INITIAL REGULATORY EVALUATION 

NOTICE OF PROPOSED RULEMAKING

PART 145: REPAIR STATIONS

OFFICE OF AVIATION POLICY AND PLANS

REGULATORY ANALYSIS DIVISION

Allen Mattes

January 2011

U.S. Department

of Transportation

FEDERAL AVIATION

ADMINISTRATION

Office of Aviation Policy and Plans

Washington, D.C. 20591
2

TABLE OF CONTENTS

 Page

 EXECUTIVE SUMMARY 1 

I. INTRODUCTION 5

II. COSTS OF COMPLIANCE 7

III. BENEFITS 30

IV. COMPARISON OF COSTS AND BENEFITS 33

 
1

EXECUTIVE SUMMARY CHECKLIST

Summary of the Total Costs and Benefits of this Rulemaking

As seen in Table 1, there are 4,105 affected US repair stations of which 1,838 are 

small repair stations with 10 or fewer employees, 1,913 are medium-sized repair stations 

with between 11 and 199 employees, and 354 are large repair stations with 200 or more 

employees. During the 10 year period of this analysis, it would also affect 1,060 future 

repair stations of which 680 will be small repair stations, 350 will be medium-sized repair 

stations, and 30 will be large repair stations. The proposed rule would impose total 

compliance costs of $14.493 million, which would have a present value of $13.045

million using a 7 percent discount rate and a present value of $13.836 million using a 3 

percent discount rate. 

TABLE 1

TOTAL AND PRESENT VALUE COMPLIANCE COSTS BY REPAIR STATION 

SIZE

(Millions of $)

(2011 – 2020) 

 

COMPLIANCE COSTS

REPAIR STATION

SIZE

NUMBER OF 

REPAIR STATIONS

PRESENT VALUE

(Number of Employees) TOTAL 7 PERCENT 3 PERCENT

SMALL

(1 – 10) 1,838 $ 1.949 $ 1.738 $ 1.852

MEDIUM

(11-199) 1,913 $ 5.226 $ 4.699 $ 4.987

LARGE

(200+) 354 $ 7.318 $ 6.608 $ 6.997

TOTAL 4,105 $14.493 $13.045 $13.836
2

As seen in Table 2, the FAA estimates that the average one-time compliance cost 

would be $1,146 for a small repair station, $2,848 for a medium-sized repair station, and 

$21,474 for a large repair station. 

TABLE 2

AVERAGE ONE-TIME COMPLIANCE COSTS FOR A REPAIR STATION BY 

REPAIR STATION SIZE

(2011 – 2020)

Repair Station Size One-Time Compliance Costs

Small $ 1,146

Medium $ 2,848

Large $21,474

The proposed rule would adopt a National Transportation Safety Board (NTSB) 

recommendation to enhance the overall safety of repair station operations.

Who is Potentially Affected by this Rulemaking

All 4,105 existing US FAA certificated repair stations and the 106 annual new 

repair stations would be affected by the proposed rule. 

Our Cost Assumptions and Sources of Information

Discount rates – 7% and 3%

Period of analysis – 2011-2020

Monetary values expressed in 2010 dollars

Labor compensation rates:

TABLE 3 

PERSONNEL COMPENSATION RATES

(2010 Dollars)

Average Compensation Rates by 

Repair Station Size

Labor Category Small Average Large
3

Value of 1 hour of Repair station General Manager 

time

$45.58 $68.45 $105.62 

Value of 1 hour of Repair station 1st Line Supervisor 

time

$29.91 $38.90 $ 49.40 

Value of 1 hour of Repair station Mechanic and 

Service Technicians time

$23.69 $29.19 $ 35.79 

Value of 1 hour of Repair station Office Manager 

time

$18.95 $24.65 $ 32.18 

Value of 1 hour of Repair station Clerk time $17.69 $22.15 $ 27.72 

Compliance Costs

As seen in Table 4, the estimated total compliance costs of the proposed repair 

station manual revision ($12.869 million) would be approximately 88 percent of the total 

compliance costs. 

TABLE 4

SUMMARY OF TOTAL AND PRESENT VALUES OF THE COMPLIANCE COSTS

BY PROVISION AND BY REPAIR STATION SIZE

(2011 – 2020)

(Millions of 2010 Dollars) 

Compliance Costs

Present Value

PROVISION Total 7 Percent 3 Percent

RATING SYSTEM 

APPLICATION $ 1.624 $ 1.412 $ 1.524 

REPAIR STATION 

MANUAL REVISION $12.869 $11.633 $12.312

TOTAL $14.493 $13.045 $13.836

Benefits

Making the ratings current with today’s aviation technology rather than with the 

1940’s technology would align repair station ratings with their capabilities as well as 

enhance the FAA’s supervisory authority and ability. The proposed rule would also 

make it possible to prevent a repair station person in authority whose previous repair 
4

station privileges had been revoked from automatically receiving another FAA approval. 

Thus, the proposed rule would adopt a NTSB recommendation and enhance the overall 

safety of repair station operations. Consequently, the FAA believes that the proposed 

rule would improve aviation safety with benefits greater than the costs of compliance. 
5

I. INTRODUCTION

I.A. BACKGROUND

The FAA regulates and certificates all repair stations (both in the United States 

and in foreign countries) that repair and maintain aircraft that are registered in the United 

States (N-Registered aircraft). 

The Federal Aviation Administration (FAA) published a Notice of Proposed 

Rulemaking (NPRM) in 1999 to revise the Part 145 repair station regulations. Among 

the several proposed regulations were ones to revise the ratings system and to establish a 

quality assurance program. 

Some commenters disagreed with the need for new ratings. Other commenters 

agreed that new ratings were needed, but they opposed the FAA’s proposed ratings 

system. Most commenters generally opposed the proposed quality assurance program 

requirements. Nearly all of them stated that the proposed requirements were too rigid 

and involved too much paperwork for small repair stations. 

In response to these comments, the FAA did not include these proposed 

regulations in the 2001 final rule, although the final rule did include a quality assurance 

provision that is a key element of a quality system. 

On October 15, 2001, the FAA tasked the Aviation Rulemaking Advisory

Committee (ARAC) to address these two issues. ARAC sent its technical reports and 

recommendations to the FAA on August 13, 2002.

On December 1, 2006, the FAA proposed a rule based on the ARAC 

recommendations and on the public comments to the1999 NPRM. The FAA received 
6

156 mostly negative comments on the 2006 proposal. Subsequently, the FAA withdrew 

its proposal on May 7, 2009. 

This revised proposal is based on the FAA review of the public comments and its 

further analysis of the repair station industry. 

I.B. SUMMARY OF THIS PROPOSED RULE

The FAA proposes to revise the part 145 repair stations regulations. The 

significant proposed changes would: 

1. revise the repair station ratings system; 

2. revise the certification requirements; and

3. provide a basis to reject a repair station certificate application from an applicant 

that had had a certificate revoked or under investigation.
7

II. COSTS OF COMPLIANCE

II.A. INTRODUCTION

The FAA estimates the costs of compliance of this proposed rule in this chapter. 

We first summarize the estimated compliance costs for individual repair stations by repair 

station size. We then summarize the total and present value compliance costs for the 

repair station industry, first by repair station size and then by the individual proposed 

provisions. 

After the summary section, we describe the repair station industry. We then 

proceed to calculate the individual repair station compliance costs and then the total and 

present value compliance costs by repair station size for each of the proposed 

requirements expected to impose compliance costs. We conclude with a summation in 

which all of the compliance costs are aggregated by repair station size and by proposed 

requirement. 

II.B. COMPLIANCE COST SUMMARY 

II.B.1. Time Frame of Analysis

The FAA analyzed the expected costs of this proposal for a 10-year period. To 

simplify the computational analysis, we assumed that the final rule would be issued on 

January 1, 2011. Thus, this analysis covers the years 2011 through 2020. 

II.A.2. Compliance Cost Summary Tables

As seen in Table 1, using numbers of employees as the basis for repair station 

size, the one-time compliance costs for an existing repair station would be $1,146 for a 

small repair station, between $2,576 and $4,277 for a medium-sized repair station, and 

$21,474 for a large repair station. The one-time compliance costs for a future repair 
8

station would be $169 for a small repair station, between $344 and $452 for a mediumsized repair station, and $1,296 for a large repair station.

TABLE 1

ONE-TIME COMPLIANCE COSTS AND LABOR HOURS FOR AN EXISTING AND 

A FUTURE REPAIR STATION BY REPAIR STATION SIZE

One-Time Incremental Compliance Costs and Labor Hours

Repair Station Size Existing Repair Stations Future Repair Stations

Number of Employees Cost Labor Hours Cost Labor Hours

Small

1-10 $ 1,146 41 $ 169 5

Medium

11-49 $ 2,576 63 $ 344 7

50-99 $ 3,373 83 $ 344 7

100-199 $ 4,277 105 $ 452 9

Large

>199 $21,474 354 $1,296 18

As seen in Table 2 the FAA estimates that the total compliance costs would be 

$14.493 million, of which small repair stations would incur $1.949 million, mediumsized repair stations would incur $5.226 million, and large repair stations would incur 

$7.318 million. 

Using a 7 percent discount rate, the present value of the total compliance costs

would be $13.045 million, of which small repair stations would incur $1.738 million, 

medium-sized repair stations would incur $4.699 million, and large repair stations would 

incur $6.608 million.

Using a 3 percent discount rate, the present value of the total compliance costs 

would be $13.836 million, of which small repair stations would incur $1.852 million, 

medium-sized repair stations would incur $4.987 million, and large repair stations would 

incur $6.997 million.
9

TABLE 2

TOTAL AND PRESENT VALUES OF THE COMPLIANCE COSTS BY REPAIR 

STATION SIZE

(2011 – 2020)

(Millions of 2010 Dollars)

Repair Station Size Compliance Costs

Number of Employees Present Value

Total 7 Percent 3 Percent 

Small

1-10 $ 1.949 $ 1.738 $ 1.852

Medium $ 5.226 $ 4.699 $ 4.987

11-49 $ 3.136 $ 2.815 $ 2.990

50-99 $ 1.064 $ 0.959 $ 1.016

100-199 $ 1.026 $ 0.925 $ 0.981

Large

>199 $ 7.318 $ 6.608 $ 6.997

Total $14.493 $13.045 $13.836

As seen in Table 3, the estimated total compliance costs of the proposed repair 

station manual revision ($12.869 million) would be approximately 88 percent of the total 

compliance costs. 

TABLE 3

SUMMARY OF TOTAL AND PRESENT VALUES OF THE COMPLIANCE COSTS 

BY PROPOSED PROVISION AND BY REPAIR STATION SIZE

(2011 – 2020)

(Millions of 2010 Dollars) 

Compliance Costs

Present Value

PROVISION Total 7 Percent 3 Percent

RATING SYSTEM APPLICATION $ 1.624 $ 1.412 $ 1.524 

REPAIR STATION MANUAL REVISION $12.869 $11.633 $12.312

TOTAL $14.493 $13.045 $13.836

II.C. REPAIR STATION INDUSTRY 
10

II.C.1. Number of Existing US Repair Stations

The proposed rule would affect every repair station allowed to work on NRegistered aircraft. As seen in Table 4, as of March 2010, the FAA has certificated 4,105 

repair stations in the United States to work on N-Registered aircraft. The FAA has also 

certificated 739 repair stations located in 67 foreign countries with 46,131 employees to 

work on N-Registered aircraft. The country in which the repair station is located does not 

dictate its ownership because US owners operate repair stations in both the United States 

and in foreign countries and foreign owners operate repair stations in both the United 

States and in foreign countries. This Initial Regulatory Evaluation (IRE) estimates the 

proposed rule’s economic impact only on repair stations located in the United States 

because that is the requirement under Executive Order 12866. 

The FAA has classified repair stations into size categories using the criterion of 

number of employees. The costs to comply with the proposed rule would generally 

increase with repair station size and the number of employees is the best basis to 

distinguish among repair station sizes.

1

 Further, mechanic and technician wage rates are 

positively correlated with repair station size. Larger repair stations tend to do more 

highly technical and complex work (e.g., repairing and maintaining turbojet and 

turboprop engines, landing gears, etc.) than do smaller repair stations. Correspondingly, 

large repair station mechanics and technicians are generally paid more than are small 

repair station mechanics and technicians. Thus, this analysis reflects that both the 

average number of labor hours for compliance and the average cost of those labor hours 

 

1 There will be cases in which the type of work done by the repair station may result in instances 

where the number of labor hours for compliance may not be perfectly correlated with the number 

of employees. However, on average, the number of employees is a good proxy for the number of 

labor hours needed for compliance. 
11

would increase with repair station size. Based on our analysis of the repair station 

industry, the following 5 categories based on number of employees appropriately

delineate the qualitative and quantitative differences among repair stations with respect to 

the compliance costs of the proposed rule: 

1. Small (One class of 1 to 10 employees)

2. Medium-Sized (Three classes of 11 to 199 employees)

A. Class A. (11 to 49 employees) 

 B. Class B. (50 to 99 employees)

 C. Class C. (100 to 199 employees)

3. Large (One class of 200 + employees)

Of the 4,105 repair stations in the United States, 1,838 (44.8 percent) are small 

repair stations with an average of 5 employees, 1,913 (46.6 percent) are medium-sized 

repair stations with an average of 47 employees, and 354 (8.6 percent) are large repair 

stations with an average of 874 employees.2 

This is a segmented industry in which small repair stations have a total of 9,130 

employees (only 2.2 percent of total industry employment), medium-sized repair stations 

have a total of 90,240 employees (22.1 percent of total industry employment) and large 

repair stations have a total of 309,307 employees (75.7 percent of total industry

employment). 

TABLE 4

NUMBERS AND PERCENTAGES OF EXISTING REPAIR STATIONS AND 

EMPLOYEES 

(March 2010) 

 

2 The FAA has used the SBA-defined categories of "small" (fewer than 1,500 employees) and 

"non-small" (more than 1,500 employees) in this industry for our Regulatory Flexibility Analysis.
12

Repair Station Size

Number of 

Employees

Number of 

Repair

Stations

Percentage 

of Repair 

Stations

Total 

Number of 

Employees

Average 

Number of 

Employees

Percentage 

of All

Employees

Small

1-10 1,838 44.77% 9,130 5 2.24%

Medium 1,913 46.60% 90,240 47 22.08%

11-49 1,321 32.18% 30,718 23 7.52%

50-99 337 8.21% 23,933 71 5.86%

100-199 255 6.21% 35,589 140 8.71%

Large

>199 354 8.62% 309,307 874 75.68%

Total 4,105 100.00% 408,677 100 100.00%

II.C.2. Numbers of Future US Repair Stations

The number of future US repair stations equals the existing number minus the 

number of repair stations that leave or are absorbed plus the number of new repair 

stations. As the compliance costs differ between existing and for new repair stations, we 

calculate separate cost estimates for these groups. The number of US repair stations

declined from 4,204 in 2006 to 4,105 in 2010; a 0.6 percent annual net decline. The FAA 

assumes that the 0.6 percent annual rate of decline will continue between 2011 and 2020. 

The FAA also assumes that the future distribution of the repair stations by size will be the 

same as the 2010 distribution seen in Table 4.3 The forecasts for the next 10 years by 

repair station size are seen in Table 5. 

TABLE 5

 

3 While nearly all of the future new repair stations will be the smaller repair stations (see Table 

5), the number of repair stations going out of business will similarly be disproportionally found 

among smaller repair stations. Over time, some of the existing medium-sized repair stations will 

become large repair stations while some of the existing small repair stations will become 

medium-sized or large repair stations. Consequently, the FAA assumes that the repair station size 

distribution will be constant over this time period of analysis. 
13

FORECASTED NUMBERS OF REPAIR STATIONS BY YEAR 

(2011 – 2020)

Repair 

Station Size

YEAR

Number of 

Employees

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Small

1-10 1,827 1,816 1,805 1,794 1,784 1,773 1,762 1,752 1,741 1,731

Medium 1,902 1,890 1,879 1,867 1,856 1,845 1,834 1,823 1,812 1,801

11-49 1,313 1,305 1,297 1,290 1,282 1,274 1,267 1,259 1,251 1,244

50-99 335 333 331 329 327 325 323 321 319 317

100-199 253 252 250 249 247 246 244 243 242 240

Large

>199 352 350 348 346 344 341 339 337 335 333

Total 4,081 4,056 4,032 4,007 3,984 3,959 3,935 3,912 3,888 3,865

II.C.3. Number of New US Repair Stations

The FAA certificated 423 new US repair stations during the 4-year time period of 

2006 - 2009. Of these 423 new repair stations, 271 had 10 or fewer employees, 110 had 

between 11 and 49 employees, 16 had between 50 and 99 employees, 13 had between 

100 and 199 employees, and 13 had 200 or more employees. The FAA assumes that the 

4 year averages of these numbers of new repair stations will continue during the next 10 

years. Based on that assumption, as seen in Table 6, the FAA forecasts it will annually

certificate 106 new repair stations, of which 68 will be small repair stations, 35 will be 

medium-sized repair stations, and 3 will be large repair stations.

TABLE 6

FORECASTED NUMBERS OF NEW US REPAIR STATIONS BY YEAR 

(2011 – 2020)

Repair 

Station Size

Year
14

Number of 

Employees

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 TOTAL

Small

1-10 68 68 68 68 68 68 68 68 68 68 680

Medium 35 35 35 35 35 35 35 35 35 35 350

11-49 28 28 28 28 28 28 28 28 28 28 280

51-99 4 4 4 4 4 4 4 4 4 4 40

100-199 3 3 3 3 3 3 3 3 3 3 30

Large

>199 3 3 3 3 3 3 3 3 3 3 30

Total 106 106 106 106 106 106 106 106 106 106 1,060

II.C.4. Number of US Repair Stations Projected to Go Out of Business or Merge

The FAA estimated the number of repair stations that will go out of business or 

merge in each year 2010, 2011, and 2012 by adding the net negative changes in the 

forecasted number of total repair stations from Table 5 (24 in 2010, 25 in 2011, and 24 in 

2012) to the forecasted number of new repair stations from Table 6 (106 in each of 2010, 

2011, and 2012). The FAA assumes that all of the out of business repair stations in 2010, 

2011, and 2012 would be culled from repair stations existing in 2010. The FAA then 

assumes that none of the 391 existing repair stations (130 in 2010, 131 in 2011, and 130 

in 2012) that would go out of business would apply for a new rating from the FAA, and, 

consequently, would incur no compliance costs. After 2012, repair stations that would go 

out of business could also come from new repair stations. 

As seen in Table 7, of the 391 existing repair stations that will go out of business

in 2010, 2011, and 2012, 237 will be small repair stations, 139 will be medium-sized 

repair stations, and 15 will be large repair stations. Thus, 3,714 existing repair stations 

(4,105 minus 391) would incur compliance costs, of which 1,601 would be small repair 
15

stations, 1,774 would be medium-sized repair stations, and 339 would be large repair 

stations. 

TABLE 7

FORECASTED NUMBERS OF EXISTING US REPAIR STATIONS THAT WOULD 

GO OUT OF BUSINESS AND THE NUMBERS THAT WOULD INCUR 

COMPLIANCE COSTS

(2010 – 2012)

II.C.5 Compensation Rates for Various Repair Station Labor Categories

Table 8 contains the hourly compensation rates for various repair station labor 

categories. As published in the 2006 IRE, the original data were from the U.S. Dept. of 

Labor 2001 National Industry Specific Occupational Employment and Wage Estimates –

SIC 372 – Aircraft and Parts median hourly rate, which were then multiplied by 1.2345 

for benefits4and by 1.0239 to account for inflation from 2001 to 2003. The 2006 IRE 

used the 25th and 75th compensation rate percentiles as the corresponding costs for the 

“Small” and “Large” repair station categories. 

 

4 The benefits adjustment is based on FAA, Office of Aviation Policy and Plans, Economic 

Values for Evaluation of FAA Investment and Regulatory Programs (FAA-APO-98-4: June 

1998) Table 4-5. p.4-22. 

Repair Station Size Year Number of Repair Stations 

Number of 

Employees

2010 2011 2012 Total Out of 

Business

Total Incurring 

Compliance Costs

Small

1-10 79 79 79 237 1,601

Medium 46 47 46 139 1,774

11-49 36 36 36 108 1,213

51-99 6 6 6 18 319

100-199 4 5 4 13 242

Large

>199 5 5 5 15 339

Total 130 131 130 391 3,714
16

The FAA cannot use the same source to update those data for this analysis. In

2004, the U.S. Department of Labor (DOL) jettisoned the Standard Industrial 

Classification (SIC) codes in favor of the North American Industry Classification System 

(NAICS). The NAICS now subsumes employment and wage data for the former SIC 372 

within a larger NAICS category that also includes aerospace manufacturing employees. 

The FAA determined that this NAICS category labor wage is inappropriate for the repair 

station sector because aerospace manufacturing employees earn sufficiently more than do 

repair station employees that using their combined average would upwardly bias repair 

station employee compensation. As a result, the FAA uses the 2003 compensation data 

from the 2006 IRE and updates it to 2010 dollars.5

TABLE 8

REPAIR STATION PERSONNEL HOURLY COMPENSATION RATES BY 

COMPENSATION RATE PERCENTILES 6

(2010 Dollars)

Compensation Rate Percentile

and Repair Station Size

Labor Category 25%

Small

50%

MediumSized

75%

Large

Value of 1 hour of Repair station General 

Manager/Owner time $45.58 $68.45 $105.62 

 

5 The IRE 2003 dollar values were increased by 17 percent (see 

www.westegg.com/inflation/infl.cgi) to update the values to 2010 numbers. 

6 The 2006 IRE used data from the U.S. Dept. of Labor 2001 National Industry Specific

Occupational Employment and Wage Estimates for SIC 372 “Aircraft and Parts” median hourly 

rate multiplied by 1.2345 for benefits and by 1.0239 for inflation. The 2006 IRE “Small” and 

“Large” labor cost estimates were calculated by using the 25th and 75th percentiles, respectively,

for the total occupational title to the average SIC 372 salary for that occupation. The benefit

multiplier was from Table 4-5 FAA-APO-98-4. However, the 2004 U.S. Department of Labor 

revision of the SIC codes now subsumes the specific employment and wage data for aircraft and 

parts employees within larger categories that include higher-paid aerospace manufacturing 

employees. The higher average wage rates resulting from including higher-paid aerospace 

manufacturing employees are inappropriate to represent the average wage rates for the repair 

station sector (particularly for small repair stations). As a result, the FAA adjusted the 2006 IRE 

data to account for inflation to update its information to 2010 dollars.
17

Value of 1 hour of Repair station 1st Line 

Supervisor/Quality Control Manager time $29.91 $38.90 $ 49.40 

Value of 1 hour of Repair station Mechanic and Service 

Technicians time $23.69 $29.19 $ 35.79 

Value of 1 hour of Repair station Office Manager time $18.95 $24.65 $ 32.18 

Value of 1 hour of Repair station Clerk time $17.69 $22.15 $ 27.72 

As previously discussed in Section II.C.1., larger repair stations have higher 

compensation rates than do smaller repair stations. In this analysis, the FAA uses the 

25th percentile labor compensation rates for small repair stations, the 50th percentile 

labor compensation rates for medium-sized repair stations, and the 75th percentile 

compensation rates for large repair stations. 

II.D. BACKGROUND INFORMATION TO CALCULATE COMPLIANCE COSTS

II.D.1. Cost Assumptions 

II.D.1a. Discount Rate

As mandated by the Office of Management and Budget (OMB),

7 we use 7 percent 

as the primary discount rate and 3 percent as a secondary discount rate for the sensitivity

analysis. 

II.D.1.b. Time Frame of Analysis

The FAA analyzed the expected costs of this proposal for a 10-year period. To 

simplify the computational analysis, we assumed that the final rule would be issued on 

January 1, 2011. Thus, this analysis covers the years 2011 through 2020. 

II.D.1.c. Base Year of Analysis

All monetary values are expressed in 2010 dollars. 

II.D.2. Types of Compliance Costs

 

7 Office of Management and Budget, OMB Circular No. A-4, New Guidelines for the Conduct of 

Regulatory Analysis, Mar. 2, 2004.
18

II.D.2.a. Incremental Costs

This analysis is concerned only with the incremental costs; i.e., the costs in 

addition to those that a repair station currently incurs. The baseline for determining the 

incremental cost is current industry practice; not compliance with the current rule. 

II.D.2.b. One-Time Compliance Costs

An existing repair station would incur a one-time cost to submit a ratings system 

application under the new FAA ratings, to review its training program, to revise its 

manual, etc. An existing repair station has two years after the effective date of the final 

rule to apply for a new rating. All existing repair station certifications would no longer 

be valid 2 years after the effective date of the final rule, which for the purposes of this 

analysis is assumed to be January 1, 2013. 

We assume that one half of the existing repair stations would submit their 

applications and incur one-time compliance costs during 2011 and the other half would 

submit their applications and incur one-time compliance costs during 2012. We assume 

that new repair station applications would be submitted and the one-time costs incurred 

during the year before they would enter the industry. 

II.D.2.c. Annual Compliance Costs

Beginning in the year following FAA approval, a repair station would incur 

annual compliance costs such as maintaining a current list of the products on which it 

could work, enhanced training of new employees, etc. We have preliminarily determined 

that these annual incremental compliance costs would be minimal. The FAA requests 

comments on this determination. 

II.E. PROPOSED PROVISIONS IMPOSING COMPLIANCE COSTS 
19

II.E.1. Rating System Application

The proposed rule would create a new ratings system. An individual repair 

station’s application costs would vary by a number of factors; i.e., the number of ratings, 

the complexity of the work, the magnitude of the risk if the repair were to fail or if the 

maintenance were to be improperly performed, etc. For example, a repair station 

applying for a Category 2 airframe rating that would allow it to work on all transport 

category airplanes would need more labor hours to complete its application than would a 

repair station applying for a Category 1 airframe rating with the intention of working on a 

limited number of general aviation aircraft models. As we do not know individual repair 

station plans, we assume that larger repair stations would apply for more numbers of and 

for more complex ratings than would smaller repair stations and that the average labor 

time to complete a ratings application would increase with repair station size. 

As seen in Table 9, the FAA estimates that the smallest repair stations would 

require 2 hours of general manager/owner time, 2 hours of first-line supervisor/quality

manager time, and 1 hour of clerk time to complete an application. The FAA then 

estimates that a medium-sized repair station would require 3 to 4 hours of general 

manager/owner time, 3 to 4 hours of first-line supervisor/quality manager time, and 1 

hour of clerk time. Finally, the largest repair stations would require 6 hours of general 

manager/owner time, 8 hours of first-line supervisor/quality manager time, and 2 hours of 

clerk time. 

Thus, applying the hourly compensation data from Table 8 to the number of labor 

hours, the average compliance cost to apply for the ratings would be $169 for a small 
20

repair station, between $344 and $452 for a medium-sized repair station, and $1,296 for a 

large repair station. 

TABLE 9

NUMBERS AND TYPES OF REPAIR STATION EMPLOYEE HOURS AND 

COMPLIANCE COSTS TO APPLY FOR A RATING 

Repair 

Station Size

Number of hours by Labor Category 

Number of 

Employees

General 

Manager/

Owner

First-Line 

Supervisor/Quality 

Manager

Mechanic Clerk Total Compliance 

Cost Per 

Repair Station

1-10 2 2 0 1 5 $ 169 

11-49 3 3 0 1 7 $ 344 

50-99 3 3 0 1 7 $ 344 

100-199 4 4 0 1 9 $ 452 

>199 8 8 0 2 18 $1,296 

The majority of the total application costs incurred by a new repair station would

be caused by existing rule requirements that the proposed rule would not alter. However, 

a new repair station would incur the same additional costs as those incurred by existing 

repair stations to modify its application to the proposed requirements and to submit a 

letter describing how it would comply with part 145. 

It should be noted that although the category of new repair stations would incur 

one-time costs in every year, an individual new repair station would incur this cost only

once – during its application year. Hence, as far as an individual new repair station is 

concerned, its costs to apply for ratings would be a one-time compliance cost. 

As seen in Table 10, based on the number of existing repair stations by size 

category reported in Table 4 minus the number of existing repair stations by size category

that will go out of business between 2010 and 2012 reported in Table 7, the FAA 

estimated that the total one-time compliance costs for existing repair stations would be 
21

$1.346 million. Using a 7 percent discount rate, the present value of the one-time 

compliance costs for existing repair stations would be $1.216 million. Using a 3 percent 

discount rate, the present value of the one-time compliance costs for existing repair 

stations would be $1.287 million.

TABLE 10

ONE-TIME COMPLIANCE COSTS FOR EXISTING REPAIR STATIONS TO APPLY 

FOR A RATING 

(Millions of 2010 Dollars)

Repair Station Size Number of 

Repair Stations

Compliance Costs

Number of Employees Present Value

Total 7 Percent 3 Percent 

Small

1-10 1,601 $0.270 $0.244 $0.258

Medium 1,774 $0.637 $0.575 $0.609

11-49 1,213 $0.418 $0.377 $0.399

50-99 319 $0.110 $0.099 $0.105

100-199 242 $0.109 $0.099 $0.105

Large

>199 339 $0.439 $0.397 $0.420

Total 3,714 $1.346 $1.216 $1.287

As seen in Table 11 (based on the numbers of new repair stations in Table 6 and 

the unit compliance cost in Table 9), the FAA estimated that the total one-time 

compliance costs for new repair stations would be $39,000. Using a 7 percent discount 

rate, the present value of the one-time compliance costs for new repair stations would be 

$27,000. Using a 3 percent discount rate, the present value of the one-time compliance 

costs for new repair stations would be $33,000. 

TABLE 11

ONE-TIME COMPLIANCE COSTS FOR NEW REPAIR STATIONS TO APPLY FOR 

A RATING 
22

(2011 – 2020)

(Millions of 2010 Dollars)

Repair Station Size Number of New 

Repair Stations

Compliance Costs

Number of Employees Present Value

Total 7 Percent 3 Percent 

Small

1-10 680 $0.115 $0.081 $0.098

Medium 350 $0.124 $0.088 $0.106

11-49 280 $0.096 $0.068 $0.082

50-99 40 $0.014 $0.010 $0.012

100-199 30 $0.014 $0.010 $0.012

Large

>199 30 $0.039 $0.027 $0.033

Total 1,060 $0.278 $0.196 $0.237

As seen in Table 12, the FAA estimated that the total one-time compliance costs 

for applying for a repair station rating would be $1.624 million, of which $385,000 would 

be incurred by small repair stations, $761,000 would be incurred by medium-sized repair 

stations, and $478,000 would be incurred by large repair stations. 

Using a 7 percent discount rate, the present value of the one-time compliance 

costs would be $1.412 million, of which $325,000 would be incurred by small repair 

stations, $663,000 would be incurred by medium-sized repair stations, and $424,000 

would be incurred by large repair stations. 

Using a 3 percent discount rate, the present value of the one-time compliance 

costs would be $1.524 million, of which $356.000 would be incurred by small repair 

stations, $715,000 would be incurred by medium-sized repair stations, and $453,000 

would be incurred by large repair stations. 

TABLE 12

ONE-TIME COMPLIANCE COSTS TO APPLY FOR A RATING 
23

(Millions of 2010 Dollars)

Repair Station Size Compliance Costs

Number of Employees Present Value

Total 7 Percent 3 Percent 

Small

1-10 $0.385 $0.325 $0.356 

Medium $0.761 $0.663 $0.715 

11-49 $0.514 $0.445 $0.481 

50-99 $0.124 $0.109 $0.117 

100-199 $0.123 $0.109 $0.117 

Large

>199 $0.478 $0.424 $0.453 

Total $1.624 $1.412 $1.524 

II.D.2. Repair Station Manual Revision

Every repair station would need to revise its repair station manual. This revision 

would include the procedures to obtain new or modified ratings, a review of the training 

program, and the processes and documentation by which it will either self-certify (and 

self-decertify) articles on its capabilities list or its procedures to request that articles be 

added to its operations specifications. 

As seen in Table 13, the FAA estimates that the smallest repair stations would 

require 12 hours of general manager/owner time, 12 hours of first-line supervisor/quality

manager time, and 4 hours of clerk time to revise its operating manual. A medium-sized 

repair station would require between 16 and 24 hours of general manager/owner time, 

between 24 and 48 hours of first-line supervisor/quality manager time, and between 6 and 

10 hours of clerk time to revise its operating manual. A large repair station would require 

96 hours of general manager/owner time, 192 hours of first-line supervisor/quality

manager time, and 20 hours of clerk time to revise its operating manual.
24

The FAA believes that this proposed rule would create minimal additional 

incremental compliance costs for a new repair station because it would develop its 

manual from the start to meet the proposed rule. The majority of the manual costs 

incurred by a new repair station would be to meet current rule requirements that the 

proposed rule would not alter. Instead, the proposed rule would redirect the repair station 

effort from meeting current rule requirements to meeting the proposed rule requirements. 

Consequently, the FAA determined that the total manual development time for a new 

repair station would not change, but it would be spent in different directions. 

 The cost to a repair station to revise its manual equals the wage rate by labor 

category (Table 8) times the estimated hours. As seen in Table 13, the cost to an existing

small repair station would be $977, the cost to an existing medium-sized repair station 

would be between $2,162 and $3,731, and the cost to an existing large repair station 

would be $20,178. 

TABLE 13

NUMBERS OF REPAIR STATION EMPLOYEE HOURS AND COMPLIANCE 

COSTS TO REVISE THE REPAIR STATION MANUAL 

Number of 

Employees

General 

Manager/Owner

First-Line 

Supervisor/Quality 

Manager

Mechanic Clerk Total Compliance 

Costs Per 

Repair Station

1-10 12 12 0 4 28 $ 977 

11-49 16 24 0 6 46 $ 2,162 

50-99 20 36 0 8 64 $ 2,947 

100-199 24 48 0 10 82 $ 3,731 

>199 96 192 0 20 308 $20,178 

As seen in Table 14, the FAA estimates that the total one-time compliance cost 

would equal the compliance cost per repair station times the number of repair stations. 

For existing repair stations the compliance cost would be $12.869 million, of which 
25

$1.564 million would be incurred by small repair stations, $4.465 million would be 

incurred by medium-sized repair stations, and $6.804 million would be incurred by large 

repair stations. 

Using a 7 percent discount rate, the present value of the one-time compliance 

costs for existing repair stations would be $11.633 million, of which $1.413 million 

would be incurred by small repair stations, $4.036 million would be incurred by mediumsized repair stations, and $6.184 million would be incurred by large repair stations. 

Using a 3 percent discount rate, the present value of the one-time compliance 

costs for existing repair stations would be $12.312 million, of which $1.496 million 

would be incurred by small repair stations, $4.272 million would be incurred by mediumsized repair stations, and $6.544 million would be incurred by large repair stations. 

TABLE 14

ONE-TIME COMPLIANCE COSTS TO REVISE THE REPAIR STATION MANUAL 

(Millions of 2010 Dollars)

Repair Station Size Compliance Costs

Number of Employees Present Value

Total 7 Percent 3 Percent 

Small

1-10 $ 1.564 $ 1.413 $ 1.496

Medium $ 4.465 $ 4.036 $ 4.272

11-49 $ 2.622 $ 2.370 $ 2.509

50-99 $ 0.940 $ 0.850 $ 0.899

100-199 $ 0.903 $ 0.816 $ 0.864

Large

>199 $ 6.840 $ 6.184 $ 6.544

Total $12.869 $11.633 $12.312

II.E. PROPOSED PROVISIONS NOT IMPOSING COMPLIANCE COSTS 

II.E.1. One-Time Costs to Create a Capabilities List
26

The proposed rule would require each repair station that chooses to use a 

capabilities list rather than the operations specifications to list the articles on which it can 

work must be maintained on a standard FAA-approved form that will be developed. 

Although the FAA intends that its form will generally follow the typical formatting used 

by most repair stations, as this form does not yet exist, we cannot estimate the potential 

costs of completing it. 

II.E.2. FAA Capability to Deny an Application

Currently, the FAA cannot deny a repair station license to a qualified applicant, 

regardless of its prior behavior. The proposed rule would give the FAA the authority to 

deny a repair station license to an applicant that has either had its certificate revoked for 

cause or has voluntarily surrendered its certificate while it is being investigated for 

revocation. As the FAA revokes an average of 6 repair station licenses a year, the overall 

compliance costs of this proposed provision would be minimal. 

II.F. COMPLIANCE COSTS BY REPAIR STATION SIZE

As seen in Table 15,

8

the one-time labor hours and compliance costs for a repair 

station would be 33 hours and $1,146 for a small repair station, between 53 and 91 hours 

and between $2,506 and $4,183 for a medium-sized repair station, and 326 hours and 

$21,474 for a large repair station. 

TABLE 15

ONE-TIME AND ANNUAL LABOR HOURS AND COMPLIANCE COSTS FOR A 

REPAIR STATION 

(2010 Dollars)

Repair Station Size One-Time

 

8 Table 15 sums Tables 9 and 13. 
27

Number of Employees Labor Hours Cost

Small

1-10 33 $ 1,146

Medium

11-49 53 $ 2,506

50-99 71 $ 3,291

100-199 91 $ 4,183

Large

>199 326 $21,474

II.G. TOTAL AND PRESENT VALUE COMPLIANCE COSTS 

As seen in Table 16,

9

the FAA estimates that the total compliance costs would be 

$14.493 million, of which $1.941 million would be incurred by small repair stations, 

$5.226 million would be incurred by medium-sized repair stations, and $7.318 million 

would be incurred by large repair stations. 

Using a 7 percent discount rate, the present value of the compliance cost would be 

$13.045 million, of which $1.738 million would be incurred by small repair stations, 

$4.699 million would be incurred by medium-sized repair stations, and $6.608 million 

would be incurred by large repair stations.

Using a 3 percent discount rate, the present value of the compliance cost would be 

$13.836 million, of which $1.852 million would be incurred by small repair stations, 

$4.987 million would be incurred by medium-sized repair stations, and $6.997 million 

would be incurred by large repair stations. 

TABLE 16

TOTAL AND PRESENT VALUES OF THE COMPLIANCE COSTS 

(2011 – 2020)

 

9 Table 16 sums Tables 12 and 14. 
28

(Millions of 2010 Dollars)

Repair Station Size Compliance Costs

Number of Employees Present Value

Total 7 Percent 3 Percent 

Small

1-10 $ 1.949 $ 1.738 $ 1.852

Medium $ 5.226 $ 4.699 $ 4.987

11-49 $ 3.136 $ 2.815 $ 2.990

50-99 $ 1.064 $ 0.959 $ 1.016

100-199 $ 1.026 $ 0.925 $ 0.981

Large

>199 $ 7.318 $ 6.608 $ 6.997

Total $14.493 $13.045 $13.836

II.H. COMPLIANCE COSTS BY PROVISION

As seen in Table 1710, the proposed repair station manual revision would account 

for about 88 percent of the estimated total compliance costs in both total costs and in 

present value costs at both 7 percent and 3 percent. 

TABLE 17

SUMMARY OF TOTAL AND PRESENT VALUES COMPLIANCE COSTS BY 

PROVISION 

(2011 – 2020)

(Millions of 2010 Dollars)

Compliance Costs

Present Value

PROVISION Total 7 Percent 3 Percent

RATING SYSTEM 

APPLICATION $ 1.624 $ 1.412 $ 1.524 

REPAIR STATION 

MANUAL REVISION $12.869 $11.633 $12.312

TOTAL $14.493 $13.045 $13.836

 

10 Table 17 sums Tables 12 and 14. 
29

III. BENEFITS

III.A. INTRODUCTION

The proposed rule would make the classification system current with today’s 

aviation technologies rather than with the 1940’s technologies, thereby enhancing the 

FAA’s supervisory authority and ability. It would also adopt the NTSB 

recommendations by preventing a repair station person in authority that has had its 

previous repair station privileges revoked from automatically receiving another FAA 

approval without further FAA investigation. The FAA believes that this proposed rule 

would enhance the overall safety of repair station operations. 

III.B. ABILITY TO DENY AN APPLICATION

Currently, the FAA must grant an application to every technically qualified 

applicant – regardless of previous conduct. This inability to refuse a technically qualified 

applicant was noted by the National Transportation Safety Board (NTSB) during its 

investigation of a January 24, 2003, accident in which a Beech 95 (Travelair) lost control 

shortly after takeoff after a 2 1⁄2-foot section of a blade separated from a propeller 

installed on the No. 2 engine. The resulting crash killed the pilot. The owner of the 

repair station (T&W Propellers) that had completed the maintenance on the propellers 

immediately before the flight, was also its chief inspector. This person had previously

been the chief inspector at another repair station, Southern California Propeller Service, 

Inc. (SCPS). The FAA had revoked SCPS’s repair station for performing improper 

maintenance and overhauls on aircraft propellers and, after issuing a special airworthiness 
30

information bulletin to owners to have these propellers re-inspected, found that 17 

propellers (40 percent of those re-inspected) were improperly overhauled by SCPS. In 

light of this, the NTSB issued its recommendation A-04-01 that the FAA

Issue a regulation, similar to 14 Code of Federal Regulations 119.39, that applies 

to applicants for a Part 145 repair station certificate, so the FAA can prevent 

individuals who have been associated with a previously revoked repair station 

from continuing to operate through a new repair station.

They also issued recommendation A-04-02 

If an air carrier, operating, or repair station certificate is surrendered prior to 

completion of an enforcement investigation that is based on charges that could be 

grounds for revocation, the FAA should nonetheless complete the investigation to 

the extent necessary to document all available facts relating to the fitness of the 

involved individuals; these facts should be made available to all FAA personnel 

responsible for granting a future air carrier, operating, or repair station certificate 

when considering the fitness of the applicant. 

This proposed requirement meets these two NTSB recommendations.

III.C. REVISED RATINGS SYSTEM

The proposed rating system would change the current system from one that 

reflected the reality of 1940s and 1950s aviation technology and construction to a system 

that reflects today’s technologies. Aviation has significantly changed and categories that 

made sense then are no longer appropriate. By revising these ratings, repair stations and 

the FAA would have a system that would more directly apply to the current and 

foreseeable future repair station industry. Further, the proposed rule would establish 

criteria for the FAA to uniformly interpret and enforce the requirements across its offices. 

Although the FAA cannot quantify those potential benefits, we believe that they would 

occur. 
31

III.D. CAPABILITIES LIST

As discussed in the NPRM, a repair station currently using a capabilities list can 

add “as needed” work as well as to add or change capabilities after a self evaluation 

without awaiting FAA approval. However, these additions are reported only to the local 

FAA. By requiring that these changes be reported on an automated form, the FAA would 

have national data concerning which repair stations are performing specific types of 

repairs and maintenance – information that is now difficult to obtain. 

 
32

IV. COMPARISON OF COSTS AND BENEFITS

The total costs of this proposal would be relatively small ($14.493 million over a 

10-year period, spread amongst approximately 5,000 repair stations), but it is difficult to 

quantify the benefits. We believe, however, that the potential benefits, which derive in 

part from (1) giving the FAA authority to (a) deny a repair station certificate to an 

applicant whose past performance resulted in a revocation, and (b) revoke all FAA-issued 

certificates held by any person who makes fraudulent or intentionally false entries or 

records; (2) defining what operations specifications consist of and providing a welldefined process for both industry and the FAA to amend them; and (3) updating the 

ratings system, justify the costs of the proposed rule. 

The current rule provides that, with certain unrelated restrictions, an applicant 

who meets the requirements of the rule is entitled to a repair station certificate regardless 

of any past regulatory non-compliance issues. The NTSB recommends, and the FAA 

agrees, that repair station applicant past performance should be a consideration, as is 

currently the case with air carrier applicants. We also believe the current rating system, 

dating to the 1930’s and 1940’s, hampers the FAA’s ability to appropriately rate repair 

stations and impedes a repair station’s ability to accurately describe the work it performs. 

The repair station community and the FAA have struggled, and continue to struggle, with 

the application of current technology and business practices in an antiquated rule. The 

proposed rule would accommodate current technology and provide language to 

accommodate future technological development. With total present-value costs over a 

ten-year period of $14.493 million, this rule would be cost-beneficial if it prevents 

accidents that would result in at least three fatalities over 10 years. The FAA believes 
33

that one or more accidents are likely to occur during that period and that this rule is 

necessary to prevent them. If this proposed provision had been in place prior to the 

accident described above, the FAA would have denied the repair station certificate 

application, and the faulty propeller maintenance would not have occurred―thus, neither 

would the accident.