in the structure? MR. CROTTY: Invariably it's people in quality control or quality assurance. MR. FERNANDEZ: In our facility they report to the director of quality assurance. FSF: Who reports to? MR. FERNANDEZ: Who reports to myself and I report to the president. CHAIRMAN FRANCIS: I think there's an issue here that the Flight Safety Foundation spent a lot of time on, and that is this issue of where does the safety person report in an organization. Obviously in an airline to have a safety person reporting to someone whose business is keeping the airplanes moving may put him in an awkward position. It's important that if you have a safety officer, that that person have the ability to get to the top of the organization without going through the person that's trying to do the production, if you will. FSF: I think I would tack onto that also, when your audits are done, you know, where does the auditor report to? Does he report to the safety? You can see, I'm following the same reasoning here as the Chairman. It has to be above the level of the reporting organization I believe. I like to go on, Mr. Chairman, if I might and ask another question. We talked about -- Dick, I believe you mentioned the issue with the brake valves and how you solved that. Is there currently an organization or is there a system in place to allow that information to flow between the various repair stations, to insure that all the repair stations get that kind of information? In other words, you solved this on your aircraft, and there's other repair stations dealing with similar aircraft. So is there some system that's actually in place to where that information will disseminate through all the repair stations? MR. HORN: If I'm not mistaken, I believe that was an SDR issue. In fact, I'm sure it was. FSF: Let's take it beyond an SDR issue, though. I can't come up with one right off the top of my head. Is there a system that transmits safety related data across the spectrum of 145's? MR. HORN: I'm not aware of one, no. FSF: Okay. Thank you. MR. HORN: You mean personal safety or aircraft safety? FSF: Aircraft safety. CHAIRMAN FRANCIS: This is sort of a variation on the question that I asked earlier. Do you have a way, when you find, and share with your three carriers, have a way of transferring that without that sort of circle to other people that are dealing with the same kind of equipment? MR. HORN: I'm not aware of one, no. FSF: I guess this kind of leads me into my next question. We've talked about the capturing of data and sharing of data. The Chairman mentioned this earlier. Just to take off on that, if we had such a system, we could share that type of data across the repair station industry, and just as a general comment, Mr. Chairman, all of our discussions that I've heard today have been relevant to airlines and operators. I think we need to keep in mind that we've got some significant fleets out there that are below the airline level. When you look at -- they're starting to become mixed, but both Boeing and AirBus are now producing a business aircraft and we have a large business aircraft fleet. Then we can look at the fractional owners. When you look at a fractional ownership operator out there he has a fleet that probably rivals some of the numbers of the air carriers, commercial air carriers in the United States. I'm just concerned that we don't lose sight of those people when we're talking about the MD-11's and the 737's in these discussions. That was just a comment and not a question. CHAIRMAN FRANCIS: Thank you. Sara. ARSA: Yes, sir, Mr. Chairman. Thank you very much. Dick, when we were talking about consolidation, it seems to me that consolidating into these bigger companies that have more financial resources has helped us deal with this high cost of doing business in today's environment. Do you find that to be true? MR. HORN: Yes. ARSA: I mean the company that owns you now has a collective -- is better capable of coming up with a new paint hangar or to create the environment where you can do your specialty better. MR. HORN: That's true. ARSA: When you put in your same quality system across your four repair stations, did you find that the FAA supported you in that effort? MR. HORN: The answer to that is yes. But it's through different FSDOs, but all of the four FSDOs recognized the safety and quality system and who that ultimately reports to, because it does report up to a senior vice president. ARSA: So all four FSDOs were looking at your quality system and your inspection procedures manual the same way, Mr. Horn? MR. HORN: I don't know whether they were all looking at it -- you'd have to ask them. I can't answer for them. ARSA: So you were able to create -- when you said one quality system, I'm sorry I leaked to it being similar IPMs. MR. HORN: They are. ARSA: In all four locations. MR. HORN: They are. And so is the safety manual. ARSA: Okay. There must have been a small miracle working there. MR. HORN: It took a long time. ARSA: Oh, okay. I'm sorry I didn't ask that question. I didn't ask the right question apparently. MR. HORN: You should have asked how long did it take and how many hours did we spend. ARSA: How long did it take? MR. HORN: About four months. ARSA: And people were working diligently on this, I'm guessing more than one person? MR. HORN: About four people. The whole object was to have the same inspection procedure manual and the same safety manual for all the facilities, and we did get there. ARSA: Okay. When you talked to Debbie about heavy maintenance providers, I think you concentrated on aircraft. In the former administrator's letter he also included engines facilities and I believe landing gear and believe it or not, X-ray. Those were all considered providers that had to go on the op specs, if I remember correctly. We came down to 25 facilities in your opinion were heavy maintenance providers. But you're talking about air frame maintenance, are you, Dick? MR. HORN: Yes. In reality I'm not including engines because we really don't do any engines other than limited replacement components. We do do X-rays, however. We are on our customers' op specs for X-rays and NDT. ARSA: Mr. Fernandez, when you increased your internal audits -- I'm sorry. When you created your internal audit system, has that reduced cost for you? MR. FERNANDEZ: Yes, it does. ARSA: Has that helped you reduce warranty returns? MR. FERNANDEZ: Warranties, we reduce it a great deal through the audits and one of the things to the reliability program, we've been able to monitor the units that we've been controlling the quality on and reducing the units that we want to get away from that we'll leave to the OEMs to work on. ARSA: Speaking of OEMs, when you run into an inadequacy or a blank spot in their manuals and you suggest that they fill in that blank spot, how responsive are they? MR. FERNANDEZ: We've had real good luck with that part of it. We've had better luck when we get back to them as far as the discrepancy in one of the manuals, them getting back to us right away than obtaining technical data from them. ARSA: In the first place, right. Is that helped because your air carrier is also informed at the same time, your air carrier customer is also informed? MR. FERNANDEZ: Yes, that helps us a lot. ARSA: Is this truer on newer equipment than it is on older equipment? MR. FERNANDEZ: It's true on both. On the older it's a little harder, the communication going back and forth and sometimes it delays the process than on the newer equipment. ARSA: Bart, what auditing standards do you use when you go into a 145 on behalf of the third party 121's and the third parties that you work for? Are you using the NASIP check list? What auditing standards are you using? MR. CROTTY: I have developed my own format and check list for doing audits. Although, I'm very well aware of the case and other people's formats and check lists as well. ARSA: Do you start out with the regulation by any chance? MR. CROTTY: Of course, always. ARSA: The interpreted material that the FAA has? MR. CROTTY: The interpreted material? ARSA: Yes. MR. CROTTY: You mean like handbook material and orders and things like that? ARSA: Right. MR. CROTTY: Often I do, yes. ARSA: Did you find the training of personnel more consistent at the airlines than you do at repair stations? MR. CROTTY: That the airline be more consistent? ARSA: In training of their personnel. You mentioned earlier that repair stations, smaller, whatever that term means, repair stations have inconsistencies in their training programs. MR. CROTTY: Correct. ARSA: Is that not found at airlines? MR. CROTTY: Well, it concerns -- also it concerns the contract requirements that they might have with the airline. Of course, the airline can always put in additional requirements in contracts to the repair stations. ARSA: I think you misunderstood my question. The air carrier under 121 has to have an adequate training program, the same requirement that I have when I work for a 121. Do you find that air carriers have adequate training programs for their personnel doing maintenance? MR. CROTTY: Generally so, yes. ARSA: Adequate, okay. It's my fault. Dick, the standards that you meet as a company, would you agree that they are above and beyond the standards that are put forth in these books? MR. HORN: Oh, that's minimum. ARSA: So the answer to that is yes? MR. HORN: I have one, by the way. I've got them. You bet you. I wouldn't come here without one. ARSA: But these are minimum standards to insure safety, but your requirements, for instance, your internal audit systems, the audit systems that you apply to your vendors, etcetera, those are above and beyond these regulations. Would you agree with that? MR. HORN: In many cases, yes. ARSA: You do that for good positive commercial reasons? MR. HORN: Yes, you bet. And safety, too. ARSA: You wouldn't stop that if you didn't have this increase in audits that you've experienced over the last two years? MR. HORN: We've also grown at the same time, Sara, from 300,000 square foot to 1.4 million. So I think the audit increase is because we've increased as well. I think the audit details have increased. If I had to put a percentage on it, I'd say 50 percent greater than what they were before. ARSA: Internally, your choice? MR. HORN: Both cases. Both from regulatory agencies and ourselves. ARSA: Do you find that the quality of the personnel coming to your facilities doing audits from the government has increased or decreased? MR. HORN: Increased. ARSA: So these people understand your job and what their job is? MR. HORN: Absolutely. ARSA: Mr. Hiles, does the union have a training program? MR. HILES: Yes, they do. ARSA: Is that a training program above and beyond what you expect your carrier to provide you? MR. HILES: Yes, it is. ARSA: Do you have an apprenticeship program? MR. HILES: Not really. We have an FAR training program that we provide our individuals and we're also part of the human factors development training. ARSA: So when you say FAR, is that to the A & P Part 65 or is it 121? MR. HILES: A little bit of both, mostly 65. ARSA: Are you as a union addressing or planning on addressing the mechanic shortage that we all know is pressing at our heels? MR. HILES: Yes, that has been a big topic and concern. The enrollment is down in schools, as you know, and the union is working with different colleges and so on and so forth to promote this profession. ARSA: This profession, meaning airline maintenance profession or just aviation maintenance? MR. HILES: As an aircraft technician, yes. ARSA: So for air carriers? Help me here. Flight safety just pointed out to us there's a bigger fleet out there than air carrier fleet, and that maintenance needs to be done, too. MR. HILES: I agree. That's one of the things that we've found, that probably over 50 percent of the employees in a 145 station are non-certificated mechanics. ARSA: And all of the union members are certificated mechanics, sir? MR. HILES: No. The majority of them are. ARSA: The majority of them are, but it's not a requirement of joining the union. MR. HILES: Absolutely not. ARSA: It just happens to be that is where the union is created, is in an environment that needs more A & P mechanics? MR. HILES: Yes. ARSA: Okay. No more questions. Thank you. CHAIRMAN FRANCIS: Dave. RAA: Mr. Horn, you mentioned that you're audited quite a few times a year. What is it, several dozen times a year? MR. HORN: 46 last year. RAA: 46 times a year. Do the carriers, other than case, which of course is in sharing audit practices, that is to make the audit functions of individual carriers more effective, do they ask to like share information that they perhaps provided other carriers? Is there any of that going on? MR. HORN: I'm not really aware of it to that detail. But if we bring a new customer in, I know that customer to talking to our other customers in terms of what are you finding at our facilities, in terms of our quality, etcetera. I'm sure of that. RAA: They ask for like who are your other customers. Obviously if it's a small fleet and you're working on that type fleet, they have that information and they could go to that customer. Do they ask that you share that with them as well, when they come in and audit? MR. HORN: They ask for it, yes. We give it to them. They also ask who the customer base is and what the base is as far as fleet types. And then in part of your question, in the detail audit, some of our customers do extremely detailed audits on every airplane. For instance, one customer does a cabin audit which takes about two and a half hours. Another customer does a lubrication audit as well, and takes a specific part of the airplane, perhaps landing gear, mainly landing gear and does a lubrication audit. If we fail that, it goes onto another in another area of the airplane. So we get some pretty substantial audits, really every airplane. And it's an ongoing audit to some degree with every one of our customers. We've got probably six representatives for each of our major customers. Three of them have QA specialists in our facility. RAA: Thank you. Mr. Crotty, my perception of the FAA policy bulletin on audits, HBAW 9605 I think it is, the C revision level, which requires the air carriers to conduct certain audits and to find out certain information. I assume you're familiar with that bulletin. Have you looked at that? To me this kind of requests more certification type issues than real quality assurance type issues. Perhaps a carrier with more limited resources might kind of have to fill the blanks, so to speak, before he can get to the real meat of things. If you had an open hand in rewriting that bulletin, how would you change it? MR. CROTTY: I really haven't considered that. RAA: Thank you. ATA: No questions. Thank you. CHAIRMAN FRANCIS: Jack? MR. DRAKE: I wanted to ask Mr. Hiles whether we've covered everything that you wanted to bring to our attention as far as problems that you perceive from the use of Part 145 repair stations. MR. HILES: No, I guess, is the answer to that. I'm certainly not here to promote the union. Today I'm here because of the safety of flight. Some of the things that we have found, like I said, over 50 percent of the folks are non-certified and we feel that that's a problem, especially when they're required to use the carriers' manuals, and the manuals are written for trained certified technicians. To us that is a major concern. We think there should be more focus on training in the 145 area. We see a lack of that. More specific task training. For the smaller 145 stuff that is done in our house, we see a lack of that. A good example is just painting an aircraft, they have to -- they paint the flight control services and these services need to be rebalanced. Well, initially they didn't know that so now that became a problem. So we see an area that if you're going to be doing this stuff, let's get task training there. Let's know how to remove a rudder, rebalance it and reinstall it and re-inspect it properly. MR. DRAKE: Do you have any suggestions for how we should improve our oversight? MR. HILES: As far as 145 oversight, I can't really speak a lot to that. As far as carrier oversight, it's daily in our house. On any given day, especially in Pittsburgh or Charlotte, you'll see three, four inspectors either on the hangar floor or the line, up in records, in the shops. But as far as 145, if that happens, I'd be surprised if it did, but I can't answer that. MR. DRAKE: Mr. Horn, I was wondering if you might comment on the statement about training being adequate. Do you see it the same way? MR. HORN: We do a considerable amount of training. Most of our management or a large percentage of our management came from 121 carriers as management people and are used to training people to properly do the job. It's a cost effective issue because if you're not trained, that spells that horrible word called rework. You don't want to do rework obviously from the economic standpoint as well as the safety standpoint. So we do a considerable amount of training. Everybody can do more, let's face it. But I think we do an adequate amount of training for the type of work that we do. MR. DRAKE: That's all. Thank you. MR. ELLINGSTAD: I'd just like to clarify very briefly the investment in oversight with Mr. Horn and Mr. Fernandez. Mr. Horn, you'd indicated I think at one point that there were two auditors that were performing your quality assurance work internally. MR. HORN: That's correct. MR. ELLINGSTAD: Do you contract any of that work out or you have two people that are doing this? MR. HORN: Two permanent auditors that are on staff. MR. ELLINGSTAD: What's the nature of their interaction with either the regulatory, the FAA inspectors or the carrier quality assurance people? MR. HORN: I guess I didn't answer the question before. But their reporting is to the director of quality assurance. They accompany every audit that we have in our facility, be it a JAA, JAR, the airline audit or the local FSDO audit or an ATOS audit. They accompany them and I believe both of them are case trained. MR. ELLINGSTAD: How many subcontractors do you have and what kind of auditing do you do of them? MR. HORN: You mean mechanics themselves or subcontractors in terms of other 145's? MR. ELLINGSTAD: Of other 145's. MR. HORN: I really can't give you a number. It's probably in the area of 20 I would guess. We have audited each one of them and I believe we audit them on an annual basis. I think we send out -- every other year we send out a written audit request and then we go to the facility every two years, if I'm not mistaken. MR. ELLINGSTAD: This work is done by these two auditors? MR. HORN: Or our QA director or our manager of QA or myself. I've done some myself. MR. ELLINGSTAD: Thank you. Mr. Fernandez, real quickly, what kind of staff do you have assigned to your audit activity? You indicated I believe that you do some internally and that you also use some independent consultants. I'm just trying to get an idea of sort of the magnitude of the allocation of resources to this function. MR. FERNANDEZ: As far as vendor audits that we do, we only have like five vendors that we use. Most of the work that we do, we try to keep in house except for like plating and rewind, which we sub that type of work out. That's handled -- audits that we visit them are handled through independents and through our QA director. MR. ELLINGSTAD: But with respect to the auditing of your own -- MR. FERNANDEZ: Of our own facility, it's handled by quality control manager. The training specialist participates in that and our director of quality control and I do a lot of walk-throughs also myself. MR. ELLINGSTAD: Thank you. MR. ROSENBERG: I think this topic has been touched on marginally, but I'd just like to visit it briefly, and it has to do with the seniority level of mechanics. Let me start out by asking Mr. Fernandez. You mentioned that 14 of the 54 mechanics have an A & P certificate. What is the seniority level of those 14 people? MR. FERNANDEZ: The seniority level? MR. ROSENBERG: Have they been there a long time? MR. FERNANDEZ: Let's say, about eight to about 12 years have been with our facility. We have nine repairmen and we have nine FTC that hold SECs. MR. ROSENBERG: Would you say that you don't have a problem then recruiting and keeping qualified mechanics? MR. FERNANDEZ: We don't have a problem in recruiting. As a matter of fact, in the past four years, everybody we recruited -- we've been really careful bringing them in and scanning them before we've put them into the operation. Our average skill level is over 12 years. MR. ROSENBERG: Is that typical of the smaller facilities, Mr. Crotty? MR. CROTTY: The only thing I'd like to say is I haven't heard the subject been brought up of what we call contract workers. I think as far as the repair stations are concerned, this is probably something that's right on the horizon, that everyone is having trouble with, finding adequate work force, hiring people that are casual or temporary or contracted workers, proper supervision of them. I'm very surprised that this has not been brought up and focused on as far as dealing with the repair stations. I just see it as a horrendous problem on the horizon right now. But I just wanted to get that out. MR. ROSENBERG: Let me ask it another way. Mr. Horn, would a PMI come in and look at the turnover rate of your mechanics, of your employees? MR. HORN: They know what it is. MR. ROSENBERG: Do they? MR. HORN: Yes. MR. FERNANDEZ: On our turnover rate, I just want to mention, in the last four years it has been less than two percent. So we've done a pretty good job in keeping the guys. MR. ROSENBERG: Okay. Thank you. CHAIRMAN FRANCIS: Thank you, everyone. We've ended up, we're a little later than we'd anticipated. I think that's okay. It's ten of 1:00. Let's take an hour for lunch. Please try to be back here promptly. (Whereupon, a recess was had.) CHAIRMAN FRANCIS: All right. We've got our last panel which FAA maintenance and inspection programs and practices, four folks from the FAA who are here. This is scheduled for two hours. We are not going to go two hours without a break, at least I'm not going to go two hours without a break. So after an hour, we will take a break and then come back and see where we are at that point. So if maybe we could ask these folks to give their name for the record and a short description of where you are and what you do. MR. UNANGST: I'm Russell Unangst. I'm a headquarters staff specialist for air carrier maintenance programs and I'm assigned to the air carrier maintenance branch, Washington, D.C. CHAIRMAN FRANCIS: Thank you, sir. MR. CROW: I'll Bill Crow. I'm the supervisory principal maintenance inspection for American Airlines, its repair station at Tulsa, which is quite a large repair station. CHAIRMAN FRANCIS: American Airlines? MR. CROW: Yes, sir. CHAIRMAN FRANCIS: The small carrier? MR. CROW: I better go on. It's a repair station at Tulsa which is a large air frame and turbine facility, also at Alliance Airport, a large air frame facility and also the supervisory principal for Texas Aero Services, Texas Aero Engine Services, Ltd., which is a limited partnership between Rolls Royce and American Airlines. CHAIRMAN FRANCIS: Thank you, sir. MR. SCARPINATO: I'm Nick Scarpinato. I'm an aviation safety inspection. Currently I'm the principal maintenance inspector for World Airways. CHAIRMAN FRANCIS: Based in? MR. SCARPINATO: Washington Dulles FSDO. MS. SAUNDERS: I'm Patti Saunders. I'm an aviation safety inspection stationed out of Memphis, flight standards office. Currently I'm a partial program manager on the FedEx CMU. I do the 727 side of the house. CHAIRMAN FRANCIS: Another small carrier. We'll start with the tech panel. MR. MC GILL: Why don't we just start out just very quickly here, if you don't mind, and let's talk about, we have a propose out on 147. Let's just kind of whatever we can talk -- I know it's under consideration right now, but is there anything at all we could say about it at this stage and get that out of the way right now? MR. UNANGST: It's currently in the comment period and it would be inappropriate for us to say anything at this time. MR. MC GILL: I just wanted to get it straight. CHAIRMAN FRANCIS: I would request that everyone else that's going to be asking questions keep that in mind, that these people are in the position to comment obviously on a rule that's in the comment period. So don't waste everyone's time by asking questions that might touch on that. MS. BRUCE: I'll pick up from there. In the 1990's we're growing; the air transport business has increased by different numbers, but let's just say 1,000 aircraft since 1990. Over that same time frame the amount of contract repair work has increased. So those two facts together say that there's a shift in business. So the question to you would be, to begin with, a very general one. How is the FAA responding to those business changes, the fact that there's an increased number of aircraft units in the market and that the maintenance of those aircraft has changed from roughly 30 percent of all maintenance since, say, 1990 to now something approaching 50 percent is now done on contract. So programmatically how would you say you've been responsive to that change? CHAIRMAN FRANCIS: Don't all lunge forward. MS. BRUCE: I was trying to start out with a general one. MR. CROW: At the risk of talking too much, let me tell you what I know about that, Deborah. We're very cognizant that the airlines are growing very rapidly and they're expanding. We've very cognizant that a lot of the work is going to contract maintenance facilities. I'd like to share an opinion that I think is important and I'd like for my friends at the NTSB to know that a lot of us share it. Regardless of whether an air carrier contracts out all of its work or some of its work or none of its work, I don't think it really has any connotation as to the quality of the air carrier or the repair stations doing the work. I think that's fair to say because the carriers themselves are ultimately responsible for the air worthiness of the aircraft and they do develop the programs based on the needs that they have, both environmentally and operationally. It's been my experience as an FAA inspector over the years that the carriers that I've represented as the principal maintenance inspector, that most of them are very diligent in creating appropriate contracts with the repair stations and executing a fair amount of oversight on those. Occasionally we find anomalous situations where something has been missed, but I wouldn't want to characterize that as being something that is on a wholesale basis or really detracts from the air worthiness of the aircraft. There are improvements we can make in that arena. I don't think the industry has ever gotten to the place yet where improvements are not appropriate, both for the air carriers, repairs stations and for the FAA. MS. BRUCE: But you know, it's really a different situation than, for instance, at Tulsa where you've got a huge consolidated repair station effort going on, say, back to the years where we're running the 145 there for American but we were just repairing the American aircraft right there at that huge maintenance base to a situation where that maintenance work is being distributed geographically around. You can't say there isn't an effect of that because you're crossing regional boundaries. It's harder to get a consolidated team of knowledge at the same level looking at these programs when they're distributed around. So what I'm hearing you say is it doesn't matter whether you do it in house or out. But it would seem to me it would if you're talking geography and different Part 145 business or you're working in more than one business structure. MR. SCARPINATO: One of the things you have to be concerned about, Deborah, for the air carriers in particular, there are unique jobs that do come up that there are air frame concerns, power plant concerns as well as component concerns, that if you try to develop an all-in-one facility in today's marketplace, you may find that the recency of experience for the mechanics that do that job is it only comes up periodically. We may not keep them qualified to the level that we want them to be qualified at. It may meet the requirements of Part 65 as far as the recency of experience requirements are concerned, but we've got to show some latitude and offer appropriate justification for why it should be contracted out. American Airlines, of course, does all of its heavy checks. It has a large turbine facilities both at Tulsa and the limited partnership at Alliance. But they still contract out a multitude of components, basically components. As we've heard our friends on the air carrier side and the repair station side say, it's done through a contractual agreement with the utilization of the air carrier's policies and procedures manual, the requirements of 145(2) take you directly to 121, sub part L with probably three exceptions in that package, and the process specifications are all engineered and approved by the ACOs and those are passed down, put into the hands of the repair station and the repair stations do a pretty good job of taking care of business. That's my experience. So I have to tell you that we spent a great deal of time not only looking at the American certificate over the last ten years here with the FAA, but aside from the anomalous situations we run into, that Mr. Crow just spoke to, some of those are very evident to the FAA also. We believe that the repair station industry is doing a pretty good job with anomalies and exceptions. MS. BRUCE: Is it fair to say that out of maybe 2,500 is an early number used that Part 145 certificates that do some aspect of air carrier maintenance work, so that includes component shops and large shops otherwise, that the majority of those are inspected by geographic inspectors. MR. CROW: That's not necessarily true. It depends on the way you manage your certificate. On the larger certificates, on the air worthiness side of the house, I've got about 37 people, of which 12 of them are geographic folks. Prior to the ATOS coming into play, I had taken the opportunity and the liberty to market about 100 or so geographic inspectors that helped me look at American and we gave them the limited training we could at that time under the ATOS concept. All of the people that I have assigned to my unit, both air worthiness and operations have been trained on air carrier specific topics with American, as well as going through ATOS. I'd like to share with you that I believe, in my opinion, that the people that I've got on the outside, my extended family, my geographic inspectors, in many cases because of the air carrier specific training are as qualified to do those areas of oversight for repair stations as some of the people that are assigned at DFW with me in my CMU. So I do have a very high level of confidence in the people that are assigned to the team that I'm working at American Airlines with. MS. BRUCE: Nick, would that differ if you put on a different airline hat that's not as large as American? MR. SCARPINATO: I can comment on that. I'm the principal maintenance inspector on a very small, I would say a very small airline, and we have five people on the team. We practice due diligence and we do go out very often to do repair stations, especially for substantial maintenance providers. We go out in the field and do that from the CMU. MS. BRUCE: Are those pretty much yours, in the Eastern region, are your repair stations there? MR. SCARPINATO: Not necessarily. Some of them are, some of them are not. MS. BRUCE: Does that make a difference on whether you get to visit them? MR. SCARPINATO: I'm sorry. Could you say that again? MS. BRUCE: Does it matter whether they're in your region as to whether you visit them or whether you have another geographic inspector in another region visit them? MR. SCARPINATO: What we try to do is, especially the substantial maintenance providers, the ones that are doing the C-checks, we make an effort, whether that be California, North Carolina, Texas, wherever that may be, we try to go. I guess the answer is no, it doesn't make any difference. MR. MC GILL: Is that very difficult to get that level of expertise if you need it, if you call it in and you need some assistance to help do the oversight at some other location like that? Is there any problems you've uncovered there? MR. SCARPINATO: Is the question is there a problem getting my own folks to do it? MR. MC GILL: Do you have a problem getting extra help from the geographic people to do any type of surveillance that might be in some other area outside where you're not physically able to go there every time? Can you pick up a telephone and call someone and get somebody else to come out and check some area of an out- sourced repair, components, whatever? MR. SCARPINATO: The answer to that question is yes, I can and I have. MR. MC GILL: Do you feel that's adequate? The people, do they report, maybe write something back to you, tell you the results or whatever they did and so forth? Is that appropriate? MR. SCARPINATO: The FAA has a requirement that every time you do surveillance or inspection that you do document it under the program tracking reporting system, PTRS and we insist that that's done. In addition to that, if there's what I characterize as a serious problem, a violation of the regulation, then there is more substantial follow up than just the PTRS entry. MR. MC GILL: You say you got one small carrier. Do you do other -- what is your total number of certificated activities that you personally do now? MR. SCARPINATO: Up until the 1st of this month I was assigned to two Part 121 air carriers. Since then I've taken on a new job, but my position will be filled by someone else very soon. MS. BRUCE: Go back to the geographic inspectors. What would be a work load that might be -- standard is the wrong way to put it. But how many locations might a geographic inspector visit or be responsible for? MR. CROW: Deborah, let me share this with you so we can answer that properly. I think between Patricia and Nick and myself, there's is an evolving culture difference. American Airlines is being surveilled under the ATOS program. I think Nick's World Airlines is under the old PTRS program, and I think FedEx is still under PTRS, although at some point in the future they will all be ATOS carriers, appropriately so. If I might, could I answer regarding ATOS? MS. BRUCE: Yes, although I want you to know I'm really trying to lay the ground work for the PTRS, NASIP, RASAP, that kind of inspection process, to get us to a point where we could talk about ATOS and how it's going and how it's gotten there. It's good for everyone's information to know those differences between your work. Go ahead. MR. CROW: Let me go ahead quickly. I'm going to answer this from my previous experience with the FAA under PTRS, and I'll share this microphone with Nick. Over the years with the FAA I've done an awful lot of NASIP with most of the big carriers, a lot of NASIP, RASAP and OSAP. We did go through a period of time where it was difficult to put our hands on geographic people because they just, quite frankly, weren't available because of all of the work we have to do, not only with the air carriers but in the repair station arena and also in general aviation. We are going through some concerns right now about keeping the people we have assigned for geographic work but that has to do with ATOS. But we're working at that. We don't think we're going to have it fixed today, but I would think in the very near future. Our folks in Washington are developing programs, policies and procedures that will help us with that and of course, Russ may have something to say about that. But I'll give it back to Nick and then I'll come back in at the proper time. MR. SCARPINATO: Let me try to answer the question as far as geographic surveillance goes, and it's going to be from my perspective which is from one principal standpoint. What we do, the way we practice certificate management is we do it by quarters. We look at the type of inspections that we're getting and we do what we call a surveillance plan for the next coming quarter. And we go out to the geographic community with a letter, asking them to focus on specific areas that we've identified as areas that we want to focus on based on a lot of different areas from our own surveillance, from information that we get from SPAS, from information that we get from just looking at the raw data that's coming in on PTRS, and we develop our surveillance plan. I just have recently looked at what geographic surveillance that we had in the last six months and out of all the inspections that was done on World Airways since March up until the end of July, 42 percent of the inspections that were done were done by the geographic people. So I would characterize that as pretty good surveillance. What that tells me is the way we're managing the certificate is working. MS. BRUCE: Patricia, you're working down in Memphis FSDO. Any comment on how you break down the work between the inspections done by geographics and reporting back up through to PMIs? MS. SAUNDERS: We're under PTRS, so we utilize the same system. We analyze from SPAs, the safety performance analyst system we have available to us and we go through quarterly and we gather the information of who has been where and what inspections have been done. If there's any interest items, then we'll focus on that. It's a feedback system primarily. MS. BRUCE: The obvious interest here is to just see how geographic inspectors who have moved from the certificate management office go look at repair stations that may be working under different regional structures and is that reporting smooth in between the two, is basically what the question is headed towards. MR. MC GILL: Pat, do you see any difference in a repair facility, any type of the management oversight of that versus another small carrier or something, or a large carrier in your case? Is there any difference in what you do, information that you get from a maintenance repair facility versus an air carrier in the maintenance reliability and human factors, any area; do you see anything different? MS. SAUNDERS: I'm not sure I understand your question. You mean from the management aspect of the 145 side of the house? MR. MC GILL: Yes. If you're doing both in that area, do you see anything different in a carrier versus a small 145 facility? Do you see any difference on how you would do the oversight or anything of the results of the oversight? MS. SAUNDERS: Of course, there would be. We would gauge the inspection reports that come back to us and if there is a systemic problem or there is an anomaly, we would focus more energy in one direction. MR. MC GILL: You would basically go out or you're in an office and you wait for the reports to come in or do you actually go out into the field to do that? MS. SAUNDERS: We actually go out into the field and utilize a team concept. People from the certificate management unit will go out in a team and we all focus the areas. We will go and perform our audits. MR. MC GILL: What about you, Nick? You're doing both, right? MR. SCARPINATO: My involvement with 145 oversight is this. When we go out, we do not do audits of 145 repair stations. What we do is we go out and evaluate how the repair station is complying with World Airways continuous air worthiness maintenance program. That's all that I ever do with them. MS. BRUCE: Who would be doing the 145 audit or observation, the inspection of the 145? MR. SCARPINATO: I can't speculate on that. The certificate management office for the repair station I would suspect. MR. CROW: Let me help you out with that in just a minute, if I could. Under the PTRS code system, we have what we call a 3640 and a 3650. The 3640 inspection, that's just a PTRS number, is one where Nick was describing where we go look, see if the repair station is meeting the requirements of 145(2). Under the 3650 inspection, that is a certification inspection where the principal inspector assigned to that particular repair station will revisit the certification requirements, the continuing certification requirements for that repair station. Now, often when we go out and do a 145(2) inspection under 3640, in the old days, we certainly would not turn our head towards certification things. If we found those, we would open up another 3650 and document those on a separate PTRS form, notify the PMI and the certificate holder district office. The ones that we did under 145(2), then we would take care of those through the CMU. MR. MC GILL: So do you have some sort of verbal dialogue with the PMI on the certificate? MR. CROW: I think it's more than verbal, Frank. Obviously whenever we do a repair station inspection, there is a report as well as the PTRS documentation. Typically, if you're doing a repair station visit on behalf of the carrier that you represent, the letter of information, it may be an information letter, it might even be a letter of investigation. We go to the carrier because that's the inspection you would be doing under PTRS. But in addition to that, a copy would go to the repair station, a copy would go to the principal maintenance inspector responsible for that repair station and that dialogue is not informal. It's a very formal way of communicating in addition to PTRS. Of course, when it gets into PTRS then there is a transfer of information through automation process in the OSAP system. MS. BRUCE: I think the point here was to sort of lay the ground work on what that inspection, oversight process is but now maybe it's time to direct a question to Russ and ask about ATOS since now we've got those two programs kind of overlapping each other a bit. Just for the record, give us sort of a thumb nail sketch of what ATOS is. MR. UNANGST: Do you want to handle it, Bill? I'll be happy to. I'm not real heavily involved in ATOS, just from the policy perspective. Bill has been working with it since the inception so he's more qualified to answer that. MS. BRUCE: Okay. MR. CROW: Is that all right, Deborah? MS. BRUCE: Sure. Maybe list the ten airlines that are under the program. MR. CROW: The ten large air carriers are the ones that are involved in ATOS. Let me very quickly give you a picture of ATOS so you can put it in your mind's eye. ATOS is the air transportation oversight system that was developed specifically to look at air carriers, both as a certification entity using what we call the safety attribute inspection which is a certification tool and the element performance inspection which is the surveillance that we've been doing under PTRS. There were ten carriers, and I think you've got them listed somewhere in the NTSB hearing paperwork. We've all been involved in this since about a year ago last October. The way the ATOS program works is it's pretty much subjective. Initially you have a couple of tools up front. One of them is called a system safety assessment tool. This is one that the principal team, the principal maintenance avionics and operations inspectors come together and review the tool itself and answer the questions appropriately. That drives you to another tool which is called the air carrier assessment tool or ACAT, that will actually, once you answer the questions and put in the values that you believe are appropriate through subjective knowledge and active participation and knowledge of the air carrier's operation, will actually drive, through algorithms, to fill some base line numbers in the CSP. Now, I know I'm using a lot of acronyms. I apologize for that. But a CSP is comprehensive surveillance program that's developed for one year at a time. Now, that CSP is not static. It's a very dynamic tool, as well as the industry being dynamic, and it can be re-targeted as you identify items in the database are fed back through the system, you re-target. But once the CSP is completed it assigns all of the inspectors that are available in the CMU, all of my people that are DFW and all of those extended family members of ours that are out, as what you might refer to as geographic inspectors. It gives them a work program for the year. That work program is developed during the finalization of the CSP. When we do that, we don't just do it ad hoc, if you will, or laissez faire. We bring in all of our inspectors that are assigned to that CMT, certificate management team and we all in turn discuss and develop what needs to be done where, in addition to what the principal inspectors know, and we develop the CSP and we buy into it, and once the CSP is finalized, then it's put into work and that becomes the carrier program for the following year. Again, it is re- targetable. It can be re-targeted based on the dynamics of the air carrier's environment that we observe or they share with us through the process of doing the CSP. MS. BRUCE: I'll get into the tools in a minute, but the question has always begged to be asked and I'm going to go ahead and ask it. The phase 1 carriers were Alaska, America West and American, Continental, Delta, Northwest, Southwest, TWA, United and U.S. Airways. Those are large air carrier organizations that would have had extensive management structure in place when we wanted to implement ATOS. So the question I'm asking is, we picked the best of the bunch to start the program with, and yet, one of our concerns from the safety point of view is not the slice here, but the slice as you run down through the industry, and so the question is, why did we start there? MR. CROW: That's a good question. There's a couple of ways to answer that. One of them would be from the system safety concept, those ten air carriers really compose about 95 percent of all the air transportation, the available seat miles within the U.S. transportation system. That's one reason that you might say that that was logical from a system safety standpoint. I think the other thing that I would share with you is hindsight is always better than foresight. It might have been advisable, along with those ten air carriers, to have done some of the, if you will, the smaller carriers to see how the program would work in that environment. But I think the thinking that was prevalent at that time was since we were going to develop the ATOS program and put it into position, for all the right reasons of trying to develop a system safety program, and increase safety because we were concerned with the numbers of airlines, the size, the growth and the potential for years to come, that we did plug in and try to capture the 90 percent, 95 percent of the air transportation industry. We've since learned, and I might say this very pro-actively, flight standards service, executive leadership has been very encouraging to all of us ten principal sets, to offer constructive criticism regarding the ATOS program. They knew, as we knew, that there would be situations come up that were difficult to manage. We would be going through the learning curve and we've done that. At this present time, because of the questions you ask, there are multitudes of changes that are going on in ATOS, all for positive solid reasons. Hindsight might have indicated that it would have been good to look at some of the smaller ones. But I think the overwhelming concern at that time was to encompass the largest portion of the air transportation industry and try to apply those safety concepts there. This is a totally different culture than surveillance under PTRS. Surveillance under PTRS simply is inspections. This is a system safety culture. MS. BRUCE: So I guess the question is, do you think that what you've learned from those ten is going to transfer equally well down into smaller airlines? Will it transfer? MR. CROW: My opinion is that it will but it will take some very surgical changes within the program because in the air transportation industry there's probably three distinct areas. There's the mega certificates, then there's the 121, 60 seats or more, then there's the 121, 60 seats or less. It's used to be different than that. But now on the advent of FAR 119, it's caused that emphasis to shift a little bit. I think that surgically we're going to have to modify some of the ATOS, EPIs and maybe some of the SAIs that are SEST or certification evaluation surveillance team, in order to accommodate all those needs. It may be difficult and history may prove that we can't do everything with one broad brush. So we're in the learning curve and we're on the uphill climb on that. So I think your point is well taken and I think you'll see flight standards addressing that. MR. MC GILL: Bill, when will we see the next number of air carriers? We've got these ten right now and we've got the teams. When might we see the next? MR. CROW: As you know, the NTSB is very interested in this, as well as the GAO and IG and I think from -- I can't speak policy for the FAA and I wouldn't attempt to do so, but I think that we're going to perfect some of the things that we have in revision now before that happens. We do have a committee of folks that are working on Phase 2 ATOS and they're working on a plan of how to incorporate other carriers into ATOS. When will it be perfected? I don't know that. But I would certainly think it would be in time to coincide with all the improvements that we made. MR. MC GILL: Okay. Mr. Chairman, did you have a -- CHAIRMAN FRANCIS: Just to go back a little bit. One of my concerns has been with ATOS, the ability, and you make reference to this, of the cultural issue, as you put it, in terms of the enormous adjustment the flight standards inspector has to make going from a surveillance system to what is kind of a risk management system. That's enormous. I wonder, going back to Deb's question, whether you can't make an argument for having used the ten big ones, that that allowed it to be a little more structured for the inspector. I'd be interested, number one, in your reaction to that and number two, I'd be interested in how you see, all of you, see the transition to ATOS going in terms of the ability of the inspector to make this pretty enormous leap in terms of approach to doing his or her job. MR. CROW: Let me try to take the first one, Mr. Chairman. I'll tell you, first of all, I was not in the elite group of Dave Hanley and Dave Gilliam and Tom Stuckey and the others that made the initial decision, when Tom was acting as AFS-1, to do that. But I've certainly had a lot of dialogue with those three gentlemen and had the opportunity to share, if you will, constructive criticism about that with them. I think they made the best decision they could make at the time, given the tools that they had to work with and what they were trying to accomplish. I would feel a little uncomfortable in trying to second guess exactly why they did that, other than the offering that I made to you which is one that's been often spoke of from flight standards. Now, if you'll help me just a minute and rephrase the second question. CHAIRMAN FRANCIS: The first question, and I'm not asking you to rejustify. My first question was, is it possible that using the ten large carriers, where there is kind of an established known structure, that that would make it easier for the flight standards inspector to make this cultural transformation that they're having to go through. And then the second question was, in your eyes or the eyes of all of you, how is that going and how is the cultural shift going? MR. CROW: I think we're definitely developing a learning curve. As you know, when you change from one culture to another, by the way, the airlines have previously done this, it's difficult to do that. So any learning or operating experience that we do have in the big air carrier environment, I think will cross over to those that are operating similar equipment. It's unique to understand that in the air carrier involvement, whether you have 700 airplanes or whether you have two, those airplanes deserve the same type of oversight from the FAA and have comparable maintenance programs. So I do think there is benefit in what we've done with the major air carriers. I think it will benefit those others that are brought on. I think some of the lessons we learned will be especially benefit to our certification evaluation, certification team commonly called CECT as they bring new carriers on and bring them on using the SAIs or the certification part of the ATOS program. So I think there are benefits of what we've done and I think the future will bear that out, if there's anyone else that would like to approach that. MR. MC GILL: Let just take one aspect of when you have the teams coming in right now. We build the STRs around that, MRR or something. Are these things that you observe that the air carriers, are they 145 facilities or in fact identifying and returning these and are we capturing that information appropriately, SDR information? MR. SCARPINATO: I can speak for the certificates that I'm involved with. I feel very comfortable that they're reporting their regulatory requirement to report MRRs. Because World Airways, for example, is a small airline, I'm able to maybe get closer and be around the operation and see it working and know what's going on every day and know that they are doing the reporting. I feel confident that that's happening as far as MRRs go. MR. MC GILL: The SDR program itself, Russ, do you have any intake on that, how it's coming along? MR. UNANGST: As far as I know it's coming along fine. The reporting is expected. It's considered to be a mandatory record. As such, the Congress has designated the failure to make such a report a criminal act. With that kind of gravity, we would expect that people submit those reports when they're supposed to. MR. MC GILL: We tried to identify several. Mr. Horn earlier tried to talk a little bit about the sharing of what information we get, whatever we're learning from whatever reasons, maintenance, mistakes, whatever. We don't seem to have a good grasp, I don't think, of how this information is being, not only evaluated, assessed, the analyzation of it, but how it's distributed and of course, the SDR program is only one. But I don't know. Is there anything that any of you can tell me that might be -- MR. CROW: Let me address, Frank, a couple of ways. Let me take you to one, called the safety performance analysis system which is SPAS, that's the common vernacular, acronym for that. The SDR program is alive and most all of the carriers that I've ever associated with do a very good job on their reporting. There are anomalous situations that do occur, but for the most part I would think it's working pretty well. That's my opinion. There are others that may hold a different opinion. But from my point of view and the emphasis that I put on it, with the certificates that I represent and have represented over the years, they were very much in compliance. But there are other media for sharing information and one of them is SPAS. As we all know, SPAS is driven by PTRS, which is program tracking reporting sub-system through the use of the FAA form 8036. That's serving the industry well with the exception of us that are involved in ATOS at this particular time. But through SPAS, SPAS, for those of you that are very knowledgeable about computers you'll understand that this is a repository. This is a compiler of information. It will assess data from multitudes and multitudes of places of different databases and bring it all into focus either as a statistical presentation or a pictorial presentation that will allow people to look at these things. If the work has been done under PTRS codes that I shared with you earlier, 3640 in particular, then that information would show up under the air carrier's designator under SPAS, and any findings and all findings that are identified in the repair station would eventually flow to SPAS for presentation, either statistically or pictorially. If it were done under 3650, you have to be a little bit creative to get that in there because then it goes under the repair station identifier because it's a certification activity. Could we use a better media? Could we have better medias for sharing that information? Probably so. But right now, I think if you look at the SDR program for the FAA, from the FAA perspective, I believe it's working. It is a regulatory requirement. SPAS is a good tool for compiling information and sharing information. MS. BRUCE: I eventually want to get us actually focused on 145's instead of just the whole broad inspection process. But you brought up two points that I just really wanted to tie together here. One is the fact that you've got this large industry of PTRS data and then we're going under ATOS. So the first question is, how is that getting integrated so that you don't lose all this history that you've had? I think that's kind of what you're hinting at in your last answer. Those aren't fitting together just real well. That may be expected but at least some response to that. MR. CROW: Let me rephrase that, if I might. It's not that they're not fitting well together. If you're a student of database management and database development you realize that the fields that drive the SPAS database and the fields that drive the ATOS database are completely different. And they're different because they're two different cultures. One is a single inspection criteria and one is a systems safety. One of the questions I think that the NTSB, that the Board had an interest in is when would those two come together and what information are we losing. One has to look carefully at what you're trying to attempt. Again, I'll use the word culture. We're moving from an end item, a single inspection culture to one of systems safety. It's similar to moving from quality control, where you did a spot check of X number of items coming off an assembly line or manufacturing line, to one of oversight of the systems, the policies and procedures, if you will, and the controls of the air carrier. So in my own mind, in my opinion, I don't know that the two databases will ever marry. I think the information that's contained in SPAS today and continuing to be input in SPAS today is very good for the carriers that are not into ATOS. I think once the ATOS database is developed and refined, and revised as appropriate, using the FAA folks and our friends in the industry, that we'll develop a database that will provide information that's far superior to that that's in PTRS. MS. BRUCE: And then the second part of that question, you've got information, whether it's of long history or whether we just have to make a break and start with ATOS and use what we've got under that culture, one of the hopeful aspects for ATOS is that we're going to analyze what we've learned and progress from that by refining as we went forward and yet, this year we didn't seem to quite get all the analyst positions in there, it's really critical position to the program. So how are we or you doing on getting analysts to look at the information you are collecting? It's a long question, but very simply put, do we have ATOS analysts or can we hope to get them and how is that going? MR. CROW: Well, the FAA has got a couple of problems with the budget. I think that's well known and I think that's circumstantial. I don't think that has anything to do with fault. The FAA went out to hire the analysts to be an additive to the DEPMs, the data evaluation program managers, to be a part of each CMT. And the FAA pro- actively went to hire some of those folks, and we did hire some. We didn't hire them all. One of the reasons we didn't hire them all was on a valued engineering process. Right now we are still trying to finish up and re-evaluate, re-establish and develop a database for ATOS. Without the free information flow and being able to capture a lot of the information that we're capturing in other media in the interim, the analysts may not have a very active lifestyle within the office. So what we're doing right now, obviously we're trying to get some more money and we are trying to hire the analysts now, because we're much closer to having that need. So that's kind of the analyst story. I think we want them. We view that as being a very important part of what we do, because they'll be able to feed us back information that we might not otherwise see. So the long and short of that is a budgetary constraint, as well as being able to have data for them to evaluate. MR. MC GILL: But the individual members of your team, you're making a great learning curve right in here individually, is that not so? MR. CROW: Yes, I think it's true, Frank. One of the things that I would like for you to acknowledge is the principal on one of the major carriers is that the data repository that we have is only one tool that we use as a principal inspector. It would be hard and difficult and you may not want to buy into it, but we spend an immense amount of time in very open dialogue with our carriers. We spend a great deal of time with them, understanding their problems, understanding areas where we have conformity or maybe small compliance concerns. So the database, the information that comes to us as principals is generally something that we've already been involved in. Once we deal with it, we handle it, we work through it, we gain compliance, we gain conformity, and then it's put in the database. But for all of our other friends, the ones that reside in Washington and for the other people that are doing comparative analysis, one air carrier against another air carrier based on the ATOS presentations and SPAS presentations, those things on balance give those folks an opportunity to see what somebody else is doing. But for the principal, that may be managing a certificate, the database repository, the information that's contained in SPAS and even in ATOS will be something that we have already done rather than something that we're going to do. Now, what it does for us, though, once it's developed, it lets us go back and look at trends and to identify situations where we should direct our attention, and that's very valuable. And the analysts will be very helpful in that regard as well as the information that we develop. MR. MC GILL: Do you all stick specifically now to your team on American Airlines or do you also now come back down and help some principal that does some other certificate location? MR. CROW: We have an ad hoc committee. We refer to it as the major air carrier principal inspector committee council. It's an ad hoc thing. Our friends in Washington have let us do it because it's beneficial. We try to do standardization between air carriers. We look and talk about different elements, with what they're doing, different things that they're doing as far as contracting out and try to bring that information verbally to the table to discuss and also to give feedback to Washington on some areas that we might do things a little better, both as air carriers repair stations and also the FAA. MR. MC GILL: So there are areas where you're learning something and you're able to pass it down. MR. CROW: Very much so. Very much so. MR. MC GILL: Do you get involved in any NASIPs or RASAPs or anything like that at this time MR. CROW: Well, under the ATOS concept we haven't done any NASIPs or RASAPs on the ATOS carriers. We've been trying to perfect the system. I think that we still have NASIPs. A NASIP is the National Aviation Safety Inspection and RASAP is one conduced by our regional folks and also there's an OSAP which is an office special inspection. Those are continuing on the non-ATOS carriers. The large carriers, we're quite involved in the perfection of ATOS right now. MR. MC GILL: I was actually referring to the non-ten carriers. MR. CROW: They're still going on. MR. MC GILL: Where you would still kind of bring what you're learning right now into another inspection of some other certificate holder. MR. CROW: Not specifically ATOS gained information, but knowledge and experience, we share that across the spectrum. If Nick and I were both principals and he was still on World Airlines, many of us within the FAA, we have a very open dialogue which is an unofficial communications net that allows us to talk one to another and say hey, this is some of the concerns we've identified and developed. So the learning curve that we're in and whatever we do, we have a great deal of dialogue albeit informal or formal that does assist the other principals in their work. MS. BRUCE: I'd love to cover some more things other than ATOS, but as long as we're right here in the middle of it, one of the things I want to ask is how it can be specifically responsive to Part 145 oversight. MR. CROW: ATOS has within its confines a couple of sections, one in the SAIs, the safety attribute inspections and it's safety attribute inspection 1.3.7 which deals specifically with the air carriers' responsibility regarding out-source organizations. That's a certification requirement, so that one would drive you to looking at the air carriers' policies and procedures and the controls that would insure that the air carrier did have in its policies and procedures, procedures to establish appropriate contractual arrangements and oversight, quality assurance and controls for the people that they would contract with or out-sourced to. Under the surveillance portion called an EPI, element performance inspection, we have specific surveillance items that when we would go, as Nick and I and Pat have described, go to a vendor albeit a contract maintenance facility or what have you, then those EPI items are done at that contractor's location as well as at the air carrier source. So those instruments, those two tools, specifically in ATOS, drive us directly to contract or out-sourcing organization oversight and certification for the air carrier. Currently there are no 145 specific SAIs for certification of repair station or EPIs for the surveillance, if you will, the continuing certification requirements of a repair station. MS. BRUCE: Should we expect those? MR. CROW: Yes, we do. We do. Yes, we do. There will be several iterations with ATOS and I feel confident that you'll see those in the future, when, I'm not sure. MS. BRUCE: Put those tools in perspective for me. I'm familiar with systems safety analysis tools and I think are higher level. But I was looking for specifically are there any of those tools or the assessment tools that are targeted to the 121s use of a repair station? MR. CROW: We ought to rephrase that. That doesn't sound right. In order to understand the ATOS concept, you have to understand all of the tools and their purpose in the development of a CSP. When I suggested to you that the SSAT, which is the systems safety assessment tool, when it's developed, it's the first iteration, if you will, climbing a set of stairs. That's the first step. That has some impact on what you do in the ACAT which is the air carrier assessment tool and then the ACAT itself drives the minimum surveillance levels in the CSP. Then the CSP, we adjust those as we feel we need to at the principal level. But at the current time there's nothing in there other than the one SAI that I mentioned, 1.3.7 and the one EPI with the same number. MR. MC GILL: What kind of training do the special team members get specific to ATOS? MR. CROW: First, there are several requirements before I can use any of my resources to look at any of the carriers. Number one, they have to complete a stringed training as an FAA inspector which means typically you don't have a novice person that's out there with no training at all. So first they complete string training at the FAA academy. Secondly, they must complete the ATOS training so they understand the ATOS concept, and they're able to apply them. Third, they must go through air carrier specific training, where I spend generally a week, two concentrated times a year to teach them about the certificate that they're going to be assigned to. And then we continue recurrent training on a semi-annual basis with our folks also and then I put them on an OJT plan and have my inspectors that are at the CMU in Dallas, as we do our team events and we do a main base, we do nine sub-bases a year plus about 50 to 60 line stations a year and a team concept using my CMT people as well as my extended CMU members to do those. We develop reports. The reports are passed around and their learning curve and their expertise is developed using those folks in an OJT environment until I'm ready to sign off for them where they can work independently. MR. MC GILL: The training on a specific airplane, you bring those people in so you have at least so many that have background training on whatever the operator is using? MR. CROW: We try to do that, Frank. One of the limitations that we have right now, training funds are very difficult for the FAA to get right now. So we do a lot of surveillance or oversight of the air carriers' in house training programs. Our folks don't get credit for those programs but they do receive the knowledge. So we try to lessen the impact, mitigate the impact by doing that and it's pretty successful. All of the carriers that I'm familiar with, the big ten, are very pro-actively involved in doing that because it's to their benefit as well as ours. MR. MC GILL: What kind of training did you get, say, prior to World, on the type of airplanes and their operations and so forth? MR. SCARPINATO: If the question is specific training on the aircraft system -- MR. MC GILL: Yes. MR. SCARPINATO: I don't have any. MR. MC GILL: Have you ever requested any? MR. SCARPINATO: The request that I have in right now are for the folks that actually go out and put their hands on the airplanes more than I do and I am successful. I have them scheduled. MS. BRUCE: But you have inspectors who could actually be looking at airplanes for which they have no system background knowledge? MR. SCARPINATO: Is that directed to me? MS. BRUCE: Yes. MR. SCARPINATO: I think you would have to be more specific in that. All of our inspectors have had some experience. They come to us as people who are qualified on airplanes. So there may be a case where they might not have specific training on that system, maybe they're a qualified DC-10 mechanic but yet they've not ever worked on an MD-11. MR. MC GILL: The oversight of a smaller 145, from your perspective, is there a specific standard that has to be observed? MR. SCARPINATO: Did you say 145, sir? MR. MC GILL: Yes. MR. SCARPINATO: I can't comment on 145. MR. MC GILL: Pat, can you? MS. SAUNDERS: No, I can't comment on a 145 either, but it's standard for inspection. We have guides. Is that what you mean, from our side of the our house, the FAA side of the house, the carrier side? MR. MC GILL: I was just trying to get something back to the 145 portion right here. MR. UNANGST: I may be able to help with that, Frank. MR. MC GILL: Yes. MR. UNANGST: We don't use 145 standards. We use 121 standards. So actually 145 certification and standards for that don't really enter into it. MS. BRUCE: But you would use a 145 standard when you're issuing the 145 certificate. MR. UNANGST: Right. MS. BRUCE: So how does that process work? I apply for 145 certificate, what are you evaluating my criteria for rating against? MR. UNANGST: I'm not real familiar with that. These are all air carrier folks here. So Part 145 is a different world. MR. CROW: Let me give you a helping hand there for a minute. Within our FAA handbook, 8310, we have chapters in there that deal with FAR 145 repair station certification. We also have one that deals with the surveillance for the oversight. In addition to that, we have job aids that tell our inspectors what criteria -- not criteria, but what they must meet. And within the 8310, in the certification chapter, it details a quite lengthy process of all of the processes from what we call the passive, the pre-application statement of intent through the formal application, through the demonstration phase to the certification phase. So our handbooks cover all of that pretty well. Could they be improved? Possibly. But for the most part they do a pretty good job, as our inspectors do their jobs. MS. BRUCE: I might clarify that 83.10 is sort of the bible for the PMI. That's the handbook. MR. CROW: It's just another resource. Just another resource. MS. BRUCE: The last little side note I heard is that six and a half pounds of paper that you have to track against, do you use that one? MR. CROW: The main thing that we use is the FAR and the requirements in the FAR. I think it's important that the folks understand that the FAA is interested in compliance with the regulations, number one. So the certification requirements for 145 certificate holder, air agency are detailed quite clearly and if they are for a 145. It's not a lengthy requirement, but they're very detailed and the 83.10 provides back up and additional information with that, as well as some of the -- that have come out, handbook bulletins that have come out and other resource material such as advisory circulars 145.3, 145.7 when we're dealing with a foreign repair station, maybe using an MOE and a Part 7 for that certification activity. There's a lot of resources, Deborah, that are available to us and we use those. CHAIRMAN FRANCIS: I think maybe we'll just take -- we've done an hour here. And I would say that as these things go after lunch, the number of nodding heads has been reasonably low on the scale, but perhaps in doing our risk analysis of that which is to come in the next hour, maybe it's time to take a ten minute break here. (Whereupon, a recess was had.) CHAIRMAN FRANCIS: We're here in the home stretch. I don't recall who had the ball, but you guys can decide. MS. BRUCE: I'll take it. Nick, let me start off talking more about how the air carriers oversee the Part 145 repair stations that's doing work for them. Just as a beginning, what's been the practical effect of requiring the air carriers to list their substantial maintenance providers in their ops spec? That's a requirement that's come about in the last few years. I'm sure it was driven by some sort of situational needs but what's been the practical effect of that? MR. SCARPINATO: I'll try to answer that as I understand the question. The D-91 is something to me that's a very dynamic thing, at least for the air carrier that I have certificate management responsibility for. They add and delete substantial maintenance providers quite often. I'm glad to have the opportunity to have some type of control over that because I'm the one that has to add it to the ops spec. That's makes them have to identify it to me and it gives me some idea what they're doing and the opportunity to do surveillance also. So I think for the practical impact it has to me, I think it's a very good and positive thing. MS. BRUCE: That requirement has come about, you know, 1996, so it hasn't been a requirement to list the D-91 for too many years now. Prior to that, what drove it to that? Why was there a need to list it in the ops spec? It's not a bad idea, I agree. It's a good idea, but what was -- MR. UNANGST: The driver for that, I have the policy right here but the driver for that was former administrator Hinson. He wanted it that way, and that's generally why it happened. But it's there for all the reasons that Nick just mentioned. Prior to that an air carrier could use a maintenance provider -- for example, the air carrier is based in Los Angeles but he's having all of his maintenance done in London, the heavy maintenance. They were under no obligation really to notify the FAA other than to make a change to their -- there's a listing requirement in the manual. Other than that, there wasn't any requirement for them to notify anybody. Prior to using those maintenance providers, they're required to make a number of determinations and in some cases, we found that that wasn't really being done. So what the D-91 did was formalize all that and the FAA considerably a better oversight over that activity. MS. BRUCE: But like in Nick's case, where he's a PMI on two different airlines prior to just a recent job change, would he have had trouble keeping up with who those were? I know he doesn't now. They're in the D-91. I'm just still after what prompted the definition of putting the listing in your D-91 form. MR. UNANGST: Like I mentioned, it was Administrator Hinson, there was a perception that these audits and surveillance were not being accomplished and this again, is to just formalize it and everybody knows what everybody else is doing now. It also gives the FAA, through the regulatory authority of ops spec amendment, if the FAA determines that the quality of work is not what it should be and there's a danger to public safety, they can amend the ops specs to stop that work from occurring there. MS. BRUCE: When you list them on that form, for a moment let me pretend I'm submitting to you a change to my D-91 and I'm an operator and I want to add a new maintenance provider to my list. Do you look and see what sort of licenses that adds to my capability or do you look to see if the work I'm listed to perform or that I have performed is matching my license, any cross check done with that information? MR. SCARPINATO: Is the question, is there any -- for an example, if a 145 repair station is going to do a check C for air carriers, obviously they'd have to have that rating on their operations specs to do so. And the answer is yes, that would be the very first step that I would do if I was the principal for an add to a D-91. The D-91s assure that they were authorized to do the work. MR. MC GILL: How many different 145s right now does, say, World Airways actually use or is on your ops specs right now? MR. SCARPINATO: Rough estimate about 25. Again, it's dynamic. Sometimes I have more, sometimes I have less. The reason for that is that since their operation is worldwide, they have to have strategic locations around the globe where they can do certain things and from time to time, whether it's business decision or what drives it, sometimes they remove repair stations and add them. So the number is dynamic. MR. MC GILL: How do you go about choosing these repair facilities? MR. SCARPINATO: How do I choose them? MR. MC GILL: Yes. MR. SCARPINATO: To audit them? MR. MC GILL: To use them, to be able to list them on your D-91 and your selection process. MR. SCARPINATO: That's done by the air carrier. I guess my explanation would be for a need to have one. I mean I don't know what drives their selection of one repair station versus another. MS. BRUCE: Are you aware of the audit procedure that World goes through in order to add a station to their D-91? MR. SCARPINATO: Yes, definitely, because that's something that we audit ourselves, is the steps that they took to assure that that repair station could do the work. I mean there's several things they have to do. MR. MC GILL: How often do you do that? MR. SCARPINATO: How often do I do it? Every time they add one. MR. MC GILL: Every time? MR. SCARPINATO: Every time. MS. BRUCE: So walk me through what the steps for their selection would be. You said they have to go through a certain number of steps. It can be as simple as? MR. SCARPINATO: Again, they'll make a determination for whatever reason, that they want to use a facility. At that point they'll identify to the principal that we're going to add another substantial maintenance provider to the D-91. Normally I get advance notice of that. This is not something they would come in on Friday afternoon and say, oh, by the way, we have an airplane that's there and we want to put it on the D-91. That would not be acceptable to me. So I'll get advance notice that they're contemplating doing this, and they'll send an audit team out. Sometimes, not always, but sometimes I'll send an assistant to go with them, based on a lot of different things. I like to do that if I can and we have been part of the audit teams on many of them. MS. BRUCE: You would know when that was going to happen? MR. SCARPINATO: Yes. But what the air carrier is responsible to do is they're responsible to do an audit of that facility, for such things as competent and trained personnel to do the maintenance on the airplanes, adequate management staff, adequate technical publications, adequate tools, an ability for that repair station to communicate discrepancies for the CAS system, the continuous analysis surveillance. Those are the type of things that they have to assure. And when they do that, they will bring evidence of that audit back to us if we didn't participate. I don't mean just a checked off sheet. We want to see what the discrepancies were, how they found them, how they were corrected, and before we add the substantial maintenance provider to the D-91, all of the steps have been taken. In most cases, if it's a brand new, the first time they're going to take a C-check in, we usually go for some part of that check, to see how it's going. MS. BRUCE: Is it likely that they'll also in that process tell you how they're going to evaluate the work that is done at the facility? You say, do they have the ability to do the work I want done, but will that include a component that says here's how we'll evaluate the work that they do complete for us? MR. SCARPINATO: I don't know that I understand. I'm sorry. MS. BRUCE: The audit would look at facilities, tooling, personnel, training, documentation. Those are all capabilities of the facility. Do you often see any sort of how the air carrier would do an assessment of the work performed by that, in other words, any sort of follow on check that they might do in tracking against, say, a D-check that they would track. MR. SCARPINATO: I think to answer that is that before they use the facility, they will go in and do specific things. Once it's approved, they'll provide training to that substantial maintenance provider on how to do work in accordance with their -- program. Also they don't just send the airplane there and leave and come back and pick it up. They go with a team. The team consists of quality assurance personnel, material people, interior people, inspectors, maintenance. So they have a whole team there and they do an assessment of the airplane. If they take an airplane in for a C-check, they want to get a C-check inspection done. They don't want the airplane to leave in worse shape than when it went in. So there is an assessment of the facility by the air carrier. MS. BRUCE: We heard this morning that, you know, two to four people is a likely rep team that might go along with an airplane. I'm under the impression we were talking the really large organizations. Give you give me situations where you wouldn't rep an airplane when it went in to a repair station? MR. SCARPINATO: In my experience, with the air carriers that I'm principal on, they always send more than two to four people. They send enough people to cover the airplane on all shifts during the time the airplane is there. MR. MC GILL: About how many repair facilities do they have for any one time, major repair facilities? Is there one, or say, three or four? MR. SCARPINATO: In the United States, World has used several different ones this year. For a lot of reasons, in some general persuasion by the certificate management office, they have started to settle on one that they're going to use, but during this year we've seen as many as three different ones that they've used for C-checks. MR. MC GILL: When they do some sort of training for their maintenance program, the work package is going with the particular airplane going in, they send someone up there to instruct that 145 facility in their procedures? MR. SCARPINATO: That's correct. MR. MC GILL: Then you come along later and verify and do the checking. Do you specifically send an inspector at some point to that facility to look at it? MR. SCARPINATO: We try to do that on almost every inspection and I've been successful with that. Yes, I send somebody on the certificate management team to at least be there during part of the C-check and we try to do that and we've covered almost every one this year. MR. MC GILL: But when the carriers are adding multiple major repair facilities and then the next layer of component repair, third party or whatever we want to call that, how do you hold that surveillance? MR. SCARPINATO: To get down to the component repair level, we would more depend on geographic inspections. As I described earlier, we do assessments every quarter for the next coming quarter, to determine what our surveillance plan is going to be for that quarter and we identify areas that we want specifically focused on, areas that we've seen problems in. We use a lot of different tools to do that. As I indicated, we query SPAS daily which is pretty significant for me as a certificate manager because I'm able to look and see how that air carrier is performing against its peer group and I think that's significant. We also get a lot of information, what type of SDRs are being submitted, what type of things that we're physically seeing. When I say we, I mean the certificate management team is seeing when we do surveillance and we develop our quarterly plan and we ask for targeted things from the geographic community. I've been fairly successful with getting good geographic support, at least in those last six months. MR. MC GILL: Can you determine any differences in some of these -- repair facilities by just something, the number of non-routine coming off an airplane after it comes out of these checks? Do you look at that and see how that's handled? MR. SCARPINATO: I think that there's some -- there's probably some value in doing that. The way I would look at that is, maybe for a simpler explanation, let's just say an A-check, because that's one that's done more frequently. In our CAS meetings we look at dispatch reliability. We look at the type of non- routines that you're starting to see on the airplane when it gets to the end of its A-check cycle and that's a pretty good indicator the quality of the inspection that you're getting from a maintenance provider. In other words, in my opinion you should have a 300 hour airplane, if that's your A-check cycle. You shouldn't see an airplane that hardly can't make it to that. If you do, then maybe there is some question about the quality of the inspection that you got while you were there. So I guess there is some quality in looking at that. MR. MC GILL: Are you invited and do you participate in any CAS meetings? MR. SCARPINATO: I'm invited to the CAS meetings and I make almost every one. If I can't make it, my assistant goes, somebody off the certificate tries to be able to make every one. We've been fairly successful doing that. Have we missed some? Sure, but we try not to. But in every case, we do get the CAS data well in advance of the meeting. MR. MC GILL: A report is sent to you? MR. SCARPINATO: Yes. In advance of the meeting, usually we get the CAS report two or three days before the scheduled meeting and we have an opportunity to look at what they're reporting, develop questions so when we go to the CAS meeting that the air carrier has, we're not getting it cold. We have a chance to develop questions. The CAS is something that, me as a certificate manager, I take a lot of time with. I believe in the system. Just for the record World does not have a reliability program so the CAS is what we use to assess the health of the carrier. MR. MC GILL: Because you say it's doesn't have a reliability program, you have the CAS, but obviously they have some sort of ATA coding of systems with a base line on performance? MR. SCARPINATO: That's correct, yes. MS. BRUCE: Frank has asked a couple of questions over this about service difficulty reports. I've gone in and looked at those. Help me if I'm wrong here. I can't trace that back to who did the work. I might find out that on a particular airplane type there has been a reporting of a failure of a certain system or certain component. But it doesn't tell me anything about who did the work on that, right? MR. SCARPINATO: I don't believe it does. MS. BRUCE: Okay. MR. SCARPINATO: But there are ways that you could find that information. MS. BRUCE: How? MR. SCARPINATO: If you had a specific -- I can't think of an example. But you have a landing gear failure or something and that's reported on the MRR. You can take that and go back to the air carrier and trace it back. MS. BRUCE: I'd have to do it on an item by item basis on that particular carrier. It's not captured otherwise. MR. SCARPINATO: No. MS. BRUCE: Okay. MR. MC GILL: Nick, are all of these maintenance reps full time employees of the carrier or do they occasionally use outside maintenance consulting reps for the airplane on these heavy checks? MR. SCARPINATO: In my experience, the ones that I'm involved with, they're full time employees of the airline. MR. MC GILL: Have you ever worked any certificate holders that bring in consulting reps? Is there any difference at all? MR. SCARPINATO: Not in my experience. I don't recall that. MS. BRUCE: You mentioned reliability programs between continuous analysis and surveillance. Have you ever had a certificate holder take a particular airplane from one program to the other? MR. SCARPINATO: No. MS. BRUCE: From MSG-2 to MSG-3 program. MR. SCARPINATO: I don't think -- those are maintenance programs. That's not reliability programs. But the answer to your question is yes, I have. In fact, I'm involved with that right now. One of my air carriers is moving from MSG-2 to MSG-3 on DC-10's. MS. BRUCE: How is that affecting the number of -- maybe I haven't gotten to the right evaluation phase to answer this yet. But can you tell me whether that's increasing or decreasing the task work and how they're going to evaluate the success of the program over time. MR. SCARPINATO: Right now it's a little too early to answer that because the first airplane hasn't come on line yet. But I can say, from just getting the program together, it's obvious that the MSG-3 is going to be a lot more task oriented for the inspectors than the old program was. It's apparent to me it is, but I have no hard data because we haven't started with it yet. MS. BRUCE: The MSG-3 would involve more tasks? MR. SCARPINATO: There will be more inspectors involved in my opinion. MR. MC GILL: You said you worked in some policy areas. Is there anything new that we have in 145 policy that is coming out of whatever area, other than probably regulation, the 800 series or 8000 series or service bulletins? MR. UNANGST: Not to my knowledge, other than the NPRN that's out right now, but of course we wouldn't really develop any new policy or guidance until after that was finalized. MR. MC GILL: So there might be some direction to go to. MR. UNANGST: Right. MS. BRUCE: Russ, if I've got a repair station and I'm doing a very specialized operation, let's say, I'm a plating shop and I'm doing work on a particular kind of engine and the specs for plating that engine are actually driven by the OEM. They've done enough work and they continue to do engineering analysis on what would improve that process. How do I get that information if I'm a Part 145 operator in Texas somewhere? MR. UNANGST: It should be in their manual. MS. BRUCE: Let's say it's an ongoing refinement of their engineering process that's at, say, Pratt & Whitney. MR. UNANGST: Well, you should be able to just call up and buy one. But there are some -- MS. BRUCE: What if Pratt & Whitney is running their own Part 145 work so we find ourselves somewhat in competition? MR. UNANGST: I wasn't aware that there was a refusal on the part, to provide some of that stuff. I do know that some of those, particularly with the engine manufacturers, some of those processes that they use are licensed. They're patented and under that situation, the user of that process has to be licensed and, of course, pay a fee and all those things to use that process. MR. MC GILL: Do you have some sort of oversight that could guarantee, or we would feel confident that the person doing the overhaul would have the latest current revisions to whatever procedures or changes? MR. UNANGST: Well, with a Part 121 air carrier, you'd be assured of that because that would be supplied by the air carrier. MS. BRUCE: I guess like even on the licensing, I'm looking for your intervention to keep that license from getting so restrictive that we can't perform the range of work out in industry. How do you - - MR. UNANGST: I'm not sure. Restricted in what way? MS. BRUCE: The OEM not providing the ability to the 145 to maintain their license or their procedures for certification. Those can be tied together. MR. UNANGST: I think that's getting into an area of some legal things about what they have to supply and what they don't. If an air carrier is using that repair station to do maintenance, then they're obligated to provide the repair station with the information. If the repair station is working for somebody that is not an air carrier, then they're under Part 43 and 91. They're obligated to use the manufacturer's manuals. MR. MC GILL: Just a practical point of view, Russ, do you think that these repair procedures are passed from that air carrier to the first 145 facility to then a second, perhaps say, an engine or some other component, do you think those procedures are passed down with each time? I'm just asking. MR. UNANGST: With the way the regulations are written, they should be. MR. MC GILL: They should be. MR. UNANGST: Maybe one of my colleagues could answer that from a practical standpoint. MR. CROW: Let me try a little bit here. I think it's important to note that anytime that we certificate or we have an applicant for 145 repair station, our expectation, as well as their offering, is that they have all the technical manuals, all of the data, all of the tooling and all of those things that are required. We have a requirement to do that, Frank. We can't simply certificate a carrier if they don't have all of those things. If they have Part 43 -- MR. MC GILL: I'll just take it as a practical point of view. You have all the manuals for a particular engine. Do you think they're physically transferred from the carrier with a 145 to the engine person? MR. CROW: Yes, I do. Typically the repair station has a requirement to have those on hand for certification and continuing certification. From time to time an air carrier will do an engineering change or engineering specifications order or something else that causes some of the processes to change, and the air carrier may issue those. If it's a change in process spec, the air carrier certification office has to approve the process. There are certain things that they can do. I'm talking about a major repair or major alteration. Other than that, changes in the manual can be done by an engineering function. Typically, anytime you have a certificated repair station that is rated, say, to do JT8 overhaul, they will have, as a matter of the certification, all of the tooling, all of the equipment, all of the requirements to complete all of the work for which they're rated. That's a foregone conclusion, even before the air carrier comes in the door. MS. BRUCE: I guess I'm not thinking about at the time of certification. I think that's obviously checked there. We're talking about afterwards. MR. CROW: This is a continuing certification requirement. When we look at them, when the PMI looks at a repair station, one of his or her responsibilities is to assure that those continuing certification requirements are there. MS. BRUCE: All right. So that's one aspect of documentation. Russ, what about how a repair station would maintain the other types of documentation you would need, like how do they get ADs, advisory circulars? Do you know of any problems in how that works as far as their continual tracking of technical information that they need to stay current? MR. UNANGST: Normally they do that by means of a subscription service. MS. BRUCE: Through? Is there a way they can do that through the FAA or does that require commercial service? MR. UNANGST: You can do it either way. MS. BRUCE: Okay. MR. UNANGST: The government printing office provides all those things. There's the National Technical Information Center in Springfield, Virginia that has a lot of that information. MS. BRUCE: All right. Patricia, I don't want you to fall off the end of the table down here. I want to talk about some data I guess. What's your primary job responsibility for tracking information? Maybe back to sort of a restatement of how you fit in with these other three gentlemen, what's your role in Memphis? MS. SAUNDERS: I'm not a principal inspector. I'm a partial program inspector. MS. BRUCE: Pardon me? MS. SAUNDERS: I'm a partial program inspector. MS. BRUCE: I guess that's what I'm asking. Tell me what that is and what you do. MS. SAUNDERS: I have certificate responsibility for a particular portion of the certificate and my portion, within the Memphis FSDO, is the 727's. As far as -- MS. BRUCE: So that would mean you've got the responsibility for 727 aircraft for a given certificate for FedEx? MS. SAUNDERS: That's correct. MS. BRUCE: So only that piece of them. So you would have received training particular to that equipment type and then you're working under the certificate management office to work that piece of the operation. MS. SAUNDERS: No. Nick answered that question earlier about specific training. We're hired already as professionals. We're already certificated mechanics when we come into the industry. MS. BRUCE: What's your training on a 727? MS. SAUNDERS: I have none. MR. MC GILL: What do you do with this information? Who analyzes this information? MS. SAUNDERS: We share it with the certificate unit itself. We access SPAS, the safety performance system. I can do certain portions of it. I share that information. Maybe I'll access just the 727's SDRSs and I'll say, look, the service difficulty report is saying we have a trend in this one particular area, let's focus here. Or maybe I'll just access PTRS and do specific queries and break it down to a specific item that I'm interested in. CHAIRMAN FRANCIS: We've done almost two hours here and we haven't even started with the parties or anyone else. If you've got some burning last questions. MS. BRUCE: I'm fine. Thank you. FAA: Russ, just to ask you a question about the -- maybe you're familiar with the new automated op specs for 145 that's supposed to be issued to the field regarding standardization, or if anyone else on the panel can answer this. MR. UNANGST: Can you say that again, please? FAA: The automated op specs for 145 that has to do with standardization. Are you familiar with that? MR. UNANGST: Just a little bit on the periphery. It follows along with the same philosophy we use for the Part 121 air carrier op specs to standardize them because the way the repair station operations specifications are written out may differ greatly from one to the other. So if it's controlled and centralized, they should all be the same. Everybody has a level playing field. FAA: One more. There was a discussion this morning about case audits. Can you maybe give an explanation on the case audits in regards to 121 and the role? MR. UNANGST: As far as I know, the case organization has set some certain standards for audits of repair facilities by air carriers. The air carriers are issued operational specifications authorizing them to utilize case procedures to conduct some of their audits FAA: Thank you. That's all, Mr. Chairman. FSF: I just have basically one question. CHAIRMAN FRANCIS: Basically one question. FSF: Just basically, yes. CHAIRMAN FRANCIS: This is like Sara saying honestly. FSF: Mr. Crow, you mentioned earlier that there's a lot of informal communication between the PMIs. My question, the basis of it, how do you maintain standardization between the PMI and the geographic inspectors with an informal system? MR. CROW: We have a formal system between those. What I was making reference to in that statement was they're the principals that are assigned to the ATOS responsibilities, the others that Deborah articulated earlier. With our geographic inspectors we communicate with those folks through the ATOS program. There's a process in the ATOS model that will allow them to identify their findings. Let's say they're doing an element performance inspection, a part of that element performance inspection, when you drill down into, there are individual activity reports on which they document their findings. Those findings, once they're documented in the individual activity report, through an automation process that uploads them, through the ATOS program management office, through an automated process, through the LAN system and through the WAN system to each one of their offices, and we view their findings and we develop a dialogue based upon what their findings are. For instance, if you were one my inspectors and you had a finding, once I view that in the ATOS program, then I would probably call you and have a discussion about that and see if I could glean additional information or if what you had in there was sufficient for us to agree upon a course of action on that discrepancy. FSF: And then what would they -- I'm trying to balance this with Nick on the FAA is continually, do we have so many different people making decisions that as we move between regions we get different answers on the same questions. That's where I'm getting to on the standardization. MR. CROW: Okay. Let me try to address that and try to share with you what's really happening. The ATOS program does offer an awful of opportunity for that type of standardization. One of the reasons we do the air carrier specific training is to move away from that time that we had general aviation folks and, say -- and I don't say this to be critical, just circumstantially - - general aviation folks, 135 folks, 125 folks, people that are overseeing 129 airplanes, looking at a 121 certificate holder. And they may not have had as much direct understanding of that certificate requirement. One of the reasons that we're trying to move into the ATOS model is because it gives us better controls for understanding, communications, for planning and accomplishment of the surveillance by being able to bring our people in. As you recall, I mentioned specific air carrier training. So we're able to do that. The people that are assigned out there in the ATOS positions in the geographic community are assigned specifically to one air carrier. Now, there are some that do have more than one, but we're working on that. So they have an intimate of the certificate they're on, know the people they're talking to and the standardization is achieved by narrowing the field of people that they have to talk to. So a geographic inspector would be responsible to the assigned principal, to the CMT that they happen to be assigned to. I think it's going to be a better process when it's perfected. FSF: Thank you. CHAIRMAN FRANCIS: I think it's interesting you're using the word narrowing. Having 23 years of FAA/NTSB experience I think that this has always been an issue with the FAA. It's 47,000 people and as long as you have geographic dispersal and human beings involved, you're going to have different interpretations. Narrowing it is the challenge. Until the computers are doing it all, there's going to be different interpretations, different ways that people look at it. MR. CROW: It's a difficult thing to do because the management concepts that you're looking at, this is a centralized authority with de-centralized resources. That's kind of an oxymoron in itself. So it is difficult to do but we are beginning to manage it and ATOS is providing us an opportunity to do that, where we couldn't do that previously. CHAIRMAN FRANCIS: Sara, no questions? ARSA: I don't expect any answers, but I do ask questions. Just for the record the SDR, there was a notice of proposed rule making for the SDR system about a year and a half ago I believe, two years ago. HBAW put it through to the FAA. They got so many comments on it that they withdrew the rule and are expecting to issue a supplemental notice of proposed rule making on the service difficulty reporting system which is really the MRR system. Also Debbie, just for the record, when you make that report, you're supposed to state the apparent cause of the failure, which if it was a maintenance failure, if, as opposed to other failures that might happen, it would have been listed on that report. Gentlemen, we talk about the requirement list heavy maintenance providers on the ops specs. I believe that was really not strictly based on the regulations, but on the fact that the administrator asked the air carriers to comply with an additional requirement so that they could show that they were indeed complying with the handbook bulletin that specifically told them how to list those heavy maintenance providers, is that not correct? MR. UNANGST: No, we use the regulation. The ops spec is based on a regulation. ARSA: But the requirement to list your heavy maintenance providers on there, that was a requirement of the regulations, Russ? MR. UNANGST: Yes. ARSA: So, what, you just weren't enforcing it for a lot of years? MR. UNANGST: No. There's a regulation that outlines what are required operations specifications. Right at the end of that list is -- ARSA: Anything the administrator wants. CHAIRMAN FRANCIS: Could we let him finish, Sara please, before you interrupt him? ARSA: Okay. MR. UNANGST: We use the interest in safety in air transportation to invoke that little clause in there and come up with the D-91 operations specifications. The rest of all of that is on the ops spec, besides the list, every one of those paragraphs in there is a paraphrasing of a regulation and sub-part of Part 121. ARSA: Are there requirements for adding or deleting a heavy maintenance provider in a handbook bulletin? MR. UNANGST: That's the guidance to the inspector to do that. But the authority for doing that is in the -- ARSA: You did answer the authority question, anything else the FAA wants. I understand that. But in your experience, for instance, Bill, did American have in place a system for choosing its maintenance providers? MR. CROW: They had a vendors list and they also had policies and procedures in the GPM that identified the processes that they would go through to do that. ARSA: And that was available to you before this D-91? MR. CROW: Yes. That was available to us but when you look at a vendors list, in all realistic candor, you might have several hundred vendors on a major air carrier certificate and the management of those vendors from a perspective of who's doing what takes a lot of detail work to get in there to find out what they are. It could have been managed that way possibly, but I think the administrator saw fit to go the other way with the HBAW 9605(c) as amended to place them on D-91. ARSA: Those were just heavy maintenance providers. We still have numerous maintenance providers out there that are not listed on the D-91, right? MR. CROW: That's correct. ARSA: So we did limit it to heavy maintenance providers? MR. CROW: Substantial maintenance contracts - - ARSA: Sorry? MR. CROW: -- as defined in the -- ARSA: As defined, right. You could go in today to an air carrier and have a list of their maintenance providers other than the -- sorry -- substantial maintenance providers and ask them what particular job that maintenance provider was doing for them and they would be able to answer that question, correct? MR. CROW: I think for the most part, that's correct. Very soon we will have all of that captured on the automated ops spec where we can pull it down individually, each certificate holder district office. ARSA: So all of their maintenance providers will be on their ops spec? MR. CROW: Substantial maintenance contractors, required by HBAW 9605. ARSA: But there are other maintenance providers other than the substantial maintenance providers? MR. CROW: Many. There are many. ARSA: And at anytime you can go ask the air carrier what those maintenance providers were doing for them and they would be able to tell you? MR. CROW: That's correct. And we routinely review the audits of the QA function that looks at those, as well as we look at a lot of them ourselves, from the FAA perspective. ARSA: And the continuing analysis and surveillance program, there is a requirement of 121 and it does require specific audits to be performed of their maintenance providers, does it not? MR. CROW: It should as a part of 121.337. Each air carrier is different obviously in their CAS program. So you have to get into the policies and procedures and define those, since as we all know, that particular -- is one of the shortest one in the regulator's handbook so each air carrier has the opportunity to develop that, collaborative, with approval from the FAA. ARSA: Bill, do you know of any personally that do not do on site audits of their maintenance providers under their CAS program? MR. CROW: I'm not aware of any, Sara, that do not conduct those audits. ARSA: And under your guidance material, such as your advisory circulars, it's -- let me rephrase that. I have never read any of your advisory circulars that suggest that I can do anything but an on site audit as a 121. Is there any guidance material that says that they don't have to do an on site audit or suggests that they would have to do an on site audit? MR. CROW: HBAW 9506(c) specifically talks about on site audits. ARSA: For the heavy maintenance providers. I'm talking about for any maintenance that's provided. MR. CROW: You caught me at a loss for words. I don't know of any that would allow you to do anything other than that. As you well know, the case program, in many cases, do use preliminary audit reports to initially qualify a certificate holder before they receive a case audit or an air carrier audit. So there is some practice in the industry where audit check lists are mailed to determine basic qualifications as far as ratings and that's before the initial on site audit is made. ARSA: Okay. That's a new one on me. I didn't realize that case would allow you to go in a case registry without a personal audit, on site audit. In order to get on the case registry -- MR. CROW: They cannot get on. I said that's a basic qualification check list. ARSA: So in order to just determine whether or not you're going to get an audit, not to provide maintenance to the carrier. MR. CROW: It's a pre-qualification audit, pre-qualification check sheet to assure that before the case auditors go, they meet the basic requirements that case has got and also maybe that the carrier may have, if the carrier uses those also. ARSA: We had a great advertisement for ATOS in the first hour and a half of our discussions here, gentlemen. But is ATOS officially in existence at all of the ten carriers? I understand, through the grapevine, that the inspectors' resource material was under review since not all of the questions and information sought by the FAA could be tracked back to the regulations. MR. CROW: As I said earlier, our leadership was very courteous in allowing us to constructive criticism and feedback regarding the first iteration of the ATOS program. I don't think it's a secret nor do I think anybody would try to conceal that there were things that could have been done better on the implementation phase and development of ATOS and those are the things that flight standards is involved in today. We just recently finished rewriting the EPIs, the element performance inspections which would make it better for the industry as well as for the FAA inspectors. There are a lot of ongoing initiatives to correct some of those things. I think that our leadership in Washington has acknowledged those things. I think the GAO has been kind enough to point that out in their most recent GAO report. I think the NTSB has seen those. And I think collaboratively we're trying to move forward positively and change those things, revise those things that need to be revised. ARSA: So we're really still in the current -- I just read a statement that was handed to us as parties the other day that says the first stage currently being implemented, so you are still in the implementation stage and doing all of your adjustments. If you read the ATOS beginning, my understanding is it's going to go to smaller carriers and then to repair stations eventually, is that not true? MR. CROW: We're in what we refer to as phase 1. There have been no other carriers added. During the phase 1 concept we'll be in a continual implementation phase because each carrier, as their personalities -- and I'm talking about their capabilities and all of the things that surround an air carrier, they're all different. Some of the processes that we use, some of them have been -- they work reasonably well, some of them didn't work reasonably well. We do have a team of folks that are working on what we call ATOS phase 2, and also ATOS version 2. Phase 2 is an ongoing process of where the modules, there are eight system safety modules in the ATOS program, and those are being reviewed now. The FAA has chosen to develop a lot of teams including the ATOS program office, the CECT team members using principal inspectors and other qualified people that have been trained and have got operating experience in ATOS, to try to work some of those issues out. That's what the most recent initiative was in rewriting the EPIs. ARSA: But the ultimate goal of ATOS is to review all certificate holders under this similar systemic system of review with resource management and risk management? MR. CROW: Let me rephrase that if I could. I think the FAA's ultimate goal is to move from one culture of individual inspection into a system safety culture. That includes risk management, risk identification, risk potential identification, working through a process of collecting data using analysts and move forward into the future in the year 2000 and beyond and at some point, logically and logistically move all of the 121 air carriers under that concept. I suspect later on, later iterations will include the rest of our family, the 135 folks. I don't know whether we'll embrace our 125 folks or the 129.14 people. But I think right now the FAA is planning on going forward into a system safety concept and culture that will embrace 121 and 135, and at some point 145. ARSA: And not just the 145's involved in the 121 world? MR. CROW: I'd like to be able to say yes or no to that, but I think that's a policy decision to be made in Washington. I don't know exactly what the thinking is on that. ARSA: Okay. With respect to the oversight, since you handle both 145 and 121 carriers -- MR. CROW: Certificate holders. ARSA: -- certificate holders, Bill, when a 121 -- you said you handle Texas Aero -- MR. CROW: Basically. ARSA: Repair stations for engines. When a 121 flows down the work to the 145 and the 145 flows it out the door to other 145's or other maintenance providers, the 145, the contractor with the 121, is under a continuing obligation to comply with that 121 carrier's maintenance program, is that correct? MR. CROW: That's correct. ARSA: So whether or not the air carrier provides the information to the repair station, the repair station has an equal obligation to ask the air carrier for that information, is that not correct? MR. CROW: I think that's the typical business arrangement. ARSA: Under 145.2 it doesn't say provided -- the air carrier provides me this information. It says thou shalt comply with this. MR. CROW: That's correct, under 145.2 it embraces all of sub-part L except for three provisions. ARSA: Right. And they are required to get the training from the air carrier equal to the air carrier requiring to provide that information. MR. CROW: That's correct. ARSA: Okay. Thank you. MR. CROW: You're welcome. RAA: Did you deliberately put me behind Sara? CHAIRMAN FRANCIS: Is that good or bad? RAA: I'd kind of like to reiterate what I asked -- CHAIRMAN FRANCIS: You were victimized by the fact that Sara and Walt sat next to each other in the pre-hearing. ARSA: I thought you liked me, Dave. That's what the problem is. RAA: Mr. Horn brought up the fact that he had been audited 48 times during the last year, during a period, and of those, a number of those were FAA audits. The issue being accessibility to that information, that is, if you send one of your members on a team, an air carrier team to audit a substantial maintenance provider, your accessibility to that information from the previous audits, how accessible is that to you? MR. SCARPINATO: I believe that any audit that the air carrier did would be accessible to me if I asked for it. RAA: No. I meant of other air -- the FAA people that accompanied other air carriers to a 145 repair station. Can you get that information in your determination as to whether you should approve this ops spec change? MR. SCARPINATO: I believe I could get it. Is it something that's easy to get? I can't say, but it would be available if we made calls. I think the first call would be the principal maintenance inspector assigned to that repair station, for instance, in this case you used TIMCO as the example. The principal maintenance inspector for TIMCO would be one of my first contacts, in the case where we were going to add TIMCO to the D-91 for World Airways. RAA: So the PMI at TIMCO would also receive the audits that were done by other inspectors that came in that accompanied other carriers; is that a process or procedure that you know of? MR. SCARPINATO: We make that information available. It's available. Everything is documented in our national program, like the PTRS. So it's available. But it's also provided to them as a courtesy, just by going in there in my experience. But all the information is officially available to any FAA inspector. RAA: The reason I brought it up is we were talking about the differences between after the bulletin 96.05(c) and before and the main difference really is in the prior approval. To change your ops spec you need prior approval of the FAA, whereas, previously it was a requirement of the operator to put it in his maintenance manual. In fact, I think it's 379, specifically states to put it in your manual. And I have received information from some of our carriers that some inspectors are kind of holding this up, so to speak; that is, the approval to add contracts to their ops spec. It's a time when by requiring a prior approval, why, you have to have all your ducks in a row and so forth. One of the ducks that you have to place in the row is to educate the local inspector. He has to be comfortable with his decision to approve this process. I'm looking for a more effective way of informing that particular inspector from his own people, that he feels comfortable in signing off that ops spec. Do you have any comments to that? MR. SCARPINATO: I have not -- I'm not familiar with that procedure. That's not in the handbook bulletin, as far as I know. RAA: D-91, you sign it off each time it's revised. MR. SCARPINATO: Oh, you're talking about me personally. I thought you were talking about the repair station PMI. RAA: No. D-91 ops spec change, every time you want to add a provider, substantial maintenance provider, you revise that, you sign it off. MR. SCARPINATO: That's correct. RAA: That requires, as I said, information on both sides, air carrier contractually and the FAA in feeling comfortable that this provider is insuring your oversight of that, not only the repair station, but your oversight of that air carrier to insure he meets his obligations on air worthiness. MR. SCARPINATO: What I do personally, as I previously explained to you, is I comply with the guidance provided. That guidance requires for us to evaluate the audit the air carrier performed and if the air carrier feels that that repair station, that specific repair station can do the things that I previously talked, qualified trained personnel, equipment, manuals and procedures, all those things are in place and their authorized on the ops specs to do so, and they did their audit and they're comfortable with that repair station, they provide me with all the information as far as the information on the audit, the items that were found during that audit, how they were corrected prior to the air carrier arriving to that facility, then I have no problem with adding that to the D-91. That's a pretty established procedure. It's clear to me that that's what we do. RAA: Okay. Thank you. Just a note to Deborah on this issue on getting qualified vendors, that you have an OEM qualifying certain vendors to do a certain process, that the issue really is in delegation. That is, if only certain repair stations are sanctioned by the OEM to do that, is that a proper procedure recognized by the FAA. CHAIRMAN FRANCIS: Were you expecting an answer? RAA: No. I wanted to bring that out. It's an issue -- CHAIRMAN FRANCIS: It's a comment. RAA: -- of delegation of FAA's authority, could get into delegation of FAA's authority when you have a service bulletin calls out qualified vendors only, that it does limit the market as to who can do that repair for good reasons or whatever. Thank you. ATA: We have a couple of questions. First, the panelist that spoke several times about the databases that FAA has created, and I guess those databases are pretty well populated by now, my question goes to whether there is a system in place by which those data are massaged in a way that identifies the most frequent areas of violation of regulations, inadvertent or otherwise, to the end, that users are then advised on what the most frequent problem areas are and how to avoid them. MR. CROW: Let me try to answer that. It's a pretty good question, but let me try to answer, give you an answer rather than to dismiss it. The original ATOS concept -- I'm trying to pick my words wisely in front of the Board. The original ATOS concept was one that moved away from enforcement as a primary tool for gaining compliance. It moved into an arena of system safety where a review of the carrier's policies and procedures would allow you to identify one of the seven system safety attributes. They're too numerous for me to recall. I can't recall them all right now. Under the ATOS concept, enforcement is one venue that is still there, but it's not a prime consideration in the ATOS program. ATOS program works hand in hand with other ancillary programs such as AASP, aviation action safety programs. It's a different culture. Your question regarding the database as being massaged, I'm not understanding the word massaged. I don't know whether that's mitigating or aggravating in the way you use it. ATA: Trended. MR. CROW: Trendy. Okay. If we're talking about identifying trends, that can be relayed on and articulated to, either in some media form or by the PMI to the certificate holder. I believe that will be in there. I wish that I had more intimate knowledge about the database development. The contractor, GTC, is in the process of making revisions to that and helping us get that thing solidified. But I can't go beyond much what I've shared with you now because I don't really have all the answers on the database at this time. ATA: Thank you. One other question from the table is related to that and that's under the general category of the value of the data collection that FAA does. We have participated in the SDR system as suppliers of data for many, many years. It struggled to find an example where that data has led the agency to take some specific regulatory action to improve safety. I wonder if you might respond with some reassuring examples. MR. UNANGST: The SDR system is a follow on from the regulation of reporting requirements. The reporting requirement is in sub-part B, records and reports, Part 121. And the primary objective or function of those reporting requirements are to let the FAA know that there may be a problem with the maintenance program. Every one of those instances in the report may be indicative of some kind of fault someplace in the maintenance program. So from that aspect, it still works and there's a lot of folks still working on the SDR system which is designed to be a database that anybody can look at to identify problems that are common to an airplane type or an airplane operation. It's not only useful for the FAA but it's useful for each air carrier, if they choose to look at it to identify problems which may be unique to an airplane type that's being operated. ATA: I'm waiting for your specific example. MR. UNANGST: I don't have a specific example off the top of my head. ATA: Thank you, Russ. CHAIRMAN FRANCIS: Jack. MR. DRAKE: I've got a couple follow ups in the ATOS area. We talked about risk analysis and trending, and I was wondering if maybe Bill could answer, how does ATOS provide for the analysis of this data to provide the trending that will result in specific actions to correct whatever deficiencies are identified. MR. CROW: Well, this goes back to our discussion regarding the analysts that we plan to hire. But it also goes back to the training of the analysts that we plan to hire. It also takes you back to the facilitation and the understanding of the training of moving all of the CMT, the certificate management team, in the same direction, understanding what makes an air carrier go and what are areas that we need to look at from the standpoint of risk management and from the standpoint of what do we need to analyze. The industry is very dynamic so the people that are going to be doing the analysis and the value that we get from the analysis is going to be tailored to a standard. But also tempered with the operating environment, the operating demographics of that air carrier itself. We hope to get a lot of value from it. I think history will be the best teacher of what we've gotten out of it. It's going to be dependent upon how the database is designed. It's going to be dependent again, the interfaces between the principal inspector, the partial program manager, such as Patricia and others. It's a difficult question to answer without just giving you the surety of the expectation that it will work and it will work well. But I don't have anything that I could offer you in the face of wait, to say it will or won't. MR. DRAKE: It sounds like the analyst then is the key. The analyst on board or the team of analysts on board now? MR. CROW: I'm sorry. I didn't understand. MR. DRAKE: The analysts that would be used to study this data. MR. CROW: In some cases the analyst is on board with some of the CMTs. There are some that we don't have the analyst yet. I don't have an analyst on my team yet. I do have a DEPM that does provide some of that function. Many of us over the years have done quite bit of analysis work for the FAA, but we simply don't have the funding right now, Jack, to hire all of those folks. We are in the process. Probably the new FY, you will probably see them come on quickly. That's my opinion and that's not a policy statement, but that would be my expectation. MR. DRAKE: I understood that there were about ten analysts that would be hired and there may be one on board now, is that about right? MR. CROW: I don't know exactly how many are on. I interface with my peers for the ten major carriers and several of them have got them. Southwest Airlines I think recently hired one to go with the DEPM resource that they have. I'm not sure how many more we have, just to be honest with you. MR. DRAKE: Before we started we were given -- I guess I'll call it an FAA position paper, and it identified some recent initiatives. I don't know when they happened. But one of them was the hiring of 300 additional aviation safety inspectors. Do you know what the progress of that is? MR. CROW: No, I do not. That's a Washington thing and maybe Russ can handle that. MR. UNANGST: That's already occurred. MR. DRAKE: Okay. MR. UNANGST: I believe that occurred over a period of about two years. MR. DRAKE: I didn't know whether that included the ATOS staffing. I guess it does not. MR. CROW: No, it didn't. The ATOS staffing is coming out of -- type thing. That 300 people that you're making reference to now, that Russ acknowledged, that's what we've done since 1997 in trying to backfill some positions where we moved and we needed not only to fill our attrition but to get more resources. I thought you were speaking of something in the future. MR. DRAKE: I wasn't sure what the 300 covered. You just mentioned and I think others have mentioned previously, a lack of funding and I don't know whether that affects travel for purposes of air carrier maintenance or Part 145 repair station maintenance. MR. CROW: It affects both of them, Jack. Quite frankly, all of us in the major air carrier business under the ATOS concept on a daily basis, because of the funding shortfalls, we had to refigure our LOAs, our travel funds and watch them very closely every day. We report it almost on a daily basis to headquarters in Washington, the shortfalls we would have if we were not able to get funding. Our folks work very diligent in Washington trying to identify monies wherever they possibly could to keep us going and thus far they've done a pretty good job. I'm not aware of anybody within my cognizance that has really had to move away from doing any required work, although we're very cognizant of the need to keep it going. Our executive leadership has done an excellent job, I think, in trying to keep that funding coming. Do we need more funding? Certainly, we do. We need it for training. We need it for travel. That's very important in the life of ATOS, also in the transition period of moving from moving new carriers into ATOS whenever the appropriate time is and to help our friends and to do the oversight that we need to do at the contract maintenance facilities and at the repair stations that we also manage. So money is a very important consideration to those of us that are in the field. MR. DRAKE: Does that also have a bearing on training the ATOS inspectors that came from FSDOs? MR. CROW: It may have. We had a pocket of money that was assigned to the ATOS program office and I know they've worked diligently and scrounged very hard to come up with the money to let us continue to do the things that we need. They've been very supportive to us in the field. To what depths they've had to go and to what resources they've had to go to, to get the funding, I would applaud their efforts because it's got to be a difficult job. MR. DRAKE: Do you know if any of those inspectors that came from FSDOs came from a strictly general aviation background? MR. CROW: Some of them have. The FAA is doing a pretty good job. Flight standards is doing a pretty good job in screening those folks and trying to identify only people that have got an air carrier background to work in the ATOS arena. From time to time there are people that are what you might call dual qualified or have an experienced background in both areas. The transitions into the ATOS program are easier to accomplish if you have a strong air carrier background. It's more difficult if you don't have a strong air carrier background. And to transition a general aviation inspector to an air carrier assignment and accomplish the ATOS training and the specific air carrier training, that's a pretty overwhelming responsibility to embrace. MR. DRAKE: Do you have that problem with any of the people that assisting you with your program? MR. CROW: No, I don't. I'm very blessed. I've got some of the very best people in the world that are working on my team. MR. DRAKE: I've just got one more. With the previous panel -- I hope Bill can answer this -- there was discussion of how many people in a repair station were qualified as A & Ps or repairmen. Do you have a feel for what sort of percentages desirable or needed? MR. CROW: Not really. You know, the FAR allows the folks in repair stations to work under the repair station certificate authority for return to service and such as that. There are certain requirements that have to be made. Certainly one of the things that makes our job easy is to have highly trained qualified certificated mechanics. But there are also many highly trained qualified non-certificated people that are working in repair stations and doing a good job also. MR. DRAKE: Thank you very much. MR. ELLINGSTAD: Mr. Scarpinato, in your response to a couple of questions with respect to 145 repair station work that was contracted out by World Airways, you implied that the selection of the repair stations and approval of them as well as the oversight of their activity depended very strongly on the quality assurance activities that were being performed by the carrier. Is that a fair statement? MR. SCARPINATO: I want to make it clear the I'm not exactly sure how the air carrier decides which repair station they're going to select. MR. ELLINGSTAD: That's one of things I want to get at, is what the FAA's responsibility is with respect to overseeing the overseers and to determine that, you implied that the procedure was, shall we say, informal in the sense that you receive some information from the airline with respect to their audit. Is there a formal process that you expect to review with respect to those audits? MR. SCARPINATO: I believe it is formal. I apologize if I made it sound like it wasn't. What they do is they comply with our guidance based in the handbook bulletin that identifies the areas that they need to look at. They identify the station that they're going to do. The quality assurance department is usually the one that's responsible for it at the air carrier. They go out and they -- MR. ELLINGSTAD: What is your responsibility with respect to the qualifications of the people in the quality assurance department in terms of assessing the validity of the information that you're being given to make that determination of whether that's an acceptable repair station or not? MR. SCARPINATO: As I understand the question, it's what is my responsibility for the qualifications of the people that are actually doing the audit, is that correct? MR. ELLINGSTAD: Right. MR. SCARPINATO: What we look at -- the quality assurance function at World Airways is directed by the chief inspector which is an ops spec position which is something that we regulate. So the person that's ultimately responsible for doing the audit is someone that's added to the ops spec. He might not necessarily be the person that's doing it, but the people that are doing the audit are the ones that work for him. Now, we evaluate the quality of the audit in a couple of ways. We do it by reviewing the findings that the auditor has made at the actual facility and we also go out with him and assist doing the audit, if you will. Maybe not really assist but over the shoulder, verify that the audit is being conducted thoroughly by a qualified person. MR. ELLINGSTAD: You implied, though, that that was not the case in every one of those audits. There isn't a requirement that you participate in every such audit? MR. SCARPINATO: No, I don't believe so. MR. ELLINGSTAD: Thank you. CHAIRMAN FRANCIS: I think that's the end of our forum for today. First, let me thank everyone, panelists, parties, particularly Frank and Deb who have done the lion's share of the work in preparing for this, Carolyn Dargan who is no longer with us I don't think who administratively gets us here and makes sure we've got rooms and things like that, those on the Board of Inquiry, Maria, Denise. This is the beginning or toward the beginning of this study and I would encourage all of you who are here, whether panelists or parties or audience, if you have things that you think are contributory to this study, we would welcome having them. If you can send them in to Jim within the next 30 days, we will incorporate them into the proceedings for this forum which will compose part of the study. So I really would encourage you to do that. Obviously one day is a little short for trying to do all that we're trying to do here and there are a lot of people here that know a lot and we would like to benefit from that. We'll have the results of this forum published within three months or so. That will be available and I assume it will be available on our web site. With that, I would say again thank you, to you all and I appreciate your contribution. Have a safe trip home. (Whereupon, the hearing was adjourned at 4:45 p.m.)