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.)