U.S. Department of Transportation

**FEDERAL AVIATION ADMINISTRATION** 



# REGULATORY EVALUATION

Air Carrier Contract Maintenance Requirements

**NOTICE OF PROPOSED RULEMA KING**  **(14 CFR P AR**  **T S**  **12 1**  **, A ND 135**  **)** Office of Aviation Policy and Plans Re gulat ory Analysis, APO - 30 0

June , 2012**TABLE OF CONTENTS**

**Section Page No.**  Executive Summary
................................ ................................ ................................ . i I. Assumptions
................................ ................................ ................................ ............ 1 I I. Benefits
................................ ................................ ................................ ................... 2 III. Costs
................................ ................................ ................................ ........................ 3 A
. Air Carrier Costs
................................ ................................ ............................... 3 B
. FAA Costs
................................ ................................ ................................ ......... 5 IV
. Comparison of Benefits and Costs
................................ ................................ .......... 7i **EXECUTIVE SUMMARY**

This rulemaking would propose requirements for part 121 and for part 135 (with aircraft ty pe certificated for a passenger seating configuration of 10 seats or more) air carriers to develop policies, procedures, methods, and instr uctions for accomplishing contract maintenance that are acceptable to the FAA and to include them in their maintenance manuals. Each operator also would be required to provide to its local FAA Certificate Holding District Office a list that includes the n ame and address of each maintenance provider it uses and a description of the ty pe of maintenance that would be performed.
This proposed rule would assist the FAA in its oversight responsibilities and ensure consistency

between contract and in
- house air carrier maintenance. Over 10 y ears, the cost to part 121 and part 135 (with aircraft t ype certificated for a passenger seating configuration of 10 seats or more) air carriers and the FAA would be approximately $ 2. 4 million ($ 1.6 million , present value at 7 %) . The FAA believes these benefits have value exceeding the costs.1

I
. Assumptions

 The rule is expected to take effect in 2014 . The time horizon for these pote ntial benefits is 10 y ears, 2014 through 2023
.
 All monetary

values were expressed in constant 2011 dollars. We calculated the present value of the potential benefit stream b y discounting the monetary values using a 7 percent interest rate from 2014 to 2023
.
 The FAA identified 301 part 121 and part 135 ( with aircraft ty pe certificated for a passe nger seating configuration of 10 seats or more) ai r carriers that would be affected b y this proposed rule.

 We use the following costs per hour as the burdened wage rates for this evaluation.

Unb urden ed Burden

ed Man ag er $41.34 $69.78 Te ch nic al w ri te r $21.78 $36.76 Ed itor $25.74 $43.45 Au di to r $29.50 $49.79 FA A ins pector $56.96 $96.14 So ur ce fo r u nburdened ra tes e xc ept fo r t he FA A In sp ector ra te: h ttp: //w

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ates

Once the wage rates are established, to assess the incremental cost to society , we burden the mean wages with fringe benefits and overhead to calculate the actual employ er costs of employ ee compensation.2

I I . Benefits This proposed rule would ensure consistency between contract and in
- house air carrier maintenance and assist the FAA in its oversight responsibilities. The DOT IG reports placed much emphasis on the need for improved FAA oversight of air carrier contract maintenance. In order for the FAA to better be able to provide this oversight, the IG, in 2003, recommended the agency develop a means to identify repair stations that perform maintenance for air carriers.
In accord with the IG’s recommendations, we are proposing this rule so the FAA would have a dedicated and readily

available list in an acceptable fo rmat of all air carrier contract maintenance providers. These lists would be useful for purposes of FAA anal ys is and oversight of both the air carriers that contract portions of their maintenance and their maintenance providers.
Although the IG reports d iscussed earlier dealt primarily with maintenance conducted for part 121 certificate holders, the FAA has found similar problems with maintenance providers not following the maintenance programs of certificate holders conducting commuter and on
- demand oper ations with aircraft ty pe certificated for a passenger seating configuration, excluding any pilot seat, of ten seats or more under part 135 . In a similar vein, the FAA has also found that some of these operators conduct insufficient oversight of their ma intenance providers. Even before the passage of Public L aw 112
- 95 in February 2012, the FAA was planning to propose rules for both part 121 and 135 certificate holders that would require additional procedures and oversight to help ensure that the certifi cate holders’ manuals would be followed by outside maintenance providers. The statute mandates new requirements for part 121 certificate holders, including that they

be directly

in charge of what it defines as “covered work.” Because the FAA3

has observ ed the same t ypes of lapses with maintenance performed for part 135 certificate holders, we are proposing the same requirements for these operators. The FAA believes that b y requiring part 135 certificate holders to adopt the new part 121 statutory requ irements, a higher level of safety

would be achieved.

III . Costs From 2014 to 2023 , the cost to part 121 and part 135 (with aircraft t ype certificated for a passenger seating configuration of 10 seats or more) air carriers and the FAA would be approximate ly

$ 2. 4 million ($ 1.6 million , present value) , as shown in Table 2
.

Ye ars Ai

r Carr ie rs Cost s FA

A Cos ts To ta l Co sts Presen t Va lu e Cos ts 2014 $616,569 $28,939 $645,507 $526,926 2015 $192,420 $0 $192,420 $146,797 2016 $192,420 $0 $192,420 $137,193 2017 $192,420 $0 $192,420 $128,218 2018 $192,420 $0 $192,420 $119,830 2019 $192,420 $0 $192,420 $111,990 2020 $192,420 $0 $192,420 $104,664 2021 $192,420 $0 $192,420 $97,817 2022 $192,420 $0 $192,420 $91,417 2023 $192,420 $0 $192,420 $85,437 2014- 2023 $2,348,351 $28,939 $2,377,290 $1,550,288 So urce: U.S. De par

tm ent of T ra ns por

tation, Fe deral

A viation Adm

in is tration. Ta bl e 2. C osts of

t he Proposed R

ule

A
. Air Carrier Costs The proposed rule would require that the air carrier’s manual has all the policies, procedures , methods, and instructions for the accomplishment of maintenance b y another person to inc lude the information necessary for certificate holders to ensure all maintenance is performed in4

accordance with its maintenance program. The proposed rule would also require that the air carrier provides and maintains a list with th e name and address of each maintenance provider used and the t ype of maintenance that is to be performed. We estimate that 94 part 121 air carriers would have to revise their manuals and provide the list . To revise each manual , we estimate a manager woul d need 4 hours, a technical writer would need 40 hours, and an editor would need 2 hours. To provide the list, we estimate a manager would need 1 hour, a technical writer would need 3 hours, and an auditor would need 10 hours. To maintain and update the list, we estimate a manager would need 6 hours per y ear and a technical writer would also need 6 hours per ye ar. The manager ’s loaded salary expressed as an hourl y wage rate is estimated to be $ 69.78 per hour; the technical writer ’s hourl y rate with be nefits is estimated to be $ 36.76 per hour; the editor’s hourl y rate with benefits is estimated to be $43.45 per hour; and the au ditor ’s hourly rate with benefits is estimated to be $ 49.79 per hour. The FAA estimates that for part 121 air carriers the cost of revising the manuals , providing the list , and maintaining and updating the list would be about $837 thousand ( $ 562 thousand present value at 7%) as presented in Table 3
.

Af fe cted ai r carri ers Ave rag

e cost to re vis e m an ua l Av erag e cost to prov id e l is t Ave ra ge to maintai n an d up date l is t To ta l Cos t Presen t Val ue Cos ts 2014 94 $1,837 $678 $639 $296,454 $241,995 2015 $639 $60,091 $45,843 2016 $639 $60,091 $42,844 2017 $639 $60,091 $40,041 2018 $639 $60,091 $37,422 2019 $639 $60,091 $34,974 2020 $639 $60,091 $32,686 2021 $639 $60,091 $30,547 2022 $639 $60,091 $28,549 2023 $639 $60,091 $26,681 2014- 2023 $837,277 $561,583 Ta bl e 3. Part 121 Air Car ri er C osts5

We estimate that 207 part 135 (with aircraft ty pe certificated for a passenger se ating configuration of 10 seats or more) air carriers would revi se their manuals and provide the list
. For these smaller operators we expect the manager would complete the manual revisions by himself or herself and provide the list
. To revise each manual , we estimate a manager would need 8 hours. To provide the list, we estimate a manager would need 5 hours. To maintain and update the list, we estimate a manager would need 6 hours per ye ar and a technical writer would also need 6 hours per y ear. The manager’s loaded salary expressed as an hourly

wag e rate is estimated to be $69.78 per hour and the technical writer’s hourl y rate with benefits is estimated to be $36.76 per hour . The FAA estimates that for part 135 air carriers the cost of revising the
manua ls , providing the list , and maintaining and updating the list would be about $1.5 million ( $1.0 million present value at 7%) as detailed in Table 4.

Af fe ct ed ai r carri ers Av

erage cost to re vis e m an ua l Av erage cost to prov id e l is t Ave rag

e to maintai n an d up date l is t To ta l Cost Presen t Val ue Cos ts 2014 207 $558 $349 $639 $320,114 $261,309 2015 $639 $132,329 $100,953 2016 $639 $132,329 $94,349 2017 $639 $132,329 $88,176 2018 $639 $132,329 $82,408 2019 $639 $132,329 $77,017 2020 $639 $132,329 $71,978 2021 $639 $132,329 $67,269 2022 $639 $132,329 $62,869 2023 $639 $132,329 $58,756 2014- 2023 $1,511,074 $965,083 Ta bl e 4. Part 135 Air C ar ri er C os ts

B. FAA Costs The FAA has to ensure that the air carrier’s manual has all the policies, procedures , me thods, and instructions for the accomplishment of maintenance b y another person to include the information necessary for certificate holders to ensure all maintenance is performed in accordance with its6

maintenance program. We estimate that 94 part 121 a ir carriers would revise their manuals. To
ensur e that each manual was revised, we estimate an FAA inspec tor would need 1 hour at a loaded salary of $96.14 per hour
. The FAA estimates that for part 121 air carriers the cost of ensuring the manuals were r evised w ould be about $9 thousand ($7 thousand present value at 7%) as identified in Table 5
.

Table 5. Part 121 FAA Costs # of Part 121 manuals that were revised by the air carrier Average cost

to ensure a Part 121 manual was revised Costs Present

Value Costs 2014 94 $96 $9,037 $7,377 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014
- 2023 $9,037 $7,377

We estimate that 207 part 135 (with aircraft ty pe certificated for a passenger seating configuration of 10 seats or more) air carriers would revise their manuals. To ensur e that each
m anual was revised, we estimat e an FAA inspector would need 1 hour at a loaded salary of $96. 14 per hour
. The FAA estimates that for part 135 air carriers the cost of ensuring the manuals were revised would be about $2 0 thousand ( $16 thousand present value at 7%), as presented in Table 6.7 # of Par t 135 m an ua ls th at were rev is ed by th e ai r carri er Ave rag

e cost to en su re a Part 135 ma nua l wa s rev

is ed Costs Presen t Va lue C osts 2014 207 $96 $19,901 $16,245 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014- 2023 $19,901 $16,245

Ta bl e 6. Part 135 FA A Co sts

IV . Comparison of Benefits and Costs This proposed rule would ensure consistency between contract and in
- house air carrier maintenance and assist the FAA in its oversight responsibilities.
In accord with the IG’s recommendations, we are proposing this rule so the FAA would have a dedicated and readily

availa ble list in an acceptable format of all air carrier contract maintenance providers. These lists would be useful for purposes of FAA anal ys is and oversight of both the air carriers that contract portions of their maintenance and their maintenance providers
. Although the IG reports discussed earlier dealt primarily with maintenance conducted for part 121 certificate holders, the FAA has found similar problems with maintenance providers not following the maintenance programs of certificate holders conducting commuter and on
- demand operations with aircraft ty pe certificated for a passenger seating configuration, excluding any8

pilot seat, of ten seats or more under part 135 . In a similar vein, the FAA has also found that some of these operators conduct insuff icient oversight of their maintenance providers. Even before the passage of Public L aw 112
- 95 in February 2012, the FAA was planning to propose rules for both part 121 and 135 certificate holders that would require additional procedures and oversight to help ensure that the certificate holders’ manuals would be followed by outside maintenance providers. The statute mandates new requirements for part 121 certificate holders, including that they

be directly

in charge of what it defines as “covered work.” Because the FAA has observed the same t ypes of lapses with maintenance performed for part 135 certificate holders, we are proposing the same requirements for these operators. The FAA believes that b y requiring part 135 certificate holders to adopt the new part 121 statutory requirements, a higher level of safety

would be achieved.

Over 10 ye ars, the cost to part 121 and part 135 (with aircraft t ype certificated for a passenger seating configuration of 10 seats or more) air carriers and the FAA would b e approximately $ 2.4 million ($ 1.6 million , present value at 7% ) . The FAA believes these benefits have value exceeding the costs.