American Airlines Hit With Record-Setting $24 Million Fine

Back in February, we wrote that American Airlines could be on the hook for up to $20 million over allegations the airlines made thousands of flights in jets containing potentially dangerous wiring. But the FAA went even farther than that figure, announcing today that it plans to fine American $24.2 million, more than double the amount of the previous record fine.

According to the FAA , American did not fully comply with a 2006 directive to upgrade the wiring in the compartment where the main landing gear is stored in its fleet of MD-80 jets. As a result, regulators say the airline flew 14,278 times on planes with wiring that wasn’t up to snuff.

Says DOT Secretary Ray LaHood:

We put rules and regulations in place to keep the flying public safe… We expect operators to perform inspections and conduct regular and required maintenance in order to prevent safety issues. There can be no compromises when it comes to safety.

American now has 30 days to respond to the charges. In the meantime, a rep for the company did release this statement:

These events happened more than two years ago, and we believe this action is unwarranted… We are confident we have a strong case and the facts will bear this out … American Airlines has always maintained its aircraft to the highest standards, and we continue to do so.

Even if AA is able to knock a few Ms of this fine, it will almost certainly end up as one for the record books. The highest fine ever collected by the FAA was against Southwest Airlines in 2008. The airline ended up haggling down their original $10.2 million penalty to $7.5 million.

In 1987, the FAA attempted to collect $9.5 million from Eastern Airlines (wow, memory lane!) but was only able to wrest $1 million from the airline’s cold, dead hands.

FAA fines American Airlines $24M for safety lapses [USA Today]

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  1. NoThankYou says:

    In other news..American Airlines announced today a new Safety Surcharge Fee.

    • mandarynn says:

      Exactly. As if AA will really be paying for this in the end!

      • dolemite says:

        I think the same thing each time there is another class action lawsuit against a medical company. “Oh great, now so and so prescription is going to go up.

        It’s like there is a tug of war for all the money in America, between the government, lawyers, pharma, and the ultra rich, and the rest of us try and grab crumbs.

        • JMILLER says:

          Or that company will be put out of business (Eastern Airlines and 100′s of others) and they will FOLLOW THE LAW. AA can not just add on fees to cover this. They are NOT a monopoly. United, SWA, Delta all would happily pick up some extra passengers that AA feels safety does not matter to.

      • FacebookAppMaker says:

        I think they would. I know if i was american, i would never book with AA after reading this. However, even if people don’t read this article, most people are smart enough that if they saw the “safety surcharge fee”, they would reconsider.

        For instance, after i read your comment i went to my girlfriend, who happens to have frequent blond moments:

        Me: Hey melissa, you got lucky. WestJet (one of Canada’s airlines) just announced a Safety Surcharge Fee of $0.50 for each mile your on the plane.
        Melissa: ….. [long pause]…. So… they are going to charge me a fee to not crash the plane?

        • AngryK9 says:

          If they actually added a new fee, It would not be named something obvious like “Safety surcharge”. It would be named something completely unrelated to what it is covering. Most likely however, they will simply increase current fees such as bag fees, booking surcharges, etc. Most consumers would never know the difference.

        • DingoAndTheBaby says:

          Sadly, Americans will continue to fly with American Airlines if they have the cheapest fares. There’s oodles of lip service about willingly paying more for a plane ticket instead of all this nickel-and-diming, and tons more faux-indignation about lack of safety records and putting the screws to the consumer. But when it comes down to the basics, we Americans are cheapskates. Pure and simple. It’s been mentioned many times here before, and it’s no less true: flying used to be expensive but you got what you paid for, now it’s just quasi-public transportation (read: city bus) in the sky. I’m not saying flying should be some sort of class distinguishing device, but people need to shit or get off the pot about all this nonsense. Instead, we have: “I’m never gonna fly them again. No siree, Bob. Not at all… Wait, they have roundtrip fares for $99, transcontinental. Sign me up!”

          • UCLAri: Allergy Sufferer says:

            This is not only Americans. Look at what Euros put up with in regard to RyanAir.

            But yeah, America boo hiss. Boo hiss.

    • runswithscissors says:

      Not at all!

      In other AA news, the airline announced that Executive bonuses would be cut by 24 million to cover the fine, because the Executives took responsibility as the people in charge of the company.

      ..

      .

      AHAHAHAHHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!!!

      Nah, they’ll totally like 100 frontline employees, raise fees, up their bonuses, and order up hookers and blow for the next company retreat.

      • runswithscissors says:

        “lay off 100 employees”, that should have read. I’ll go sit in the corner for 2 minutes as punishment.

      • SolidSquid says:

        In other AA news, the airline announced that Executive bonuses would be cut by 24 million to cover the fine, because the Executives took responsibility as the people in charge of the company. This 1% cut in bonuses will then be payed back with a cumulitive increase of 5% per year left of contract or for 20 years, whichever is larger

    • sonneillon says:

      They should have charged their FAA bribe fee.

  2. partofme says:

    Hit them for every penny when it comes to safety violations. I just flew in an MD-80 with AA this summer. There’s obviously a lot of people like me, because even if their flights were half empty, there were 713,900 passengers who took a risk they shouldn’t have needed to take.

  3. c!tizen says:

    “These events happened more than two years ago, and we believe this action is unwarranted.”

    Yeah, I mean we flew a ton of people in unsafe jets, potentially putting hundres of thousands of peoples lives at risk, even though we were gouging them for every penny we could, but COME ON… that was like 2 years ago… get over it.

    Not the smoothest move AA. Sometimes you need to just man up and take your licks. Be graceful about it, admit you fucked up, apologize and pay the fine. You were literally playing with peoples lives, you need to fire the idiot PR guy that’s behind that message.

    • qwickone says:

      I know, seriously! I think this is a good move on the FAA’s part – “we’ll fine you even if we found out about it after the fact”. It would set a bad precedent to not do it this way.

    • dg says:

      Yeah, it happened two years ago. It’s been getting dragged out for that long by AA.

      If I were the FAA – I’d say “Fine, you don’t want $24Million, OK. No problem. $50 million. Want to try again?”

      The only thing the airlines understand is money. So fine them 150% of the COSTS to operate each non-compliant flight. When the profits are erased, and it’s costing them $$$, they’ll snap into compliance.

      If they don’t – revoke their damn license to operate.

  4. Ed says:

    Doesn’t the gov’t know who pays these fines? The CONSUMERS DO!!!

    They need to hit them where it hurts. Don’t make them pay fines. Make them give us 2 inches more of legroom or deny them access to certain routes for a period of time.

    • Loias supports harsher punishments against corporations says:

      All of those situation – including the current fines situation – results in higher fees no matter what.

      All of that would just be included in the total cost of doing business, which would force raising prices. The way the FAA makes it hurt that along with higher prices comes less demand as consumers seek other airlines.

    • JMILLER says:

      Think it through. AA is not a monopoly. Imagine if only 1% of the flying public turn away from AA because of this. AA can not make the consumer pay for this. If they do, that 1% number becomes 20%. See United, SWA, Delta, do not have that same fine. If AA wants to jack up their rates to cover it, let them. I know Delta, SWA , United etc all would happily take a 20% increase in volume.

    • Warren - aka The Piddler on the Roof says:

      “Doesn’t the gov’t know who pays these fines? The CONSUMERS DO!!!”

      Not if we don’t give them our money we don’t.

  5. mergatroy6 says:

    I applaud the FAA for issuing the fines but AA is still getting away with murder.

    They are paying $1,695 per unsafe flight. Divide that by the number of passengers and you have the true value of human life as seen by the government and corporations.

    • huadpe says:

      Well, that depends on how unsafe the flights were. They did 14278 flights without any incident, so there’s obviously a very low chance of this being an issue.

      Speeding also endangers human life. Should a speeding ticket be $6,000,000? (the usual actuarial value for an unspecified human life)

    • sonneillon says:

      Not quite an accurate representation of the fine. What is should be is how much would it have cost to fix the wiring on the 100 or 200 planes that had bad wiring. Probably wouldn’t be 24 million. And they will likely still have to pay the money to fix it or get hit with another series of fines.

  6. leftturnonred says:

    Again: Unless we are going to stop spoon feeding the airlines taxpayer money whenever they need a boost, what the hell good does the government fining airlines do?

  7. greatgoogly says:

    Look for American to soon implement a new “fine compensation fee” to your tickets. I flew them 3 years ago and the service on the ground was absolutely horrendous.

  8. your new nemesis says:

    I think we need a new system. How about instead of fining just the corporation, we impose legal and financial hardship on the highest level executives responsible for any infractions like this. So, airline doesn’t update it’s wiring, then who-ever said “no, don’t fix it, they’re fine” gets fined personally, and sees some jail time. A bank manager forecloses on the wrong house or loses money, criminal penalties etc. Maybe then the level of corporate incompetence and malfeasance will subside some.
    i’m dreaming, i know, but wouldn’t it be grand?

    • TailsToo says:

      If only…

      • your new nemesis says:

        Now that corporations are people (enough to donate to campaigns) couldn’t they be subject to the same laws that apply to you or I?

    • ARP says:

      I’ll sign up for your newsletter.

    • Warren - aka The Piddler on the Roof says:

      Yeah, if only the ones making the laws weren’t being paid off by the violators this might actually happen. Maybe if the people of this country took over for the government we might have a chance. Nah, that’s just crazy talk.

  9. ChemicalFyre says:

    Yeah. Fine the crap out of them. That worked the first time. It’s not like they’ll pass the cost on to the customer, or cut more corners…or something.

    • ARP says:

      If an airline can’t get their act together to be safe, then should not be in business. So if those fines force them to raise prices, then they’ll lose business. It’s in their financial interest to be safe, so they can keep fares low. The problem is that the fines are often less than the cost of operating unsafely. Make it hurt and they might actually take it seriously.

      • ChemicalFyre says:

        While I agree with you in principle, it won’t work out that way in practice. You know how businesses often have something along the lines of ‘Savings we can pass on to the customer’ ?

        Expenses work exactly the same way. AA will have no choice but to pass it on, or just as you said…go out of business if they can’t manage a way around it.

  10. rage says:

    Thank you for flying teabagger airlines we might make it to your next destination.

  11. TailsToo says:

    Hey, rather than hurt the shareholders with a fine, how about jail time for those responsible? It drives me crazy how these criminals hide behind the company shield. Someone decided to ignore safety regulations, and unless those people face the music, the unsafe practices will continue.

    • greatgoogly says:

      ding ding ding. Until the corporate weasals get a little jail time in max, with Bubba as their cellmate they will keep calculating the cost of the fines vs the benefit of neglect.

    • Conformist138 says:

      Why are shareholders so damn special? They put their money into a company, all on their own and by their own choice. That company fucks up and suddenly everyone thinks it’s unfair for shareholders to take a hit? Can’t profit from good times and demand exemption from the bad. Call it a risk or a gamble, but it’s not some evil thing that shareholders lose money when a company goes retarded.

      What irks me is the ability to pass a fine on to their customers, the people truly paying everyone for the privilege of having their safety compromised. I see no problem with these fines coming with some kind of price freeze. You gotta pay x-dollars in fines and we’ll monitor your rates for 2 years or something.

      The problem is, we can’t send a corporation to jail. They are “people” but cannot ever serve jail time. It’s like sending your hand to prison for getting too stabby while the rest of you remains free, particularly if we could just acquire new hands on a whim.

  12. evilpete says:

    How much did AA “save” by delaying work on the wiring. I am sure there was a cost/risk analysis.

    for example if they expected the fine to be only a 2 or 3 million maybe the delayed the work to keep planes in the air earning 6 to 8 million.

  13. Warren - aka The Piddler on the Roof says:

    Great! So when do AA customers get their share of this fine? You know, for being in danger.

    Hello? Anyone there…?

  14. INsano says:

    +1 to the very, very long list of reasons I avoid flying if at all possible. The nature of a corporation LEGALLY accoutable to its shareholders to maximize their profits, will eventually cut corners everywhere. Welcome to incorporation bitches.

    I can hardly wait to see the results of the 1000km/h Chinese high-speed rail line. The Japanese lines have run with hardly a death(other than suicide) or accident since the 60s–how long before a cheap Chinese knock-off goes off the rails?

    A Consumerist isn’t just cheap; he/she is frugal knowing when to pay for quality.

  15. dreamfish says:

    “… American Airlines has always maintained its aircraft to the highest standards”

    It doesn’t matter whan random, self-created standards you may be thinking of – the only ones that matter are those set by the FAA who say you didn’t implement them when you should have done.

  16. AI says:

    Another way to look at it: While against regulations, considering 14,278 flights were completed successfully, maybe the wiring was up to snuff?

    • DingoAndTheBaby says:

      That’s a really full half-full glass. I like your optimism. I disagree with you, but I like it anyway.

      • UCLAri: Allergy Sufferer says:

        Actually, he’s right from a statistical perspective as well.

        Also, it sounds to me like the FAA was just making AA into an example.

  17. Abradax says:

    Give the money to the individuals who flew on unsafe planes. Why should the government get the money?

  18. Mr.Grieves says:

    Yes they didn’t crash as a result of the wiring. But they could have, and the lawsuits and fines would be far higher. The fact is they didn’t comply within the timeframe and put people at risk, pay up AA!

  19. TerpBE says:

    So if you assume about 85 people per flight, that works out to just under $20 per person whose lives they put at risk.

  20. Squeaks says:

    Another reason why I don’t fly.

    • UCLAri: Allergy Sufferer says:

      I hope you enjoy taking ships abroad. Flying is awesome. It would take a week or more to get to France by ship. By plane? 7 hours. So awesome.

      Unless you have an anxiety problem regarding flying. Then I’m sorry.

  21. ZeGoggles says:

    I’m a huge fan of AA and will continue to fly them. However part of me feels they needed this. They REALLY need to stop using the MD-80s in their fleet.

    It’s time to let go AA. Move on to using 737s.

  22. UCLAri: Allergy Sufferer says:

    I fly mostly Star Alliance, but I daresay… I doubt people were really in danger. A lot of the FAA regulations are so far above the minimum threshold for safety that it probably didn’t increase fliers’ risk considerably to be on the MD80s.

    Still, if this gets more MD80s out of the air, then that’s great. I somehow doubt it. They’re still cost-effective for AA.

    • Flopsy says:

      Oh snap, it’s UCLAri! I’ve been lurking on Consumerist since graduating from UCLA. Didn’t know you were here… Small world.

  23. 310Drew says:

    I can’t believe people still fly AA knowing that they are still using MD80′s. These planes need to be retired.

    I’ll stick to only flying Continental, AirTran, Frontier & JetBlue. Southwest if absolutely necessary.

    When there are Airlines out there like AirTran and Frontier that have among the newest fleets of jets, that also service many of the markets AA does, what idiot chooses AA ? Not I !!

  24. aa worker says:

    april 10 2008 : Gerard Arpey, chairman and chief executive of AMR Corp. and American Airlines, said Thursday that he was “profoundly sorry” for the massive disruptions to passengers related to the grounding of its MD-80 fleet this week.
    “I take full, personal responsibility for our being in this situation,” he said.
    >>>time to pay up Arpey. open your own wallet and pay for your arrogance.

  25. aa worker says:

    Gerard Arpey, chairman and chief executive of AMR Corp. and American Airlines, said Thursday that he was “profoundly sorry” for the massive disruptions to passengers related to the grounding of its MD-80 fleet this week.
    “I take full, personal responsibility for our being in this situation,” he said. (april 10 2008.)

    Time for Arpey to pay up out of his own pocket. AA passengers should boycott until he does.
    otherwise you will pay for him, and he will take another $3million bonus.

  26. ninjatoddler says:

    I seriously hope AA goes bankrupt. Their cotomer sevis is the worst among all major airlines. There’s also no direct cotomer sevis phone line. You have to send a dumb email and hope for the best in which case it’s an apology email with a scripted line from Roberto Silva.

    If you email them again, you get responses with bad grammar going by the “Sorry I cant help you but we will make sure that you have a better experience flying with us the next time.”