Arrow Air Inc., the Miami-based airline whose plane crashed yesterday in Newfoundland and killed all 258 people on board, paid the Federal Aviation Administration $34,000 in civil penalties last June to settle charges of safety violations the FAA developed during special investigations.
The violations ranged from "failing to perform maintenance and preventive maintenance on its aircraft" to inadequate record-keeping, FAA documents show. Among other things, FAA inspectors found incomplete training records "due to poor management and control."
As is customary in the civil penalty cases, Arrow did not admit regulatory violations. FAA and Arrow officials said yesterday that the questions raised during those special inspections in 1984 were resolved.
Arrow is one of a number of small airlines that operate older planes and survive primarily on charter business, although Arrow also operates scheduled flights between Puerto Rico and the U.S. mainland.
The DC8 that crashed yesterday was chartered by the Multinational Force Headquarters in Rome to carry U.S. personnel home for Christmas after peace-keeping duty in the Mideast.
Arrow also has a $13.8 million contract with the Air Force's Military Airlift Command to provide regular passenger flights from Norfolk to Spain and Africa and from the Philippines to Diego Garcia in the Indian Ocean.
The Pentagon is a steady source of revenue to the charter business. Capt. Wayne Crist, a spokesman for the Military Airlift Command, said yesterday that the Air Force is paying civilian airlines $424 million this year for passenger and freight services.
Airlines are selected by competitive bid and must prove that they meet FAA safety requirements. Military aircraft, Crist said, "are not set up for routine passsenger service . . . . It doesn't make sense to try and compete with airlines on routine, standard commercial routes."
Seventeen U.S. carriers are under contract to the Air Force, including well-known names like Northwest and United, but also many lesser-known names such as Arrow and Rich International.
The FAA safety violations were discovered as part of an industrywide inspection ordered in 1984 by Transportation Secretary Elizabeth Hanford Dole. Arrow was one of 16 carriers ticketed for additional FAA surveillance after a first round of inspections.
Anthony J. Broderick, the FAA's associate administrator for aviation standards, said, "I honestly think that if you take a look, you will find that Arrow had significant discrepancies and needed significant corrective action. We needed to stay on top of it, and they stayed fixed."
Richard P. Skully, who once held a position similar to Broderick's at the FAA and is now senior vice president for maintenance and operations at Arrow, said, "We have satisfied the FAA."
Arrow Air is one of several Miami companies owned or controlled by the family of George E. Batchelor, a businessman with a long history in Florida aviation. Other Batchelor companies own and lease aircraft, perform aircraft maintenance and manufacture and install "hush kits" to bring older, noisy engines such as those on the plane that crashed in compliance with current noise regulations.
Arrow Air leases most of its planes, including the DC8 that crashed yesterday, from International Air Leases, a Batchelor company. Arrow operates 11 airplanes, Skully said, including one McDonnell Douglas DC10 jumbo, three Boeing 727s and seven McDonnell Douglas DC8s, not counting the one that crashed.
Besides the $34,000 paid to the FAA, Arrow Air has paid an additional $20,000 in civil penalties since 1983 to the now-defunct Civil Aeronautics Board and the Department of Transportation for failing to provide service as required to American Samoa and for failing to file financial data within required time limits, a DOT spokesman said.
The most recent available data at the Department of Transportation shows that Arrow had an operating loss of $7.2 million for the first nine months of 1984, the spokesman said.
Batchelor told Knight-Ridder Newspapers in an interview last year that the airline has never produced much of a profit. "The buying and selling and leasing of aircraft has been the most profitable part," Batchelor said.
He founded the airline in 1947 as a charter carrier based in California. Arrow and 185 other so-called "irregular" carriers were grounded by the old CAB in 1953 because it found that those airlines were taking business from regularly scheduled airlines. Arrow was revived in 1981, three years after Congress deregulated the airline industry partly to encourage new carriers to enter the business.