Issues of Importance to U.S. Civil Aviation and Civil Aircraft Manufacturers

MAINTAINING A STRONG FEDERAL AVIATION ADMINISTRATION

THE FAA'S IMPORTANT ROLE IN AIRCRAFT SAFETY AND THE DEVELOPMENT OF U.S. CIVIL AERONAUTICS

AEROSPACE INDUSTRIES ASSOCIATION OF AMERICA, INC. A Joint Project of the Aerospace Research Center and the Office of Civil Aviation

Consultants Gellman Research Associates, Inc.

A Publication of the Aerospace Research Center Virginia C. Lopez, Executive Director

AEROSPACE INDUSTRIES ASSOCIATION OF AMERICA, INC. 1250 Eye Street, N.W. Washington, D.C. 20005

September 1989 INTRODUCTION

The civil aircraft industry has been a consistent "economic winner" for the United States, contributing positive trade balances year after year. In 1988, the U.S. enjoyed an aerospace trade balance of $ 17.9 billion. Over 70 percent of that surplus can be attributed to the worldwide success of U.S. civil aircraft, eng ines and part s.

Aside from its trade contributions, the civil aircraft industry contributes tci the nation through technology spinoff and a wide range of industri al technological capability. It provides jobs for over 330,000 workers - approximately one-quarter of aerospace employment.

The commercial transport sector has been the strength of U.S. civil aircraft manufacturing in recent years. A record backlog and strong passenger growth projections indicate that will continue. Increased shipments of pi ston rotorcraft in 1988 and an anticipated 1989 upturn in unit sales of turbine helicopters - plus strong sales of business jets and sing le eng ine pi ston aircraft by general av iati on manufacturers - are other promi sing signs for the civ il sector. This positive pi cture helps offset the less optimisti c prospect for the aerospace defense sector. Until recentl y, U.S. military orders provided the impetus for growth in the industry ' s workload; however, civil orders now drive backlog growth.

C ivil aircraft industry prospects are good. But it woul d be a mistake for the United States to assume that the industry's market positi on is indefinitely assured. Foreign competition is strong and growing. Other countries recognize the important role aerospace plays in developing a nati on' s industrial and technological capabilities. Aerospace. includ ing civil aircraft manufacture, contributes enormously to nati onal economic well-being through techno logy spinoffs and a diffusion of techno­ logical capabil ity to other industri al sectors. This awareness - combined with the pressures of financ­ ing new aircraft and engine projects and of competing fo r sales in a growing market that is now largely outside the United States - has fos tered a global industry of many hi ghl y capable pl ayers.

C ivi I av iati on trade issues - partic ul arl y fo re ign government support of manu facturers - have received considerabl e attention in recent years. In a number of instances, the fact that civil aircraft manufacturers abroad receive direct government support influences the United States' business position. But matters re lating to U.S. poli cy and its implementati on also have a strong influence on U.S. civil aviati on and U.S. civil aircraft manufac turers.

This paper is one in a seri es on civil aviation issues. The seri es is published in an e ffo rt to look beyond present success and assure that a world-class U.S. civil aircraft industry rem ains on the leading edge. 4 MAINTAINING A STRONG FEDERAL AVIATION ADMINISTRATION: THE FAA'S IMPORTANT ROLE IN AIRCRAFT SAFETY AND THE DEVELOPMENT OF U.S. CIVIL AERONAUTICS

SUMMARY

The Federal Aviation Administration (FAA) is U.S. production often involves either multi-country pro­ one important part of a triad that includes aircraft manu­ duction of U.S.-designed equipment or participation in facturers and the airlines, and is responsible for safe, ef­ multinational consortia with other countries. In such in­ ficient air travel. The FAA's certification system, regu­ stances, key components, subsystems, or even entire latory standards and airworthiness directive approach to products are manufactured overseas. The United States correcting problems have gained worldwide acceptance. has benefitted tremendously from these arrangements - Its roles of ensuring safety and promoting the use of U.S. its civil aircraft exports have grown far more than imports aircraft have been complementary and compatible. of these products from other countries. Joint production arrangements are facilitated by bilateral agreements that Today the FAA faces a different, more dynamic have existed for years between the United States, Canada environment than it did when it was established 30 years and European countries. As air travel increases in the ago. The type and nature of services required from FAA Pacific Rim and countries there develop their own civil continually change, yet the FAA has budget constraints aircraft industries, market access in that area of the globe that often prevent it from responding rapidly. Changes in often depends upon production sharing. However, the the international civil aircraft market in recent years United States may not have up-to-date bilateral certifica­ include the advent of multinational aircraft production, tion agreements with these countries. Developing indus­ strong competition for aircraft markets, and even com­ trial nations may not even have well-developed govern­ peting certification standards as foreign countries' stan­ ment airworthiness authorities. dards have gained credibility and standing worldwide. At the same time, the FAA's reputation as a technical agency Working with the European nations in air­ has suffered where the politics of safety issues have worthiness standards harmonization is also a critical tended to supersede decisions based on technical consid­ FAA activity. The existence of a highly competitive erations. European industry, and the greater economic integration of Europe, has led to elimination of competing European While the FAA and others concur in the need to national standards and the development of Joint Air­ attract and keep the most qualified technical personnel, worthiness Requirements (JARs). The United States is budget pressures make it difficult to provide the neces­ currently working with Europe to achieve common per­ sary financial incentives. An FAA pay increase program formance-based design standards across countries. A has been designed to address this issue for controllers, serious concern is that the United States does not have full safety inspectors and technicians who service and main­ input to the European deliberations on the setting of tain air traffic contro l equipment. It may be a model for standards. Without it, there is a possibility that the JARs incentives for other employees. The Aircraft Certifica­ could supplant the FARs as the internationally-accepted tion Regulatory Program, fo r example, has experienced regulations governing civil aviation, posing market prob­ difficulty in recruiting and training aerospace engineers, lems for U.S. manufacturers. manufacturing inspectors and flight test pilots. The matter of continuing education for certification staff has The agency's technical independence has al­ also been recognized as beneficial but has not yet been ready been eroded by the politicization in the United fully addressed. States of aviation/safety issues. Various administrations, through the Office of the Secretary of Transportation, Important aspects of the FAA's role today in­ have become involved in setting rulemaking priorities, cl ude support in establishing or updating certification all ocating FAA resources and decision-making. Con­ agreements with other countries, and providing technical gress has engaged in aircraft design by making technical assistance for the development of airworthiness capabil­ decisions through the political-legislative process. ity in these countries. T hi s aspect of the FAA' s mandate Manufacturers have absorbed the greater economic ri sks is vital to U .S. manufacturers seeking business. Today, of decisions based on un substantiated arguments. Ulti- 5 mately these costs, which can be out of proportion to the automatically accepted as being rooted in techni­ potential for increased safety, are paid for by the public. cal excellence. Occasionally, FAA standards are The usurpation in some instances ofF AA' s role in setting not being accepted by foreign authorities. The airworthiness requirements means that accountability for agency is no longer seen as the final U.S. author­ air safety has been diffused. This has weakened the ity on aircraft safety. agency's standing in the international aviation commu­ nity. RECOMMENDATIONS CONCLUSIONS Support the FAA' s current plan for incentive pay Current FAA plans for incentive pay programs programs. Such a plan will only be useful where are important steps forward in attracting the best net additional funds are appropriated to pay for it. qualified personnel. Budget constraints and in­ fl exibility should not be permitted to undermine Expand the use of private and company designees the agency's ability to attract top-flight talent and (designated engineering representatives, desig­ to constantly upgrade existing staff. nated engineering organizations, designated manufacturing inspection representatives, and As new markets open up in the Pacific Rim designated airworthiness representatives) to ful­ countries and elsewhere, the FAA will play a key fill FAA services and provide additional re­ role in updating bilateral airworthiness agree­ sources without significant cost to the agency or ments, and providing technical assistance to the federal budget. foreign country airworthiness organizations. These activities support U.S. manufacturers Try new approaches to FAA staff training includ­ involved in supplier relationships or joint ven­ mg: tures with non-U.S. compani es. an extensive exchange or rotation pro­ gram through which FAA staff can spend time An inherent requirement in FAA's worldwide working with other government agencies (such regulatory role is sensitivity to national sover­ as NASA or DOD), research laboratories or eignty concerns and the capabilities of foreign private companies as a means of increasing tech­ airworthiness authorities. The recent FAA rule nical knowledge. change permitting service and maintenance of U.S. fleet aircraft abroad is consistent with the FAA staff visits to manufacturers and changing nature of the market and helps meet the participation in manufacturer training sessions to growing demand for maintenance of U.S.-regis­ acquire familiarity with new technologies and tered aircraft worldwide. processes.

The FAA 's effort s to obtain commonality in air­ G iv e strong priority to working with the Euro­ craft certification requirements, particularl y with pean countries who are developing Joint Air­ the European Joint Airworthiness Requirements worthiness Requirements to insure their com­ (JARs), are necessary to prevent duplication of monality with U.S. standards, and the continued effort and increased costs. At the same time, it is integrity of U.S. Federal Airworthiness Regul a­ important to in sure that the JAR requirements do tions. not supplant the U.S. Federal Aviation Regula­ ti ons (FARs). This could have a negative impact Maintain a strong FAA commitment to updating on U.S. technology and FAA regulatory leader­ bilateral airworthiness agreements with foreign ship. countries and providing technical airworthiness assistance. The United States cannot afford to lose the impor­ tant advantage provided by the FAA's preem­ Restore the FAA's independence as a technical inence as a standard setting organization. If for­ decision-making organi zation- free from politi­ eign countries see FAA ruling as politicall y in­ cal influence- so that it can be seen once again as flu enced, the agency's decisions are no longer the final U.S. authority on aicraft safety. 6 MAINTAINING A STRONG FEDERAL AVIATION ADMINISTRATION: THE FAA'S IMPORTANT ROLE IN AIRCRAFT SAFETY AND THE DEVELOPMENT OF U.S. CIVIL AERONAUTICS

The Federal Avi ation Administration which, fo r meet. The FAA has frequentl y acknowledged problems over 50 years, has set standards governing the design, attracting and retaining quali fied technical personne l. producti on, airworthiness, operati on and maintenance of aircraft - and ensured compliance - is one important part Thirty - even 20 - years ago, commercial trans­ of a tri ad responsible fo r safe and efficient air travel. ports, which constitute the largest share of civil aircraft , Aircraft manufacturers, and the airlines who operate and were produced almost entirely in the United States. maintain the ai rcraft in the service of passengers, share These U.S. aircraft consisted largely of U.S . s y s t e m ~ and that role w ith the government agency that regulates them. components. Today, the United States has strong compe­ The success of this three-way relati onship over the years tition from other countries and companies from many is evident in the outstanding safety record of air travel. * nati ons pursue the same aircraft sal es opportunities. Now, too, U.S. producti on often involves either multi-country The FAA's regul atory acti vities have been an production of U.S.-designed equipment or participati on important factor in the worldwide preeminence of U.S. in multin ational consorti a with manufacturers in other civil aeronautics. Its certi ficati on system, regul atory countries. In this environment, opportuniti es fo r U.S. standards and airworth iness directi ve approach to cor­ sales abroad depend upon FAA-negotiated bilateral air­ recting problems have gained worldwide acceptance. worthiness agreements or technical assistance programs The work of the FAA has in no small measure contributed with foreign countries. The ability to acquire necessary to the acceptabili ty and success of Ameri can aircraft product approvals or technical assistance on a timely products around the globe. The FAA's mandate, under basis is important to U.S . producers and frequently in­ the Federal Aviation Act of 1958, includes "regul ati on of volves the approval of products produced overseas- and air commerce in such a manner as to best promote its the acceptance of a fore ign country's airworthiness cer­ development and safety," and " the promoti on and en­ tificati on. couragement and development of civil aeronautics." The agency's roles of ensuring safety and of promoting U.S. Foreign airworthiness standards have, in fac t, civi l av iati on have been complementary and compati ble. gained credibility and standing worldwide and poten­ ti all y could supplant FAA standards in some areas.* This Today, 30 years after the passage of the Federal could result in considerable cost for U.S . manufacturers Aviation Act, U.S. manufacturers and the FAA- whi ch in terms of critical systems and components bein g recle­ regulates both manufacturers and their airline customers signed to meet other than FAA standards. The FAA's - face a very different environment. The civil aircraft worl dwide reputati on as a technical agency has suffered market has undergone considerable change and restruc­ in recent years, its independence as an agency making turing, one aspect of which is rapid change in technology. technicall y-based decisions in the public interest has Manufacturers are developing advanced-technology c ivil diminished. The politics of safety-related issues have aircraft incorporating new approaches to propul sion, superseded decisions on technical merits and attracted in­ structures and flight management systems. They are in ­ volv ement in rulemakin g by the Office of the Secretary of troducing new manufactu ri ng techniques fo r greater effi­ Transportati on. In addition, various constituencies have ciency and cost savings. Thi s places heavy demands influenced Congress to go beyond its role of setting upon the FAA for technical expertise - demands whi ch poli cy and providing guidance to take a hand in technical can be difficult for a budget-constrained organi zati on to decisions - in effect, to regul ate by legislati on. These

* Despite voca l public concerns for sa fety since deregulation in 1978, * The FAA is curremly working to deve lop common regulations with that record has generally improved in recelll years in view of the European nat ions who have developed the Joint A irwort hiness Re­ significalll increase in number of hou rs and miles fl own and of aircraft quirements (JARs) as a se t of reg ulations acce ptable am ong them­ departures. se lves . 7 developments have preempted the FAA's role and its Additional training and continuing education for power and independence to do its job guided solely by FAA certification staff could also be highly beneficial, as technical factors. noted by FAA and the NRC. Staff must keep up with the latest level of technology embodied in civil aerospace U.S. civil aircraft manufacturers operate in a products. Engineers and others need to become better dynamic environment where the type and nature of serv­ inf01med about industry technology developments, ices required from FAA continually change. It is in the changes in engineering practice and design aids, certifi­ interest of manufacturers and their airline customers- and cation data systems, and so forth, in order to anticipate of th e flying public whose first concern is safe, affordable changes in both technology and processes that companies and efficient air transport - that the FAA remain the will employ in future certification programs. These preeminent technical agency for civil av iation. include an increasing use of computer design aids, com­ posite materials, electronic systems, microprocessors FAA Personnel Resom·ces and sofware, among others. One concept which deserves exploration is an exchange or rotation program where Studies by the FAA and others have agreed on the FAA technical staff can spend time working with other need to assure that compensation for technical personnel government agencies (NASA or DOD), research labora­ working in regul atory standards and compliance, includ­ tories or private companies as a means of enhancing tech­ ing aircraft certification, promotes recruitment and reten­ nological knowledge.6 (While FAA employees may tion of the most qualified individuals. Additional staff participate in government exchange programs, this prac­ training has been identified as another critical require­ tice is not widespread for aircraft certification technical ment. staff.)

In a management study, the FAA noted prob­ Another means to achieve some of the beneficial lems in the certification area, which most directl y impacts e ffects of an industry/FAA exchange program would be manufacturers: "The Aircraft Certification Regulatory to provide the staff and travel resources necessary forcer­ Program is experiencing increasing difficulty in recruit­ tification office or technical personnel to conduct peri­ ing and training well-qualified aerospace eng ineers, manu­ odic visits to manufacturers. Typically, FAA staff visit a facturing inspectors and fli ght test pilots .... The current manufacturer only when it is related directly to a certifi­ pay structure is not competitive with the aerospace indus­ cation project or problem. One solution could be FAA try, making it difficult to recruit and retain highly quali­ staff attendance at manufacturer training sessions on a fied personne l. "u The National Research Council's space available basis. (NRC) 1980 review of aircraft certification practices recognized FAA's difficulties in attracting qualified per­ sonnel.' A report by the U.S. Congress' Office of Designees- A Partial Solution to Budget Constraints - Technology Assessment also supported th e need for Allowing expanded use of designees to fulfill FAA additional resources in the aircraft certification area: services could draw upon industry expertise and add "OT A finds that, in the long term, FAA wi II need greater technical depth to the agency. Designees are private expertise on its own staff in areas of new aviation technol­ individuals or companies appointed by FAA to perform ogy to provide oversight comparable to today 's."·' specified duties in its stead but under its authority. Des­ ignated engineering representatives (DERs) - who per­ The FAA is initiating a 5-year incentive pay pro­ form duties related to data approval and other compo­ gram to attract technicians, fli ght standard s personnel nents of certification programs - could ease the FAA's and air traffic controllers. This program provides addi­ workload. Even if additional DER input were restricted tional pay of up to 20 percent of base pay at hard-to-staff only to U.S. domestic manufacturing programs, it would facilities. About 2,000 employees would receive addi­ considerably relieve the FAA staff and, for example, tional allowances.'' The program is an important step in allow it to expand international activities. Allowing U.S. addressing the issue of qualified personnel and could companies, which qualify as designated engineering or­ serve as a model for aircraft certification employees. It gani zations (DEO ), to perform some functions that are should be noted that an incentive compensation plan now accomplished by FAA employees may be another would only be useful where net additional funds were means to remedy constraints on FAA resources. appropriated to pay for it. 8

DERs can provid e a significant resource advan­ considerably - its civil aircraft exports have grown far tage to the FAA since the federal government can main­ more than its imports. In 1988, the U.S. civil aircraft in­ tain a direct role in transport certification without having dustry recorded a positive trade balance of$14.3 billion. to pay DER salaries. In general, the federal government (See Figures, pages 12-13.) cannot be immediately responsive to dramatic changes in the workload of its employees while market demand can Whether the U.S. industry can equal or exceed increase the supply of DERs. 7 The FAA has a plan to such a performance in the future depends on the mainte­ implement an enhanced designee program; in addition to nance of free trade policies worldwide and an ability to DERs, it would cover Designated Engineering Organiza­ maintain technological leadership in their products. In tions (DEOs), Designated Manufacturing Inspection Rep­ any event, U.S. industry will have to continue to enter resentatives (DMIRs), and Designated Airworthiness into business endeavors with foreign companies both to Representatives (DARs).8 Properly designed and exe­ spread financial ri sks and to gain access to export mar­ cuted, such a program could allow industry to assume kets.* more duties without any compromise of safety and with costs paid fo r by private industry. With the considerable foreign competition for U.S. manufacturers - and with numerous companies pursuing The FAA - And The Needs of A Global Industry the same sales opportunities - the ability to acquire product approvals or technical assistance on a timely In today's hi ghly competitive international mar­ basis has become extremely important to U.S. producers. ket environment - with a heavy emphasis on multina­ The FAA recogni zes that it is operating in a different en­ ti onal aircraft programs - the FAA' s role has taken on vironment today. " Design and production sharing," the new dimensions for the U.S. civil aircraft industry : help­ FAA concludes, " is rapidly emerging in the civil aero­ ing maintain the preeminence of U.S. civil aeronautics, nautical product manufacturing industry on an interna­ and facilitating the industry 's participation in th e global tional scale, growing beyond the simple ' foreign suppli­ marketplace. ers' activities envisaged by the modern Bilateral Air­ worthiness Agreements of 1972 vintage toward the de­ International arrangements in which U.S. manu­ velopment of th e more complex 'transnational confed­ facturers are in volved include production of th e CFM-56 erati on ' contending with the realities of an integrated engine developed jointly by General Electric and world economy."'1 SNECMA of France, the Boe ing 767 whi ch has ri sk sharing partners in Italy and Japan among other countries, The intern ationally-oriented activities of the FAA In­ the McDonnell Douglas MD-I I transport whi ch in volves clude: partners in sixteen other countries, the International Aeroengines Y -2500 consortium whi ch includes Pratt & Negotiating bilateral airworthiness agreements Whi tney, Rolls Royce and other European and Japanese with other countries; compani es, and li censed production of the McDonne ll Douglas MD-80 aircraft in th e People 's Republic of Monitoring performance of foreign authorities China. W hile in each of these cases the product may be under bilateral airworthiness agreements; eli gible to ho ld a U.S. airworthiness certificate, key com­ ponents or entire products are manufactured overseas. In Developing special arrangements with foreign air­ all cases, except license production of the MD-80 in worthiness authorities to deal with intern ational China. existing bil ateral arrangements between the Un ited joint ventures and coproduction arrangements States and foreign country airworthiness authoriti es were between foreign and U.S. manufacturers; used to maintain the certification in tegrity of the product. In the case of the li cense production of the MD-80, the Maintaining maximum practical commonality tn FAA has conducted a technical assistance program to international aircraft certificati on standards; help organize a civil airworthiness authority in China.

The world civil aircraft industry as a whole has * The effects of forei gn government subsidi es for commerc ial aircraft experienced a tremendous increase in trade as a result of programs could still negati ve ly affect U.S . ex po rt s as well as under­ lllJn e the positi on of th e U.S . in dustry at home. internationalization and the Uni ted States has benefitted 9

Approving aircraft imported under FAR 21.29; and Sikorsky Helicopter and Bell Helicopter each faced this situation when they were in competition for license pro­ Issuing export airworthiness approval. 10 duction of a heli copter model in an Asian country. The country in question does not have an existing bilateral The FAA is involved in the approval process for airworthiness agreement with the United States. There aircraft and components imported into the United States, was no established procedure to permit production sur­ whether foreign-built aircraft or components purchased veillance in order that the helicopters produced could be from abroad by a U.S. company for installation into sold with a U.S. certificate of airworthiness. The FAA 1 aircraft manufactured in thi s country. In either case, this also indicated that the provision of direct oversight of the U.S. production certification would be an undue burden J involves FAA acceptance of a fo reign country's air­ worthiness authority certification under a Bilateral Air­ given the FAA's available resources. As a result, the worthiness Agreement; such agreements govern interna­ program did not go forward. tional trade in aircraft and components by defining there­ sponsibilities and types of approvals acceptable to signa­ The issue of FAA oversight was a paramount tory countries. Under bilateral agreements, FAA ap­ consideration in plans for the li cense production of the proval also is acceptable for the export of U.S. products MD-80 in the People's Republic of China. The license to nearly every part of the world. In fact, most countries production of the MD-80 in China is being accomplished do not have their own regulations for the design and along with an FAA technical assistance program to help production of aircraft; rather, FAA's have become preem­ organize a civil airworthiness authority in that country. inent in this regard . A number of European countries. This type of assistance by the FAA assures that accept­ however, have begun development of Joint Airworthiness able oversight is avail able for foreign companies that Requirements (JARs). Standardization of these with supply U.S. companies, are involved in joint ventures FAA regulations is an emerging issue and an extremely with U.S. companies, or export aircraft to the United important requirement for industry (see page I 0). States.

Hi storically, the civil aircraft manufacturing A commitment to updating bilateral airworthiness industry in the free world has been located in the United agreements and providing technical assistance to foreign States, Canada and Western Europe. The FAA has exist­ country airworthiness organizations is clearl y compat­ ing bilateral ai rworthiness agreements with these coun­ ible with FAA's role of ensuring safety while encourag­ tries and well-developed relations with their airworthiness ing U.S. civil aviation. authorities. However, U.S. relati ons are not as well developed with some newly industrialized economies International Regulatory Relations - Foreign Repair Stations Issue -Inherent in the nature of FAA ·s reaula- such as those in the Pacific Rim and elsewhere that are ~ rapidly entering aerospace manufacturing. Air transpor­ tory relations around the world is the need to exercise sen- tation services are growing rapidly in these countries; as sitivity where national sovereignty and pride are con­ these nations become sizable customers for aircraft sales cerned. If foreign governments conclude the United - commercial transports as well as li ght aircraft and States is di scriminating against the e fficacy of foreign he licopters -they also seek to obtain a share of produc­ airworthiness rules and capabilities, these governments tion. Often the leve l of overseas production is a key issue may reciprocate. The FAA perceived this to be the case among sales offers from competing manufacturers. in the in stance of limitations on U.S. carriers· ability to However, because they have not had a large hi storical obtain maintenance and repair services at foreign repair role in aircraft manufacturing, developing industri al stations; thi s was despite certificati on of the foreign countries generally do not have up-to-elate bilateral ar­ repair stations by the FAA and despite the fact th at U.S . rangements with the United States to provide for the airlines and manufacturers' maintenance bases have certification of design and production of aircraft or hi stori call y provided maintenance to foreign-registered components, or they may not have well -developed gov­ aircraft. In 1988, the FAA rev ised its ruling to remove re­ ernment airworthiness organizations. These are difficul­ stri cti ons on the use of overseas repair stations by U.S. ti es for U.S. manufacturers seeking to do business in carriers. Legislati on has si nce been introduced in Con­ these countries. The means to provide production inspec­ gress to severely restri ct or ban foreign repair station use. ti on systems which sati sfy FAA requirements may not If th e rule is reversed, trade could be reduced. Foreign exist. governments may retaliate as this ac ti on could be inter- 10

preted as a violati on of the General Agreement on Tari ffs some diffe rences between JARs and FARs in actual tests, and T rade (GATT). the major diffe rences are in interpretati on of the require­ ments: some JAR requirements and interpretati ons are The FAA rule change was a positive step reflect­ more stringent than the FARs. For a number of reasons, ing an awareness of the global nature of the market and there is a possibility that JAR requirements could sup­ the need to meet a growing demand for the maintenance pl ant the FARs as the internati onall y-accepted aircraft of U.S.-registered ai rcraft worldwide. Rule reversal and design regul ati ons. Since U.S. manufacturers have less the imposition of mirror image provisions by the United influence on the development of JAR requirements than States' trading partners, which currently do not place on the FARs, there is concern in the industry about the li m itations on repair of foreign aircraft by U.S. facilities, potenti al impact on U.S. technology and FAA regul atory coul d cause serious damage to the U.S . civil manufactur­ leadership. The ri sks may be heightened by Europe ' s ing industry. It could effecti vely restrict the ability of plan to accomplish greater economic in tegrati on in 1992 U .S. manufacturers to market their products and support and thereafter. JAR standards could supplant the FARs services abroad. as the preeminent certi ficati on standards because of the number of countries in volved in the JAR e ffort. The FAA Maintaining U.S. Preeminence in must continue to work to obtain commonality in aircraft Ai rcraft Certification certi ficati on requirements, but it will have to dedicate the personnel and other resources necessary to work with the Because U.S. manufactured aircraft have his­ JAR countries and to have an input to the JARs, as may torically dominated the airline fleets of the free world, be appropriate. FAA recogni zed thi s obligati on in a FAA's certification system, regul atory standards and recent re p o rt. 1 ~ airworth iness directive approach to correcting problems have gained worldwide acceptance. FAA preeminence as a standard setting organi ­ zati on is an important competitive advantage which the An important aspect of the FAA 's intern ati onal United States cannot affo rd to lose. Un fo rtunately, it has activities is the coordinati on of regulatory standards with been diminished by an erosion of FAA's technical inde­ foreign country airworthiness activit ies. At present, pendence. Great Britain and the USSR are the only countri es outside the United States whi ch maintain complete cer­ Pre-empting FAA -Regulation by tification regulations. 11 Other countries apply additional Micromanagement special conditions as they deem appropriate. However, 12 European countries have developed a Jo in t Air­ In recent years, th ere has been growin g publi c worthiness Requirement (J AR) for transport category awareness of health and safety issues and pressure fo r aircraft.* A JAR 23 for li ght aircraft is bein g developed. acti on to meet a range of concern s. Where av iati on safety There also may be JARs for helicopters but no formal is concerned, Congress and several Administrati ons have agreement to proceed has yet been es t a bli s h e d . 1 ~ responded by politicizin g the process of rul emak ing. Congress has gone beyond its role of setting poli cy and Common performance-based design standards providing gui dance and oversight. The Secretary of across countries p)·event need less duplicati ons of effort Transportation whose role, as envisioned by Congress, is in obtaining aircraft certi fication. For example, nine E u­ coord in ation of nati onal transportation poli cies, has ropean countries all ow U.S.-certi ficated aircraft on their become in volved in settin g of rul emaking pri oriti es, registers without modificati on but the United Ki ngdom all ocation of FAA resources, setting comment peri ods does not, causing additional expense for U.S. manufac ­ and e ffecti ve dates, and decision-mak ing. In so doing, turers. 13 As the Europeans e lim inate their own certifica­ FAA's authority has been undermined and decision­ tion differences, the resulting JARs are findi ng greater makin g based on technical facts has been replaced by de­ acceptance in the rest of the free world. Whi le there are cision-mak ing based on arguments that may not be sub­ stantiated.

* Europea n coun tries involved in Joint A irworthiness Requ irements While FAA has set perfo m1ance standards th at are : A ustria, Belgium, Denm ark, Finland, France, Ita ly, Netherl ands, perm it industry to be innovati ve in meeting the standards, Norway. Sweden, Switze rl and , United Kingdom. W es t Germ any. increasing ly, Congress has engaged in aircraft design by I 1

making technical decisions through the political-legisla­ FOOTNOTES tive process. For example, rulings on cabin interior materials have been made despite the unavailability from 1 Office of Airworthiness, Federa l Aviation manufacturers of materials that meet the stated require­ Administration, Aircraft Certification Regulatory Pro­ ments, and a lack of comparability among materials gram Management Efficiency Study, (Washington, D. C.: safety tests. And while the· installation of Traffic Alert September 1987), p. 52. and Collision Avoidance Systems (TCAS) is an impor­ 2 Ibid., p. 118; and, Aviation Safety Commis­ tant step in world aircraft fleet modernization and safety, sion, Vol. II: Staff Background Papers, (Washington, unrealistic deadlines were imposed - deadlines from D.C.: April 1988), p. 96. which it now appears necessary to retreat. Manufacturers 3 National Research Council, National Academy have had to absorb the greater economic ri sk of these of Sciences, Improving Aircraft Safety: FAA Certifica­ decisions as well as costs out of a ll proportion to the in­ tion of Commercial Passenger Aircraft, (Washington, crease in safety - and which must eventua ll y be passed D.C.: 1980), p. 24. along to the flying public. Moreover, actions that are .J Office of Technology Assessment, Congress of premature and inconsistent may reduce safety margins the United States, Safe Skies for Tomorrow: Aviation rather than improve safety. A far preferable approach Safety in a Competitive Environment, (Washington, D.C.: would be for the FAA, manufacturers and the air! ines to July 1988), p. 176. work in a more cooperative manner in evalu ating the pros 5 Air Traffic Control Association, ATCA Bulletin and cons of technical issues in the process of taking 88-1 2, (Washington, D.C.: December 1988), p. 5. corrective action. However, the executive order stan­ 6 National Research Council, Improving Aircraft dards for assessing the societal benefits and costs of Sc~f"ety, p. 28. regulatory changes are more and more being preempted 7 Wolfe and Newhyer, Aviation Industry Regu­ by legislative and other political pressures. lation, p. 126. x FAA, Project SMART, p. 119. In this environment, accountability for air safety 9 Office of Airworthiness, Federal Aviation has been diffused. The FAA - which has set standards Administration, £.\port/Import Airworthiness Certifica­ world-wide for several decades - has been weakened. A tion of Civil Aeronautical Products (FAA-P-8110-1), strong technology-based organization has lost prestige as (Washington, D.C.: March I, 1982), pp. 27-29. decisions have been taken out of its hands and made on 10 Ibid., pp. 7-10. political grounds alone. Foreign countries now see FAA 11 McDonne ll Douglas Corporation, McDonnell rulings as heavil y influenced by politics and this has Doug las Aircraft Corporation, Presentation to National meant that the agency's decisions are no longer automati­ Research Council Committee Studying FAA Safety cally accepted as rooted in technical excell ence. An FAA Procedures, 1980 (Slide 80-6EN-21472). certificate no longer has the presti ge it once had. Today, 12 Alan Postlethwaite, Flight International. De­ every country wants to do its own certification. This costs cember I 0, 198 8, p. II . U.S. companies enormous time and money and contrib­ u Ibid. utes to a further weakening of the standards that the FAA 14 FAA, Project SMART, p. 9 and 96. has set.

If U.S. civil av iation is to remain preeminent, a major component is a strong. respected regulatory au­ thority. The FAA must be able to attract hi ghl y qualified personnel, and maintain the network of technical alli­ ances sufficient to meet the demands for its service worldwide. And it must be restored to its role as the final U.S. authority on aircraft safety . 12 THE TRADE BENEFITS OF INTERNATIONAL COOPERATION IN AEROSPACE

The level of investment necessary to design, de­ Ultimately, international cooperation has pro­ velop and produce aircraft, especiall y large transports - vided U.S. producers with business they might not oth­ and their propulsion systems- often exceeds the net worth erwise have had, in view of the development of strong of a civil aircraft or engine manufac turers. The tremen­ competitors in this sector. The benefits are clear from the dous investment requirement has led companies from data on exports and imports of complete civi l aircraft for different countries to share financial ri sk in joint ventures the 1978 to 1988 period and where exports surpassed and coproduction arrangements. Subcontracting arrange­ imports by $7.6 bill ion in 1988 (see Fi gures). In the case ments that cross national borders are also common. of aircraft engines and parts, the trade balance increased from $66 1 million in 1980 to $2.3 billion in 1988. For There are market reasons as well fo r cooperative aircraft equipment, the trade data also show increases in intemational manufacturing agreements. In the commer­ exports and imports. The trade balance increased from cial transport sector, the larger share ofthe market is now $3. 1 billion in 1980 to $3.9 billion in 1987. In 1988, outside the United States. Therefore, sales abroad be­ aircraft equipment exports reached $5.4 billion, but a come extremely important in order to achieve the fairly substantial increase in aircraft equipment imports (to signi ficant unit sales necessary to sustain profitabl e $2.6 billion) led to a decline in the trade balance to $2.8 operations. When a U.S. manufacturer cannot penetrate billion. foreign markets without meeting local economic require­ ments, there are Clear economic incentives to conduct The changing nature of the market in which U.S. certain production acti vities overseas. Part of the trans­ industry operates was documented in an AlA report, formation of the civil aircraft and engine industry has thus The U.S. Aerospace Industry and the Trend Toward been "demand Jed," with overseas buyers imposing pu r­ Internationalization, March 1988. chase conditions. Offsets, coproduction arrangements and license production are now common practices in worldwide sales of commercial aircraft.

1 2

I:J Exp f•rts • lnl p()rts - -l· r :.. d c B a la n ce 10

T rade in Civil Aircraft ($ Billions)

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Ill Exports • Imports -- Trade Bal:.tnf..· e

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2 Trade in Civil Aircraft Engines & Parts ($ Billions)

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Exports • Imports

- Tr.adc Balance

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2 Trade in Civil Aircraft Equipment ($ Billions)

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Aerospace I ndustries Association