Kind Words for Continental

By John S. DeMott

In the easygoing days before deregulation, U.S. airlines and the Federal Aviation Administration were able to maintain a gentlemanly relationship without undermining the enforcement of safety standards. But in the new era of cut-rate competition, the FAA has been slow to adopt the sterner attitude necessary to keep America's skies safe. "In a game between two very aggressive teams, the referee has to have a fast whistle," says Jim Burnett, chairman of the National Transportation Safety Board. "And we haven't had a fast whistle from the FAA." To some critics, this soft approach was particularly evident in the case of Continental Airlines.

Former FAA officials, Continental employees and the Air Line Pilots Association accuse the FAA of burying a critical 1984 inspection report listing numerous violations that could have grounded Continental, then replacing the report with a far milder account. Two investigating subcommittees of the House and Senate have looked into the matter, as has the FBI. The criminal investigation came to a close last week when U.S. Attorney Robert C. Bonner announced in Los Angeles that there was "insufficient evidence to support prosecutive action." The episode, however, raises questions about the regulators' ability to keep at arm's length from the carriers.

Continental spokesmen vigorously deny that the airline and the FAA conspired to suppress the report or change it in any substantive way. They say the entire incident is the result of labor unrest at Continental, whose chairman is Frank Lorenzo, 46. The toughest among the new breed of cost-cutting airline bosses, Lorenzo has bought Eastern, New York Air, Continental and, last week, People Express, building his once small Texas International Airline into Texas Air Corp., the largest U.S. carrier.

In September 1983 Lorenzo placed Continental in bankruptcy, then abrogated all the carrier's expensive union contracts and cut salaries by as much as 70%. The airline's pilots staged a bitter two-year strike, and Continental began hiring nonunion pilots.

FAA regulations require close policing of any carrier in a strike situation or financial difficulty, since the airline may be rapidly hiring and promoting less well-trained people. Accordingly, the FAA dispatched a special team to keep an eye on Continental. Headed by San Francisco-based Harry Langdon, a 24- year FAA veteran, the airline operations inspection team was made up of inspectors from around the U.S. to counter possible chumminess between regional officers and airlines. In a report sent to the Western Pacific regional office in April 1984, Langdon's group recommended 20 enforcement actions for the breaching of 31 regulations, which could have resulted in hundreds of individual violations. The team reported that Continental had sent planes over the Pacific without weather forecasts, failed to make or document fueling-equipment inspections, omitted required ground training and kept inadequate training records for its flight crews.

Langdon's findings were never made public. When Senators reviewed the report last March at a hearing of the Permanent Subcommittee on Investigations, the recommendations for enforcement action had been deleted. Also missing were critical comments about Continental's management, the company's strike problems and the shortage of personnel. Expunged were Langdon's criticisms of lax enforcement of regulations by Western Pacific regional officials of the FAA. Whole pages and key paragraphs had disappeared, but some words had been added. "Continental Airlines personnel and management remained cooperative" was changed to "Continental Airlines personnel and management were very cooperative."

The revisions came from the top level of FAA management. Anthony Broderick, the agency's associate administrator for aviation standards, took the highly unusual step of returning the voluminous report and documentation to the Western Pacific regional office with orders to rewrite it. As he said to the Senate subcommittee, "I requested that they . . . remove any material that was unwarranted generalization or unsubstantiated opinion not supported by facts." The rewrite, however, left in undocumented statements of opinion favorable to Continental.

Langdon, who has since retired, wrote to Transportation Secretary Elizabeth Dole protesting what he called a "cover-up." Dole did not respond, but FAA Chief Donald Engen says "there is no basis in fact for what Mr. Langdon states . . . When you get down to it, you find it to be a labor-management issue."

Republican Congressman Guy Molinari of New York intends to press for further hearings on the matter. Molinari particularly wants to know whether the regulatory agency was unduly influenced by former high-level FAA officials hired by Continental. These include Clark Onstad, the FAA's onetime chief counsel, now Continental's vice president of governmental affairs in Washington, and Dewey Roark, the FAA regulations attorney who became a legal consultant to Continental in March 1984 and helped draft the airline's rebuttal to the Langdon report.

Ultimately, the penalties against Continental were no more than a mild slap. The FAA fined the airline less than $100,000 for three of the violations, and allowed the others to be corrected after warning letters. In contrast to the Continental experience, Alaska Airlines had 90 pilots grounded in 1984 for similar training violations. The FAA also fined the smaller airline a stiff $600,000.

With reporting by Jonathan Beaty/Los Angeles