The airline is expected to resume service later in September. But under the terms of its agreement with the FAA, ValuJet will be limited to no more than 15 planes, flying initially to just five cities. That’s less than a third the size of its fleet before the Florida disaster. Rivals like Delta Air Lines have been taking advantage of ValuJet’s troubles to horn in on its markets. Meanwhile, the airline faces a daunting tangle of lawsuits and investigations, NEWSWEEK has learned, including criminal probes into the causes of the Florida crash. That’s in addition to a trade union’s charges that ValuJet is still not ready to fly, despite the FAA’s assurances.
All told, it’s been a rough summer for an airline that was not long ago one of the industry’s high-fliers. Founded three years ago by Robert Priddy, a former baggage handier, ValuJet grew from a two-plane upstart to a regional powerhouse owning 51 aircraft. Priddy and his chief lieutenant, Lewis Jordan, a former deputy to Continental’s Frank Lorenzo, took pride in building what they called a “lean and mean” operation. Among other things, that meant no hot meals or frequent-flier miles; pilot’s salaries were roughly half the national average.
The airline’s no-frills flights and tough cost controls meant it could offer enticingly cheap fares, as low as $89 for a one-way flight from Atlanta. Then came the Florida crash, which abruptly changed ValuJet’s image. Suddenly, critics suggested that maybe the airline was too mean and lean, that perhaps it was skimping on aircraft maintenance as well as on frills. There’s no evidence to suggest that was so; in fact, the crash has been attributed to hazardous materials, mislabeled by a subcontractor that caused a fire in the cargo bay. Even so, independent experts and federal regulators found what the FAA called “serious deficiencies” in ValuJet’s maintenance operations. For example: an engine that caught fire during one flight, mechanics neglecting critical repairs, a rate of “unscheduled landings” that was far higher than that of other airlines.
Such problems were clearly serious enough to persuade federal regulators to crack down on the airline-and move slowly in recertifying it. The Feds now tell NEWSWEEK that they are satisfied the airline can operate safely. Among other things, ValuJet appointed a retired air force general, James B. Davis, to serve as a new “safety czar.” It has since overhauled its aircraft maintenance and training procedures, in compliance with FAA directives, and reduced the amount of maintenance farmed out to independent subcontractors. That gives the airline greater assurance that the work can be performed more reliably and be better supervised. ValuJet’s smaller fleet will also be easier to oversee; under the FAA’s new regimen, the agency has increased the number of inspectors assigned to the airline from three to seven. “We’re thrilled,” said Jordan after the FAA authorized ValuJet to resume service last week. “We could be back in the air very soon.”
Not everyone is happy, however. Last week the union representing ValuJet’s flight attendants criticized the government’s decision, calling its investigation a “whitewash” and accusing Priddy and Jordan of being “unfit” to run the airline. According to a complaint filed by the union with the Transportation Department, which has seven days to receive objections from any third parties, the two executives misrepresented the qualifications of a key manager responsible for maintaining ValuJet’s aircraft. They also withheld information critical to determining whether the airline is indeed safe to fly, according to a union statement. ValuJet executives dismissed the claims as an attempt to sabotage discount airlines like ValuJet in favor of unionized carriers such as Delta. A Transportation Department official told NEWSWEEK that it had carefully reviewed the union’s objections but found “no evidence” that ValuJet’s management was unqualified.
Still, ValuJet will face other legal turbulence once it returns to the skies. Apart from whatever liabilities it may incur as a result of the Florida crash, the airline also faces criminal investigations into the accident. “ValuJet has received grand jury subpoenas for the production of various documents” in both Florida and Georgia, according to the company. Executives also confirm that it had received an “informal request” for documents from the Securities and Exchange Commission, raising the possibility that it could come under scrutiny for federal securities violations. The airline would not comment further.
More immediately, ValuJet has to get back in business. The FAA’s ongoing scrutiny should help allay public safety concerns. Whether ValuJet can operate competitively is another question. The airline entirely missed the all-important peak summer flying season. Expenses are also likely to rise, aviation experts say, because it will be more costly for ValuJet to perform its own maintenance work, as opposed to hiring independent contractors. Meanwhile, Southwest Airlines has been nibbling at markets that were formerly ValuJet’s domain, as has giant Delta. Leaner and meaner after a two-year cost-cutting program of its own, Delta is also starting up a discount airline, just as ValuJet is trying to get back into the game.
None of this seems to faze ValuJet’s top executives. Jordan last week emphasized ValuJet’s strong financial condition. (The airline has more than $200 million in cash.) Initially it plans to begin service from Atlanta to Washington Dulles, Orlando, Tampa and Ft. Lauderdale; in time, it hopes to expand service to 17 cities. Fares will be as low as ever, Jordan promises. This may not help make ValuJet the power it once was. But at least the airline has overcome its biggest hurdle: another crack at the once friendly skies.
