FAA allegedly rushed a Southwest approval

U.S. air-safety regulators likely acted improperly in the way they authorized Southwest Airlines Co. to begin flights between California and Hawaii last year, according to the main government agency that handles federal whistleblower complaints.

The preliminary conclusion by the Office of Special Counsel pertains to a Federal Aviation Administration employee's allegations that agency managers gave the carrier preferential treatment by rushing the approval process and cutting corners in other ways. The counsel's staff "found a substantial likelihood of wrongdoing" by FAA employees, according to one of several documents and emails between staff and the whistleblower reviewed by The Wall Street Journal. The inquiry hasn't been made public.

The employee, who has been granted formal whistleblower protections, alleged that FAA managers engaged in "gross mismanagement and an abuse of authority" for "the financial benefit of the airline," according to the counsel's summary.

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The claims, alleging the FAA sought to help Southwest reach one of its top growth priorities, aren't related to ongoing investigations of the grounded fleet of Boeing Co.'s 737 MAX jet. If the allegations are substantiated, however, they would offer more evidence of FAA lapses regulating the aviation industry's safety.

The FAA already faces intense scrutiny from lawmakers, travelers and other critics who contend that the agency ceded too much authority to Boeing in the MAX's design. The latest allegations, combined with prior FAA failures to hold the carrier fully accountable for safety shortcomings, may result in greater scrutiny of potential operational hazards at various carriers.

The special counsel's finding late last year has prompted an investigation by the FAA's internal compliance watchdog, according to spokesmen for the FAA and the Transportation Department, which supervises the agency. That probe focuses on how Southwest received permission last February to launch service on those long oceanic routes, regarded for years by airline management as prime growth markets.

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A Southwest spokeswoman said the approval "was deliberate and thorough in following all applicable processes." The carrier complied with standard FAA requirements and met all FAA regulations during a "stringent" process that took some 14 months, she said, without responding to specific allegations.

The FAA declined to comment beyond confirming the investigation's existence.

A spokesman for the counsel's office declined to comment.

Before a U.S. airline can operate twin-engine jetliners on extended overwater trips hours away from emergency airports, it is subject to special FAA safety reviews, including various drills on the ground followed by demonstration flights without passengers. Southwest, which carries the most domestic passengers, flies only Boeing Co.'s twin-engine 737 models. Three- and four-engine jets aren't subject to the same rules.

The whistleblower alleged that agency managers held Southwest pilots and officials "to a lower standard than they otherwise would have been," according to the special counsel's summary. The allegations, according to the summary, also accused managers of rushing some of the steps and relying on inspectors from outside the Dallas-area office that normally oversees Southwest. The claims, according to the summary, further alleged that the FAA's expedited approval "was based solely on the finances of the airline."

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As part of the unusual speed, according to the summary of the allegations, the whistleblower indicated FAA managers brought in employees to observe all six demonstration flights who lacked the necessary 737 pilot licenses and had less specific knowledge about Southwest operations than local FAA employees. A local inspector, who had the required credentials, was relegated to the cabin during the flights while personnel from FAA headquarters, tasked with accelerating approvals, were assigned to sit in the cockpit, according to the summary.

After vetting the claims, the special counsel late last year decided they were significant enough to warrant referral to Transportation Secretary Elaine Chao. Investigation of the allegations was assigned to the FAA's office of audit and evaluation, which is responsible for following up confidential disclosures by current employees, according to the FAA and the Transportation Department.

Investigators from that office conducted interviews last week with Dallas-area FAA personnel, according to a person familiar with the details.

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Investigators for the House Transportation and Senate Commerce committees separately have been monitoring the allegations and the FAA's response, according to people familiar with the details. The committees, these people said, learned about the allegations from FAA officials.

The moves come seven months after the FAA removed three senior managers from the local Southwest oversight office, amid other allegations of lax safety enforcement raised by agency whistleblowers and resulting government inquiries.

The Transportation Department's inspector general has for months been looking into some of those allegations, including lapses by Southwest in documenting maintenance for more than 100 of its jets and failures over the years to reliably compute the weight of checked baggage.

Less than two weeks ago, the FAA proposed a $3.9 million penalty against the airline over the electronic transfer of aircraft weight data. Southwest said it would work with the FAA to resolve the issue. The agency also has stepped up compliance reviews of baggage loading.

The whistleblower, according to special counsel documents, alleged that the approval last February of Southwest's Hawaii plans was part of a wish list prepared by industry "to help the airlines recover financially" from a partial government shutdown in December 2018.

Southwest's push to offer flights to Hawaii was part of the airline's bid to fend off growing competition in California. Hawaii is a popular vacation spot for Californians, and Southwest executives had described the destination as a gap in the airline's network, one they were anxious to plug.

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The effort appears to have paid off. Hawaii service, which began in March, was one of the bright spots in 2019 for Southwest in what was otherwise a challenging year, as the airline grappled with the grounding of the 737 MAX.

The overall length of the FAA's review, including a slower pace than Southwest anticipated during the initial phases, meant flights started a few months after the carrier had hoped to begin service. The 35-day partial government shutdown threatened to derail the final push. Costs mounted as the process dragged on, because Southwest had already invested in airport improvements in Hawaii and other startup costs, but wasn't yet able to offer flights to the islands.

According to the whistleblower, FAA managers revved up pressure to meet accelerated deadlines once federal employees returned to work after the furloughs. At the time, Southwest and FAA officials were eager to complete the process before another potential government shutdown, according to people familiar with the discussions.

Tickets for the airline's first Hawaii flights sold out almost immediately after going on sale two weeks before service began.

Southwest serves Hawaii destinations from Sacramento, Oakland and San Jose with its current fleet of 737s, but eventually plans to use more fuel-efficient 737 MAX jets, after those return to service.