Two-Way Traffic In Airplane Repair

High-Tech Work in U.S. Helps Make Up for Outsourcing

Northwest Airlines is gutting two hangars at Minneapolis-St. Paul International Airport because the standard work of overhauling the airline's 747 fleet has moved to Asia.

Air China, meanwhile, is sending its planes to San Francisco for high-tech engine work by United Airlines mechanics.

U.S. carriers have outsourced thousands of maintenance jobs. At the same time, however, some airlines have stepped up their efforts to bring maintenance work into their shops. The major carriers are "insourcing" work from domestic low-cost carriers that don't have their own maintenance crews and from airlines based in China, South Korea, Canada and elsewhere.

The aircraft maintenance industry is "a classic manifestation of globalization," said Martin N. Baily, senior fellow at the Institute for International Economics. "Labor-intensive, somewhat less technically sophisticated stuff goes overseas, but more high-tech, leading-edge stuff would remain in the U.S. Maybe the U.S. even has a comparative advantage."

Delta Air Lines' insourcing includes repair work on engines for Atlantic Southeast Airlines and Comair at Delta's hub in Atlanta. Its revenue from such work has increased, to $200 million last year from $40 million in 1999.

American Airlines recently signed a contract that gives it the option to repair Rolls-Royce aircraft engines for other airlines. United does maintenance work for Air China, Korean Air, Air Canada and the U.S. military.

"We make a high profit margin on engine overhauls and landing gear," said Joseph Prisco, president of Local 9 of the Aircraft Mechanics Fraternal Association, the union representing mechanics at United Airlines. "Air China sends a lot of their engine overhaul work to us. The costs are probably more expensive per head, but we do a faster job and better job than they can get done in their own country."

Globally, the business of repairing or overhauling airplanes is expected to grow to more than $50 billion by 2013, from $35 billion today.

The insourcing helps keep some airline employees busy and modestly bolsters the carriers' bottom line. "Through the bankruptcy process, one of the things we are trying to do is become more efficient -- to look at what we can do profitably and what we can't," said Jeff Green, a United Airlines spokesman.

But the global trends haven't blunted the pain felt by the mechanics who have ended up on the losing end of the outsourcing movement.