ValuJet, if it flies again,
will be smaller and poorer
June 20, 1996
Web posted at: 12:15 a.m. EDTFrom Correspondent Carl Rochelle
WASHINGTON (CNN) -- ValuJet, the Atlanta-based airline grounded Tuesday by the Federal Aviation Administration, may fly again. However, according to documents obtained Wednesday by CNN, it will resume business poorer and substantially smaller.
As part of a consent order signed by ValuJet, the airline has agreed to pay $2 million to the FAA to cover the cost of inspections and enforcement of the order. If ValuJet flies again, it will be limited initially to using only 15 of the more than 50 DC-9 jetliners it had in service before the crash.
The FAA has been conducting investigations into ValuJet's safety since February, prompted by the discovery of a number of regulatory violations by the airline in the past year. The investigations intensified after the May 11 crash of ValuJet Flight 592 into the Florida Everglades. All 110 people on board that flight died.
In making its case against ValuJet, the FAA listed 34 different problems found with the carrier, including work signed off but not performed and safety problems discovered but not fixed. That led the FAA to allege 14 specific violations of federal aviation regulations. Most of the violations concerned inspection, maintenance and record keeping by the airline.
The consent order also outlined the specific steps that ValuJet must take before it resumes operation.
Four thousand ValuJet employees attended a private town meeting in Atlanta Wednesday, and were told that all should still have their jobs once the airline resumes flights. Lewis Jordan, the president of ValuJet, told the meeting that that the company would work with the FAA to "aggressively bring this company back as fast as we can."
"I was asked as I walked through the door this morning, whether it was my plan to have all 4,000 back," he said. "My answer was, yes, and more."
But even if the airline gets its jobs back, the more serious challenge might be to get its customers back. Analysts say cheap fares will help.
"When things finally quiet down, I think the flying public is going to be looking again for the $59 fares again, and so we'll be seeing them returning to ValuJet. They're going to give it a shot and I think they can come back," said Edmund Pinto of Aviation Daily.
But those low fares may be tough to maintain if the FAA forces ValuJet to implement more costly operating practices. "If you look at ValuJet being shut down, that's as much for the FAA's benefit as it is for ValuJet's," said the Aviation Foundation's Darryl Jenkins.
"I mean, the bottom line is FAA doesn't have a clue how to manage or regulate an airline like ValuJet, and basically, ValuJet was shut down to give the FAA some time to learn," he said.
ValuJet was able to offer cheap fares because its operating costs were low. Borrowing a term from video games, some describe ValuJet as a "virtual airline." The company controls the planes and the manpower, but farms out much of its maintenance to subcontractors. In contrast, traditional airlines pay for large in-house maintenance and training operations.
SabreTech Inc., one of ValuJet's maintenance contractors, admitted Wednesday that two of its employees had failed to put safety caps for shipping a number of oxygen-generating canisters that could have contributed to the crash of Flight 592. They falsified paperwork indicating that the shipping caps had been put in place.
However the FAA's new attempt to regulate ValuJet proceeds, it will be difficult for anyone to duplicate the company's amazing growth. If other virtual airlines are forced to assume new costs of added FAA oversight, the cost of doing so could wipe out most of the savings that made ValuJet such a successful startup.
Related stories:
- Two unsung heroes of the ValuJet search resume their routines - June 20, 1996
- ValuJet Time Line
- ValuJet crash coverage
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