The disclosure Thursday that Flyi Inc. may have to pay a $1.55 million fine because of safety violations committed by its predecessor marked the second time in two years that the company has been fined for such infractions.
Dulles-based Flyi is the parent of financially troubled Independence Air. A year earlier, the Federal Aviation Administration proposed a $1.5 million fine against Flyi's predecessor, Atlantic Coast Airlines, because of similar safety violations from 1999 to 2004. Atlantic Coast negotiated a $1.25 million settlement and promised the government that its maintenance and record-keeping problems had been corrected.
"But they hadn't," Laura J. Brown, an FAA spokeswoman, said yesterday. "Some of the same problems were continuing."
Both the 2004 fine and the one proposed Thursday are higher than the average penalties assessed by the FAA. This week's fine -- for violations that occurred over a short period of time, from May through October 2004 -- might have been lower if Flyi hadn't already been sanctioned by the FAA, Brown said.
"The reason the fine was so large was that the problems in the current case were similar to those identified in the previous case," she said. "It's a large amount. In the course of the past couple of years, we have had a handful of fines that [large]. Most of the fines are not in that category. When you get a fine in that category, it's generally the result of . . . some kind of breakdown in the system."
Flyi officials said they reported the problems in both cases to the FAA and corrected them each time, blaming them on an outdated computer maintenance-tracking system. As a result of the faulty system, the airline said, it failed to perform safety-related aircraft tests and inspections at required intervals. In one instance, Atlantic Coast continued to operate a jet on 455 flights after a deadline had passed for a "heavy maintenance" check, the FAA has charged.
Flyi said the alleged violations involved Independence Air and United Express flights operated by Atlantic Coast, which ran commuter flights for United Airlines and Delta Air Lines. Last fall, Atlantic Coast was renamed Flyi, which dropped the commuter business to operate Independence Air.
The FAA says Flyi has complied with government regulations -- the airline has a new tracking system now -- and is safe to fly. "If they weren't safe to fly, we wouldn't let them fly," Brown said.
Yesterday, Flyi officials were again preparing to return to the bargaining table to try to knock down the fine. The FAA has given the company 30 days to fight the charges and make its case for a lower fine.
"We have been invited to use the informal process to discuss their findings and determine the truth," Bill Lange, Flyi's vice president of safety, compliance and security, said in an interview last night. "At the moment they are allegations. Admittedly we self-disclosed them. But there are reasons behind them that the FAA may not have given proper weight to."
The FAA fines dozens of airlines, large and small, each year and has shown a willingness to strike a bargain. In the late 1990s, for example, it proposed a $5 million fine against America West for maintenance-related violations. The two sides settled for $2.5 million.
More typical, though, was the $100,000 fine assessed against Delta Air Lines in February for a hazardous materials violation. The FAA knocked that one down from $165,000.
"Normally the airlines come in and make a case and say: 'Look, we don't think this fine should be [assessed] for the following 23 reasons,' " Brown said. "Then we take a look at that and we may make a determination to reduce that or not. The whole point of our enforcement policies are to deter people from not following the rules."
Atlantic Coast paid the $1.25 million fine in June 2004 to settle an allegation that it had "failed to have a properly functioning aircraft inspection program and failed to keep appropriate maintenance records." The latest charges are similar.
"This says to me: They had a record-keeping problem. I have not heard anything that says to me: They have found an unsafe airplane," said John M. Cox, president of Safety Operating Systems LLC, a District-based aviation safety consultant who says he has not done any work for Flyi. "I don't believe Independence Air is a slipshod airline."
Flyi had $4.98 million in cash and cash equivalents on March 31, according to the company's most recent financial statement. The airline lost $103.7 million in the first quarter and expects to lose money for the rest of the year.
Flyi shares closed yesterday at 73 cents, unchanged from Thursday.