Some air carriers 'insourcing' work — to companies in U.S.
By Sara Kehaulani Goo
Washington Post
Northwest Airlines is gutting two hangars at Minneapolis-St. Paul International Airport because the standard work of overhauling the airline's 747 fleet has moved to Asia.
Air China, meanwhile, is sending its planes to San Francisco for high-tech engine work by United Airlines mechanics.
U.S. carriers have outsourced thousands of maintenance jobs. At the same time, however, some have stepped up efforts to bring maintenance work into their shops. The major carriers are "insourcing" work from domestic low-cost carriers that don't have their own maintenance crews and from airlines based in China, South Korea, Canada and elsewhere.
The aircraft maintenance industry is "a classic manifestation of globalization," said Martin Baily, senior fellow at the Institute for International Economics. "Labor-intensive, somewhat less technically sophisticated stuff goes overseas, but more high-tech, leading-edge stuff would remain in the U.S. Maybe the U.S. even has a comparative advantage."
Delta Air Lines' insourcing includes repair work on engines for Atlantic Southeast Airlines and Comair at Delta's hub in Atlanta. Its revenue from such work has increased, to $200 million last year from $40 million in 1999.
American Airlines recently signed a contract giving it the option to repair Rolls-Royce aircraft engines for other airlines. United does maintenance work for Air China, Korean Air, Air Canada and the U.S. military.
"We make a high profit margin on engine overhauls and landing gear," said Joseph Prisco, president of Local 9 of the Aircraft Mechanics Fraternal Association, which represents mechanics at United Airlines. "Air China sends a lot of their engine overhaul work to us. The costs are probably more expensive per head, but we do a faster job and better job than they can get done in their own country."
Globally, the business of repairing or overhauling airplanes is expected to grow to more than $50 billion by 2013, from $35 billion today.
Insourcing helps keep some airline employees busy and modestly bolsters the carriers' bottom line. "Through the bankruptcy process, one of the things we are trying to do is become more efficient — to look at what we can do profitably and what we can't," United Airlines spokesman Jeff Green said.
But the global trends haven't blunted the pain felt by the mechanics affected by outsourcing.
Since the Sept. 11, 2001, terrorist attacks, the U.S. aviation industry has slumped, forcing carriers to reduce costs and lay off thousands of workers. Airlines have shut down huge maintenance facilities in cities such as Oakland and Indianapolis and reconfigured hangars at Minneapolis-St. Paul. Employees who managed to keep their jobs were forced to take pay cuts — in some cases, several times.
Northwest, Continental, FedEx Corp. and United Parcel Service Inc. outsource so-called heavy checks, which are required when planes reach a certain age, to Asia. The heavy checks are more labor-intensive because they require an entire strip-down of the aircraft and repair or replacement of major components. Lower pay in Asia makes the work more affordable.
"They have no intentions of bringing that heavy work back in," said Jim Atkinson, president of AMFA Local 33 at Northwest Airlines in Minneapolis. "It's very disturbing for me that hundreds of millions of dollars are supporting China and Singapore's economy."
