Airlines fume over cost of seat safety row

by reuters | Thomson Reuters Foundation
Friday, 24 September 2010 16:35 GMT

* Koito seat checks may be ordered after safety row

* Checks could affect 150,000 seats on 1,000 planes

* Company says not notified, declines further comment

* Industry body questions whether airlines should pay

(Adds Continental response, market estimate, background)

By Mariko Katsumura and Tim Hepher

TOKYO/PARIS, Sept 24 (Reuters) - Airlines fretted on Friday over the cost of carrying out checks on more than 100,000 potentially faulty passenger seats after safety authorities proposed a clampdown in the wake of a manufacturer testing row.

The proposed safety order comes seven months after Japanese seat manufacturer Koito Industries <6747.T> admitted changing designs without following procedures and faking safety test results, prompting a 33 percent slump in its shares in Feb. 9.

U.S. and European agencies on Thursday provisionally called for worldwide checks on Koito seats, a move estimated to affect 150,000 seats on 1,000 passenger jets built mainly by Boeing <BA.N> or its acquired units or European rival Airbus <EAD.PA>.

The plan is subject to a two-month consultation exercise.

"We are examining the directive and trying to work out its consequences. It does seem to us very legalistic rather than safety-based," said David Henderson, spokesman for the Association of European Airlines in Brussels.

"The fault is not with (airlines) but with the manufacturer. From that point of view, I would be surprised if the airlines would be happy to pick up the cost. The real worry is that there will be some kind of legalistic ban on using the seats altogether and having to scrap them."

The U.S. Federal Aviation Administration said the controls, designed to check strength and resistance to flames, would include over 40,000 seats on 278 U.S.-registered aircraft.

It estimated the cost of the exercise to U.S. airlines alone at $875,000. [ID:nLDE68M25K]

Continental Airlines <CAL.N>, said by industry executives to be among the U.S. airlines most directly affected, said it had already made significant progress in tackling the issue.

"We've been closely working with the FAA over the past year in anticipation of the rule and have completed initial testing on a majority of our aircraft," said spokeswoman Julie King.

Authorities stopped short of issuing emergency directives, implying they were not certain whether the seats were dangerous. Any part seen as a definite risk must be tackled promptly.

But EASA said that it and Japanese safety agency JCAB had concluded that "all data (both design and manufacturing) generated by Koito must be treated as suspect".

Some airlines have already reported delays in getting new planes delivered as Koito scrambled to fix the problem.

Thai Airways <THAI.BK> said it had replaced Koito as seat supplier and that it planned to sue the Japanese company for compensation for delayed delivery. [ID:nSGE68N0DU]

Industry officials said the airline had taken delivery of at least one Airbus A330 without seats as it sought a solution.

$2 BILLION SEAT MARKET

Airlines buy seats separately from the rest of the aircraft but usually have them installed by the planemaker.

Seat costs range from $2,300 in coach to as much as $150,000 for a luxurious lie-flat seat in first class, the FAA said.

Under the proposed directive issued by the European Aviation Safety Agency (EASA), airlines would have to check any seats supplied by Koito within two years or else remove them.

The FAA proposal gave a more scaled approach.

The measures mark the first international response by regulators since Koito revealed in February it had received a "business improvement order" from the Japanese government.

Koito said on Friday it had not received any request from the U.S. or European authorities or anyone else regarding the safety checks, and a spokesman declined further comment.

Koito's shares fell 0.7 percent in Tokyo.

Koito started business in 1915 making lenses for railway signal lamps and began making car headlamps in the 1950s. It also makes seats for Japan's high-speed bullet trains.

Among major clients, Koito lists Japan Airlines <JALFQ.PK>, All Nippon Airways <9202.T>, Singapore Airlines <SIAL.SI>, Virgin Atlantic [VA.UL] and Continental Airlines <CAL.N>.

Analysts estimate Koito's percentage share of the $2 billion annual market for aircraft seats in the low single digits, behind leaders B/E Aerospace <BEAV.O> of the United States and France's Zodiac <ZODC.PA> which have about a third each.

However, its seats have been on some high-profile layouts, including the first business class seats to be fitted on the world's largest airliner, the Airbus A380, when the European superjumbo first flew for Singapore Airlines <SIAL.SI>.

Airbus said only 3 percent of its aircraft in operation, or around 200 planes, included Koito seats in any of their cabins.

Japan Airlines would not say how many Koito seats it had, but a spokesman said it was "a large number".

Singapore Airlines said it would review the proposals and "work closely with Koito and the aircraft manufacturers" to ersolve any outstanding problems. (Additional reporting by Tim Kelly, Harry Suhartono, Matthias Blamont, Maria Sheahan, Alison Leung, John Crawley, Deepa Seetharaman, Manunphattr Dhanananphorn; Editing by Will Waterman)

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