At the same time, price competition has forced airlines to contain costs. This report focuses on U.S. passenger airlines because their outsourcing of maintenance, especially to foreign countries such as China and El Salvador, has generated specific concern among Members of Congress. Engine Repair and Overhaul . MRO Outsourcing and Employment

All airlines outsource some of their aircraft maintenance. The MRO sector in China has grown along with the airline industry. The issues raised have included quality control procedures; the level of regulatory oversight; mechanic pay, skill, training, and experience; the degree of qualified supervision; the lack of English language skills or requirements to read and comprehend maintenance manuals; and the absence of drug and alcohol testing programs on par with those required at U.S. repair stations. Statistical analysis of the relationship between airline service reliability and maintenance outsourcing also is inconclusive. Moreover, there are concerns that FAA's resources and capabilities to inspect foreign repair stations are spread thin. 112-95 ) address concerns over bilateral aviation safety agreements with respect to FAA inspection authority. Workforce Issues

Considerable concern has been raised in the media regarding pay rates for foreign repair station workers, particularly those located in Latin America. Consequently, limited English language skill among workers at these facilities may not, by itself, be cause for significant concern. Reflecting these concerns, Congress included provisions related to the oversight of foreign repair stations in the FAA Modernization and Reform Act of 2012 ( P.L. Part 145 by February 14, 2013, with assessments based on the type, scope, and complexity of work performed; FAA to ensure that foreign repair stations are subject to appropriate inspections consistent with existing U.S. requirements; That agreements with foreign aviation authorities or other foreign government agencies provide an opportunity for FAA to conduct independent inspections of foreign repair stations when warranted by safety concerns; FAA to notify congressional oversight committees within 30 days of initiating formal negotiations with foreign governments on new maintenance safety or maintenance implementation agreements; FAA to issue an annual report describing improvements to identify and track where air carrier (14 C.F.R. Part 121) maintenance is performed; a staffing model regarding the number and geographic placement of FAA inspectors; inspector training; and a quality assessment of FAA and foreign authority inspections performed under existing agreements; FAA to request that all member countries of the International Civil Aviation Organization establish drug and alcohol testing programs encompassing all safety-sensitive maintenance workers that perform work on commercial air carrier aircraft; FAA to publish a proposed rule by February 14, 2013, to require drug and alcohol testing programs at all Part 145 repair stations that service Part 121 aircraft, consistent with the laws of the country where the work is performed; and FAA to conduct annual inspections at all foreign repair stations consistent with obligations under international agreements. Policy Implications

While U.S. airlines are increasingly sending aircraft overseas for major repairs and overhauls, highly skilled maintenance workers in the United States working on foreign aircraft have helped the United States retain a positive trade balance of aircraft maintenance work in the globalized MRO industry. Safety concerns raised regarding work performed by foreign repair stations over the past decade have largely been anecdotal, and detailed studies have not identified specific indications that outsourcing maintenance to foreign MROs has increased risk. Nonetheless, examination of maintenance offshoring practices reveals several potential policy implications both for U.S. jobs and for airline safety. The greatest threat to such standing does not appear to be primarily from the offshoring of heavy maintenance, but rather from the possibility that other countries may invest heavily in advanced training and technical capabilities to compete more directly with the United States on high-value engine and component repair and overhaul operations. Implications for Aviation Safety

With regard to safety, FAA has limited resources to allocate to oversight and inspection of foreign repair stations, thus necessitating reliance on foreign regulators and airline auditors to conduct routine oversight of foreign repair facilities.
Airlines outsource maintenance to countries like China and El Salvador to achieve cost savings from the comparatively lower wages and from lower costs to build and maintain repair facilities. In some cases, particularly in China, government investment and other incentives, along with backing from national airlines, have spurred rapid expansion of the foreign aircraft maintenance industry over the past decade. While airline maintenance work outsourced to foreign repair facilities has increased considerably over the past decade, there are no conclusive data indicating that this has directly resulted in the loss of U.S. jobs. Despite increased maintenance outsourcing, the United States continues to maintain a positive trade balance for airline maintenance work, a trend that likely reflects the United States' advanced capabilities on high-value engine and aircraft component work.
While investigative reports and labor union sponsored studies of airline outsourcing practices have been critical of foreign repair facilities, more detailed statistical analysis does not support conclusions that maintenance outsourcing or offshoring has had measurable negative impact on safety, quality control, or reliability. Although some experts believe that safety is being compromised and the regulation and oversight of foreign repair stations needs to be improved, analyses of recent trends do not provide obvious evidence that maintenance outsourcing has adversely affected airline safety.
Specific concerns have been raised regarding the Federal Aviation Administration's (FAA's) limited resources to oversee foreign repair stations, and FAA's extensive reliance on foreign regulators and the airlines to monitor these facilities. Additional concerns have been raised over worker training and qualifications at foreign facilities, the relatively low numbers of workers at these facilities with FAA certification, and the lack of English language skills necessary to read and comprehend maintenance manuals and instructions.
Congress also has been concerned about the adequacy of drug and alcohol testing programs at foreign repair stations that work on U.S. aircraft. In the FAA Modernization and Reform Act of 2012 (P.L. 112-95), it mandated drug and alcohol testing at those locations in a manner consistent with existing bilateral aviation safety agreements and the laws of countries where the repair stations are located. Additionally, the act directed FAA to ensure that foreign repair stations are subject to appropriate inspections consistent with existing U.S. requirements and bilateral air safety agreements; inspect foreign repair stations annually; and carry out independent inspections when warranted by safety concerns.
The United States has continued to maintain a positive trade balance with respect to airline maintenance work. However, future foreign investment in advanced training and technical capabilities related to high-value engine and component repair and overhaul could lead to more direct foreign competition in these areas. While available data do not indicate that offshoring of maintenance work has negatively impacted safety, specific areas for potential improvement include the allocation of FAA inspectors and resources focused on the oversight of foreign repair stations; FAA certification and qualification standards for individuals assigned to supervisory roles at foreign repair stations; and standards or guidelines for English language proficiency and comprehension of written technical materials among foreign repair station mechanics.