ValuJet was touted as a success story of deregulation. Founded in 1993 and based in Atlanta, it was one of many small, no-frills airlines that went head to head with the bigger airlines. Few of the no-frills lasted long, although they enjoyed a few good years of high revenue. Like many no-frill start-ups, ValuJet bought used or reconditioned jets.
ValuJet kept capital expenses to a minimum, paid its pilots only for flights they completed, and its maintenance was divided up among fifty different contractors at eighteen companies. ValuJet's safety record steadily deteriorated. In 1994, ValuJet pilots made fifteen emergency landings, and in 1995, its pilots were forced down fifty-seven times. From February through May 1996, ValuJet would have an unscheduled landing on average every other day. Schiavo, who was receiving the reports about ValuJet's mishaps, was concerned that the FAA had reviewed ValuJet's planes over the last three years and had never reported any significant problems until March 1996 when FAA inspectors recommended grounding ValuJet. Unfortunately, the FAA did not ground ValuJet.
Immediately after the crash of ValuJet Flight 592, Transportation Secretary Federico Peña assured the public that the airline was safe. The FAA began an investigation of ValuJet to determine the cause of the accident and found numerous problems. One plane repeatedly flew with a hole in the engine cowl, which would have reduced the effectiveness of the fire extinguishers if there had been a fire. A plane was returned to service uninspected after being struck by lightning. An unqualified technician was performing X-ray examinations of critical aircraft parts. A consent decree was signed with ValuJet, under which ValuJet agreed to pay $500,000 immediately and $1.5 million within sixty days. In return the FAA agreed not to pursue any civil penalty for violations described in the agreement, except for violations of regulations on hazardous materials and civil aviation security.
On July 8, 1996, Inspector General Schiavo resigned. Her decision to resign was voluntary, she declared. Nonetheless, her resignation may well have been prompted by a guest essay that was published in Newsweek shortly after the ValuJet crash. She wrote that she had had longstanding concerns about ValuJet and blamed the FAA for the crash. Long criticized for her outspokenness, her criticism of the FAA prior to any investigation of the crash was unprecedented and inappropriate. 25