Pilot Rest Rule Exempting UPS, FedEx to Be Reconsidered

A regulation exempting pilots at United Parcel Service Inc. (UPS) and FedEx Corp. (FDX) from new rules to combat fatigue will be reviewed after the U.S. government disclosed errors in its analysis of costs and benefits.

The Federal Aviation Administration, responding to a lawsuit by UPS pilots challenging the exemption, said in a court filing that it discovered unspecified errors behind its conclusion that the rule would be too costly for cargo airlines.

“This is the type of relief we asked the court to provide,” William Trent, a lawyer for the Independent Pilots Association, said in an e-mailed statement. “A flawed cost- benefit formula, issued at the last minute, without opportunity for public comment and examination, was at the core of our legal objections to the FAA’s exclusion of cargo pilots from new science-based pilot rest rules.”

The agency discovered that the cost to the cargo industry was underestimated because some items weren’t included in the analysis, according to an FAA official who wasn’t authorized to provide the information. That may indicate the rule won’t be altered.

The errors were inadvertent and don’t affect the portions of the rule that apply to passenger airlines, the FAA said in an e-mailed statement today.

“The FAA will ask an outside group to review the cargo analysis and then will reissue the cargo analysis for public comment,” it said.

Cost Calculations

UPS will wait until the new analysis is released before commenting, Kara Ross, a spokeswoman for the company, said in a phone interview. The carrier agreed with the government that cargo pilots shouldn’t have to follow passenger-pilot rules, Ross said.

FedEx believes it’s unrealistic to apply the rules to cargo, Maury Donahue, a spokeswoman, said in an e-mailed statement.

The FAA created new restrictions in December on the hours passenger-airline pilots can fly in an attempt to reduce fatigue. The regulations for the first time take into account the time of day pilots work and number of takeoffs and landings, both of which can exacerbate fatigue.

A law passed in 2010 ordered the FAA to revamp decades-old pilot work rules after fatigue issues surfaced in the Feb. 12, 2009, crash near Buffalo, involving a plane operated by Pinnacle Airlines Corp. (PNCLQ)’s Colgan Air. The crash killed 50 people.

The law didn’t differentiate between passenger or cargo pilots and the FAA’s initial proposal would have included both.

OMB Weighs Costs

After review by the U.S. Office of Management and Budget, an arm of the White House, the final rule concluded the benefits of improving pilot safety at cargo carriers weren’t worth the expense. Costs are based primarily on the loss of life in crashes, so cargo accidents are inherently less costly under the formula.

Representatives of pilot unions, passenger airlines, cargo carriers, the FAA and other interested parties met 12 times with officials at OMB and its Office of Information and Regulatory Affairs between July and November, according to records on the OIRA website.

OIRA Administrator Cass Sunstein has emphasized the importance of ensuring that the benefits of rule-making outweigh costs so economic growth isn’t impeded.

“I don’t believe you’ll see a single rule issued in the last eight months that fails cost-benefit analysis,” Sunstein told a congressional committee in September.

Transparency Sought

The rule-making process was transparent until the proposed regulation went to OMB for review, Brian Gaudet, a spokesman for the IPA, said in a phone interview.

“This is basically bringing this back out to the light of day,” Gaudet said.

The government asked the U.S. Court of Appeals in Washington for permission to reopen the rule-making process with a corrected cost-benefit analysis. It will then grant unions, industry groups and the public a chance to comment on the analysis, the filing said.

The FAA’s filing doesn’t say the government intends to overturn the cargo exemption.

“These errors are of sufficient amount that the FAA believes that it is prudent to review the portion of its cost- benefit analysis related to all-cargo operations and allow interested parties an opportunity to comment on that analysis,” the government said in the filing.

To contact the reporter on this story: Alan Levin in Washington at alevin24@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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