Kind Words for Continental

In the easygoing days before deregulation, U.S. airlines and the Federal Aviation Administration were able to maintain a gentlemanly relationship without undermining the enforcement of safety standards. But in the new era of cut-rate competition, the FAA has been slow to adopt the sterner attitude necessary to keep America's skies safe. "In a game between two very aggressive teams, the referee has to have a fast whistle," says Jim Burnett, chairman of the National Transportation Safety Board. "And we haven't had a fast whistle from the FAA." To some critics, this soft approach was particularly evident in the case of Continental Airlines.

Former FAA officials, Continental employees and the Air Line Pilots Association accuse the FAA of burying a critical 1984 inspection report listing numerous violations that could have grounded Continental, then replacing the report with a far milder account. Two investigating subcommittees of the House and Senate have looked into the matter, as has the FBI. The criminal investigation came to a close last week when U.S. Attorney Robert C. Bonner announced in Los Angeles that there was "insufficient evidence to support prosecutive action." The episode, however, raises questions about the regulators' ability to keep at arm's length from the carriers.

Continental spokesmen vigorously deny that the airline and the FAA conspired to suppress the report or change it in any substantive way. They say the entire incident is the result of labor unrest at Continental, whose chairman is Frank Lorenzo, 46. The toughest among the new breed of cost-cutting airline bosses, Lorenzo has bought Eastern, New York Air, Continental and, last week, People Express, building his once small Texas International Airline into Texas Air Corp., the largest U.S. carrier.

In September 1983 Lorenzo placed Continental in bankruptcy, then abrogated all the carrier's expensive union contracts and cut salaries by as much as 70%. The airline's pilots staged a bitter two-year strike, and Continental began hiring nonunion pilots.

FAA regulations require close policing of any carrier in a strike situation or financial difficulty, since the airline may be rapidly hiring and promoting less well-trained people. Accordingly, the FAA dispatched a special team to keep an eye on Continental. Headed by San Francisco-based Harry Langdon, a 24- year FAA veteran, the airline operations inspection team was made up of inspectors from around the U.S. to counter possible chumminess between regional officers and airlines. In a report sent to the Western Pacific regional office in April 1984, Langdon's group recommended 20 enforcement actions for the breaching of 31 regulations, which could have resulted in hundreds of individual violations. The team reported that Continental had sent planes over the Pacific without weather forecasts, failed to make or document fueling-equipment inspections, omitted required ground training and kept inadequate training records for its flight crews.