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A Florida pilot's whistleblower lawsuit illustrates the cost pressures in the regional flying industry
By Caroline Salas
(Bloomberg)—On the evening of Dec. 10, 2007, pilot Kenny Edwards got the order to fly a Continental Airlines Inc. (CAL) commuter flight from Tampa, Florida, to West Palm Beach. He told his dispatch supervisor he wouldn't do it.
The plane's collision avoidance system was broken, and a worn seal around the main cabin door made it difficult to maintain air pressurization above 10,000 feet, he told his bosses.
Gulfstream International Airlines Inc. (GIA), which operated the Continental flight, ordered Edwards to fly the 19-passenger Beechcraft 1900D turboprop plane anyway, Edwards says. He refused. As a result, he was fired.
Edwards filed a complaint with the Federal Aviation Administration, bringing into focus the hidden dangers of flying on regional airlines, which account for half of all scheduled passenger flights in the U.S., Bloomberg Markets magazine reported.
In May 2009, the FAA found that Gulfstream had violated multiple regulations; it proposed a $1.3 million fine. Gulfstream is appealing the penalty, which would be the largest ever for a regional, says FAA spokeswoman Alison Duquette.
FAA inspectors found that Fort Lauderdale-based Gulfstream put planes in the air even after the company's own staff had repeatedly reported malfunctions in the aircraft.
Gulfstream crews documented seven times in a month that one turboprop had faulty landing gear; eventually that plane touched down without wheels under its nose, on its belly. Gulfstream also scheduled crew members to work more hours than allowed, according to the FAA.
And the airline had installed automotive parts not certified by the FAA for use in airplanes. Edwards, 44, has sued Gulfstream (which isn't related to business jet manufacturer Gulfstream Aerospace Corp.) under a Florida whistle-blower law, alleging the company retaliated against him by firing him.
"They were trying to force pilots to fly airplanes that weren't in any condition to fly,'" Edwards says. "They did everything to cut costs, and they seemed to be crossing a line to where it was not safe."
Edwards's concerns resonate across the U.S. for millions of people who fly regional airlines every year for business and pleasure. Companies like Gulfstream run the fleets that Delta Air Lines Inc. (DAL), UAL Corp.'s United Airlines (UAUA), Continental and most other majors use for commuter flights.
Continental Flight 3407, operated by Colgan Air Inc., crashed in icy weather on Feb. 12, 2009, outside of Buffalo, New York, killing all 49 people on board and one person on the ground.
The plane's captain had been trained by Gulfstream, which also has an aviation school known as Gulfstream Academy. The pilot and his first officer may have erred in responding to a stall warning by pulling up the nose of the plane rather than pointing it down to increase speed, the National Transportation Safety Board found.
Gulfstream also trained the co-pilot on the last fatal commercial airline flight before the Continental crash. That involved a Delta commuter plane, operated by Comair Inc., which used the wrong runway in Lexington, Kentucky, in August 2006, killing 49 people.
Gulfstream also previously employed the two pilots who crashed a Pinnacle Airlines Inc. (PNCL) plane with no passengers after deciding to fly at their jet's maximum altitude to have fun, the NTSB found. They crashed and died in Jefferson City, Missouri, in October 2004. The first officer attended Gulfstream Academy, according to the NTSB.
Gulfstream Chief Executive Officer David Hackett says it's just a coincidence that the crashes were piloted by graduates from the company's academy.
"The analogy we like to use is: You're 25 years old; you had a car accident; who taught you to drive at 16?" Hackett says.
Pilots for regionals are often less experienced than those who fly for the majors and are forced to work more-grueling schedules, says U.S. Senator Mark Begich, a Democrat from Alaska who sits on the Aviation Subcommittee of the Senate Commerce Committee.
Regional companies handled more than 158 million passengers in 2008, according to the Washington-based Regional Airline Association. Regional flights usually bear the names of their major airline partners.
That leaves many passengers unaware that the planes they fly on—and the pilots who command them—may not match the safety standards of the airline whose name they see on their tickets, Begich says.
The last five fatal crashes of commercial passenger carriers in the U.S. involved planes operated by regional airlines, according to the NTSB.
Major airlines contract out to regionals to lower their expenses by getting around union agreements, says Captain Paul Rice, first vice president of the Air Line Pilots Association, the world's largest pilot union, with about 53,000 members.
"The way the industry is structured is that management will go out and find a new airline and start siphoning off the business to whoever will fly for cheaper," says Rice, 52, a pilot at United for 23 years.
"The American public is only just starting to wake up to that," Rice says. "What they are buying is the lowest-cost operation that's available."
Guaranteed Cockpit Time
Pilots, mechanics and crew schedulers say Gulfstream International doesn't want to hear complaints about safety. Founded in 1988 as a charter airline, Gulfstream now flies commuter planes for Continental and United, mostly in Florida and the Bahamas. Gulfstream has never had a fatal accident.
Pilots say Gulfstream has an unhealthy relationship between its airline and its flight school. Gulfstream's training program is different from others, because it guarantees students time as a first officer, the No. 2 position in the cockpit, flying passengers for its own airline, Gulfstream says on its Web site.
"We offer the fastest possible transition to the 'Right Seat' of a commercial airliner," Gulfstream says.
For $32,699, students get 522 hours of training—including 250 hours as a first officer for Gulfstream International Airlines. That means student pilots are paying Gulfstream for the privilege of flying as first officers.
"Gulfstream is selling the job," says Charlie Preusser, a regional airline pilot who flew for Manassas, Virginia-based Colgan Air. "When you've got a guy fronting the cash, there's a lot of pressure on the company to keep him onboard no matter how bad he is."
Gulfstream CEO Hackett says all of the airline's first officers meet FAA standards to fly a commercial airline.
Gulfstream International Group Inc., the parent of both the airline and the flight school, went public in December 2007.
Its share price dropped 21 percent in the week following the May 21, 2009, FAA-proposed fine. The stock has tumbled a total of 51 percent to $1.42 as of Dec. 29. In the four quarters ending September 30, 2009, the company reported $6.5 million in losses, with $88.7 million in revenue.
Gulfstream's initial public offering was underwritten by Taglich Brothers Inc., a New York brokerage that publishes research on 31 companies with market values of less than $250 million. Michael Taglich, president and chairman of the firm, is Gulfstream's largest individual shareholder, regulatory filings show.
"Gulfstream didn't do anything materially wrong, and I'm confident that there's no material substance to the FAA allegations," Taglich says.
Taglich Brothers, the only company that rates Gulfstream stock, downgraded its recommendation on the shares to "neutral" from "speculative buy" in June because of the proposed FAA penalty.
In October, the U.S. House of Representatives voted to toughen training requirements so that an airline pilot would need 1,500 flight hours, up from 250 currently. The Senate hasn't yet voted on that measure.
"It's clear there's a difference between the major airlines and the regionals," Senator Begich says. "It's bad business and bad safety procedure for the majors not to understand that whatever standards they're living by, they should have the same standards for their regionals."
One of the FAA's top priorities is making performance consistent across major and regional airlines, says spokeswoman Duquette.
"We definitely acknowledge there needs to be a greater level of professionalism," she says of regional airlines.
On June 15, the FAA asked airlines in the U.S. for written commitments showing they've started or planned accident- prevention programs; 98 percent have done so, the FAA said in October.
Roger Cohen, president of the Regional Airline Association, says the more than 30 companies he represents follow all federal regulations.
"There is no gap between major airlines and regionals on safety because it is the No. 1 priority and the same for every airline," he says. The association opposes raising minimum flight hours to 1,500 because that could discourage people from becoming pilots, Cohen says.
The major airlines say they trust their regional counterparts.
"Safety is Continental Airlines' top priority, and we expect the same from our partners," spokeswoman Julie King says. She declined to comment on Continental's affiliation with Gulfstream.
United Airlines spokeswoman Megan McCarthy says, "All of our regional airline partners meet FAA and United's own high standards." US Airways Group Inc. (RJET) spokeswoman Valerie Wunder declined to comment. Delta Air Lines spokeswoman Betsy Talton didn't return calls for comment.
The majors don't typically hire pilots straight out of flight school. Pilots usually get experience at regionals first and have accumulated about 4,000 hours of flight experience before they're hired by the large airlines, according to the Bureau of Labor Statistics.
Regional airlines pay pilots annual salaries as low as $18,264, according to Kit Darby, a retired United Airlines captain who's now a consultant and flight instructor in Atlanta. That salary level was below the official poverty line of $21,834 for a family of four in 2008, according to the U.S. Census Bureau.
Pilots endure the low pay for the promise of six-figure salaries at the major airlines, says Darby, who has testified in civil cases for both defendants and plaintiffs as an expert on pilot hiring and compensation.
Pilots for regionals frequently commute across the U.S. for flights because they can't afford to live near the airports where they're based, Darby says.
Before operating a plane, they often sleep in crew lounges or at so-called crash pads, temporary apartments where as many as six pilots share a bedroom. Former Colgan pilot Preusser lived full time in a crash pad in Albany, New York, in 2007.
He says he slept on an air mattress and shared a room with three or four people. One pilot slept in a walk-in closet, he says. Many regional pilots can't afford meals and keep track of which hotels offer free continental breakfasts, Preusser says.
Preusser says he remembers falling asleep in the cockpit while piloting a 50-seat Embraer RJ145. He had been on standby and was assigned at the last minute to fly a 7 p.m. flight from Dallas to Cincinnati.
'It's Very Scary'
The next day, he started at 5 a.m. and flew three more flights. On the final trip that day, he dozed off for a few seconds.
"That adds up to: Let's just play Russian roulette with air traffic safety," Preusser says. "In the pilot world, being aware of your environment and what the airplane is doing is absolutely requisite. You're not fully conscious or even conscious at all and then you snap to, and it's very scary."
John Nance, a retired Air Force pilot who also flew for Alaska Airlines (ALK) and has about 40 years of flying experience, says airlines are closing their eyes to issues of training, pay and living conditions among regional pilots.
"This business of see no evil, hear no evil doesn't cut it," says Nance, who's testified for both plaintiffs and defendants in civil cases as an expert on air safety. "It is totally unacceptable legally, morally, ethically for any airline leadership to pretend they don't know what they know."
At Gulfstream Training Academy in Fort Lauderdale, the company tells prospective students that the school will teach them all they need to know about being commercial pilots.
"Jump-start your airline pilot career," the academy says on its Web site. "Fly safe, fly smart, fly Gulfstream."
The aviation school is about five miles (eight kilometers) from the Atlantic coast, and its campus is peppered with palm trees. Former Gulfstream pilot Edwards, who says the academy trained him well, says students would study sitting by the ocean.
"We would go to the beach and sit there in chairs on the sand and quiz each other," he says.
Gulfstream pays its new first officers $19.01 an hour to fly. Before September, the trainee first officers were paid $8 an hour.
"I'll stack our training program against any in the industry," says Hackett, 48, a former director of financial planning at Continental who joined Gulfstream in 2003 and became CEO in 2006.
Dan Brisco, a licensed pilot who spent 18 months as the lead mechanic at Gulfstream's Tampa base until the end of 2007, says Gulfstream Airlines is more concerned with cutting expenses than in focusing on safety.
Brisco says Gulfstream routinely flew passengers on planes with broken parts, including wheels and landing gear.
"They push the airplanes out in whatever condition they're in," says Brisco, 51, who has more than 20 years of experience as an airline mechanic. "Unless they physically stop running, they're not going to get any maintenance."
Brisco says he left Gulfstream in 2007 after he repeatedly complained to his supervisor that the company's operations were unsafe. He has since spoken with the FAA.
Gulfstream spokesman Bruce Hicks says Brisco never complained about safety issues.
When the FAA announced its proposed $1.3 million fine of Gulfstream in May 2009, the agency said the airline had installed unapproved air-conditioner compressors in its planes between September 2006 and May 2008.
Gulfstream has 23 Beechcraft 1900D turboprops, according to a Nov. 16, 2009, regulatory filing. Gulfstream bought automotive air-conditioner parts for its aircraft and modified them to use in planes, an FAA inspector found.
Such equipment isn't certified for use on aircraft, the inspector wrote. Brisco says the danger of using non-FAA certified parts is that they could explode because they may not be able to withstand extreme temperature and air pressure changes.
FAA inspectors found that crews had repeatedly reported several malfunctioning parts on airplanes, including vapor cycle systems.
The FAA hasn't yet collected the fine. FAA spokeswoman Laura Brown says she can't comment on Gulfstream because the agency is in the middle of an enforcement action.
The agency hasn't publicly released its inspectors' reports. Former Gulfstream pilot Edwards obtained them through a Freedom of Information Act request.
No Safety Issue
Hackett says his company bought the same parts that are in FAA-approved air conditioners to make repairs that met FAA standards, so there was no safety issue.
"We believe what we did is correct," he says. After the FAA inspection, Gulfstream replaced the parts with FAA-approved compressors.
Brisco says he remembers in May 2007 when the landing gear for the nose of a plane didn't come down when arriving in Tampa. The plane landed on its belly and had to be evacuated on the runway, a risky maneuver that could have resulted in death or injuries, Brisco says.
Pilots had been complaining for several days that the gear wasn't working properly, and mechanics were signing off on the safety of the aircraft without fixing it, Brisco says.
The FAA's Service Difficulty Record database documents that May 11, 2007, landing. The files show that the pilots shut down one of the plane's engines at an altitude of 1,000 feet (305 meters) and turned off the second engine before touching the ground.
Six More Reports
There were six other reports filed in the previous month about the landing gear malfunctioning on that same plane.
Gulfstream spokesman Hicks says the landing gear was a manufacturer's shortcoming, not a maintenance issue. He says Gulfstream's maintenance program has received the FAA's diamond certificate of excellence for 13 consecutive years, including 2008.
That distinction is based solely on the number of hours personnel spend in training, says the FAA's Duquette.
Gulfstream pushes fledgling pilots to fly for more hours in a day than the FAA allows, says Mary Hebig, who was a crew scheduler at Gulfstream from 2005 to 2007.
Hebig, 64, says she quit because she didn't want to be responsible for scheduling pilots who were flying while fatigued and on unsafe aircraft.
'Like Their Mother'
"I just felt like their mother," Hebig says. "Some of these kids are so young, and they want to do the right thing. They come out of the academy, and everyone is telling them, 'You gotta suck up to Gulfstream, do what they say.' These poor kids are brainwashed from the time they hit the street."
Hackett says Hebig doesn't understand FAA rules on flying hours.
Hebig, who worked the night shift, says she remembers seeing firetrucks in October 2006 surround an aircraft that took off from Fort Lauderdale and made an emergency return after an engine failed in flight.
"Thank God everybody made it back OK," she said. "Two days later, the same aircraft went out of Fort Lauderdale again and had another return with the same engine and same result."
Gulfstream fixed the engine after its second failure, she says.
"We train our pilots to be overly cautious," Hackett says. "I'm not saying it's an everyday matter, but sometimes engines don't always work perfectly."
When the FAA announced its fine in May, it said Gulfstream hadn't properly entered pilot flying hours from its manual, hard-copy logbooks into its computers. As a result, crew members flew more hours than the