The Occurrence of the Southwest Airlines Scandal - Research Paper Example

? SOUTHWEST AIRLINES Table of Contents Table of Contents 2 Executive Summary 3 Introduction 4 Company Overview 4 Scandal Summary 5 Scandal Methodology 6 Impacts of the Scandal 7 Conclusion and Recommendations 8 References 10 Executive Summary Southwest Airlines is an US based airlines company which is regarded to be one of the largest domestic airlines in the country. The company has been operating its business successfully since its inception in the year 1967. However, recently in the years 2007 and 2008 a major corporate scandal has been reported against the company. The scandal was related to falsification of safety reports prepared by the company. Both the Southwest Airlines and Federal Aviation Administration (FAA) were held responsible for this scandal. The safety reports were meant to comply with the safety regulations related to inspection of its jet aircrafts. FAA was responsible for assuring the facts that Southwest Airlines complied with all the required safety regulations related to the aircrafts flown by them. However, later it was discovered that Southwest Airlines flew around 48 jets without having done the required safety inspections for flying the aircrafts. Next when Southwest Airlines discovered this fact it mentioned that it had stopped flying the jets which involved any kind of safety issues. However, in reality the company continued to fly those planes even after finding out that it did not comply with the required safety standards. Southwest Airlines was lucky that it did not result in any type of accidents which was a probability given that the safety norms were not followed in the aircrafts. FAA was also equally responsible for this scandal because they were unable to detect such safety failures in the flights of Southwest Airlines. Some FAA officials might have also been involved in this scandal. It is recommended that the safety norms related to airlines industry in United States should be more stringent and any company found not complying with the safety rules and regulations should be severely punished. The whole safety procedures followed by the airlines companies like Southwest Airlines should be regulated by the regulatory authorities like FAA. This would ensure the occurrence of such kind of scandals as cited in this study and ensure a high level of security for the passengers flying on the aircrafts. Introduction Southwest Airlines is one of the largest domestic airlines in United States which was established in the year 1967. Recently there was a major issue related to safety violations in some of the planes flown by Southwest Airlines. This violation of safety regulations by Southwest Airlines falls in the list of one of the corporate scandals that took place in United States. This corporate scandal was found to occur during 2007 and 2008. Both Federal Aviation Administration (FAA) and Southwest Airlines were found responsible for such safety violations in the US airlines industry. This study is all about the corporate scandal related to violations of safety regulations by Southwest Airlines. First of all a brief summary about the company background has been presented in this study. Then a summary of the scandal has been discussed in this study. In addition to this, how the scandal was performed by the different involved individuals and authorities and its various impacts have also been discussed in this study. Lastly some of the recommendations have been included which relates to how these types of scandals can be prevented from occurring in future. Company Overview Southwest Airlines Co is an US based public company headquartered at Dallas, Texas. It was founded in the year 1967 (Yahoo Finance, 2012). Originally it was known as Air Southwest. Later it was renamed as Southwest Airlines and commenced its business operations in the year 1971. The shares of the company are traded in the New York Stock Exchange (NYSE) with the ticker symbol “LUV”. Southwest Airlines is engaged in the business of providing scheduled transportation for its customers through air in the United States. It started its business operations with three of the Boeing 737 aircraft which served the three cities in Texas namely, Dallas, San Antonio and Houston. It managed to expand its business on a large scale mainly due to its acquisition of AirTran Holdings in the year 2011 and as at December 31, 2011 the company operated a total of 698 aircrafts that includes 88 Boeing 7171s and 610 Boeing 737s (Southwest Airlines Co., 2012a). AirTran Airways is now operated as one of the wholly owned subsidiaries of Southwest Airlines. The company is regarded to be one of the lowest fare domestic airlines in United States and is committed towards providing best Customer Services in the airlines industry (Southwest Airlines Co., 2012b). Scandal Summary Recently in the year 2008, Southwest Airlines and Federal Aviation Administration (FAA) were accused of presenting false safety reports. The safety reports prepared by Southwest Airlines were meant to comply with the safety regulations related to inspection of its jet aircrafts. This falsification of safety reports by Southwest Airlines was confirmed by the United States House Committee. According to the findings of FAA, which was responsible for inspecting the safety issues related to Southwest Airlines, nearly 48 jets were flown by Southwest Airlines on 59,000 or more flights?? before realizing the fact that the required safety inspections were not conducted on those planes. Then later when Southwest Airlines became aware of the fact that flight inspections were not conducted by them it still continued to fly nearly 38 of its Boeing jets on around 1451 flights without properly checking those planes. Ultimately when the Southwestern Airlines inspected its planes, it was found that almost 6 of them had cracks in it. It included one of its planes which had a crack that was almost four inches long. During March 2007, FAA was notified by Southwest Airlines regarding the safety concerns but it did not conduct inspections of its planes. They also mentioned that they are not flying any of its planes which were questionable. However, in reality 38 of the planes were actually flown by Southwest Airlines for at least a week’s period after making such comments or disclosure. Thereafter, FAA was found to have fined Southwest Airlines amounting to around $10.2 million accusing the airlines company of violating the safety standards. However, it seems that at least some of the supervisors of FAA might have been informed about the safety standard lapses of Southwest Airlines well in advance. According to the statements of two of the whistleblowers of FAA, two of the officials of FAA who were held responsible for looking into the matters related to safety concerns of Southwest Airlines failed to take any type of actions related to the information received by them regarding the facts that Southwest Airlines did not conduct safety inspections of its planes. It has also been mentioned by the whistleblowers that FAA did not act on the concerns related to the involved FAA employees until the federal agency was approached by the whistleblowers with matters related to these concerns. It has been reported by the whistleblowers that the root cause of the problem was a cozy relationship that existed between the Southwest Airlines and some of the FAA officials as a result of one of the former FAA inspector who was once an employee of Southwest Airlines. Scandal Methodology The details as to how the Southwest Airlines scandal occurred can be better understood through the knowledge of how FAA engages itself in inspecting and assessing the issues related to safety operations undergone by the airlines companies in United States. In the meanwhile a report has been prepared by the US Department of Transportation in 2008 which is related to the assessment of the risk-based system followed by FAA regarding the safety precautions followed by the suppliers of the aircraft manufacturers in United States (FAA, 2008). A quality assurance system is followed by FAA and was audited by the US Department of Transportation. The main objective of undergoing such audit procedure was to measure or evaluate the oversight of FAA regarding issues related to the quality assurance systems for foreign and domestic suppliers maintained by the aircraft manufacturers in United States. Some of the findings of the inspector general of US Department of Transportation are mentioned below: It has been reported that the suppliers were not verified by the aircraft manufacturers regarding issues related to whether the sub-tier suppliers were providing them with parts according to the prescribed safety standards or not. This can be considered as a critical safety issue because of the prior occurrences of engine failures in some of the aircrafts due to the speed sensors present on the fuel pumps that were obtained from the suppliers being faulty. It is essential that the oversight of the suppliers by the aircraft manufacturers should be effective to ensure that aviation supply chain is devoid of any kind of sub-standard parts. One such instance related to this issue occurred in February 2003 when one of the suppliers were found to release nearly 5000 parts which had manufacturing defects and possessed problems for large passenger aircrafts in their landing gears. A failure was reported in at least one of those landing gears. FAA was aware of this fact and the supplier who was involved in such activity in 2003. However, no supplier audit was performed by FAA in for years time period since 2003. One of the suppliers of aircraft manufacturer was allowed to produce several parts taking help of employees who were untrained. It has also been found that one of the new employees was involved in inspection activities in an improper manner. Later it was found out that the employee was not given any kind of formal training regarding inspection of the products. All these findings of the report suggest that along with Southwest Airlines, FAA was responsible for the occurrence of this scandal. The motives behind the Southwest Airlines to fly its planes even after knowing that it does not meet the mandatory safety regulations regarding inspection of the planes before allowing it to fly can be some kind of profit motives behind the incident along with managerial incentives. It has been found that many of the planes did not meet the safety standards for flying; still they were flown by Southwest airlines. Hence deciding to inspect those planes would have resulted in Southwest Airlines not being to fly those planes which would ultimately have had an adverse effect on its revenue generation. Thus Southwest Airlines took the risk of violating the mandatory safety checks to fly its planes to fulfill its profit making motives. Another big question behind this safety violation issue was what was the reason behind installation of such unauthorized parts by Southwest Airlines and how the issue was not tracked through the maintenance procedures carried on by Southwest Airlines? Later it was found out that those affected parts used in the planes of Southwest Airlines were supposed to be supplied by one of the FAA approved contractor of the company. However, the supply of parts was actually sub-contracted to another vendor which was again not approved by FAA (Aviation Today, 2009). This might be one of the reasons behind this violation of safety standards by Southwest Airlines. Impacts of the Scandal The Southwest Airlines safety scandal as depicted in this study did not bring about any major impact on the company or the passengers travelling the affected planes. However, it could have resulted in serious consequences for the passengers travelling on those planes which failed to comply with the safety rules and regulations. After the discovery of the scandal FAA directed Southwest Airlines to replace all the parts included in the affected planes that were not approved by FAA. Around 50 B-737 airplanes of Southwest Airlines had unapproved parts installed in it and thus had to be replaced by the company. Next Southwest Airlines was instructed by FAA to conduct daily inspections of its aircrafts and submit a report to FAA until all the unapproved parts were completely replaced (FAA, 2009). Another aspect of this scandal was how Southwest Airlines managed to hide its Safety failures from FAA. The safety reports presented by Southwest Airlines did not indicate any instance of its failure to comply with the safety standards of any of its aircrafts. Initially FAA was also unable to detect any of these safety concerns. As mentioned earlier, it has been reported by one of the whistleblowers of FAA that one of the FAA official who was responsible for looking after the safety concerns related to the aircrafts flown by Southwest Airlines was previously an employee of the organization. Hence this type of relationship between Southwest Airlines prevented detection of major safety faults in the aircrafts of Southwest Airlines. Conclusion and Recommendations Southwest Airlines is one of the major domestic airlines of United States and had been operating its business activities successfully over the years. No major scandals or safety concerns have been reported against Southwest Airlines until the occurrence of this safety scandal mentioned in this study. Southwest Airlines and FAA both were accused of presenting false reports regarding the safety procedures followed by the airlines company. Southwest Airlines were found to fly aircrafts which did not meet the required safety standards and initially FAA also did not report any such incidents occurring in the company. The Southwest Airlines used certain parts in its aircrafts which were unapproved by FAA. Even cracks were found out in some of the planes flown by Southwest Airlines. This safety failure could have resulted in dire consequences for the passengers flying on those planes. However luckily no such incident occurred and the impact of such safety failure did not have a significant impact on the lives of the passengers. The Southwest Airlines scandal could have resulted in major accidents of the affected planes. Hence, it is recommended that safety concerns for the flights carrying passengers should be given highest priority by any airlines company including Southwest Airlines. FAA who is responsible for assuring safety standards being followed by the major airlines in United States like Southwest Airlines should be very careful about confirming the compliance of safety standards followed by the airlines companies. Inspections should be carried out on a regular basis on each of the planes carrying passengers to ensure highest level of safety for them. Stringent safety norms should be implemented for the companies like Southwest Airlines who are engaged in the business of providing transportation services for its passengers through air. The safety norms should include heavy amount of penalties for the airlines companies that fail to comply with any of the stated safety rules and regulations which are required to be followed. This would prevent the occurrence of any kind of major accidents as a result of safety failures in any of the airplanes while carrying passengers during their flights. References Aviation Today, 2009. Southwest Airlines to Replace Unapproved Parts. Air Safety Week, 23(33). FAA, 2008. Assessment of FAA’s Risk-Based System for Overseeing Aircraft Manufacturers’ Suppliers. [pdf] Available at: [Accessed 18 September 2012]. FAA, 2009. Press Release – FAA Approves Plan for Southwest Airlines to Replace Unapproved Parts. [online] Available at: [Accessed 18 September 2012]. Southwest Airlines Co., 2012a. 2011 Annual Report to Shareholders. [pdf] Available at: [Accessed 18 September 2012]. Southwest Airlines Co., 2012b. Company Profile. [online] Available at: [Accessed 18 September 2012]. Yahoo Finance, 2012. Southwest Airlines Co. (LUV): Profile. [online] Available at: [Accessed 18 September 2012]. Read More