U.S. watchdog says FAA, Southwest ties too close

WASHINGTON (Reuters) - Federal Aviation Administration oversight of Southwest Airlines Co maintenance was so cozy the agency allowed the carrier to violate safety orders repeatedly for years and put travelers at risk, a government watchdog said on Thursday.

Calvin Scovel, inspector general of the Transportation Department, told a House of Representatives hearing the problem likely extends to other airlines -- but not nationwide.

"FAA oversight lapses at the local and national level allowed weakness in Southwest's maintenance program to go undetected for years," Scovel told a 9-1/2 hour hearing by the House Transportation Committee.

Last month the FAA proposed fining Southwest a record $10.2 million for knowingly operating aircraft that were not in compliance with an agency order to check for fuselage cracks.

Scovel said the FAA regional office in Dallas, which is responsible for Southwest oversight, "developed an overly collaborative relationship" with the carrier.

This allowed Southwest to repeatedly self-disclose violations of mandatory FAA safety directives with an agency "rubber stamp" and no follow up, which is required to avoid fines, Scovel said.

Southwest, according to Scovel, had inspection lapses dating to 1999. Most recently, the airline violated four different safety directives eight times since December 2006, including five this year.

Scovel said the breakdown in compliance at Southwest "unnecessarily increased risk" to travelers.

Southwest said it aggressively inspects planes and has always been safe, while the FAA characterized any problems at Southwest, including the lapsed inspections for cracks, as isolated and dealt with.

Five Southwest and FAA employees were removed from their jobs after the lapsed inspections were revealed.

WHISTLEBLOWERS

The highly publicized problems at Southwest triggered aircraft groundings and flight cancellations at other carriers in recent weeks as they hurried to bring their inspection programs into full compliance.

FAA whistle-blowers underpinned much of the inspector general's investigation of Southwest. Three testified on Thursday about sloppy record keeping, incomplete procedures, and alleged indifference by superiors. They said their concerns were dismissed or not fully investigated and they spoke of threats and other retaliation for speaking out.

"The poor condition of the Southwest Airlines regulatory maintenance oversight was a risk that neither inspector Boutris nor I was willing to accept," said Douglas Peters, a former FAA inspector for Southwest who now covers American Airlines, a unit of AMR Corp, for the agency.

Charalambe Boutris is an FAA inspector at Southwest and fellow whistleblower who also testified on Thursday.

Transportation Committee Chairman Rep. James Oberstar, a Democrat from Minnesota, called the Southwest incident a "systematic breakdown."

FAA safety chief Nicholas Sabatini said the Southwest case was "egregious" and he expressed disappointment and regret over the FAA's failure to carry out" its responsibilities.

"What is clear, and what should have been clear to all of our inspectors is that continued noncompliance after voluntary reporting is not permitted under any circumstances," he said.

The whistle-blower complaints initially exposed lapsed inspections in 2006 and 2007 for fuselage cracks on more than 40 Boeing Co 737s operated by Southwest.

The FAA later said the carrier knowingly flew planes that had not been inspected and cracks were found on at least five jets. Subsequently, Southwest grounded dozens of other planes for missing a second fuselage inspection.

Southwest Chief Executive Gary Kelly told the committee the carrier's inspection program is robust and exceeds FAA rules.

"A failure to comply with Federal Aviation Administration regulations is unacceptable," Kelly said. "For that reason we are taking immediate steps to improve our regulatory compliance system and auditing."

Southwest shares closed down 0.6 percent to $12.71 on the New York Stock Exchange on Thursday.

Other airlines that have recently grounded aircraft for inspections include UAL Corp's United Airlines, American Airlines, Delta Air Lines Inc and US Airways Group Inc.

(Editing by Tim Dobbyn)