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Southwest Agreed to Pay FAA for Inspector’s Time During Government Shutdown

Andy Pasztor
The Wall Street Journal

Earns Southwest Airlines

FILE- In this April 23, 2015, file photo, a Southwest Airlines jet takes off from a runway at Love Field in Dallas. Southwest Airlines reports financial results Thursday, April 21, 2016. (AP Photo/LM Otero, File)

Southwest Airlines Co. benefited from an unusual deal with federal aviation regulators during the recent partial government shutdown: The carrier agreed to cover the cost of briefly recalling a furloughed safety inspector to sign off on putting three new jets into service.

The arrangement, which hasn’t been reported before, called for a $3,150 payment and three hours of administrative office time, a Federal Aviation Administration spokesman said Tuesday. He also said that senior FAA officials issued the order after agency managers and lawyers struck the agreement and determined most of the work had been completed before the shutdown. The move complied with laws and regulations restricting agency functions while the budget impasse dragged on, he said.

Union officials complained that they weren’t consulted as required, and that the arrangement appeared to represent favorable treatment for Southwest at the expense of competitors.

The episode underscores how a big company with savvy lawyers and good agency connections was able to negotiate an agreement—before the furloughs kicked in—and shielded itself from the fallout of the partial shutdown. That occurred as federal employees and many government contractors scrambled to cope with delayed paychecks or missing payments.

Beyond aviation, some good government groups worry that disruptions stemming from furloughs may offer companies and wealthy individuals openings to obtain scarce services or special treatment. Robert Weissman, president of Public Citizen, said his organization already has gathered information about disparate agencies agreeing to keep employees on the job to favor mortgage bankers, operators of offshore oil wells and other companies. On Tuesday, he said some of the moves disregarded legal and historic precedents for determining essential agency functions. In recent cases, he said, such decisions often were “driven by political considerations to try to mask the effects from the public” or to give business interests special breaks.

Southwest, however, ended up having to wait until the partial shutdown ended to have FAA experts resume work on the carrier’s longstanding request to begin service to Hawaii from the West Coast.

Some other airlines tried to get a similar arrangement to the one granted to Southwest while FAA employees were furloughed, but failed to persuade the FAA to authorize quickly adding more aircraft to their officially designated fleets, according to industry and labor officials familiar with the details.

During the furloughs that ended this week, FAA inspectors that had been recalled to their jobs without pay were supposed to conduct—almost exclusively—oversight and other functions directly related to the agency’s core safety responsibilities.

“The FAA and Southwest entered into a reimbursable agreement to provide minimal time to complete aircraft certification services,” the agency spokesman wrote in an email. “These services were completed only after meeting immediate operational safety needs.”

The FAA reached the agreement with the airline as a pre-emptive measure before the partial shutdown began, according to the agency’s statement.

In an email Tuesday, a Southwest spokesman confirmed the carrier started discussions with the FAA as the shutdown loomed in order to add planes “so we could serve the public during the busy holiday season.”

The airline agreed to reimburse the agency for administrative costs while the government was partially closed, according to the statement, but so far it hasn’t received an invoice. The statement also said Southwest doesn’t know what other airlines requested from the agency.

The inspector picked by local FAA managers to add the three Boeing Co. 737 MAX jets to Southwest’s operating fleet of more than 700 jets was worried about his instructions and asked the union, the Professional Aviation Safety Specialists, for guidance, according to union officials. An internal union memo reviewed by The Wall Street Journal confirmed one plane was added effective Dec. 27, several days into the partial agency shutdown.

“I have never heard of anything like that before,” said Ray Morgan, a veteran FAA inspector and manager who serves as a union representative. The agreement between Southwest and high-level agency officials allowed the budget carrier “to get an advantage over the rest of the industry,” according to Mr. Morgan.

Under optimal circumstances, “you would hope other airlines would have been given the same opportunity,” said Alan Diehl, a safety expert and former U.S. government accident investigator. “It does smack of favoritism,” he said, adding the FAA should be more transparent in the event of future furloughs.

The FAA has a multitude of reimbursement agreements with companies, covering everything from airport upgrades to overseeing pilot-training schools to monitoring repair facilities overseas. But the latest Southwest activity was highly unusual because it was prompted by senior agency officials and came at a time when local FAA managers nationwide were warning inspectors to restrict their work to core safety matters.

Adding the three jets to its official fleet—after the inspector certified they were properly equipped—was intended to allow Southwest to start using them to fly passengers. Otherwise, the aircraft, each valued at about $60 million, would have sat idle until the budget stalemate ended some three weeks later.

Delta Air Lines Inc. postponed until Feb. 7 the debut of four new Airbus SE A220 aircraft because FAA inspectors weren’t available to officially add them to the carrier’s fleet, the company said. Agency officials had determined the extent of that effort would have exceeded the simple work performed for Southwest, according to a person familiar with the matter.

The Delta postponement came as airline officials explored whether they could find a way to fund the FAA inspectors’ work but the carrier ultimately didn’t pursue the option because it entailed legal and regulatory questions, a person familiar with the matter said.

On Tuesday, the FAA said it turned down requests from other carriers due to the initial lack of personnel, but as more employees were called back to work, some inspectors were able to perform certain lower-priority work for some of those carriers when time permitted.

During later phases of the partial federal shutdown, American Airlines Group Inc. was able to add four new aircraft to its officially registered fleet. But unlike Southwest, American said it didn’t agree to reimburse the FAA.

Andrew Tangel contributed to this article.

Write to Andy Pasztor at andy.pasztor@wsj.com



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