Interview: Mary E. Schiavo

So there you were, inspector general at DOT, a watchdog to the FAA. What was your perception of the FAA going in?

Going in, I thought it would be a love fest. I loved aviation; I was a pilot; I liked the FAA.

And when I went there, the urgent thing on the table was the Eastern Airlines investigation. Eastern had gone bad in a hurry. They were suspected of doing everything from bogus parts to pencil whipping -- literally duct-taping planes. They had all sorts of problems. And the Federal Aviation Administration seemed to be assisting them in giving them passes, letting them continue to fly, giving them exemptions and literally helping them limp through the skies.

And worst of all is they were under criminal investigation by the only entity, I think, that the FAA can't toy with, and that's the Federal Bureau of Investigation.

And eventually they were indicted on a 53-count indictment for pencil whipping their maintenance records, and it was a very serious offense. And that was my assignment, was to sort out what went wrong at the FAA over Eastern.

And the FAA allowed this to happen?

... The FAA certainly didn't put bogus parts on planes, ... but they did keep allowing them to struggle on when it was clear that they had problems. They continued to say: "Get better. Get better. Improve."

And then it went beyond that. Even as the FBI was pursuing a criminal case, the FAA was helping keep Eastern in the air.

And that behavior was repeated. We had another criminal case concerning maintenance facilities for TWA. It was a New York maintenance facility. We were ordered by the FBI not to tell the FAA about the investigation, because the FBI thought that they would blow it. Sure enough, the FBI was right. When the FAA found out, they actually approved some of the things that this contractor was doing and tried to say it was OK. ...

So what's your take on what was going on then and, for that matter, now?

Over the years, I've tried to dissect it so many times, and I wrote a book, trying to figure out how the FAA could go so far afield from what they should be doing.

And over the years, I've come to think that it really did stem from the way they started. They started in the Commerce Department, and their job was to promote airlines. I mean, they started at a time when people didn't fly. Unless you were a movie star or a singer, you may never have seen an airplane.

So their job was to promote aviation, and what they did is they protected carriers to keep them flying. And that was their job in the Commerce Department.

And then they were independent for a while, and they got very secretive, very protective and had an independent mind-set. So by the time they were lumped into the Department of Transportation, they really didn't have much to do with the DOT. They continued to think of themselves as an independent agency, and they continued to think of themselves as a partner -- language they still use in testifying on the Hill, for example to this day -- that they are a "partner," that the airlines are a "customer," and that they work hand in hand with the airlines to promote the economy of the carriers.

I think that's also part and parcel responsible for the security lapses of 9/11. The FAA just does not like to police. They're not good cops. They might be good cheerleaders, but they're terrible cops.

So who is the customer?

The customer is the airline, not the passenger.

That's the way it's supposed to be?

That's the way the FAA opines on their job. And they testified as recently as over the summer on the Hill and before Congress. They had extensive hearings in '08, where they kept using the term "customer" when they referred to airlines.

I want to be the customer; I'm paying for the FAA. We're paying for it, right?

Realistically, that's true. The passengers are the customers, because they're the ones who pay the taxes and the fees and the surcharges that go into the Federal Aviation Trust Fund that pays for the runways and air traffic control and airports. That's who pays, and that's who should be the customer.

Tell me more about the airline industry in the '90s. This was real explosive days for the regionals.

In the early '90s, the airlines were awash in red ink, and one of the things that they came up with is if they didn't have to pay such expensive union work salaries, and if they could push a lot of the feeder traffic down to regional carriers, develop more the spoke and hub and push down to the regional carriers, as much as they could traffic to cut their costs, then they could have a more profitable economic model. And the expensive captains would fly the long-haul, big rigs; and they would do this [part] through the regional carriers.

The trouble is the aircraft that regional carriers were flying were bad. They were flying things like ATRs, which are twin turboprops with very deficient de-icing boots. They were flying old Beeches. They were flying the Saabs and Dorniers and all sorts of turboprops, which really weren't very robust in icing. And icing caused a lot of the accidents.

They were also flying Brazilian planes called Bandeirantes, which had a problem with propellers. They had a number of things go wrong, not necessarily the same thing. Two of the accidents were icing; a couple of them were losing propellers on these Brazilian planes.

But from '91 to '94, they had a couple dozen accidents, and they lost about 75 people. In fact, in those years, they weren't called "regionals"; they were called "commuters." The commuter airlines had a fatality rate two to three times that of the commercial airlines.

And passengers didn't know who they were flying. On the side of the plane, it said "USAir"; it said "Continental"; it said "American." American had one of the worst crash records at the time. American Eagle had a number of crashes.

And so customers would get on the plane, thinking they were flying on aircraft with the same safety rules as American, United, Delta, Northwest, when, in fact, at that time, those airlines were allowed to fly under what was called Part 135, which is a section of the Federal Aviation Regulations which was much less strict and stringent than what's called Part 121, which is what the big carriers flew under.

But passengers didn't know that they were flying under rules that valued them two or three time less than the majors, and I say that through safety regulations.

So in 1994, the NTSB, the National Transportation Safety Board, really flexed its muscle to the extent it has any. It really can only ask the FAA to act.

Or plead.

Yeah, beg. And they said: "We need one level of safety. This is absurd. A passenger in Buffalo has every right to safety that a passenger in New York City does. So why do they get lesser rules?"

So finally, in March of 1997, it happened, and we went to what was called one level of safety, meaning any carrier that flew aircraft with 10 seats or more had to meet the same safety requirements of the big rigs -- which was called Part 121. You've got to have the same standards for crew; you've got to have the same standards on maintenance, on oversight, crew coordination, all sorts of things. And you were supposed to have one level of safety.

And it is a dramatic difference between those rules for the charter-type 135 vs. 125 for the big-league airlines, right?

A huge difference, especially in terms of things like training. Your pilot has to have a -- technically, they never got to this point, but you have to have an airline transport rating. You have to have specific rest requirements. You have to have crew coordination requirements. You have to have additional safety training. There was just a whole lot of things that you had to have that the commuters didn't.

And so what precipitated this?

It was the series of accidents. And I think what really helped set it apart was the majors didn't lose a lot of passengers, and the regionals did. So the difference in the safety rate was dramatic. There was a flight that went down with Sen. [John] Tower [R-Texas] on it. And that was one of the Bandeirantes that I was talking about. It's made by a manufacturer called Embraer, and they're in Brazil, and they had a problem with propellers. And the propellers would literally separate.

The fact that Sen. Tower was on it certainly got some attention, but there were a number of ones that were especially horrendous: the Roselawn ATR plane. There were a couple of other planes where they were really pushing the envelope.

Now, in that same time frame comes along ValuJet -- not a regional per se, but an upstart airline that was getting a lot of support from the FAA to get going. ...

ValuJet was a watershed event.

ValuJet, [which flew its first flight in 1993], for folks who don't remember it, was an upstart carrier flying very old equipment -- all DC-9s. Some of them they got from countries that didn't have FAA-approved maintenance certification, meaning the plane had been out of good maintenance oversight for a period of time. So they were flying junk is a good way to put it. Really ratty, old planes.

And they became a showpiece -- unfortunately for the administration at the time -- of lowered airfares, what deregulation and what allowing new entrants into the field could do to airfares.

And the ValuJet effect was where one of these new startup carriers would come into a market, it would decrease the fares, and it would increase competition. And that's the way it's supposed to work. But when you have new upstart carriers, obviously you want your FAA to be very strong. You want to put your strongest inspectors on the weakest link.

When someone comes into the aviation market with planes from another country that are in bad shape, with pilots who had to pay for their own training, with crew, support personnel who in many cases were leased from temp agencies -- everything was subbed out. And the ValuJet effect was also termed a "virtual airline." Everything was subcontracted out. Talk about code shares. This airline existed only on paper, because there were subcontractors performing almost everything.

Well, what happened is they had a bad landing and a fire about a year before the fatal accident, and the FAA dispatched people, but they didn't really do much to the carrier. And that was just a miracle that people did not die on that plane, on that hard landing.

But the FAA once again were helping the carrier keep going. Instead of hitting them with violations, they were propping them up. They were giving them waivers.

And at that time, my office -- the Office of Inspector General, the Department of Transportation -- said: "Whoa. Wait a minute. This doesn't pass the smell test. When you've got an airline having this many problems, the FAA isn't doing proper oversight."

So Office of Inspector General investigators, inspectors and auditors, paid a visit on ValuJet and the FAA to check their oversight, and we found things like duct tape on the planes, cracked windshields and windows, violations on minimum equipment lists [MELs] -- things that you must carry to have a safe flight. We found all these violations.

So where was the FAA?

Well, this is a very interesting thing. The FAA wanted to know what we were doing. The FAA said, "What do you mean there's problems?" They actually acted surprised that there were problems on ValuJet, and they said, "We're not aware of any problems on ValuJet."

They missed the duct tape and the cracked windows?

No, I think it was just lip service. They were just saying there wasn't a problem, so they didn't have to cite them.

And this airline had a lot of clout. They had a delegation in D.C. They had a senator that was very interested in them. And just after we got back from Atlanta, checking out ValuJet, I literally was called to the office of the secretary of transportation and asked what we were doing snooping around ValuJet. (Chuckles.) "Happens to be my job." (Chuckles.)

Did they try to steer you off it?

Actually, not just them. This made it all the way to the vice president's office.

That's some clout!

Airlines have clout. They still do, and they always have. There was a special Reinventing Government project aimed at the inspector general, especially the inspector general at DOT. And they said that instead of helping, we were playing "gotcha" and "aha." Well, yeah, of course we play "gotcha" and "aha." That's what we do. That was our job.

When ValuJet went down [on May 11, 1996, in the Florida Everglades] -- now, most people, when an airline crashes, including the airline itself, stand back and says, "Well, you know, we're going to look at this before we say anything," because, obviously, the plane crashes and 110 people die on a clear day -- something went wrong.

And instead of taking that hands-off attitude, the secretary of transportation and the head of the FAA went into protective overdrive. The secretary of transportation flew down to Miami and stood in the Everglades -- literally on the watery grave of 110 people -- and said, "ValuJet is a safe airline." He had no way of knowing that. And he had a lot of clues that it wasn't.

And the head of the Federal Aviation Administration jumped onboard, too. And so by doing that, the game was up. No one believed it. Everyone realized they were receiving tremendous protection, and there was a backlash. And there was a tremendous backlash by the public. There was a backlash by the NTSB, and people said: "No, no, no, no, no. We don't behave that way. When a plane goes down, at least give us the opportunity to find out what went wrong before you pronounce them safe and ready to go make money again."

And that's the ValuJet effect. And I think that that is the reason that there was so much backlash, is they were just too quick to say, "Oh, it's OK."

Who was the transportation --?

It was [Federico] Peña.

And who was head of the FAA at the time?

David Hinson.

Did the FAA, did the Department of Transportation, did the government in general change after ValuJet as it relates to airlines?

No. After the ValuJet fiasco, the FAA went before Congress, and they said that they were going to change their mandate, they were no longer going to promote airlines, and that they would be more of a regulator.

And I wouldn't have known this. I wasn't watching all the fine print so carefully at that time. I was teaching aviation. But a ValuJet family found this and brought it to me.

At the same time when they told Congress they were changing their mandate and changing where the mandate was no longer going to be to promote airlines, there's a footnote in that legislation before Congress. And the footnote says, "Although we're changing the terminology from 'promote' to 'encourage,' we do not intend to change the way we do business. This is a change for the public consumption, and we're not changing how we work at the FAA."

It was just a change of slogan.

It was just a change of slogan. It was really just what they do best. It was to just get through that particular public relations fiasco.

And so there's a footnote in the hearing? The bill? Where is it, in the rule change?

Yes. It's in the submission to the committee, yes.

A ValuJet family found that, and they were of course devastated, because it's important to families after a crash -- the one thing that keeps them going is they often say, "Well, OK, I'm going to devote my life now to making sure this never happens again." And a lot of them become just excellent activists.

And this particular lady had lost her brother on ValuJet, and she became such an activist, and she was permitted to craft some questions for the FAA. Now, the FAA doesn't answer questions from the public, but they answer questions from senators. And one of the questions that she was allowed to pose to them through the senator was: "Was anyone punished, reprimanded, fired? Was there any disciplinary action taken of any FAA employee after ValuJet?"

Was there?

The answer was no.

What led you to resign from the Department of Transportation?

I resigned because of ValuJet, and it had been building for some time. The problem is it was the tombstone mentality. It was depressing. You waited for accidents to happen, and then when they happened, you had to push the FAA to act. And waiting around for an accident and then having this tiny little window in which you could actually get some activity, and maybe you could get them to respond, and maybe they wouldn't, it was frustrating.

And every time someone else perished, the public would say, "Well, who would have ever thought that could've happened?" And, of course, inside the department, we knew: "Well, it happened before. That's the problem. These things happen over and over again." And it was déjà vu.

We would see the same thing happen, and then it would happen again. And it just didn't seem like I could spend -- I did this for six years -- another six years just waiting for the FAA to decide to change.

And it was pretty hostile. I must say every time we launched an investigation, we got a pushback from the FAA. I was -- let's see. How many times was I investigated? I'm trying to remember. All my travel was reviewed.

[By] the investigative arm of the FAA?

Well, the Senate, they would run to their friendly senators and say, "Oh, the I.G., you've got to look at her travel." ... They even pored over my phone records.

Luckily, I never ordered so much as a pizza on a government phone. I was very careful. My travel vouchers withstood all of the scrutiny. I was always where I was supposed to be, when I was supposed to be there -- something you can't say the same for senators.

And so I withstood, but I was probably investigated -- and then also by the Office of Special Counsel, by the GAO [General Accounting Office], by you name it. The people from the FAA filed all sorts of complaints. I was investigated probably a dozen times. Cleared every time.

But what they will point to time and again is the safety record, which is sterling.

The safety record is good, but it's on a plateau. And it ebbs and flows. And we're seeing that in the regional business. If you believe the FAA that the airlines can be self-policing, and if you look at the statistics, it's hard to say what the FAA is accomplishing lately, because what's happened in the regionals is statistics have now gone back to early 1990 statistics.

And we've had a lot of safety improvements since then. We've had advanced ground proximity. We've had advanced TCAS [Traffic Collision Avoidance System] equipment.

So we're back in the '90s essentially?

Yeah, we're at the same statistics. Actually, we're worse. We had about 75 fatalities in a five-year period in the early '90s, and I think we've had 88 in the past five years, and one on the majors, I think, are the statistics.

Now, obviously, there are more things to safety statistics than just fatalities. You're 88 times more at risk when you get on a regional carrier, which is statistics that are worse than statistics in the early '90s.

And there's been improvements, right?

Tremendous improvements. I mentioned advanced collision avoidance, advanced ground proximity warnings. It's not finished, but we have [been] improving air traffic control equipment. It will be better, you know, after 2020, but that has all improved. And yet we don't have safety statistics that are dramatically better.

And that says something. That says that we need better oversight, and that something has gone wrong in the regionals.

Let's talk a little bit about what has happened in the industry. 9/11 happens, and once again it's all about red ink, and the business gets grimmer, doesn't it?

It does, although they financially had recovered from 9/11. They were making money within two years.

[But] on 9/11 -- I looked at this when I started working on 9/11 cases -- a couple of the carriers that were involved in 9/11, the debt-to-capitalization ratio on one of them was 98 percent. Another one was I think 70 percent. I mean, you don't even get a decent rating out of the rating agencies -- (chuckles) -- if you're under 50. So they were already not a good economic model before 9/11 ever happened.

But they do have a couple economic issues that they hope the regionals would solve for them. The airlines, the major carriers, saw the regionals as a solution to high pilot and other salaries: contract out for that part of the business. The persons that you contract with, you get out from under the union contracts for the major carriers. American Airlines was one of the pioneers in this with American Eagle. They litigated it, and you solve the problem of high salaries.

On equipment, if you can switch some of the routes for the 250 miles -- it's gotten longer. Nowadays, it goes up to like 450 to 800 or so miles are being flown by regionals, or more -- thousands. If you can put that on cheaper equipment, then you save money.

So it was kind of a perfect storm. You knew they were going to do something to cut the loss of funds. They pushed it off to regional carriers, and also, just about the time, starting in 1997, we started getting Canadair regional jets -- 50-seater jet, which arrived on the scene just in time to fuel the development of regional carriers.

So all that comes together. The airlines need to outsource, or so they view it. The jets are there. The regional business just explodes after that.

That's right. When the Canadair regional jet arrived on the scene, probably -- I can't think of the exact statistic, but probably between 10 and 15 percent of our routes were flown by regionals. Now it's over 50. It's 53 percent of our routes are flown by regional carriers.

So we're a regional nation.

We're a regional nation. That's right. And regional carriers can have up to 70 seats. Regional pilots are flying 70-seat jets.

So it's really not regional anymore.

It's not regional at all. And that's a term of art, because they can fly very long routes. That is just a term of art that the FAA coined to put them in some sort of a category. It's a bucket they invented.

"Regional" just means cheaper in every respect, is what it means.

... A regional carrier predominantly flies aircraft that have 70 seats or less, predominantly.

And the rules are set by the pilots' unions as far as the number of seats and who flies, right? Is that where that comes from?

No. Technically they're set by the FAA.

They are. But they're supposed to be flying under the same set of safety rules that the big guys are flying under.

Well, they are, except the regionals have different contracts with their pilots, and they have different pay scales. So you can have a pilot flying a 90-seat plane for -- let's use an airline who has this very problem: Northwest. Or did. They're now, of course, about to be gone, but you have the pilot flying a jet for Northwest, the mainline carrier, and they're under a certain salary scale, making pretty decent wages. Then you could have a pilot flying a 70-seat jet for the regional. They're sitting in the right seat, and they're new, you know, under $20,000 a year.

So one level of safety gone again?

One level of safety is gone. It's gone.

Why wasn't it ever turned into something that was a rule? It was all essentially voluntary, wasn't it? I mean, they forced them to do the 121 regulations, right, the airline regulations, but that didn't make equivalent safety, did it?

Well, it did for a few shining moments when they were doing the transition and they were being watched. When the FAA was paying attention, we were doing the transition over into one level of safety, and there were a few years when the regional safety record beat the majors'.

But that's gone. And now the last five years were pretty abysmal, and we don't have one level of safety. The pilots have far less training. They have -- and hopefully this will change -- ... they have worse pay scales. They have worse rest periods. They have less training -- by far, less training.

They have far less incentive to rest when they need to rest, to cancel a flight when the weather is bad, because a lot of them get paid only for going; they don't get paid for waiting. They aren't on a pay structure that allows them that latitude to say, "You know, the holes in the Swiss cheese of safety are not stacked up right, and we're going to fall through." They don't have that luxury. And all of that exists for the major carriers, not for the regionals.

We need a Norma Rae here or something, right?

We do need a Norma Rae. If we had better whistleblower rules in the industry, we'd have a Norma Rae or Norm Ray, or both. But I think the people in the industry are very afraid. The whistleblower rules don't really protect them, and if they come forward, they're going to be blackballed in the industry, and they will not work.

They know this.

They know this, and this is true.

So they're just biding their time, trying to grind it out and, hopefully, get a better job.

And get up to the majors.

And meanwhile we're in the back, not knowing what we're getting.

And we have no choice. You know, it used to be 10, 15 years ago at least you could figure out a different route. I used to have favorite carriers, carriers I wouldn't fly, and I could figure out how to get myself from point A to point B and avoid the carriers I just would not fly.

That's gone. We're down to a few carriers. Even the regionals -- we used to have about 300 regionals a decade or so ago. We're down to really about 65, and about 10 of them have most of the routes. So the regional numbers are decreasing.

If you look at it that way, even the majors don't have much choice on the regionals anymore. The majors are down to a handful. The choice is gone. Consumer choice is gone, and it's a situation like this is the perfect storm where, if we don't have a tough FAA, we just don't have much watching out for us.

There are some who would suggest just a little uptick in fuel prices, and we'll be talking about re-regulating the airlines.

Well, at the risk of getting boatloads of hate mail again, I think we should.

Why?

Because the industry is certainly not the industry that existed when they screamed for deregulation.

And by the way, the deregulation model did lower fares a little -- not dramatically, what people say, but it did. But now we have a model where we have just a handful of airlines now. We don't on many routes have real competition at all. We have a situation where now the fleets are once again getting old. That was reversed after Sept. 11, 2001. A lot of that money that went to the airlines after 2001, while it didn't go for security, it did go for something good. They jettisoned the tired iron, and the fleets got dramatically more youthful after 9/11.

That also explains some of the safety improvements. A younger fleet, better safety equipment, newer models -- there's a direct correlation between safety.

But now we're headed the other way, and bad fuel prices, maintenance -- maintenance is another thing that in the last decade, just like regional carriers, there's been a complete shift in the statistics. It used to be offshored around 15 percent. Now, depending on the carrier, some of them, it's almost 100 percent.

But the maintenance outside of the U.S. is probably in the vicinity of 75 percent. So now we won't have that good regulatory oversight -- because while the FAA does do the initial inspections of offshore maintenance work, both when I was inspector general and by the people there now, who are doing great work and trying to keep the FAA on its toes -- they've repeated those studies, and the FAA will look initially, but then they never come back. And they never make unannounced inspections.

So if you're an offshore repair facility or maintenance facility, and you get your initial inspection, you're likely not going to see the FAA inspectors again.

Ever?

Yeah.

They never come by?

Never come by. And if they do, they make an appointment, schedule some time for tea, and that's the way they work it.

And so we're losing all of our oversight. And that to me sounds very dangerous. In a situation where you're losing the maintenance oversight, I don't think it will be too awfully long before we actually lose a lot of the crewing. You don't have to be a citizen to work for a U.S. carrier. Northwest lost that lawsuit, too. And I think we will see a lot more of crewing done from outside the U.S.

Because fewer Americans will want to go through this ordeal of becoming a pilot?

It's hard to pay your bills on $16,000 a year. I think that Americans will turn away from these jobs. I think they already have.

The regionals will say: "Oh, people line up for these jobs. They want to fly."

Well, actually, there are shortages at some regionals now. We clearly have a situation now where the regionals are having problems and where they aren't making money. The carriers say they aren't making money.

If they have a few [price upticks] - we will be exactly in the same situation, going way back to the 1930s, when the carriers themselves begged for regulation. That's how we got them regulated in the first place.

The carriers went to the government and said, "You know, we can't make any money, and we want money for new equipment." The DC-3s and 4s were coming out. "We want money. The prices that we have to pay for things are going up dramatically. We need to be regulated so we can get a decent fee, and we can give a decent wage, and we can get this industry on a stable footing." I think that we're just about in a situation to repeat history.

So why doesn't free enterprise, the capitalist system, work in this industry?

Because safety is like a rubber band. It doesn't work because you can stretch it. Planes -- a lot of them are just great. They're overbuilt. The big, old, tough Boeings were forgiving. You can stretch safety, and sometimes you don't get caught. Why? Because you can skate on by.

And bad operators can skate. Good operators often aren't rewarded for their good efforts on safety. And even when something does go wrong, they're not held accountable because the insurers step in. They take care of the issue. The bad actors are free to go forward and fly again. If you wanted any evidence of that, it's the secretary of transportation standing on the Everglades, on the backs of the downed ValuJet plane.

And there really is no accountability that you expect from a true free-enterprise system, and that is that the bad are allowed to fail. That's part and parcel of the free-enterprise system. But in aviation, the bad don't fail. The bad go to bankruptcy court, come out washed. Every seven years, it's like a pilgrimage. They go through the bankruptcy court. The bankruptcy trustee wipes out the debt, often wipes out what's owed to hardworking pilots and flight attendants and everybody else.

And this is an industry that simply does not work. It does not operate in the free-enterprise system. So why do we pretend that it does? It doesn't. It operates in this gray area. It's partially regulated. The government pays for a huge hunk of it. The government now pays for security. The Aviation Trust Fund pays for air traffic control, and the runways and the airports -- you can't even get an airport anymore without -- I mean, we get a new airport in this country, what, every decade or so? And then you have to float the bonds, and it's run by a regional airport authority. That's not free enterprise!

So there's really nothing in this system that is free enterprise -- except the red ink.

Let's talk a little bit about Colgan specifically. Give us the thumbnail history of Colgan.

I learned about the history of Colgan in a very sad way, and that is, I was called upon by the families of the pilots that were lost in the first Colgan crash to correct the record.

There was a crash of a Colgan airplane off Hyannis, Mass., just after takeoff. There were two pilots on what's called a "repositioning flight," and it had a flight number. It was really a Colgan flight, but they were moving the flight to another location to pick up some passengers and start an actual passenger load -- a workday, if you will. It's technically the end of their workday, but the plane was about to be used for passenger service.

It was the first flight after maintenance, and it was maintenance that was done by Colgan. The pilots did their usual walk-around. You don't power up the aircraft until after you complete your walk-around outside.

And this was a twin turboprop airplane. It wasn't a new plane; it was a Beech 1900, but it was a plane that had seen a lot of regional commuter service.

What it was, though, was a stretch general aviation plane. It was a plane that everybody's probably heard of, called a King Air, that Beech -- which then became Raytheon -- stretched to hold 19 people. And it wasn't any mystery to the 19. The 19 allowed it to escape some of the regulations of one level of safety. It was a plane specifically built to take advantage of some of the loopholes of safety. If you had 19 or fewer seats, you could get by with some less restrictive requirements.

Well, on that day, it was the first flight out after maintenance. The pilots took off and immediately were in trouble, because the more they trimmed -- for people who don't fly, the trim is an adjustment that you can make, and it helps your plane become a little easier to fly, because it takes the pressure off the yoke.

Kind of like fine-tuning the controls, right?

Yeah, it's like fine-tuning your plane. And the more they fine-tune it to pull the nose up, the more the nose went down. And finally, as they were struggling to get that nose up in the air so they could take off, the trim traveled to a full nose-down position, and they could not pull on the yoke hard enough to pull that plane up, and so they went straight into the ocean.

Initially, the NTSB said: "Oh, well, you know, it must be pilot error. They must have missed something on the walk-around. And, oh, yes, the manual was wrong. The manual told the mechanics to rig it improperly."

It became a mission, a true mission in life and almost an obsession to clear those pilots, because I thought they were wrongly -- they weren't blamed for the crash, but they were wrongly accused of missing something.

And I thought there were a lot of things wrong, but in that case, the pilots were pulling with all their might. And we would find out through the two years of investigation and litigation that it would have taken something like 800 pounds of force to counteract that. You don't have 800 pounds of force. It's impossible.

Even two people pulling.

Two people, and they were pulling. The pilot was pulling so hard that his ankle was broken in the impact. This fellow was fighting for all he was worth.

We launched on a long investigation, and we found so much wrong. I mean, there were issues with Colgan maintenance, with the training and with the airplane.

And what had happened was, because this had been a general-aviation plane, and it had just been stretched into a commercial plane, that the maintenance manual literally showed the rigging of the trim system backward. It was exactly backward.

And there were many other errors in the manual, too, but they had never done a scrubdown of the manual. They'd never actually had somebody go through the manual and scrub it for errors. And what it was, was just a hodgepodge. It was just if somebody came up with something that needed to be stuck into the manual, they stuck it in. It was sort of a glorified version of a stack of Post-it Notes. Just anytime somebody wanted to add on or fix something or pen something in, it just got stuck into the manual.

And it was the same thing at Colgan. They didn't have all of their flight manuals finished. They were still in the process of writing some maintenance manuals. There were holes in manuals. There were gaps in manuals.

And this would become very prophetic, because then, after the second Colgan crash, as I was sitting in the NTSB hearing room and listening to the hearing, lo and behold, the manuals still weren't done. It was now five years later, and they still had holes and gaps in the manuals, and they almost treated them, I guess, sort of like a phonebook. "Ah, you use it when you have to, but it's not your lifeline." Well, it is your lifeline.

And so we found all these problems in the manuals, but the real kicker was the U.S. federal district judge ordered Raytheon to make a plane available for us to inspect on behalf of the pilots' families. And there we found that the manuals were so bad, even the Raytheon maintenance people themselves couldn't maintain the planes.

And then you show up at an NTSB hearing post the [February 2009] Buffalo crash, and they're talking about manuals.

Same thing -- a hodgepodge mess. Manuals that weren't finished, an airline that's allowed to fly without all the manuals in place that you're supposed to have, and an aircraft, too -- it was a double problem. The aircraft itself had terrible manuals, and because it was a commuter -- I mean, I know they call them regionals, but it was just a puddle jumper; it was a twin-prop plane. They got away with these cut-and-paste manuals, these manuals that had errors in them for 20 years. And no one ever reviewed them.

Help people understand, if you're not a pilot: A manual is a big deal, right?

A manual is a very big deal for a couple of reasons. A manual is a huge deal in the maintenance, because if you're a maintenance person, and it's 8:00 at night, and you're fixing a plane for the flight the next morning, that's often all you have.

Now, the aircraft manufacturer, if they maintain a help line, it may not even be open then, but some manufacturers have help lines where you can call and get help. But that manual is your lifeline for the maintenance.

For a pilot, that manual is our lifeline, because it tells you what to do -- not just with the aircraft but when things start going wrong. Like, if you're having problems with this kind of aircraft, the manual will tell you what to do to recover from icing. The manual will tell you what to do, where to pull the circuit breakers, what to do if you've got a runaway trim. That's all in the manual.

And if you don't get that -- and this is another sad thing for regionals. If you don't get that in your training -- and often you don't; you get book learning, but often in your training you don't get hands-on training. They don't train you for a runaway trim. You never have that feel. You don't get trained for an upset event for regional aircraft pilot.

And so really, all you've got is the manual. And if your manual isn't complete or it's not accurate -- and at that hearing for the Buffalo crash, there were many things in the manual that weren't accurate, including there was a section in the manual about tail icing, and yet they testified at the hearing that this plane could not, would not experience tail icing. Yet it's in the manual.

So the flight crews, many of them inexperienced, are left to make things up.

They are. They improvise. They can, you know, flip through the manual. If you're trying to save a flight, and you're trying to pull on a yoke, and you need 800 pounds of force on that yoke, you can't take your hand off the yoke to look at the manual. It's impossible.

So what do we take away from all of this about Colgan and the way it runs its airline?

My impression stems mightily from the two years of litigation I did for those first two pilots who were lost. But I was deeply concerned. There were just so many things.

For example, our pilots, they were paid so little, they didn't have a home near their duty station. They had to commute in. For those particular ones that I represented, I didn't think fatigue was an issue. It came up in that hearing. They addressed it, because for one of them, it was the end of a duty day, and he agreed to take this short hop, this flight for them to reposition the flight.

They had issues with scheduling, issues with pay, issues with the manual, issues with training. It seemed that everyone there was just trying their best to get out of Colgan. In fact, one of the pilots that I represented had turned in his notice just before he died. He was getting out.

... It wouldn't take much of an aviation expert taking a quick walk through this operation to realize all these things you talk about. These are plain-as-day issues.

These are plain-as-day issues, and all you have to do -- if only you could -- is talk to the people who work there. The pilots there know this. The maintenance people there know this, but they aren't free to publicly say so, because if you speak out in the industry, you're going to get blackballed, and you're not going to work.

So they keep their nose to the grindstone, and they hope to stick it out until they can get a better job.

So why would a major airline, Continental, want to paint those Colgan airplanes to look like it's theirs?

Because of marketing. The one thing that airlines do well is research into branding and marketing and unit pricing. That's one of the things they love.

What they research is, "How can we get more customers, more people to get on our airline, Airline A, than Airline B?" And one of the things that they have determined over their years of consumer research is that people like to book on the airline that has the most flights at the time, or close to the time, when they want to go. And they like seamless travel.

And big carriers also discovered that, unless they had these regionals feeding passengers into them, then they wouldn't have them on the long-haul, valuable routes. If they didn't have the feeder airlines feeding them into JFK, then they would not be flying the passenger to Istanbul.

And that was one of the fatal mistakes. Everybody thinks that Pan Am 103 [which exploded over Lockerbie, Scotland, in 1988], is what brought Pan Am down. And obviously, that plane was lost. But Pan Am was lost because it had no feeder routes.

So it's a customer delivery system is all it is.

Yeah, exactly. It's a pipeline.

You would think, though, that they would care a little bit about how they run their airlines. It sounds like, in the case of Continental at least, they didn't pay any attention to safety at Colgan.

And they don't, and the sad thing is they don't have to. There's all these weird regulatory things. The U.S. aviation regulation history is very interesting -- the regulatory law. But airlines have to do safety audits on their international code shares. Like, if I code-share up with Singapore, then I have to go check that Singapore Airlines is meeting our safety standards. That's a requirement. And not only that, the Office of Inspector General in the United States Department of Transportation audits that and makes sure that you go do that.

But if I code-share with Colgan, I don't have to do that. Now, it's recommended that I do a safety audit, but the regulations don't require it. And the regulations don't require it, because they are technically -- and, of course, legally -- under FAA inspection. And the FAA says, they're just as good as the majors. So therefore, they're equivalent.

But we know they're not, so it's a regulatory loophole. You have to inspect the foreign ones, so you've got goofy situations where Delta has to go inspect British Airways or Lufthansa, but they don't have to look at Colgan. Now, some do; US Airways did audit the safety of Colgan.

And the loophole here is that British Airways doesn't answer to the FAA, and therefore you have to go check them out.

Right.

I mean, how hard would it be to just make a rule: "You've got to check out these operations. You have to do a safety audit"? Is it really that costly?

No. And it would be very simple, because the FAA could simply say: "Look, we're the Federal Aviation Administration. We have 3,800 inspectors. That's all we have. It's a world of shortage. And therefore, Continental, we can't always get out there and look at Colgan. We have one guy or one gal. So guess what? You're going to be required to inspect those carriers on which you code-share, whether they're domestic or international, because frankly, we're pretty shorthanded." That's a pretty easy answer.

What about liability, though? When you set up a contract like this, and something bad happens like in Buffalo, who's liable?

Well, this I happen to know about because I do this daily. I work on these issues.

What people think is, in the case of the Buffalo crash, because "Continental" is painted on the door of the plane, they think that Continental is responsible. Or, to use another example, in the case of the Comair crash in Kentucky, people assumed that Delta was responsible.

So you assume that they're responsible for their flights. In fact, their contract with their code-share carriers say that the code-share carrier, the contracting carrier, the Colgans of the world, is absolutely, completely and totally responsible for the safety of the operation of that flight. And, by the way, if something goes wrong with that flight, Colgan has to indemnify Continental.

"Indemnify, defend, protect, save and hold harmless" is the term in the US Airways code-share agreement with Colgan.

They're pretty much all like that.

So they go off the hook if something --

Actually, yes. They go off the hook.

And this holds up in court?

Yes. Now, there has never been a case in the United States yet where a feeder carrier, a contract carrier for a major carrier, has not had enough insurance to pay for the sums awarded to the victims of a crash or those injured in a crash. That hasn't happened yet, because there's been enough.

So it hasn't been really tested in that sense, because it's been kind of moot.

Right. It's only been tested in that the carriers have, though, petitioned the court to be let out of the litigation. And they have been let out of the litigation -- the name carriers.

So these contracts are set up, really, as a marketing tool. There's no liability, responsibility in either direction. Each is responsible, and the traveling public assumes that the major player is what they're buying.

I think the traveling public not only assumes that they're buying -- let's use the Colgan example -- that they're not only buying a ticket and flying on a USAir or a Continental flight, but they assume that they have examined them. The flying public thinks that they look out for safety.

And the reason they do is they say so on their Web sites. On the major carrier Web sites, they actually say, "We take care that ... those who fly with us in our" -- you know, call it what you will -- "our sky team, our code shares, our contracting carriers meet the same high standards." They say that. They give that impression.

For example, on the USAir Web site, at the time of the crash that I worked for, the previous Colgan crash, they actually said that they examined their carriers. And at least, to their credit, they did. They did do safety audits. But at the time of the crash that I worked, that position was vacant.

Oh, really? So they weren't auditing?

At that particular time, no. They had before, in all fairness to them. They had before.

And they're very specific about certain things that are completely unrelated to safety, like uniforms. They dictate uniforms, including -- this is for the US Airways code-share agreement, I guess with Colgan: "You must wear suitable undergarments while on duty. For safety, consider wearing cotton-based materials. Men need to wear a white V-neck or crew-neck T-shirt, and women, a white bra." So they're actually dictating what kind of underwear a crew should wear, but they don't care about safety?

And other airlines do the same. American does the same. There's actually a case about that for American, a case over the proper undergarments, but yes, they do that. Colgan has to buy their cocktail napkins from USAir to set the proper tone, but they're not the same level of safety.

All right. This code-share agreement, which dictates all this stuff about liability and underwear and everything else, why is it so secret? You were able to get this as part of litigation in this case you were involved in, but these things are not in the public domain. Why?

Actually, almost everything a carrier does they try to keep out of the public domain. I think they do it because of the things that we're talking about. They want the public to believe in seamless travel. Remember, that's a big marketing tool -- seamless travel: "We're all one big sky team"; "We're all 'One World Plus.'" They want you to think you're safely in the arms of United Airlines when you fly.

And you're not. In some cases, it's a crap shoot. ... When we had to go up to Buffalo to work, we took the company plane. We simply wouldn't get on [some types of aircraft].

But people don't like to have to deal with that. They want someone to assure their safety. And I think that the airlines keep this and many other things secret, and they do so under the guise that it is "proprietary." And that means that it's something that they use to make money. And in this country, we protect proprietary things, even if it has a safety outcome.

Now more than 50 percent of our flying is in the regional. We are in a jam here, aren't we?

We're in a jam. Like I say -- I get hate mail every time I say this -- but we're in such a jam when the safety statistics are headed the wrong way, what is so wrong with having a little stand-down, a little breather and say: "We don't want this. This is not how we want to fly, so for a couple years, we're going to intensify the regulation on the regionals"? What's so bad about that?

I think it is an obvious solution, but I do think we need to step up the regulation for a few years here.

Well, what the airlines would say is: "We can't afford onerous regulation. We're trying to run a business here."

But in this case, we'd have to remind them that the regionals aren't theirs.

We didn't ever close the loop on Hyannis [and the August 2003 crash]. When last we left the crew, they were struggling to pull up. It went in the ocean. What was the end result? What did they determine went wrong on that particular crash?

In that particular crash, what happened was the trim traveled to full stop, down. When they were doing the manual trim, the trim was misrigged so that it got to a certain point and just went all the way down to the end, full nose down. There was no humanly way to pull that out, and there was also no way for them to discover it, because the electric system still worked.

So the fine-tuning system that's designed to kind of make sure the controls are not much of a struggle to work with was rigged backwards. So when they went to go up, it went down.

It was rigged backwards, and not only when they went to go up, it went down; [but] at one point it went full nose down -- all the way down it could possibly go.

It was done backwards.

It was done backwards. No recovery.

And that was the way it was laid out in the manual.

The way it was laid out in the manual, and not just in the manual; there was a diagram, and the diagram had it backwards.

And then when we did the discovery, when they had to produce documents, what we found out is the division in the manufacturer itself, they had taken highlighters -- a red one and a green one -- and it was so confusing to them, that they had redrawn it with highlighters in their own shop manuals, but didn't tell anyone else.

And it wasn't published that way.

Right.

But is that really the fault of the Colgan maintenance people? I mean, they followed the diagram, right?

Right. They followed the diagram, and in fact, they tried to call for assistance, but the NTSB cited them for the fact that they weren't experienced. They were undertaking a maintenance procedure that they had no experience in, and the problem is you don't get that kind of experience. It's such a system where you move up as soon as you get experienced, that people doing maintenance at the regionals often don't have any.

So the maintenance people are every bit as inexperienced as the flight crews.

Everybody in the aviation world is just trying to move up and get out of the regionals.

Now, as you dove into Colgan and learned more about it, what did you conclude?

I concluded that there were lots of problems. I mean, it clearly wasn't a major carrier; it was a carrier scraping by on the bottom, from the way the pilots weren't trained and had very little to go on. I mean, they didn't have much salaries. They didn't have places to live near where they worked. They didn't get any extra training. The maintenance people didn't get any extra training. The manuals were bad. Just everything about it was certainly not as the industry and the FAA and carriers would have you believe. It certainly was not comparable to a major carrier.

So at that time, however, it was taking on all kinds of new business. Business was booming.

Business was booming at the regionals, and, in some ways, it continues to boom.

But Colgan in particular was striking deals, code-share agreements even, in that period of time, right?

Right. They changed their code share at that time, their contracts from USAir to Continental. They were doing well.

I can't quite understand this. The financials I see on the regionals, they actually make a fair amount of money.

And you wouldn't think so, given the way they're paid by the majors, but they do get little incentive payments. They have other things besides just the flat fee for basically flying the plane and providing the plane for the carrier to fill up with passengers. They have little extra payments for the number of passengers, for any mail that they take on for the carriers. If they're on time -- the really interesting thing is if they're on time, and they don't cancel any flights, also another incentive to take off. No matter what, then you get an extra incentive payment from the major carrier.

All right. So again, these code-share agreements, they're like double secret; they never see the light of day, but in the course of doing this investigation, you got the US Airways code-share agreement with Colgan. What struck you in this thing?

What struck me in the code-share agreement -- and most of the agreements that I have seen in the course of various litigations -- is that the major carrier, the carrier whose name is on the door, the carrier who's telling them what insignia to wear and how to put the cocktail napkin and what underwear to wear -- that carrier in the code-share agreement, or the agreement with their contract carrier, is absolved of all responsibility and liability.

The agreement always says the name-brand carrier, the "branding carrier," as they call it -- the USAir, the Continental, the Americans of the world -- while they will appear to the public to be the entity that's responsible, and they're the people who book you on that flight, the agreement with that contract carrier says in the event something goes wrong, the name-brand carrier is not responsible. And if anybody says they are, then the contract carrier has to reimburse them.

That surprise you a bit, that that's in that contract?

Well, it doesn't surprise me. I've been litigating these things for a while. But it would shock the public.

So the Customer Service Initiative, which is kind of like branding for all the things that you've talked about in this cozy relationship, first of all, it identified the "customer" as the airline, not the flying public. Now, the new administrator [Randy Babbitt] has changed it now to the Consistency [and] Standardization Initiative? ... Does that represent, you think, some sort of sweeping culture change at the FAA?

I'd like to think so. I mean, the new FAA administrator, he's the first pilot we've had in a long time, in over a decade. And he was out there in this world, and certainly he would, if he's talking to himself honestly, he obviously knows that the pilots at the regionals don't have the kind of experience that he had and he earned at the majors. And so I would hope that he is not drinking the FAA Kool-Aid yet. He has the potential to bring some change, sure.

And so far you're mildly optimistic right now, based on what you've seen?

I'm mildly optimistic, but one must never underestimate the ability of the very next level down at the FAA to wear down administrators. When I was there -- because it was the same scenario over and over again -- I started calling them the "kidney stone administrators," because I think I went through seven in six years. Now they have a term, so they last longer, but they would come in the revolving door, they'd make a lot of pronouncements, and then they'd go right back out the revolving door into the industry. You know, for example, Jane Garvey went off and sat on the board of Bombardier, who brought us the Q400. So a lot of times, they just waited for them to pass. Hopefully Administrator Babbitt is going to wait them out. He's had a lot of experience sitting on the tarmac. I think that man can wait.

The Call to Action.

I applaud the Call to Action, but what he needs to understand -- and he's a savvy gentleman; I'm sure he does -- but no matter what the FAA proposes, there are two more steps. They then publish it in the Federal Register, and the airlines get to oppose it, which they always do -- just as the airlines opposed improved security on July 17, 2001, even though they said, "Osama bin Laden's coming." The airlines oppose any improvements that are going to cost them money.

So the next step is he's going to get this flood of comments in from the airlines. Many of them will be negative. And then he's going to get the Hill. There will be some members of Congress and senators who come down on him that this is too costly for an industry. I think the exact quote that I used to hear was, "This is too costly for an industry awash in red ink." I heard that many times. And the Hill will, in many cases, be lobbying against these safety changes.

He's got to stick to it and seek out those people on the Hill that will help him. So he's got a couple more hurdles.

So you have a bureaucratic inertia which he has to overcome, and then outright opposition from the airlines. But I don't get that, because whatever is imposed by the FAA would create a level playing field, and if you're talking about things that would make it safer, wouldn't they want to fly safer? Isn't that implicit in the whole voluntary operation they have going now?

Well, it is, but when you increase requirements on regionals, the majors know they're going to have to pay them more. So it's not exactly a level playing field, and things that Randy Babbitt is proposing will hit the regionals harder than it will hit the majors. So that's why I think there's a little quid pro quo. The majors are getting a little chit on the back end with less requirements.

But the other thing they always trot out is this: With all these additional requirements on U.S. carriers, then they will have difficulty competing in the international market. And they always bring that out as well. And you say, "Well, you know, domestically you can't have a foreign carrier in domestic routes. "However," they say, "but those feed us for the international routes." And that's the argument that they trot out vis-à-vis the international competition.

Is it a valid argument?

It can be, because the problem for the U.S. carriers is now a lot of international carriers actually beat our safety records and have newer equipment. So now they really do have a horse race internationally. Now a lot of them can match and even better the U.S. safety rates.

But again, what the FAA says is that it's never been safer to fly. Is that not true?

It's about the same. It's been on a plateau other than this aberration on the regionals. The regionals had a bad record from the late '80s to the early '90s, and they have a bad record that's actually worse than that record now.

Really the thing that's in their favor -- the FAA should have said this -- is there are so few crashes, thank heavens, that you don't have a solid statistical finding that you can compare these various crashes. And we're experiencing a very bad spell for the regionals, but you can't have statistical significance out of these numbers. And that's true. There are sometimes so few that you really can't compare.

For example, there are some regionals that have never had a fatal crash. And how do you put them into the mix when they still have all of these issues at them? Are they just a ticking time bomb, or are they really so much better because they haven't crashed? No. Some of them are just lucky.

And so you have to take whatever statistics you have, and the reason I said you're 88 percent safer is in the last five years, there have been 88 fatalities on regionals and one passenger fatality, or one fatality on a major, and so, technically, it wouldn't be you're 88 times more at risk on a regional, because they fly far fewer miles, because they're short haul.

So you can work those statistics any way. You can work them by miles flown. You can work them by takeoffs and landings. Well, guess what? The regionals probably fare better if you do takeoffs and landings. Or you can do them on hours of exposure. And then on hours of exposure -- which is what the insurance industry does -- you have to figure in the time you spent sitting on the tarmac. So the statistics are all easy to vary, but there's one that's unassailable, and that is 88 people have died on regionals, and one has died on majors. That's pretty significant. ...

We talked about the airline industry, talked about the regulators, politics, all that stuff. How much is the flying public to blame here? Because, let's face it, when we go to Travelocity, we are absolutely, ruthlessly price-driven. We want the cheapest fare. We want to get there conveniently. Is it our fault?

No! The public is not to blame. We are purchasing goods and services. We are supposed to ask for the best deal that we can get. We are absolutely powerless. There is no part of this equation that is the public flyer's fault. We can't control safety. Heaven knows we dare not even say much at the airports anymore. We'll be escorted from the premises, in some cases, even for questioning. We have very little choice. We can't even choose our carriers anymore, because usually you only get one choice.

So this business about "it's the public's fault" is an absolute red herring. It is something that the industry is throwing out to avoid looking right in the mirror. The problem rests on their shoulders. They have undertaken this endeavor. No one forced them into this industry. If they cannot deliver the goods and services necessary for a safe flight -- and this is the part of true capitalism that doesn't exist in the aviation industry -- they deserve to go out of business.

And we don't do that. We prop them up, and we save them. You know, after 9/11, they said that. They said, "You know, if we don't save the airlines, we won't have any."

We saved the airlines, and still half of them went bankrupt and are out of existence, and the bankruptcy had nothing to do with 9/11. Instead, what we have is very little competition. They've all gelled down to three airlines, basically, and we do not have a free-market system in the aviation world.

And that's why, I think, they're deserving of regulation. But, like I said, you'll get hate mail if you say that.

This interview with you came in the midst of some of these congressional hearings. And these families have instigated a Colgan/ Continental 3407 Families, and they've done a good job getting these hearings going. At one of the hearings there was the CEO of Pinnacle Airlines, and the families collared him afterward and were quite taken aback, because he said to them, "Oh, we fixed it; it's all fixed." They were trying to press him: "You know, it's really important you do this." And he said, "Oh, no, it's all fixed." Could it be all fixed now?

No. First of all, it takes a long time to retrain that many pilots. After all, they're flying 53 percent of our routes, and if all of the regional pilots need to be trained in just stick shaker and stick pusher, we would have had to have seen a lot of pilots going off to retraining, and I know that hasn't happened.

So it's not fixed.

No, it's not fixed. And by the way, there's been no increase in their salaries. There's been no additional availability for rest time. No one's put in little rest rooms to take a little nap at the airport, so I assume pilots are still flying tired. So if they've fixed it, they've done it in a very stealthy manner. Perhaps they put the fixes in their contracts. ...

But the fact that he would respond that way --

The fact that an airline executive would respond that way to a -- I call them "crash families"; it's very unfortunate, but the family of someone who has died in a plane crash -- shows a couple of things: one, he's very flippant; and two, he does not understand the families of accident victims.

First of all, they're not nearly as naive as that statement suggests. These families research, and these families learn, and these families literally become world experts in their crash. They will know more about what happened in their crash and how to fix it than any other person on the earth. And they are relentless. And if he thinks he can give them a flippant answer and that he really believes they're dumb enough to believe that he's fixed everything overnight, this man is extremely naive. And he's in, I hope, for a big lesson.