The Crash of Air Philippines 541
May 12, 2008
By Robert Yates
Eight years ago April 19, 2000, Air Philippines Flight 541, with 131 passengers and crew members, left Manila at 5:21 a.m., flying to Davao City, on Samal Island, about 600 miles southeast of Manila.
As it approached the airport at around 7 a.m., another aircraft was on the runway. Flight 541 began to circle in low clouds, waiting for the plane on the ground to move off the runway. As it circled, Flight 541 slammed into the side of a mountain, 500 feet above sea level. The plane caught fire and disintegrated, killing everyone on board. It was the worst air disaster in the history of the Philippines. But there is more to this story than another horrible air crash. As airplanes in the American fleets wear out when they reach a point where the cost of overhauling the planes, which can run between $2 million and $8 million, is no longer worth it they are retired to the Arizona desert. There are thousands of worn-out planes lined up in the desert waiting for a second life. From there, leasing companies purchase the planes and lease them to other, usually foreign, usually developing, airlines.
Flight 541 was a Boeing 737, a 22-year-old plane that had been put out to pasture by Southwest Airlines, and bought by AAR Aircraft & Engine Group, a publicly traded company based in Wood Dale, Ill. AAR leased the plane to Air Philippines in January 1999 and sold the plane in April 1999 to Fleet Business Credit Corp., now a division of Bank of America, and assigned Fleet its rights under the lease.
The lawsuit against AAR and Fleet was filed in Cook County Circuit Court and, following litigation over the forum issue, including an appeal, stayed here. The lead plaintiff was a Chicago resident, Boeing’s corporate headquarters are here, and AAR is in Wood Dale. Donald J. Nolan of Chicago’s Nolan Law Group, who represented 47 of the plaintiffs, was appointed lead counsel. There were three other firms representing plaintiffs, all from the San Francisco Bay Area: Sterns & Walker; Bowles & Verna; and O’Reilly & Danko. Gary W. Westerberg, Christopher R. Barth, T. Patrick Byrnes, and Mark A. Deptula of Locke, Lord, Bissell & Liddell, represented the defendants.
The case settled in November 2007 for $165 million, which, Nolan said, worked out to about $1.5 million per victim.
Aside from the inherent interest of a huge settlement, the case is interesting as yet another feature of globalization in this case, the globalization of the airline industry, and the ethical and legal obligations of the companies that buy and lease the planes to airlines in countries where the safety standards are well below American and European standards and where even the culture plays a role in the safety of airlines. In the last five years, there have been more than 10 fatal commercial airline crashes involving aircraft leased to developing countries, the latest occurred on April 15 in the Democratic Republic of the Congo, killing at least 75 people.
Chicago Lawyer sat down recently with Nolan to discuss the case.
Chicago Lawyer: What were the liability issues in the case?
Nolan: There were four main issues: crew resource management, the failure to provide an enhanced ground proximity warning system under our product liability theory and spoliation for the destruction of the wreckage and failure to perform maintenance under negligent entrustment.
Chicago Lawyer: Let’s start with crew resource management. First, what is it, then, how is that an issue?
Nolan: Prior to the crash, the FAA mandated in the U.S. that crews have crew resource management (CRM) training, and what that deals with is a culture of deference in the cockpit, where human factors engineers learned and taught, and the FAA adopted, the idea that you have to have a system of checks and balances in the cockpit.
A co-pilot might notice something of imminent danger that the pilot did not notice, and it’s necessary to call that out complete deference is not afforded to the pilot in command. Whereas the FAA mandated that and has a directive in place for crews in the U.S. to have this CRM training, the government in Philippines did not so require.
Asian countries have a storied past with deficiencies in CRM, because it’s a clash with Asian culture, with deference to seniors.
For example, there was a Singapore Air crash in October 2000, on an international flight bound for Los Angeles international flight SQ006 when the crew took off in a typhoon in Taipei. There, none of the crew, even though they knew that it was not an appropriate takeoff, ever checked the action of the pilot in command.
In the Air Philippines case, the pilot was being supervised at the time of the crash by a check airman, meaning a superior on a check ride, and the check airman was one whose actions were not countered by a lower pilot, so we knew there were issues of CRM training.
Chicago Lawyer: How can the lessor be held liable for the crew’s training?
Nolan: AAR never checked to see what the standards were in the Philippines, and just presumed the Philippines would be following the FAA standard, when, in fact, they were not. So, under negligent entrustment law, which deals with what someone knew and should have known [they could be held liable].
Chicago Lawyer: And your negligent entrustment theory also relates to maintenance?
Nolan: This airplane was taken off the desert floor by AAR. It was purchased from Southwest Airlines, which is a high-mileage operating fleet, and this was a [22-year-old] airplane. Southwest Airlines is high-cycle, high-time. They really work their airplanes. Southwest made a decision somewhere along the line not to continue with that airplane a cost-benefit analysis of maintenance, upkeep, and the returns they’re offered on that.
Chicago Lawyer: How much was the lease for?
Nolan: The lease was on a per-month basis. The transactions were seven-figure transactions. I think when the plane crashed they made seven figures just on the insurance. When the plane crashed they had a financial return and a profit on the hull liability clause.
Chicago Lawyer: Who’s responsible for the maintenance?
Nolan: Both the lessor and the lessee. The lessor, having in the lease reserved to itself rights of inspection, and requiring that maintenance and safety be followed under that scenario on a legal basis it can face responsibility for the loss of life. Here, this fleet was not equipped with up-to-date manuals from Boeing.
article says the case has been settled last year, nov 2007. but until now the families of the victims were not informed of this nor received any amount yet. is there any follow-up report regarding this? email me. thanks in advance.
include this in the national geographic’s air crash investigaton.
Some of the families are now finally being paid. But many still are waiting.
The Judge in this case is working so slowly and the lawyers are all saying soon soon , but not a lot is happening.
Seeing as this was supposed to be settled in Nov 07 how come 8 months later Families are still awaiting their claim ? ? ?
may i ask for the list of victims of flight 541 accident
I am the eldest daugther of Mr. Onofre A. Villegas, one of the passengers who perished in the crashed of Flight 541 off the hilly Samal Island near Davao City in April 2000. We have heard on the news that the insurers have agreed to settle with the heirs of the passengers on board Flight 541.
In this connection, may I know if our family VILLEGAS is one the awardee for the settlement between AAR Aircraft & Engine Group and Fleet Business Credit Corp. and complaints regarding the ill fated Air Philippines Flight 541.
If our family VILLEGAS have never signed-up any claims then do we have any chance for the financial settlement. Please let us know if we can receive any so that we can prepare the necessary documents pertaining to our claims that we are the legitimate heirs of MR. ONOFRE A. VILLEGAS of Manongol, Kidapawan City, Philippines.
Thank you and hope to receive your immediate reply.
please help………………
I’m concern the family of Divinagracia Whom a victim of flight 541 Air Philippines, they not get insurance of this settlement.thnks and GOd bless
The three grandchildren of the late grandmother name Delilah Javier Divinagracia until now they have not received but we have to process the legal document for the sake of the future of this three grandchildren ,,,, HELP US NOW , HOW ???
We are Hoping your Reply and Consideration ,, and ” GOD BLESS US ” , ALWAYS , ,
Human Error
the crash was an accident just waiting to happen. this philippine aviation
should upgrade its aviation procedures which most are already obsolete