Justinian Lane

FAA’s “Largest Fine Ever” Wasn’t So Large After All

Do you remember back in March of this year when the FAA issued a $10.2 million dollar fine against Southwest Airlines because Southwest failed to inspect 737’s for fatigue cracks?  Shareholders have just filed a lawsuit against the airline alleging that the company abdicated its responsibility to properly inspect its aircraft.  An interesting fact is presented in the lawsuit: The 46 aircraft Southwest didn’t inspect flew 61,242 flights. 

Divide the $10.2 million dollar fine by the number of flights, and the FAA fined Southwest Airlines $166.56 dollars every time it flew a plane that hadn’t been inspected. That’s less than the cost of a single ticket on many of Southwest’s flights.

The real question is whether $166.56 is less than the cost of an inspection.  I bet it is, considering the (justifiably) high wages of flight mechanics.  Wouldn’t a more appropriate fine have been double, or perhaps triple the cost of the missed inspections?  Or some other figure that wouldn’t have the effect of allowing Southwest Airlines to save money by skipping safety inspections?

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Posted at 12:46 PM, Aug 05, 2008 in Business Culture | The Profits Over Safety Business Model
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Totally. However, had Southwest been appropriately fined, corporate apologists everywhere probably would have screamed "excessive" and organized to propose a bill to cap fines against negligent airlines. You know, the usual.

Posted by: Kia | August 5, 2008 2:59 PM

Clearly the plaintiff shareholders don't believe that the fine saved Southwest money, else they wouldn't have any claim.

Posted by: Lawyer | August 5, 2008 3:38 PM

As per usual, Justinian and Kia speculate without bothering to find out the facts that would show the speculation to be false -- the missed inspections were not a "per flight" inspection, but a periodic one. The fine -- and, more importantly, the hundreds of cancelled flights caused by the FAA grounding, which Justinian omits from the punishment -- clearly cost Southwest more than the cost-savings from a delay of a few months in inspections that they undertook anyway. And all Justinian had to do to find this out was read the complaint he was talking about! Or even the summary of the complaint in the short article he linked to! Typical Lane carelessness -- or dishonesty.

If Justinian really had any concern for the Southwest shareholders on whose behalf this suit is purportedly brought, he might note that those shareholders will be paying for both the plaintiffs' and the defense attorneys -- all for the privilege of an eventual settlement that takes money from the shareholders' right-hand pocket and gives it to their left-hand pocket. Shareholders lose, lawyers win.

Posted by: Ted | August 5, 2008 7:34 PM