Alaska Airlines' cost-cutting culture may have cost in safety

Company spends less on maintenance than the industry average

Posted: Wednesday, July 05, 2000

SEATTLE - Alaska Airlines' maverick heritage has evolved into a culture that condones sidestepping safety and maintenance rules to save money, The Seattle Times reported in an investigative report.

A corporate training video recalls a 1940s-era pilot who routinely loaded his plane beyond limits set by federal safety inspectors. He piled on double loads by stashing one on a nearby frozen lake, going back for more and then re-loading the first one - all to get needed supplies to a remote Alaska village.

``The way we figured it, if you can get it off the ground, it ain't overloaded,'' says the actor who played the swashbuckling pilot.

It was that same bravado that inspired Alaska's assistant vice president of flight operations, Bill Boser, to order 25 bottles of vodka from a local liquor store before a 1993 flight from Siberia. Boser ordered the vodka sprayed on the wings of the MD-80 in lieu of de-icing fluid, which the airport had run out of, according to the airline's in-house newsletter.

The Times contends that last-frontier mentality has persisted as scorn for regulations, and as lower-than-average jet-maintenance costs, longer-than-average jet-use times, and shorter-than-average turnaround time for between-flight maintenance.

And the newspaper, in a report published Sunday, suggests that mentality may have been a factor in the Jan. 31 crash of Flight 261 off the California coast. The accident killed all 88 people aboard.

In a letter to The Times quoted in the article, Alaska Chief Executive Officer John Kelly flatly rejects suggestions that the airline's culture condones cutting corners:

``Absolutely not,'' Kelly wrote. ``It makes no sense - business or otherwise - to operate an airline in an unsafe manner. Period. No cost is worth cutting, no shortcut worth taking, if it compromises safety.''

Many of the newspaper's contentions are rooted in the airline's mid-1990s drive to cut costs after it lost $85 million in 1992 and $321 million in 1993.

In addition to some very visible belt-tightening - skimpier food service and smaller flight-attendant crews - the company slashed salaries and brought in new executives to focus on saving money on maintenance and training.

The effort worked. In 1990, Alaska's stock was worth $319 million. By the start of 1999, the company's total valuation was nearly three times higher - $928 million.

As evidence of corner-cutting, critics cite Alaska's low maintenance costs for the two types of planes it flies, MD-80s and 737-400s, and its speedy turnarounds.

In addition to scheduling flights earlier in the morning and later at night - thus increasing a jet's ``block hours,'' or the time it is in active service each day - the airline in 1994 cut turnaround time from 60 to 45 minutes.

Last year, Alaska spent $262 per block hour, nearly 20 percent less than the industry's $322 average. It has lagged significantly behind the industry average in maintenance expenses since 1993, according to a Times analysis.

Alaska spokesman Greg Witter noted that Southwest Airlines has a turnaround time of 30 minutes or less and said The Times report tried to turn the carrier's can-do attitude into a negative.

``If we're skimping on cost, why are we investing so heavily in new aircraft?'' he said in an interview with The Associated Press. ``We invested more heavily in the '90s in state-of-the-art new aircraft than any carrier.''

Alaska also pioneered use of such safety features as global-positioning-system technology and ``fog-buster'' devices that allow aircraft to operate more safely in bad weather, he said.

``When you talk about our can-do attitude, that's what we're talking about,'' Witter said.

The airline's maintenance practices are the subject of a criminal investigation by the FBI and the U.S. Transportation Department's inspector general.

Meanwhile, a grand jury is investigating allegations that airline managers in Oakland signed off on work that was never performed.



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