valu jet - corporate affairs
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RHEA CULBERTSONSTEPHEN GILLIAM
AMANDA HARTNETTAMANDA WINCHIP
ValuJet Flight 592
National Geographic Channel
http://www.youtube.com/watch?v=V1y_9v2MVx8&feature=related
ValuJet AirTran Airways
Lewis Jordan, CEOFounded in 1993Low-cost air carrierEastern United StatesFleet consisted of
McDonnell Douglas MD-95s and many used aircraft ValuJet's fleet was among the
oldest in the US averaging 26 years.
Poor safety record
Founded in 1993 as Conquest Sun Airlines
Renamed Air Tran Airways in 1994
Entered into a reverse merger with Value Jet in 1997 and continued to operate under the name of AirTran Airways
Low-cost air carrierEastern and Midwest
United States
OVERVIEW: Organizations Involved
SabreTechFederal Aviation
Administration (FAA)
ValuJet’s maintenance contractor
Chemical oxygen generators
Placed 5 boxes of improperly secured canisters in the cargo compartment of ValuJet Flight 592 Did not cover and secure the
firing pins on the generators
Major roles include the following: Regulating U.S.
commercial space transportation
Issuing, suspending, or revoking pilot certificates
Regulating civil aviation to promote safety, especially through local offices called Flight Standards District Offices
OVERVIEW: Organizations Involved
OVERVIEW: Organizations Involved
Pilot and Flight Crew Candi Kubeck, Pilot
Plane Manufacturer McDonnell Douglas
National Transportation Safety Board (NTSB) Independent regulatory and investigating U.S. Government
agency responsible for civil transportation accident investigation
Miami International Airport
EXPLAIN: Flight 592
May 11, 1996Departed from Miami International Airport and
scheduled to land at Atlanta International AirportTook flight at 2:04 p.m. after a 1 hour 4 minute delayAt 2:10 the crew noticed what they believed to be an
electrical problemSmoke then fire from the cargo compartment filled the
cabinAt 2:14 the aircraft disappeared from radarFlight 592 crashed into the Florida Everglades at a speed
in excess of 500 miles an hourThe pilot, co-pilot, three flight attendants, and all 105
passengers were killed
EXPLAIN: ValuJet Response
“It is impossible to put into words how devastating something like this is to humans who care.”
Emphasized that the plane, built in 1969, was up to date on all safety inspections
Outlined various safety checks ValuJet follows to maintain its aircraft “A” Check – Most frequent, least thorough- May 7, 1996 “B” Check – Mid level safety inspection – March 19, 1996 “C: Check – Least frequent, most thorough- Oct. 1, 1995
Spoke on the integrity of Pratt & Whitney, the manufacturer of the plane’s engine
EXPLAIN: ValuJet Response
Noted that the plane’s age was not necessarily of major concern, nor was it necessarily a factor in the crash. "When you say that this is a relatively old airplane, it is
important to point out that the DC-9 is a very common airplane operated by a lot of airlines.”
"There are special inspections that are designed to protect against what are called 'aging aircraft concerns' on any airplane that goes up beyond 10, 15 years in operating time. But there is absolutely nothing about a 25-year-old plane that has been properly maintained that gives particular cause for concern.“
- Jordan Lewis, CEO ValuJet May 11, 1996 Press Conference
EXPLAIN: Who Is Responsible?
The NTSB held the following parties accountable: 1. SabreTech
Illegal transport of dangerous materials aboard a commercial flight
Improper labeling of the canisters Failure to provide the required safety equipment for the
canisters
2. ValuJet Failure to supervise SabreTech
3. FAA Failure to supervise ValuJet Failure to require active fire suppression equipment in the
cargo compartment
ValuJet SabreTech
Never prosecuted
Grounded by the FAA on June 16, 1996
Allowed to resume operations on September 30, 1996
Merged with AirTran Airways in 1997 and continued operation under the AirTran name
Florida Grand Jury Verdict: 110 counts of manslaughter 110 counts of third-degree murder
1997 Federal Grand Jury Verdict: Mishandling of hazardous materials Failure to properly train employees Conspiracy False Statements $2 million fine $9 restitution Maintenance supervisor and 2
mechanics who worked on the plane charged with conspiracy and making false statements
EXPLAIN: Short-term Consequences
ValuJet SabreTech
Operating as AirTran
Several executive officers of ValuJet recently founded Allegiant Air
Went out of business in 1999
The U.S. Court of Appeals partially reversed the guilty verdict as they could not find intent to harm
Maintenance Supervisor and 1 mechanic acquitted on all charges
EXPLAIN: Where are they now?
EVALUATION
Top Management was accessible to the media but poorly prepared CEO Jordan misspeaks on Larry King
“We’re in a business where we take the lives of people”
“We pay the lowest wages,“ when asked about wages and profitability.
EVALUATION
Top Management was accessible to the media but poorly prepared
Allowed CNN to tape meeting between officers and employees
Employees were “the true victims of the situation.”
- chief corporate counsel
EVALUATION
Top Management was accessible to the media but poorly prepared
Lauded by the media in July 1996 after TWA 800 mid-air explosion and company officials were inaccessible.
EVALUATION
Credibility Lost Jordan cautions against “rush to judgment” Proclaims safety record, then “We’ve had incidents
and a tragic accident, and now we are looking forward to a high level of safety.” ValuJet accident rate: 3.06/100,000 departures 14 Other Low-cost carriers: 0.43/100,000 departures
- Time, May 27, 1996 FAA grounds ValuJet on June 17 due to “numerous
systemic flaws” One of the oldest fleets in the US, averaging 26 years
EVALUATION
Credibility Lost ValuJet criticized for being a “virtual airline”
Provides transportation Contracts maintenance and training
Jim Hall, Vice Chairman, NTSB, before the House Transportation Committee, June 25, 1996
“I would have grounded this fleet myself if I had had any reason to believe that the airplanes were not safe. The safety of our customers is our No. 1 priority and far and away ahead of any other priority.” Lewis Jordan, before the House Transportation
Committee, June 25, 1996
EVALUATION
Credibility recovered ValuJet flies again with limited service beginning
September 26, 1996 15 Jets (down from 52)
Joseph Corr replaces Lewis Jordan as President and CEO on November 4, 1996
Merger with AirTran completed November 17, 1997 ValuJet name retired
EVALUATION
Credibility recovered Relocated HQ to Orlando from Atlanta Fleet of Boeing 717 and 737s
One of the newest fleets in the air
139 aircraft as of October 2008
Currently flies to 57 destinations with at least five more to be added in Q2 2009
WHAT THEY SHOULD HAVE DONE
ValuJet was allowed to resume business on September 30, 1996
WHAT THEY SHOULD HAVE DONE
Initial Response
Follow Up
Short-Term Actions
Long-Term ActionsChild placing flowers at the Flight 592 Memorial
WHAT THEY SHOULD HAVE DONE:
INITIAL RESPONSE:Release a statement
ASAP Show sincerity Conducting internal investigation Preventative measures will be taken
FOLLOW UP: OVERARCHING MESSAGE
VALUJET
“We pay the lowest wages.”
“We’re in a business where we take the lives of people.”
SOUTHWEST
“There are absolutely no words to accurately state our grief and our sorrow over this tragedy.”
WHAT THEY SHOULD HAVE DONE:
WHAT THEY SHOULD HAVE DONE
FOLLOW UP:Set the tone at the top and from the
beginning.
Make press releases addressing the investigation process.
WHAT THEY SHOULD HAVE DONE:
SHORT TERM: VICTIMSRelief Program
Contact victims’ families Give the number to an information hotline Mail letters of apology and condolences Provide comfort for victims’ families:
Funding for funeral/memorial services Grief counseling
WHAT THEY SHOULD HAVE DONE:
SHORT TERM: EMPLOYEESPromote communication
Hold teleconferences frequently
Anonymous Hotline Complaints, general issues, etc.
Day of Workshops Address safety, new operations and guidelines
WHAT THEY SHOULD HAVE DONE
LONG TERM:Work with FAA to make stricter regulationsHire new maintenance teamPurchase new and safer planesMaintain strict, quality control standards of
training and maintenance processesOffer higher wages to attract more qualified
employees
LESSONS LEARNED
1. Do the work before the crisis occurs
2. Be responsive, informed, and sympathetic
3. Know when things aren’t working and be flexible
LESSONS LEARNED: Preventative Procedures
Safety First
ValuJet
SabreTech
FAA
LESSONS LEARNED: ValuJet vs. Southwest
ValuJet The media, customers, and the general public were
outraged.
Significant decrease in revenue long-term.
Southwest Praised by the media, and saw continued growth in
customer bookings
Immediate drop in share value, but regained in short period following.
ValuJet 1995 vs. Air Tran 2008
ValuJet (1995) Air Tran (2008)
Revenue $ 366 million $ 2.3 billion
Net Income $ 67 million $ 52 million
Destinations 28 57
Planes 52 139
Age of Fleet 26 years old 5.5 years
THANK YOU
QUESTIONS