The Airline Suppliers Association

Volume 9, Issue 9 September 2001

STATE OF THE INDUSTRY Inside this Issue:

SBA Loans ...... 89 ASA Acts to Help Members Reserve-Duty Loans ...... 89 Distributor Oversight by Carriers .. 91 On September 11, 2001, our industry · Make loan guarantees available QA Committee Mtg & Election .... 94 changed. to the aviation industry through Export Business to the ..... 97 the Economic Development Current estimates suggest that 7000 Agency or a similar program; Congratulations to: people died that day. ASA grieves for · Provide accelerated depreciation

the fa milies of those who lost their for aviation industry capital ComJet lives in this terrible tragedy. equipment placed into service Worldwide Sales before September 11, 2001; Corp. Ronkonkoma, NY It was not the first time that a plane · Enact a seller’s exclusion that had been hijacked, nor the first time precludes product liability actions North Star Aerospace, Inc. that a plane was used as a weapon against aviation industry comp a- Federal Way, WA

against American interests, but it was nies that are not involved in the a significant shock to a nation that has design or manufacture of aircraft For their accreditation to the grown accustomed to feeling secure. and aircraft parts; Airline Suppliers Association's Accreditation Program, and

Perceptions of insecurity - financial as ASA has successfully explained what Aero Industrial Sales Company well as physical - are driving a reces- Rosedale, NY sort of assistance the industry needs; sion that is having an especially harsh now, we need your assistance: Air Parts International Sales Inc. effect on the entire aviation industry. Burbank, CA Every member of the ASA commu- nity to write to Congress and let them AOP Supply Corporation Hard times for many companies be- Houston, TX know the effect this is having on gan before September 11, and many YOUR business - this means every Bel-Air Service, Inc. ASA members have already taken Westlake Village, CA ASA member company emp loyee, steps to protect the business during from the company President to the General Transworld Corp. the tough times ahead. Since Septem- Torrance, CA hourly workers. ASA has prepared ber 11, though, ASA has focused sample letters and instructions on ad- International Airline Support Group, Inc. ALL of its attention on obtaining re- Ft. Lauderdale, FL dressing your letter. This is all avail- lief for the ASA members. able on the ASA website. River City Avionics, Inc. Memphis, TN

ASA has been in contact with Sena- There is a very real chance that some Spectrum Aerospace, Inc. tors and Representatives on Capitol Tempe, AZ distributors will not survive the next Hill about the impact on our industry. year, but ASA is confident that busi- Turbine Support Services, Inc. ASA has sought four forms of relief Simsbury, CT nesses that survive the next six for the industry: months to a year will emerge from the Unical Aviation, Inc. Baldwin Park, CA recession as much stronger comp a- · Make SBA economic disaster nies. ASA is committed to improving For their re-accreditation to the assistance loans available to all the odds that ASA members will sur- Airline Suppliers Association's aviation industry companies, re- vive and thrive. Accreditation Program gardless of geographic location;

September 2001 ASA-The Update Report 87 The Update Report A Message from ASA’s President is a monthly newsletter of the Airline Suppliers Association. Questions/ comments should be addressed to: As you know, the Association has been The Department of Transportation has working with Congress and various stated that passenger load factor federal agencies to obtain loan and tax increased last week, which is a good Jason Dickstein relief for the membership. We are not sign. However, the increase in load Airline Suppliers Association alone in this effort. In order to ensure factor is a bit misleading because it is 1707 H Street, NW, Suite 701 that distributors are included in any based upon reduced flight schedules. Washington, DC 20006 form of relief we need to have voice: (202) 730-0272 information from your company. I sent One of the results of the terrorists’ acts to all members a survey regarding the has been a huge reduction in the fax: (202) 730-0274 financial impact of the terrorist attacks workforce of the air carriers. With the email: on 9/11/01. We have received a fair numbers being as large as over the next [email protected] number of responses but we need few weeks we will probably hear of replies from more members. The more many ASA supporters who have lost The Update Report responses the stronger our efforts can their jobs. One of our biggest be. If you need a new survey, please supporters and most personable people provides timely information to help email me at: in the industry, William “Tip” Tipton Association members and readers [email protected]. has retired early from Northwest keep abreast of the changes within Airlines. Tip has been a strong the aviation supply industry. Once the information is compiled, I will advocate for ASA, and has been an share with the membership the results important figure in getting air carriers for the industry. A quick review of the and distributors to work together on The Update Report surveys already received could make a important issues. Tip brought a sense is just one of the many benefits that person cry. Most companies have of realism to a meeting by always the Airline Suppliers Association suffered staggering losses. Companies calling a spade a spade. ASA staff offers members. For information on have instituted pay reductions, lay-offs along with the Board of Directors, QA and cuts in the employee benefits. Committee and members will miss ASA-100, the ASA Accreditation working with him. Program, Conferences, Workshops, We also need your help in writing to FAA guidance like Advisory Congress. We need EVERYONE from Please be in touch and lets work Circulars, Industry Memos, or an ASA member company to write to together to make it through these trying services and benefits, contact the their Representatives and Senators. times. Host a letter-writing lunch hour and ask Association. each of your employees to send their Best Regards, own letter. A sample letter is available The Update Report on the ASA website. Michele Dickstein For information on special package rates for advertising, contact the Send Us Your Email Addresses!! Board of Directors: Association at (202) 730-0270. Terry Bond 305-925-2600 ASA will soon be changing the de- M & M Aerospace Hardware, Inc. © 2001. All material in this publication is livery method of the Update Re- John Butler 661-702-7300 subject to copyright held by the Airline port - it will become an emailed pe- Time Aviation Services, a unit of Suppliers Association. All rights reserved. riodical. This means we will need AMERON GLOBAL, Inc. your current email address if we are Amy Cochis 860-565-2712 going to be able to send it to you. Pratt & Whitney SMMO Please send the name and pre- Bill Cote 561-998-9330 ferred email address of anyone in The AGES Group Officers: your company whom you think Mike Molli 847-836-3100 Karen Borgnes 253-395-9535 should get the Update Report to: Scandinavian Airlines System Corporate Treasurer [email protected]. Roy Resto 414-875-1234 Jason Dickstein 202-730-0270 Please send us your email address Tracer Corporation Corporate Secretary even if you think we already have it. Mitch Weinberg 305-685-5511 Michele Dickstein 202-730-0270 Thanks!! International Aircraft Associates, Inc. President

88 ASA-The Update Report September 2001 ECONOMIC RELIEF

Obtaining Economic Assistance from the SBA

Many ASA members are experiencing very limited number of ASA me m- to buildings, machinery, financial distress as a result of the bers may be eligible for these loans equipment, inventory, homes events of September 11, 2001. While based on their geographical location and other property; we all hope that this distress will be · Agricultural: Based on the temporary, even temporary distress Obtaining Assistance Under the Pro- Secretary of Agriculture's can be quite damaging to a company. gram recommendation; Many ASA members have asked the · State Geographic: Based on Association how to obtain federal fi- In order to get economic disaster as- a Governor's certification nancial relief. Unfortunately, there is sistance from the SBA under current that at least 5 small business very little in the way of direct federal law, there must be a disaster declara- concerns in a disaster area financial relief available to ASA tion that covers your business. There have suffered substantial me mbers. are at least four types of disaster dec- economic injury as a result larations (13 C.F.R. sec. 123.4): of the disaster and are in ASA is currently working with the need of financial assistance Federal Government to try to obtain · Federal: The President de- not otherwise available on relief for companies within the avia- clares a Major Disaster and reasonable terms. tion industry. The industry’s most authorizes Federal assis- likely hope is to obtain access to loans tance, including individual At present, the federally-declared dis- and loan guarantees through the Small assistance; aster area related to the September 11, Business Administration [SBA]. At · Damage-Based: SBA makes 2001 tragedy covers lower Manhattan present, the program that seems most a physical disaster declara- and the area surrounding the Penta- likely to be made available is the eco- tion, based on the occurrence gon. It does not generally apply to nomic disaster assistance program. A of at least a minimum most aviation businesses. amount of physical damage (Continued on page 95)

ECONOMIC RELIEF

Essential Employee Reserve Military Duty Loans

Has one of your essential employees ployee does not have to be the owner reasonable terms from a non- been called to service in the reserves? of the small business. governmental source. The SBA will If so, then your business may be elig i- use the “undue financial hardship” ble for the Small Business Admin i- These loans are intended only to pro- test – that is would the terms and con- stration [SBA] Military Reservist vide the amount of working capital ditions of available commercial lend- Economic Injury Disaster Loan Pro- needed by a small business to pay its ing programs cause undue hardship to gram [MREIDLP]. necessary obligations (as they mature) the applicant business. Generally, until operations return to normal after SBA determines that over 90% of dis- The MREIDLP provides funds to eli- the essential employee is released aster loan applicants do not have suf- gible small businesses to meet their from active military duty. In today’s ficient financial resources to recover ordinary and necessary operating ex- economic environment, though, that without the assistance of the Federal penses that they could have met, but can mean the difference between sur- Government. are unable to meet, because an essen- vival or bankruptcy for some distribu- tial employee was called to active tors. Because the MREIDLP loans are tax- duty in his or her role as a military payer subsidized, Congress intended reservist. An essential employee is an Prerequisites to Application that the loans only be made to comp a- individual whose managerial or tech- nies without the ability to recover out nical expertise is critical to the suc- The SBA will only make a loan under of their own funds. This does not cessful day-to day operations of the this program if it determines that the mean that a company needs to dip small business. The essential em- business is unable to obtain credit on (Continued on page 93)

September 2001 ASA-The Update Report 89 90 ASA-The Update Report September 2001 REGULATORY UPDATE

Air Carrier Oversight – How Much Is Enough?

Many air carriers outsource mainte- for maintenance airworthiness, and trator will consider “adequate.” The nance and other services in an effort that regulation makes it clear that an regulations are also silent concerning to control their operating costs. When air carrier remains primarily responsi- the nature of oversight that carriers the services in question are regulated ble for airworthiness even when the need over their third -party mainte- by the FAA, the air carrier generally carrier delegates maintenance tasks to nance providers. To help fill that gap, bears the ultimate responsibility for a third party. This makes it vital for the FAA has published additional ensuring that those services are car- the air carrier to have a mechanism guidance in Advisory Circular (AC) ried out in compliance with the regu- for assuring that maintenance per- 120-16, Air Carrier Maintenance lations. Even when the FAA does not formed by contractors is performed in Programs. The latest draft version of regulate the services, though, an air a manner that meets the air carrier’s this document, AC 120-16D, is cur- carrier usually has commercial and regulatorily-required performance rently out for public comment and safety concerns that drive its over- standards. should be finalized in the coming sight decisions. Oversight of contrac- months. The draft AC strongly sug- tors’ and suppliers’ activities is essen- gests that an acceptable program will tial to meeting regulatory, comme r- consist of a mixture of data collection cials and safety obligations. Air carriers are working techniques, including physical audits. The draft AC makes it clear that in The question often is: How much with ASA to develop spe- most cases, an oversight system will oversight is enough? When can over- cific auditing practices not be considered acceptable unless it sight be accomplished solely by that will allow a carrier to includes an initial on-site audit of the “paper audits,” such as question- maintenance provider. naires, and when are more active utilize the results of ASA- methods, like on-site audits, neces- 100 on-site audits as a re- What must the initial audit look for? sary? In recent months, these ques- Section 14.d. of the draft AC specifies tions have been increasingly directed placement for the carrier’s that the air carrier’s on-site audit, or to ASA by air carriers and by the own on-site audits of parts other means, must demonstrate that companies that supply air carriers distributors.... the maintenance provider meets the with their aircraft parts. following requirements in accordance with the air carrier’s maintenance pro- The answer depends on the nature of gram. The maintenance provider must the service involved. This article In order to ensure an adequate level of have: scrutinizes the regulatory require- oversight over maintenance providers, ments for oversight of both mainte- the regulations require an air carrier to (a) The capability to do the work; nance and parts supply, and compares have a Continuous Analysis and Sur- (b) The organizational structure these two different functions. It also veillance System (CASS), as provided to do the work; examines some of the alternatives to in 14 C.F.R. § 121.373. The CASS (c) Competent, trained personnel air carrier on-site auditing of parts must be adequate to monitor and to do the work; distributors. evaluate the performance and effec- (d) Relevant and current technical tiveness of both the carrier’s inspec- and administrative material Maintenance Oversight tion program and its maintenance pro- from the air carrier manual for gram. The CASS must allow for the the work; Few contracted activities are as im- correction of any deficiency found in (e) Adequate facilities and equip- portant to air carrier airworthiness as these programs, regardless of whether ment to do the work in accor- proper maintenance. Under the Fed- those programs are carried out by the dance with the air carrier’s eral Aviation Regulations (FARs) the certificate holder or by another per- program; and carrier, as the certificate holder, bears son. (f) The ability to transfer and re- the primary responsibility for the air- ceive data and information worthiness of its aircraft, including Beyond these general requirements, necessary to support the air airframes, aircraft engines, propellers, the regulations offer no guidelines to carrier’s CASS. appliances, and parts thereof. 14 C.F. let an air carrier known when its R. § 121.363(b) assigns responsibility maintenance program contains proce- dures and standards that the Adminis- (Continued on page 96)

September 2001 ASA-The Update Report 91 IT’S NOT ROCKET SCIENCE. Running a successful service company is not hard to understand. It is, however, very, very hard to do.

We are the JDC Company. We are the hardest working company in aviation today.

TRY US. Our business is helping your business. Try us for instrument sales, exchange, overhaul, and repair services.

THE JDC COMPANY A TRIUMPH GROUP COMPANY

800/422-4559 FAA # W14R623M [email protected] FAA# J7DR707N 5520 NW 21 Terrace 425 Round Rock West Drive, # 105 Ft. Lauderdale, FL 33309 Round Rock, TX 78681 tel) 954/772-4559 fax) 954/493-8960 tel) 512/218-1900 fax) 512/218-1212

92 ASA-The Update Report September 2001 ECONOMIC RELIEF

Essential Employee Reserve Military Duty Loans

(Continued from page 89) applicant to pledge collateral if it ex- stances of each borrower, SBA deter- into its own reserves or seek comme r- ists. mines an appropriate installment pay- cial loans – it is sufficient if the com- ment amount, which in turn deter- pany can demonstrate that these op- Details About the Loans mines the actual term. tions would be unsuccessful. The actual amount loaned will depend Make sure you file for relief in a SBA must also find that the applicant on the needs of the applicant, but in timely fashion! The filing Period for company is a “good risk.” The appli- no event can it exceed $1,500,000.00. small businesses to apply for eco- cant must show that can provide rea- SBA has authority to waive the nomic injury loan assistance begins sonable assurance that the loans can $1,500,000 limit when the applicant is on the date the essential employee is and will be repaid. Loans of $5,000 a “major source of employment.” ordered to active duty and ends on the or less do not require collateral, but date 90 days after the essential em- loans in excess of $5,000 require the Interest rates are generally much ployee is discharged or released from applicant to pledge collateral to the lower than commercially available active duty. extent that it is available. Normally loans. The rates are determined by the collateral would consist of a first formulas established by the govern- The SBA tries to respond to each ap- or second mortgage on the business ment, and they are recalculated quar- plicant within 21 days and sometimes property (if the distributor’s inventory terly. The maximum interest rate for can respond within a week of applica- is owned free and clear of encum- this program is 4%. tion. brances then this could be acceptable collateral as well). In addition, per- The law authorizes loan terms up to a To obtain a Military Reservist Eco- sonal guaranties by the principals of maximum of 30 years. SBA deter- nomic Injury Loan Application, con- the business may be required. The mines the term of each loan in accor- tact the SBA Disaster Area Office that SBA will not decline a loan for lack dance with the borrower's ability to serves your state or territory of collateral – they simply require the repay. Based on the financial circum- (identified in the table below):

SBA DISASTER AREA OFFICES If your business is in one of these states or Then your local SBA Disaster Office may territories: be contacted at: Connecticut, Delaware, the District of Columbia, Maine, Small Business Administration Maryland, Massachusetts, New Hampshire, New Jersey, 360 Rainbow Blvd. S., 3rd Fl. New York, Pennsylvania, Puerto Rico, Rhode Island, Ve r- Niagara Falls, NY 14303 mont, the Virgin Islands, Virginia and West Virginia 1-800-659-2955 … or … (716) 282-4612

Alabama, Florida, Georgia, Illinois, Indiana, Kentucky, Small Business Administration Michigan, Minnesota, Mississippi, North Carolina, Ohio, One Baltimore Pl., Ste. 300 South Carolina, Tennessee, and Wisconsin Atlanta, GA 30308 1-800-359-2227 … or … (404) 347-3771

Arkansas, Colorado, Iowa, Kansas, Louisiana, Missouri, Small Business Administration Montana, Nebraska, New Mexico, North Dakota, Oklahoma, 4400 Amon Carter Blvd., Ste. 102 South Dakota, Texa s, Utah and Wyoming Ft. Worth, TX, 76155 1-800-366-6303 … or … (817) 684-5600

Alaska, Arizona, California, Guam, Hawaii, Idaho, Nevada, Small Business Administration Oregon and Washington P.O. Box 13795 Sacramento, CA 95853-4795 1-800-488-5323 … or … (916) 566-7240

September 2001 ASA-The Update Report 93

IF YOUR PRESENT INSURANCE AGENT DOESN’T UNDERSTAND YOUR BUSINESS, IT’S TIME TO CONSIDER CHANGING TO SOMEONE WHO DOES.

As members of the ASA, the Silver Eagle Agency works with aviation operations worldwide to cover all kinds of exposures. With our direct access to United States and international insurers, we are able to provide insurance programs and policies engineered to cover your specific needs and exposures at the best available cost.

Please call John Howard at the number below to discuss any of the following: Property, Automobile, General Liability Life & Health Care, Workers Compensation Shipping & Parts in Transit. Aviation Products & Grounding Liability

Silver Eagle Agency, Inc. 401 S. Milwaukee Avenue, Suite 210 Wheeling, Illinois 60090 Telephone 847-229-1500 Fax 847-229-1515 YOUR ASSOCIATION IN ACTION

QA Committee Elects Officers, Postpones Meeting

ASA is pleased to announce the re- Rosenberg (International Airline Sup- next meeting of the ASA QA Com- sults of this year’s ASA Quality As- port Group). mittee. surance (QA) Committee election. The two finished in a tie, so there ASA had already sent out an email Every two years, the ASA QA Com- must be a run-off to determine which asking members of the Committee to mittee elects new officers. Voting is one will serve as Chair and which one forebear from purchase of travel tic k- open to all voting members of the QA will serve as Vice Chair. ets in anticipation of a postponement, Committee. To be a voting member so this postponement should not cause of the QA Committee, a company ASA QA Meeting Postponed too much of a hardship to members. must (1) be a member of the trade as- ASA expects to reschedule the meet- sociation and (2) have attended at Many of the members of the ASA ing for early in 2002. least two of the prior three QA Co m- Quality Assurance Committee have mittee meetings. The top two candi- reported that their companies are lim- ASA QA meetings are open to all dates are elected to the positions of iting travel. Also, the local airport ASA members. They provide a fo- Chair and Vice Chair. next to the planned site for the No- rum for discussing quality, interfacing vember meeting is Ronald Reagan with the FAA, and improving the The election took place in September National Airport, which remains tem- ASA-100 standard. ASA QA meet- this year. The voting was extremely porarily closed in the wake of the ings frequently feature guest speakers close, with four excellent candidates, September 11 terrorist attack from the FAA or from other associa- but two candidates emerged with a (although the Virginia delegation tions. Association members inter- slim majority: Chris Anderson fighting very hard for reopening). For ested in learning more should send (Source One Spares) and Jay these reasons, ASA has postponed the email to [email protected].

94 ASA-The Update Report September 2001 ECONOMIC RELIEF

Obtaining Economic Assistance from the SBA

(Continued from page 89) eral aid under the “Federal” category. ter. 13 C.F.R. sec. 123.300(a). The In particular we are asking the White business must have been a small busi- The Pentagon declaration covers House to specifically amend its disas- ness when the declared disaster com- small business in the independent ter declaration to include the aviation menced, and you must be unable to City of Alexandria and Fairfax industry (presently, that assistance has obtain credit elsewhere. 13 C.F.R. County in the Commonwealth of Vir- been authorized only for the specific sec. 123.300(b). You must also show ginia, the District of Columbia, and locations where the results of the ter- need by demonstrating that your busi- Montgomery County in the State of rorist activity took place). ness is unable to meet its obligations Maryland. The World Trade Center as they mature or to pay its ordinary declaration applies to small busi- ASA is also assisting members in pur- and necessary operating expenses. 13 nesses in Bronx, Kings, New York, suing “State Geographic” assistance C.F.R. sec. 123.300(a)(1). Queens, Richmond, Nassau and Wes t- from the state governor's offices chester counties in New York State, (ASA is pursuing this through its You also must provide reasonable as well as Bergen, Hudson, Middlesex members because ASA does not have assurance that you can repay your and Union counties in the State of the resources to pursue this course of loan out of your personal or business New Jersey. Any business suffering action in all fifty states). cash flow, and you must have an economic loss as a consequence of "satisfactory credit and character." 13 the disaster is eligible to apply for One such effort is going on right now C.F.R. sec. 123.6. economic injury disaster relief. in Florida, where the Miami Mainte- nance Management Council and the You may use an SBA economic disas- Aviation businesses in these counties Greater Miami Airport Authority are ter loan for working capital necessary may wish to pursue Economic Injury working directly with the state to ob- to carry on your business activities Disaster Loans, which are intended to tain a state-level disaster declaration. until resumption of normal operations cover financial losses resulting from ASA has been sharing information and for expenditures necessary to al- the September 11, 2001 explosions with this group. leviate the specific economic injury. and fires at the Pentagon and World 13 C.F.R. sec. 123.303(a). Trade Center. The relevant declara- Any ASA member who intends to tion is known as SBA Declaration pursue state-level assistance should For more information about disaster #3366/9M83 for the Pentagon area contact the Association for assistance assistance loans from the SBA, see and SBA Declaration #3364/9M49 for in identifying other ASA members in the SBA webpage at http://www.sba. the New York/New Jersey area. the state. gov/gopher/Disaster/eidlall.txt or the ASA webpage at http://www. The deadline for filing for an Eco- Acquiring an SBA Loan airlinesuppliers.com/relief/ nomic Injury Disaster Loan under SBAEconDisRelief.html. Informa- these declarations is June 21, 2002. If your business is in one of the disas- tion about the World Trade Center Further information is available from ter relief areas, or if ASA is success- SBA declaration is available at http:// the SBA at 1-800-659-2955. ful in expanding the coverage of the www.sba.gov/gopher/Disnews/ SBA loan program to include other disnny.txt, and information about the What is ASA Doing? areas, then the next step will be to Pentagon SBA declaration is available apply for the loan in a timely fashion at http://www.sba.gov/gopher/ ASA is doing several things con- (remember, loan applications under Disnews/disnva.txt. nected to SBA economic disaster re- the current declarations are due by lief. ASA is asking for Congress to June 21, 2002). pass a law that authorizes SBA to dis- burse funds under this program to the SBA does not issue loans to everyone entire aviation industry. This would, who applies. Fist, your business must United States Businesses in effect, broaden the list of ways that be qualified. This means that your may also seek assistance one could obtain relief under this pro- business must fall within the scope of gram. a disaster declaration and it must have through the Small Business suffered substantial economic injury Administration help line ASA is also pursuing expanded fed- as a direct result of the declared disas- by calling 1-800-659-2955.

September 2001 ASA-The Update Report 95 REGULATORY UPDATE

Accreditation is An Option Being Taken Seriously by Air Carriers

(Continued from page 91) Because industry success is so closely general policy to buy parts from parts Beyond the initial audit, the draft AC tied to a perception of safety, there is distributors accredited under AC 00- encourages carriers to establish, as really no such thing as an acceptable 56. This is because the audit require- part of its CASS, a schedule for con- loss due to maintenance. Airworthi- ments of AC 00-56 ensure that par- ducting continuing audits or inspec- ness directives, for example, are s-i ticipating distributors and their prod- tions designed to determine the main- sued based on a perception that a ucts meet safety standards and are tenance provider’s level of compli- safety-related failure could recur. accompanied by appropriate identify- ance with the maintenance provisions Cost-benefit analysis associated with ing documentation. Some air carriers of FAR part 121. The draft AC rec- an airworthiness directive is usually are even investigating the possibility ommends that these audits be con- cursory at best if there is a perception of writing AC 00-56 into their quality ducted on a dynamic schedule, with that safety could really be impacted. manuals as their mechanism (at least the frequency of audits determined by one air carrier has worked with ASA a variety of factors such as the com- Thus, we are left with an air carrier to develop specific auditing practices plexity and quantity of the work pro- quandary: there is a desire to make that will allow the carrier to utilize the vided by the maintenance provider, sure that distributors provide safe results of ASA-100 on-site audits as a the air carrier’s level of confidence in parts, but the desire is supported by replacement for the carrier’s own on- that maintenance provider, and the commercia l and safety requirements site audits). quality of the work and associated and not by regulatory requirements so records produced. Although the AC there is little FAA guidance on the Even in the absence of such accredita- does not specifically recommend that subject. Clearly, the FAA guidance on tion programs, carriers will usually these continuing audits or inspections maintenance oversight is too robust to have the option of incorporating some include on-site audits, its recommen- be applied economically to parts sup- form of oversight as a part of any dations strongly suggest that follow- pliers. So what is considered reason- business relationship they negotiate up visits to the maintenance provider able within the industry? with prospective suppliers. are an important part of an acceptable CASS. Because there is no regulatory re- Ultimately, the question of what level quirement for oversight, other accept- of oversight is necessary for a given Supplier Oversight able means of assuring the air carrier's provider of goods and services de- regulatory and commercial needs, like pends on the needs and requirements Audits of parties who provide other questionnaires or "paper audits," can of the air carrier. Where the carrier services or goods not covered under clearly be legally sufficient. While must meet certain regulatory require- the regulations – such as parts dis- they usually meet the air carriers ments, the level of oversight it exe r- tributors – are a different story. Be- needs, some air carriers want to sup- cises over its service providers will be cause the provision of such goods and plement these mechanisms. much more extensive and intrusive. services is not regulated, there is no Where no regulatory requirements regulatory requirement to engage in Some air carrier like to perform on- apply, air carriers have considerably oversight. In these cases, oversight is site audits of parts suppliers, but this more latitude to develop alternative driven by commercial desires, and practice actually appears to be dimin- oversight methods. Air carriers are safety concerns. ishing as air carrier quality resources showing that they may desire more are stretched to the limits and as other stringent requirements than paper au- At the most basic commercial level, oversight alternatives present them- dits can provide, but the many safety safety is good business. Safety fail- selves. AC 00-56 accreditation in and security demands placed on an air ures cost money. Safety failures have particular appears to have had an im- carrier today may make it impossible direct and measurable economic pact on air carriers’ desire to perform to perform on-site audits of all of their costs, but their indirect costs may be on-site audits of parts suppliers. suppliers. The FAA AC 00-56 Ac- even more destructive to an air car- creditation Program provides an im- rier’s bottom line. Failure to maintain Industry accreditation programs help portant compromise, permitting air a perception of safety among the pub- ensure a level of independent over- carriers to gain the safety oversight lic can be devastating to an air car- sight sufficient to meet an air carrier’s benefits of on-site auditing without rier’s business. requirements. An increasing number expending the resources necessary to of carriers, for example, make it a carry out their own auditing program.

96 ASA-The Update Report September 2001 INTERNATIONAL UPDATE

Opportunities in the Ukraine

While the American aviation industry One of the expected, but unstated, cember 2000, the government de- continues to put itself back together, goals is to pool their resources in or- clared bankrupt, and is many ASA mmebers are finding the der to upgrade existing fleet and air- now considering the restructuring or non-US markets to be quite lucrative port infrastructures. Several Ukrain- the sale of the company. at present. The Ukrainian aviation ian airlines are individually soliciting market is experiencing tremendous investors in the hopes of raising capi- The United States maintains a com- consolidation in an effort to bring tal to purchase aircraft—the increased mercial service post in the Ukraine. capital together. If that consolidation resources of the allianc should make The post recommends that suppliers is successful, it could mean business each of the air carriers more attractive and prospective investors exercise opportunities for distributors and to potential investors. caution in pursuing business relation- other aviation companies. ships with companies in the Ukraine. Much of Eastern Europe is seeking to A Country Commercial Guide is In the early 1990s, each of the 25 re- purchase used (and new) western air- available at: http://www.usatrade.gov. gions of the Ukraine created its own craft from manufacturers like Boeing, Those distributors considering busi- airline from a portion of . In Airbus and Embraer. This is creating ness relations with Ukrainian air car- the past decade, all 25 have operated a market for aircraft that are being riers may also want to discusses pro- independently. About a year ago, retired in the West, as well as a ma r- spective relations with a Commercial though, five of the smaller air carriers ket for aftermarket parts and services Officer on the Embassy staff: in the Ukraine agreed to form an alli- needed to keep the aircraft in the air. ance: As the numbers of these aircraft con- tinue to increase in Eastern Europe, o National Ukrainian Airlines, that part of the world becomes more o ICAR (based in Kharkiv), important as a source of customers to David Hunter o Lviv Airlines, the aviation distribution industry. Senior Commercial Officer o Luhansk Airlines, and US Commercial Service Kiev o . The Ukrainian Aviation Alliance may 7 Kudriavskiy Uzviz be the first of its kind in the post-Cold Kiev, 04053 They are joined in this alliance by War Ukraine but it is probably not the Ukraine KYI Avia, one of Ukraine's largest last. The three largest international travel agencies. The new alliance is air carriers in the Ukraine have started Tel: (380 44) 417-1413 known as the "Ukrainian Aviation negotiating to form their own alliance. Fax: (380 44) 417-1419 Alliance." The Alliance has elected a These three are: Direct E-mail: Board of Directors, which is headed [email protected] by Mr. Mykola Plaksiy. Plaksiy is the o Ukraine International Air- Office E-mail President of the National Ukrainian lines (a joint venture among [email protected] Airlines (his contact information is Ukraine, Austrian Airlines, listed below). Swissair, and Aer Rianta op- erating only international The new alliance has stated that they commercial flights), ASA members wishing to speak di- have four goals: o Aerosvit (a Ukrainian-Israeli rectly with the Ukrainian Aviation joint venture operating both Alliance should contact the Alliance’s o to lobby for the interests of domestically and internation- President: air carriers with the Ukrain- ally), and ian government; o Air Ukraine State Airlines o to coordinated flight sched- (the largest government-run Mr. Mykola Plaksiy, President ules and tariff policies; airline). Ukrainian Aviation Alliance o to create a clearing center for 90 Povitroflotskiy Prospekt air carriers and travel agents; Although Air Ukraine is the largest Kyiv 03036, Ukraine o to unite in their efforts to state airline, it is allegedly operating a reduce airport landing and collection of unprofitable interna- Tel: (380 44) 245-9852 navigation fees. tional and domestic routes. In De- Fax: (380 44) 245-9872 E-mail: [email protected]

September 2001 ASA-The Update Report 97 Issues of the Update Report Are Now Online! Are you reading a borrowed copy of the Update Report? Subscriptions to the Update Report are now FREE to persons in the aviation industry or the government. To receive your free subscription, send your name, title, company, address, phone number, fax number and email address to ASA. Our email address is [email protected] and our fax number is (202) 730-0274.

Back issues of the Update Report are now on-line! Missing a prior issue? Issues of the Update Report are being added to the ASA web site about one month after they are published. Complete sets of volumes six through eight are now on-line!

UPCOMING EVENTS * = Schweitzer, Lewis or Dickstein will be speaking there

Oct. 3 -5 Cargo Facts 2001, Seattle, WA. Contact Kristy Koch at (206) 587-6537 or e-mail [email protected] Oct. 17-18 Aircraft Quality & Safety Conference, London, UK. Call (+44) 20 7931 7072 for details. Oct. 19-20 Manufacturers Approved Replacement Parts Ass’n Mtg, Scottsdale, AZ. Call (480) 994-3353. Oct. 24-25 Asia-Pacific Aircraft Technology & Maintenance Conf., Singapore. Call (+44) 20 7931 7072. Nov. 1 * ASA Continuing Education Workshop, Newark, NJ. Contact ASA at (202) 730-0270 for details. Nov. 7-9 Regional & Corporate Aviation Indus. Suppliers Conf., Rancho Mirage, CA. Call (310) 203-9603. Nov. 14-15 Airline Component Management & Overhaul Conf., Copenhagen, Denmark. Call (+44) 20 7931 7072 Nov. 28-29 Quebec Ass’n of Air Carriers Conv. & Trade Show, Quebec City, PC, Canada. Fax: 418-871-8189. Dec. 4 * ASA Continuing Education Workshop, Miami, FL. Contact ASA at (202) 730-0270 for details. Dec. 5 * ASA Continuing Education Workshop, Ft. Lauderdale, FL. Contact ASA at (202) 730-0270.

2002

June 23-25 ASA 2002 Annual Conference , Four Seasons Hotel, Las Vegas, NV. Call (202) 730-0271 for details.

arising. from issues airworthiness prevent to identified properly are

that the parts we provide provide we parts the that sure making by industry the support to part our do

ble. Although the Association does not focus on airport security, we can all all can we security, airport on focus not does Association the Although ble.

i- poss as safe as aviation keep to part our do to pledge We tragedy. 2001 11,

SA’s deepest sympathies and regrets go out to the victims of the September September the of victims the to out go regrets and sympathies deepest SA’s A

0274 - 30 7 ) (202 Facsimile:

0270 - 730 2) (20 Telephone:

6 2000 DC Washington,

01 7 Suite NW, Street, H 1707

Association Suppliers Airline

98 ASA-The Update Report September 2001