It seemed like a cant-miss deal: Charlottes airport in 2007 started buying hybrid buses from a local company that promised better gas mileage, cleaner emissions and a quieter ride.
But more than six years later, the airports DesignLine buses have traveled a rocky road.
The vehicles have been plagued by maintenance problems, including braking issues and a fire that a former executive says still causes him concern. The airport has also had trouble getting parts, which the former DesignLine executive said was a sign of the companys financial struggles.
The Charlotte-based bus maker has since filed for bankruptcy, and the FBI is investigating the company over allegations that it placed used parts in new buses. DesignLine has told the airport that it will still provide service for the buses but that the vehicles are no longer under warranty.
The maintenance and parts issues are detailed in hundreds of pages of airport emails and documents obtained by the Observer through a public records request.
The documents provide an inside look at the struggles DesignLine has faced at Charlotte Douglas International Airport. They also show the airport bought more buses even after problems had emerged.
The airport still has 10 DesignLine buses, which cost nearly $5 million, among the 66 it uses to shuttle passengers between parking lots and terminals. The records suggest Charlotte airport officials came to question the purchases as problems began to pile up.
It appears we did not do enough research before getting involved with these guys, wrote Matthew Bauer, the airports former ground transportation manager, in a 2011 email.
A group led by retired Air Force Lt. Gen. Buster Glosson and his son, Brad, bought DesignLine in 2006 and moved it from New Zealand to Charlotte. The company attracted high-profile investors, including former North Carolina Gov. Jim Martin and Charlotte businessman Cameron Harris, and employed former Charlotte Mayor Anthony Foxx as an in-house lawyer from late 2009 until he became U.S. transportation secretary in July.
From a factory off Westinghouse Boulevard, DesignLine made buses for transit agencies in cities such as Baltimore and Denver, giving Charlotte a toehold in a promising green energy business. But over time, the bus company faced lawsuits and contract cancellations over late deliveries and performance problems, according to court documents.
DesignLine brought in new management in spring 2012 but filed for bankruptcy in August 2013. A California investment group has agreed to buy DesignLines assets and says it plans to reopen after negotiating new contracts with its customers.
An airport spokeswoman said Charlotte Douglas worked with DesignLine to address issues with the buses and believes most of the problems stemmed from the companys new technology. The spokeswoman said the fire and braking problems were investigated and that drivers make pre-trip checks multiple times per day.
The airport would not operate the DesignLine (buses) if we did not believe they were safe, the spokeswoman said.
Its nice to be cleaner
Charlotte Douglas wanted to set an environmentally friendly example for airports around the country when it bought its first two DesignLine buses in 2007, according to an application for a $40,000 N.C. State grant that went toward the $880,000 purchase of two buses.
In an interview, former Aviation Director Jerry Orr said the buses were appealing because the airport has a huge problem with air quality around the terminal building where cars and buses drop off and pick up passengers. Clearly, its nice to be cleaner, Orr said.
Buster Glosson, who served as DesignLines chairman, said he made the initial contact with Orr about the companys buses and that the aviation director decided to buy two buses that had been used at the Wachovia Championship golf tournament.
The first two buses were made in New Zealand, but it was helpful to have the companys new headquarters nearby, Orr said. It was also beneficial for DesignLine, which could showcase the airport buses for prospective clients.
We thought it was an interesting deal with a lot of potential, Orr said.
Asked whether he ever faced any pressure from Foxx or DesignLines investors to buy the companys buses, he said he did not.
The airport bought the buses under a no-bid contract because the buses were only available from DesignLine, according to a City Council document. The price tag of $440,000 per bus was as much as $200,000 more than the cost of an all-diesel vehicle, DesignLine CEO Brad Glosson told the Observer in 2007. But he said buyers save money on fuel and parts.
By 2010, the airport was ready to add five more buses to its fleet. The $2.7 million purchase was made with help from a $1 million Department of Energy grant awarded as part of the Obama administrations 2009 stimulus legislation. That purchase was also made under a no-bid contract.
To me, it was a source of pride that the DesignLine product from our Charlotte assembly plant was so well received at many airports and city transit systems, Martin told the Observer. He said he was not involved in presenting the buses to prospective clients.
Bigger fleet, more problems
As the airports fleet grew, so did its problems.
To reduce emissions and produce a quieter ride, DesignLines buses ran on batteries charged by a diesel-powered turbine and the braking system. But the batteries proved a frequent trouble spot, according to the emails.
The DesignLine buses were regularly out of service, Bauer, the airport official, wrote in one email. For instance, this AM only 2 hybrids are running and DesignLine staff is out there working on the others.
The most serious incident occurred in May 2011 when a bus caught fire after the lot attendant plugged it in for the night. No one was hurt, but the flames caused $50,000 in damage, according to a Charlotte Fire Department report.
DesignLine traced the fire to a brake resistor and said the company had developed a solution for the problem. All of the buses had been inspected and fixes made, Brad Glosson said in a letter to Orr, adding that the issue could not occur when the bus was in service.
The city of Charlottes risk management group also hired an engineering firm called Dickinson & Associates to review the incident. The firm agreed with DesignLines conclusion but did not produce a full report, according to an October 2011 email from Leila Lahbabi, the airports lead attorney. In an interview, Mike Poe, the claims and litigation manager for the city, said Charlotte hired the firm in case it would be responsible for any of the damages but no longer needed a report when DesignLine agreed to cover the cost of repairs.
In an interview, DesignLines president at the time of the fire, Scott Mintier, told the Observer that the incident troubled him.
Mintier said he has long held deep concerns about bus fires in general and suspicions about lithium-ion batteries, which were used on the buses and have caused problems for other manufacturers including Boeing and Sony.
I believe its been shown there are numerous problems with lithium-ion batteries across numerous industries, Mintier said. Theres no solution thats been found to be universal.
Mintier left the company a few weeks after the fire for unrelated reasons but said at the time of his departure the cause of the fire had not been determined.
Mintier said it is possible the brake resistor was the source of the problem but added that its hard to say for certain because the company was never able to reproduce the fire when he was there.
The airport emails suggest the fire in Charlotte wasnt an isolated incident. In an October 2011 email, Bauer said he was under the impression that a DesignLine bus operated by Disney had caught fire, leading the company to cancel its bus order.
A Walt Disney Co. spokesman did not respond to a request for comment. DesignLine delivered a bus to Walt Disney World in Florida, according to comments made by the CEO of a DesignLine vendor in 2009.
A representative for the city of Baltimore said one of its DesignLine buses had a fire in 2009 when it was out of service and there were no injuries. Transit agencies in Denver, New Jersey and Arlington County, Va., said they have not had any fires with their DesignLine buses.
Another major incident
Despite the fire, the Charlotte airport signed on for three more DesignLine vehicles in June 2011. These buses, bought under a no-bid contract for $1.4 million, came at a substantial discount because they were used, according to a City Council document.
The airport had some hesitation about adding to its fleet after the fire but was still committed to the concept, Orr said. We thought they were going to work.
Only a few months later, the airport faced another major incident.
In September 2011, a driver of another DesignLine bus said he had trouble stopping as he approached the terminal. The driver applied the brake with normal pressure and it continued at the same speed, he wrote in his report. After he applied more pressure, the bus, which had two or three passengers on board, stopped and no one was injured.
DesignLine found the regenerative braking had failed, referring to the braking system that captures energy from braking and returns it to batteries. The company said it was not a safety issue because another braking system actually stops the bus, according to a report sent to the city.
The airport again hired Dickinson & Associates, which determined that the problem was caused by the bus dropping out of drive into neutral. This would cause the regenerative brakes to fail to engage, which might affect the drivers sense of how hard to push the brake pedal but not the actual ability of the bus to stop, Lahbabi, the airport attorney, wrote in an email.
Getting parts was a problem
Another problem for the airport was getting parts when DesignLine buses broke down.
In January 2012, for instance, former deputy aviation director Will Plentl talked with Buster Glosson about improving the availability of replacement parts given our experiences and part waiting times, according to an email.
In their investigation over used parts, FBI agents have interviewed Charlotte airport officials and examined documents, including purchase orders, maintenance records and information about repair and warranty work, according to airport records and an FBI property receipt.
Municipalities often use federal grants to help buy buses, and bus manufacturers can be subject to federal purchasing regulations. It could be considered fraud if a used part was represented as new. The status of the investigation is unclear, and its uncertain whether the company or any of its employees could face charges. The FBI declined to comment.
In 2012, a vendor that made parts for DesignLine discovered that a turbine on a Denver Regional Transportation District bus had previously been used on another bus, the Observer reported in November. DesignLine informed Denver of the issue and replaced the part at no cost.
In an interview, Plentl said he wasnt aware of any used parts going on new buses, but the airport did have concerns about the availability of parts when something failed. At the time we were not thinking about whether they were new or used, he said. We were just thinking about getting buses back in service.
Mintier, the former DesignLine president, said the company had a hard time getting parts because it didnt have any money. He said he believes the FBI investigation is much ado about nothing because we didnt have any parts.
Meanwhile, the Charlotte Douglas spokeswoman said its too early to say whether the airport will be able to maintain its 10 buses, saying it depends on the outcome of the bankruptcy and the future of the new DesignLine.
Charlotte Douglas had a bumper-to-bumper warranty on the buses that covered replacement of worn-out parts such as brake pads and headlights, the airport said. It also has a contract to spend up to $48,000 for other repairs made by DesignLine. The airport isnt yet sure how much extra it will be paying because of the lost warranty coverage.
On one recent day, five of the 10 DesignLine buses were out of service for a variety of reasons. Its not unusual for any of the airports buses to need service because of their heavy use, the airport said, but sometimes the DesignLine buses take longer to fix because of their unique technology.
More than six years after the original purchase, Orr now says the DesignLine buses were probably not worth the trouble.
Buying new technology is a risk, he said. But if you dont push the envelope a little bit you, are behind the curve.
Rothacker: 704-358-5170; Twitter: @rickrothacker
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