U.S. Airline Industry: Issues and Role of Congress

Order Code RL34467

U.S. Airline Industry:

Issues and Role of Congress

Updated July 29, 2008

John W. Fischer

Specialist in Transportation Policy

Resources, Science, and Industry Division

Bart Elias

Specialist in Aviation Policy

Resources, Science, and Industry Division

Robert S. Kirk

Specialist in Transportation Policy

Resources, Science, and Industry Division

U.S. Airline Industry:

Issues and Role of Congress

Summary

Mergers, airline bankruptcies, aircraft safety and maintenance concerns,

extensive flight delays and cancellations, $100-plus-per-barrel oil prices, and a litany

of other issues define congressional interest in the airline industry at present.

Congress does not play a day-to-day role in any of these issues. Most ongoing

oversight of the industry, to the extent that it does occur, takes place within the

executive branch. Congress periodically addresses airline issues through legislation,

but for the most part the congressional role occurs primarily through oversight.

The authority to recommend approval or disapproval of airline mergers rests

entirely with the Department of Justice (DOJ). The Office of the Secretary of

Transportation (OST) makes recommendations to DOJ based on its evaluation of the

effect of a proposed merger on airline industry competition. Congress has no specific

statutory role in the airline merger review and approval process, having legislatively

charged the executive branch with that task. Members of Congress can, and do, file

statements with DOJ expressing their views on a proposed merger. Congressional

interest going forward is likely to focus on the proposed merger between Delta

Airlines and Northwest Airlines.

Recent incidents, including passengers being held in aircraft for eight or more

hours awaiting takeoff, passengers being stranded by the shutdown of bankrupt air

carriers, as well as deteriorating airline on-time arrival performance, have led to

increasing congressional interest in airline passenger consumer issues. Currently,

most passenger rights are set forth in the airlines’ “contract of carriage” language.

Existing law does, however, provide procedures and compensation rules for

“bumping” and lost or damaged baggage. The main power the Department of

Transportation (DOT) has to protect consumers is the department’s power to take

action against air carriers for “deceptive trade practices.”

Despite impressive airline safety statistics in recent years, some aviation safety

professionals and some Members of Congress have expressed concern that the

industry and regulators have been lulled into complacency with regard to safety. This

concern has been heightened recently in response to various findings that airlines

have failed to fully comply with aircraft inspections and repairs mandated by the

Federal Aviation Administration (FAA). Congressional oversight has focused on the

relationship between the FAA and the airlines and the manner in which the FAA

carries out its safety mandates. The House has passed legislation (H.R. 6493)

addressing FAA safety oversight practices. Related provisions have also been

included in a Senate FAA reauthorization proposal (see S.Amdt. 4585 to H.R. 3881).

Various issues discussed in this report are also addressed in some fashion as

part of the ongoing congressional debate over FAA reauthorization. For additional

information on FAA reauthorization, refer to CRS Report RL33920, Federal

Aviation Administration Reauthorization: An Overview of Selected Provisions in

Proposed Legislation, coordinated by Bart Elias. This report will be updated as

warranted by events.

Contents

Economic Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Airline Mergers/Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Historical Perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Recent Merger Discussions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Delta-Northwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Airline Bankruptcies/Failures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Passenger Rights Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Issues of Congressional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Passenger Access to Services on Delayed Aircraft and

the Right to Deplane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Delayed, Cancelled and Diverted Flights: Refunds and Rerouting . . . . 8

Honoring Tickets of Airlines that Shut Down . . . . . . . . . . . . . . . . . . . . 9

Expansion of DOT Airline Consumer Complaint Investigations . . . . . 9

Airline Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

FAA Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Congressional Involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

The Safety Management Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Data-Driven Safety Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

The Air Transportation Oversight System (ATOS) . . . . . . . . . . . . . . . 13

The Aviation Safety Process As A “Partnership” . . . . . . . . . . . . . . . . 14

Current Concerns Regarding FAA Airline Safety Oversight . . . . . . . . . . . . 15

Maintenance Outsourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Related Legislation and Possible Options for Congress . . . . . . . . . . . . . . . 18

Related Provisions in FAA Reauthorization Bills . . . . . . . . . . . . . . . . 18

Post-Employment Restriction Options for FAA Inspectors . . . . . . . . . 19

The Aviation Safety Enhancement Act of 2008 . . . . . . . . . . . . . . . . . 19

Related Senate Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

List of Figures

Figure 1. Selected Airline Mergers, Acquisitions, and Bankruptcies,

1978-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Figure 2. The Aviation Safety Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

U.S. Airline Industry:

Issues and Role of Congress

Mergers, airline bankruptcies, aircraft safety and maintenance concerns,

extensive flight delays and cancellations, $100-plus-per-barrel oil prices, and a litany

of other issues define congressional interest in the airline industry at present.

Congress does not play a day-to-day role in any of these issues. Most ongoing

oversight of the industry, to the extent that it does occur, takes place within the

executive branch. Congress periodically addresses airline issues through legislation,

but for the most part the congressional role, as will be discussed, occurs primarily

through oversight.1

Deregulation of the airline industry in 1978 eliminated most governmental

control over the business practices of airlines. Residual regulation over antitrust

matters (merger approval/disapproval) and oversight of certain competitive practices

remain, however, within the Department of Justice (DOJ) and Department of

Transportation (DOT), respectively. Oversight of airline consumer practices, while

limited in scope, also occurs at DOT.

As part of its authority over certain competitive practices, the Office of the

Secretary of Transportation (OST) reviews airline operating agreements and

marketing alliances, especially as regards non-U.S. airlines. It also has the

responsibility of “certificating” airlines — meaning it determines whether a new

airline is “fit, willing, and able” to provide the type of service it is seeking to provide.

Safety has never been deregulated. DOT’s Federal Aviation Administration

(FAA) exercises total oversight over the airline industry’s safety activities. It is

responsible for the licensing of all airline aircrew and mechanics, and for the

certification of all aircraft and their appropriate maintenance and operating

procedures, proscribes the operation of aircraft within the FAA operated air traffic

control (ATC) system, and provides active oversight of airline compliance with

maintenance and operating procedures.

This report provides an overview of selected airline related issues currently

subject to congressional oversight and/or possible legislation. It should be pointed

out that many of the issues discussed here are also addressed in some fashion as part

of the ongoing congressional debate about reauthorization of the FAA. These

relationships will be noted briefly as part of this discussion. Those seeking additional

information on reauthorization should refer to CRS Report RL33920, Federal

1

Title 49 of the United States Code enumerates in extensive detail most of the legal powers

that the federal government exercises over airlines.

CRS-2

Aviation Administration Reauthorization: An Overview of Selected Provisions in

Proposed Legislation, coordinated by Bart Elias.

Economic Issues

Airline Mergers/Acquisitions

Congressional interest going forward is likely to focus on the proposed merger

between Delta Airlines and Northwest Airlines. Although structured legally as an

acquisition — Delta is the acquirer in the combination and the CEO of Delta would

manage the combined firm — the proposal is most clearly viewed as a merger. It is

widely believed in the aviation community that this merger could be the first of

several in the industry. Press speculation, for example, focused until recently on a

possible United and Continental combination as a competitive response.2 Although

a United-Continental agreement failed, United is continuing merger talks with US

Airways. Future proposed mergers will also likely be of interest to Congress.

The authority to recommend approval or disapproval of airline mergers rests

entirely with DOJ. The OST makes recommendations to DOJ based on its evaluation

of the effect of a proposed merger on airline industry competition. Congress has no

specific statutory role in the airline merger review and approval process, having

legislatively charged the executive branch with that task. Members of Congress can,

and do, file statements with DOJ expressing their view of a proposed merger. During

previous merger discussions individual Members of Congress have taken positions

both for and against proposed mergers, hearings have been held, and some legislation

has been introduced and considered. For the most part, however, merger related

legislation has not been enacted, especially vis-a-vis a specific merger proposal. This

does not mean, however, that congressional opinions about mergers do not matter.

Historical Perspectives. As Figure 1 shows airline mergers and

acquisitions began occurring in the early to mid-1980s. During that period many of

the so-called “local service carriers” of the regulated era, such as Ozark, Republic,

Southern, and PSA, were combined into larger airlines. A second wave of

consolidation occurred in the later 1980s at least in part driven by the “leveraged

buyout” (LBO) phenomena. The effects of the First Persian Gulf War, which

depressed international airline travel for the first time in post World War II history,

put an end to most consolidation discussions at least for a time. Since then merger

activity has been sporadic, with some notable activity around the beginning of the

new Century, a significant combination in 2005, and the now proposed merger of

Delta and Northwest.

During the 1980s most congressional interest in mergers seems to have been

focused on service issues and on insuring that airline employees were fairly treated

as firms were acquired and/or combined. Some members of Congress expressed

2

Carey, Susan, and Melanie Trottman. “Continental Rejects Merger Overtures.” Wall

Street Journal. April 28, 2008; Maynard, Micheline. “United Said to Restart Talks with

US Airways.” New York Times. April 29, 2008.

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their views on many of the combinations of that time period. Congressional concern

was also expressed about how the merger approval process was exercised at the

federal level. Many felt that the Reagan Administration DOT was too friendly to

mergers, approving at least two mergers that DOJ had questioned. Ultimately, in

response to these concerns Congress acted to strip DOT of its preeminent role in the

merger approval process and moved it to DOJ beginning in 1989.

Recent Merger Discussions. Between 2000 and the end of 2007 there

were three significant merger/acquisition proposals. Two, American’s acquisition

of TWA (2001) and America West’s acquisition of US Airways (2005), were

approved without major congressional opposition. In each instance, the airline being

acquired (TWA and US Airways) was in significant financial difficulty, and the

acquisition was viewed by many as a way of preserving jobs and air service.

This was not the case for the May 2000 proposal by United to acquire US

Airways. That proposal engendered considerable public opposition which was very

much reflected by many Members of Congress. The merger proposal had some novel

features, including a proposal to create a new airline based at Reagan National

Airport, and later a link to the American and TWA merger, that were designed to

deflect possible anti-trust concerns related to the market power of a combined United

and US Airways. These proposals, however, were insufficient to ward off

considerable concern about the anti-competitive nature of the proposed combination.

Ultimately, DOJ would reject the merger in July 2001 and United withdrew its offer.

Congress played a very active role in the consideration of the proposed

United/US Airways merger. Although there were individual Members of Congress

who were in favor of the merger, there seems to have been significantly more

congressional opposition to the merger. These anti-merger positions were especially

apparent during several hearings held to examine the potential competitive effects of

the merger. Although no legislation blocking or otherwise altering the merger was

passed, several pieces of legislation that would have required these results were

introduced and considered.

Delta-Northwest. Executives of the merging carriers argue that this

combination is necessary for competitive reasons. In addition to creating the nation’s

largest airline, they believe the new airline will be “more stable and be better able to

grow to meet the challenges of the future” in what they view as a highly competitive

world airline industry and a difficult economic environment.3 From their perspective

the new combination, which will keep the name Delta, will provide synergies that

could reduce the firms’ operating costs by up to a $1 billion from the costs that would

be incurred by the two firms as separate entities. As part of their merger, they are

promising not to close airport hubs, reduce air service, or fire large numbers of

employees. They are also suggesting numerous other benefits that are described in

detail at [http://www.newglobalairline.com/].

3

Anderson, Richard and Doug Steenland. “Some Myths About Airline Mergers.” The Wall

Street Journal. April 16, 2008. p. A19.

CRS-4

Many airline industry observers are dubious of the claims made above. They

find it hard to understand, for example, how a firm that plans not to cut employees

and close hubs will be able to come up with the cost savings stated above. Also, the

track record of airline mergers in the United States is spotty at best, with some airline

analysts believing that there has never been an indisputably successful merger in the

industry.4 Even those who believe the merger might be positive question the

likelihood that the transition from two airlines to one will be smooth for fliers and

employees, by pointing to the ongoing difficulties at US Airways caused by merger

related employee and infrastructure integration issues.5

Approval of the merger is no foregone conclusion. DOJ has stated its intention

to closely examine the attributes of the merger, and DOT has begun its analysis of the

competitive effects of the merger. These reviews will likely take months to complete,

making it impossible to forecast when DOJ might announce its decision on the

merger.

Several Members of Congress, including the Chairman of House Committee on

Transportation and Infrastructure (T&I), Representative James Oberstar, and the

Chairman of T&I’s Subcommittee on Aviation, Representative Jerry Costello, have

reportedly expressed skepticism about the supposed positive aspects of the merger.6

They have stated an intent to hold hearings on the merger. Additional congressional

committees, Senate Commerce, Senate Judiciary, and House Judiciary, are also

expected to hold hearings on the issue.

Airline Bankruptcies/Failures

Failure is a normal feature of the U.S. business system. The failure of some

firms, however, is more notable than for others. This is the case for the airline

industry. In early spring 2008, four airlines filed for bankruptcy protection. Three,

Skybus, Aloha, and ATA, filed for Chapter 7 bankruptcy, have stopped flying and are

in the process of liquidating. Frontier filed for bankruptcy under Chapter 11 of the

Bankruptcy Code and is to continue to operate while it attempts to reorganize. All of

these failures have attracted some level of congressional interest. This is especially

true for Aloha, which provided a significant portion of Hawaii’s inter-island

transportation network.

4

Baily, Jeff. “In the Math of Mergers, Airlines Fail.” The New York Times. January 17,

2008 and McCartney, Scott. “The Middle Seat: What’s in a Merger? For Fliers, Not Much

— History Doesn’t Bode Well For Delta - Northwest Combo; A Legacy of Dropped

Routes.” The Wall Street Journal. April 16, 2008. p. D1

5

Reed, Dan. “US Airways highlights drawbacks of consolidation.” USA Today. March 6,

2008.

6

Aviation Daily. “Delta-NWA Merger Obstacles Include Labor, Competition.” April 16,

2008. p. 1

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Figure 1. Selected Airline Mergers, Acquisitions, and Bankruptcies, 1978-2007

Source: CRS analysis of various sources.

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Bankruptcy is far from rare in the airline industry. It can almost be viewed as

an accepted business practice. As can be seen in Figure 1, several major airlines

have gone through multiple Chapter 11 reorganizations since 1978. For example,

Continental (1983 and 1990), US Airways (2002 and 2004), and America West,

which purchased US Airways in 2005, (1985 and 1991). In fact, more than 150

airlines, mainly start-up firms not shown in Figure 1 (known in airline terminology

as “new entrants”), but also some well known firms, have filed for bankruptcy in the

last 30 years. In the vast majority of these cases the bankruptcy led ultimately to a

departure from the industry. Where a Chapter 11 process ultimately led to a

successful reorganization, the airline often looked very different from the airline that

had filed for protection. There is no single reason why airlines go bankrupt.

Recessions, fuel prices, bad management decisions, and labor problems, can all play

a role. Unanticipated events like the first Persian Gulf War and September 11th,

which led to significant declines in flying, have led straight to the bankruptcy court.

Congressional interest in bankruptcy is generally focused on several issues.

Primary among these is the loss and/or prospective loss of air service at an airport,

in a community, or sometimes in a region. Of immediate interest is the consumer

fallout that accompanies a bankruptcy filing. Constituents who have been stranded

or find they no longer hold valid tickets, frequently turn to congressional offices in

search of redress. Also of interest to many Members is the fate of airline industry

employees. Employees may lose their jobs, have their salaries reduced or see their

pensions eliminated or reduced. The loss of airline pensions by former employees,

for example, were a major issue following the round of airline bankruptcies that

occurred after September 11th. In some hub airline cities, an airline’s workforce can

make up a sizable portion of the local electorate.

Congress does sometimes act to assist the airline industry in times of need.

Most notably this occurred immediately after September 11th when Congress passed

the Air Transportation Safety and System Stabilization Act (ATSA, P.L. 107-42).

ATSA provided immediate financial assistance and long term loans to the airlines to

keep them operating. ATSA did not preclude bankruptcies, but it arguably prevented

additional airline failures beyond those that occurred anyway. ATSA, as the event

it responded to, represented the extreme in terms of a congressional response. The

more typical congressional response over time to airline bankruptcies could be

characterized as disappointment combined with acceptance.

Passenger Rights Issues

Recent incidents including passengers being held in aircraft for eight or more

hours awaiting takeoff, passengers being stranded by the shutdown of bankrupt air

carriers, as well as deteriorating airline on-time arrival performance, have led to

increasing interest in airline passenger consumer issues. Currently, most passenger

rights are set forth in the airlines’ “contract of carriage” language. The contract of

carriage is the legal contract between the airline and the ticket holder which describes

the rights and responsibilities of both the air carrier and the passenger. Passengers

CRS-7

may take legal action in federal courts based on these contracts.7 Historically, the

DOT role in consumer protection has been limited.8 However, existing law does

provide procedures and compensation rules for “bumping” and lost or damaged

baggage.9 The main power DOT has to protect consumers is the department’s power

to take action against air carriers for “deceptive trade practices.” The definition and

interpretation of deceptive trade practices can significantly impact the scope of

DOT’s enforcement authority.

Although airline deregulation was enacted 30 years ago, some observers believe

that some of the perceived protections of the regulated era should be reintroduced.

There are two major differences in the unregulated environment versus the regulated

environment for air passenger transportation that are important to keep in mind when

examining airline passenger issues. First, under regulation, air carriers did not set

their prices; the Civil Aeronautics Board (CAB) did. This meant that air carriers, for

the most part, competed on service and frequency rather than price. In addition, with

prices fixed by the CAB, interline agreements among airlines to accept each others’

delayed passengers were simple to manage, because all the major carriers had very

similar fare structures. Since deregulation, and especially with the advent of low-cost

carriers as major players in the industry, the primary means of competition has

become price, not service.

Second, because the CAB used a cost-plus basis for setting fares, this

encouraged air carriers to maintain a significant amount of extra capacity. Air

carriers could have passenger load factors as low as 55% and still make money. This

meant that when there were flight delays or cancellations, most carriers had seats

available to accept transfers from other airlines. In recent years, air carriers have

undergone a period of intense price competition at the same time that fuel costs have

risen rapidly. Most air carriers have responded by pursuing higher passenger load

factors, which are now often above 80% for some airlines and are even higher on

some popular routes. Such high average passenger load factors mean that, during

flight delay or cancellation situations, there may be limited available seats for

transferred passengers.

7

With the deregulation of aviation, the airline contract of carriage took the place of rules

“tariffs” that were, under regulation, adopted and published by the airlines and that became

effective upon Civil Aeronautics Board approval. For a discussion of passenger rights

tariffs under regulation see, Senate, Judiciary Committee, Oversight of Civil Aeronautics

Board Practices and Procedures, Hearing, v. 2, February 19, 1975, Washington, GPO,

1975.

8

For a discussion of consumer rights see the DOT’s Aviation Consumer Protection

Division’s “Fly Rights,” available at [http://airconsumer.ost.dot.gov/publications/flyrights.

htm].

9

On April 16, 2008, Secretary of Transportation Mary Peters announced finalized changes

to the “bumping” rule, which doubles the compensation for passengers that are involuntarily

bumped to $400 if they reach their destination within two hours of their original arrival time

and to $800 if they do not arrive within two hours. U.S. Dept. of Transportation. U.S.

Transportation Secretary Peters Announces New Measures to Improve Air Travel

Experience. Washington, DC: DOT, April 16, 2008. The current ceiling for lost and

damaged passenger baggage is $3,000 per passenger.

CRS-8

Issues of Congressional Interest

During Congress’s current consideration of the reauthorization of the FAA,

most of the interest in passenger rights has been focused on issues related to

schedules and capacity: flight cancellations, delay, and transfers between airlines.10

Under airline contracts of carriage, consumers face a major caveat: many of a

passenger’s contractual rights regarding schedules and cancellations are limited to

delays and cancellations that are under the control of the airlines. All contracts of

carriage have “force majeure,” exclusions for events such as weather conditions,

war, strikes, and in some cases shortages of labor, fuel, and facilities, that cannot be

reasonably anticipated by the airlines. Both the House-passed and Senate-reported

FAA reauthorization bills include passenger rights provisions. For a summary of

these provisions see CRS Report RL33920, Federal Aviation Administration

Reauthorization: an Overview of Selected Provisions in Proposed Legislation.

Passenger Access to Services on Delayed Aircraft and the Right to

Deplane. The treatment of passengers onboard delayed aircraft is contractual, not

legislative, and varies from air carrier to air carrier depending on the text of their

contracts of carriage. Recent reports of passengers being stuck in an aircraft that is

stranded on the tarmac without access to adequate food, water and toilet facilities has

led to calls for federal action to mitigate the impact of these situations on passengers.

Options suggested include requiring the airlines to develop contingency plans to

assure that passengers’ onboard needs are met during delays, requiring airlines to set

a clear time frame under which they will be permitted to deplane, or mandating a

specific number of hours after which any passenger has the right to get off the

aircraft.11 The airlines oppose setting a standard benchmark for the number of hours

that passengers can be held on a plane for a variety of reasons. They argue that most

passengers would rather wait and arrive late rather than have the flight cancelled and,

that being forced to return to the gate would likely be against the wishes of the

majority of passengers. They also point out that the most egregious incidents involve

weather that impacts an entire airport, making the deplaning of delayed plane

passengers operationally difficult due to gates filled with other delayed aircraft and

terminal waiting areas already crowded with passengers awaiting other departures.

Delayed, Cancelled and Diverted Flights: Refunds and Rerouting.

The refund and routing options, as well as the amenities offered to passengers, are

also governed by the individual airlines’ contracts of carriage. Airline schedules are

not guaranteed. Passenger options vary from airline to airline. The consumer issues

of recent interest include providing up-front cancellation and delay statistics on

flights and also the re-booking and transferability of tickets of delayed or cancelled

flights. In general, a passenger on a cancelled flight may request a refund for the

unused part of the ticket or accept the offer of a seat on a later flight of the ticketed

airline. There is no federal requirement, however, that the airlines arrange for a seat

on a different airline. Delayed passengers may request transfer to a different flight

10

During the previous period of interest in passenger rights, 1999-2001, pricing issues, such

as access to the lowest fares, were also a major focus of legislative efforts.

11

See “Aid for Stranded Travelers,” by James Bernstein, Newsday, June 22, 2007; “Ice

Pellets and Passenger Rights,” by Les Abend, Flying, v. 134, July 2007, 92-95.

CRS-9

of the same airline but may be required to pay a cancellation fee on the original ticket

or a higher fare to make the change. To transfer from one airline’s flight to another

airline’s flight without paying full fare for the second airline’s ticket, passengers need

to persuade the first airline to endorse the ticket to the second airline. Airlines

generally will only endorse tickets to or accept endorsed tickets from airlines with

whom they have negotiated interline agreements regarding the treatment of

transferred passengers. In recent years the major airlines have narrowed the scope

of their interline agreements, often only negotiating them with their code share

partners. Low-cost carriers generally do not have interline agreements. Even in

cases where interline agreements exist, making such arrangements is up to the

airline’s personnel on the scene. Some argue that the federal government should

require airlines to accept transfers from other airlines’ delayed or cancelled flights.

However, outside of a regulated environment, others say this could be problematic,

especially given the differences between the fare structures of the low-cost and legacy

airlines. It also would mean that the original ticketing airline would, in effect, be

pricing the fare for a seat on another airline.12

Honoring Tickets of Airlines that Shut Down. The recent shutdown of

ATA Airlines, Aloha Airlines, and Skybus has raised the issue of whether operating

airlines should honor the tickets of shutdown carriers. Since November 2006, there

has been no requirement that airlines must honor the tickets of an airline that has

ceased operations. The Aviation and Transportation Security Act of 2001 (P.L. 10771, Section 145), enacted November 19, 2001, included provisions that required

airlines providing service on a route to provide, “to the extent practicable,” service

on that route to passengers ticketed by an air carrier that discontinued service on that

route due to insolvency or bankruptcy. Passengers had 60 days, from the date of the

suspension of service, to make the transportation arrangements, and the airline

providing the service was allowed by DOT to charge a one-way fee of $25. The

provision lapsed on November 30, 2006. There has been some interest in introducing

legislation that would include provisions similar to Section 145.13

Expansion of DOT Airline Consumer Complaint Investigations.

Within DOT, the Office of Aviation Enforcement and Proceedings (OAEP) is

responsible for enforcing the DOT’s consumer protection rules. The OAEP has

significant authority, under the Airline Deregulation Act of 1978 (P.L. 95-504), to

investigate and take enforcement action against air carriers that engage in unfair or

deceptive practices and unfair methods of competition. This power is broader than

might be assumed at first glance. For instance, if a particular flight is consistently off

12

“Canceled Flight? Your Inn Trouble,” by Scott McCartney, Wall Street Journal, April 15,

2008, D1, D10; also see Statement of James C. May, President and CEO, Air Transport

Association of America, Inc., Before the Subcommittee on Aviation of the House Committee

on Transportation and Infrastructure, April 20, 2007, (Washington, Air Transport

Association), 2007, 7p.

13

See Dept. Of Transportation. Honoring Tickets of Insolvent Airlines Pursuant to the

Requirements of Section 145 of the Aviation and Transportation Security Act: Notice, June

1, 2005, (Washington, DC, 2005), p. 16. Includes a question and answer appendix. See also

McCartney, Scott. “When Airlines Fail, Fliers Have Few Protections,” Wall Street Journal,

April 8, 2008, p. D1.

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its schedule, advertising its rarely met scheduled departure and arrival times could

be investigated as a deceptive practice. OAEP can also investigate the availability

of seats under advertised fares or for frequent flyer awards. The OAEP’s staffing

level has been an issue. The staffing level peaked at 40 in 2003 and dropped to 33

in 2006. Also, much of the office’s resources have been directed to civil rights

violations such as disability-related issues, leaving limited resources for its consumer

protection responsibilities.14

Airline Safety

Since the early days of commercial aviation in the 1920s, Congress has

maintained a keen interest in the safety of airline operations. Over the past six years,

however, congressional oversight of airline safety has not been as extensive, largely

because the airlines have maintained an impressive safety record during this period.

Between 2002 and 2006, there were nine fatal accidents involving commercial air

carriers, four of which involved passenger fatalities. The accident rate over this

period was roughly one fatal accident for every ten million hours flown (0.01 fatal

accidents per 100,000 flight hours). By comparison, a decade earlier, during the

period from 1992 through 1996, fatal airline accidents were occurring at a rate of

about one every 3.7 million flight hours (0.027 fatal accidents per 100,000 flight

hours). Thus, the fatal airline accident rate has been reduced by a factor of about 2.7

over the past decade. Preliminary data for 2007 indicate that it too was a very safe

year, with no fatalities among the 766 million passengers enplaned on aircraft that

were flown a cumulative total of over 19 million flight hours.15

Despite these impressive statistics, some aviation safety professionals and some

Members of Congress have expressed concern that the industry and regulators may

have been lulled into complacency with regard to safety. This concern has been

heightened recently in response to various findings that airlines have failed to fully

comply with aircraft inspections and repairs mandated by the FAA.16 Congressional

oversight and investigation of these incidents have focused on the relationship

between the FAA and the airlines and the manner in which the FAA carries out its

mandate to regulate safety within the airline industry.

14

See DOT, Office of the Inspector General, Follow-up Review: Performance of U.S.

Airlines in Implementing Selected Provisions of the Airline Customer Service Commitment,

(Washington, DOT), 2006.

15

All statistics are derived from National Transportation Safety Board (NTSB) Air Carrier

Accident Data statistical summaries and include both scheduled and non-scheduled airline

operations flown under 14 C.F.R. Part 121 regulations.

16

See, e.g., Matthew Wald, “U.S. Inspectors Tell of Willful Neglect of Airline Inspection,”

The New York Times, April 3, 2008; Micheline Maynard and Matthew Wald, “U.S. Airlines

Face Prospect of More Chaos over Inspections,” The International Herald Tribune, April

10, 2008.

CRS-11

FAA Authority

By statute, the FAA has been given broad authority to regulate and promote

safety within the airline industry. The FAA exercises this authority by establishing

minimum safety standards regarding the maintenance and operation of aircraft to

prevent or eliminate future accidents.17 The FAA issues operating certificates to air

carriers that provide specific terms for ensuring safety. Domestic air carriers and

airlines operating as U.S. flag carriers on international routes are governed by FAA

regulations codified in Title 14, Code of Federal Regulations, Part 121, and are

therefore known among aviation professionals as Part 121 carriers. Part 121 carriers

generally have the most stringent safety requirements, and receive the highest level

of scrutiny by FAA inspectors.

Congressional Involvement

While Congress has primarily relied on congressional oversight to press for

aviation safety improvements, at times it has legislated on airline safety matters. For

example, amid growing frustration over the FAA’s slow progress and airline

resistance to equipping aircraft with cockpit collision avoidance systems, Congress

included in the Airport and Airway Safety and Capacity Expansion Act of 1987 (P.L.

100-223) language establishing specific time lines for the advancement of this

technology and deadlines for the mandatory operational deployment and use of

Traffic Collision Avoidance Systems (TCAS) on passenger airliners. Also, as part

of the FY1992 Transportation Appropriations Act (P.L. 102-143), Congress included

a set of provisions referred to as the Aging Aircraft Safety Act of 1991, directing the

FAA to establish a regulatory framework for assuring the continuing airworthiness

of aging aircraft. Under the provisions of the act, the FAA was directed to provide

its inspectors with specific training in corrosion and metal fatigue auditing

inspections. The act resulted in the FAA’s creation of an aging aircraft inspections

program to study age-related structural issues in the air carrier fleet through a process

of inspections and systematic record keeping.18

FAA oversight of the airline industry came under intense congressional scrutiny

in the 1990s following a string of accidents involving USAir in the early 1990s, a

fatal crash of a commuter turboprop after encountering in-flight icing conditions in

October 1994, and the fatal crash of a Valujet DC-9 in the Florida Everglades in May

1996. Largely as a result of congressional findings following the Valujet crash,

Congress included two significant changes to FAA safety oversight in the Federal

Aviation Reauthorization Act of 1996 (P.L. 104-264). First, the act eliminated the

FAA’s dual mandate to promote the aviation industry while at the same time

regulating its compliance with safety mandates, and it specifically designated in

statute safety as the highest priority for air commerce.

Second, the act mandated that the FAA establish a system for protecting

voluntarily submitted safety-related information to encourage employees with first

17

See 49 U.S.C. Sec. 44701.

18

See 49 U.S.C. §44717.

CRS-12

hand knowledge of unsafe conditions or practices to report their observations without

fear of reprisal. This initiative was considerably expanded by a provision in AIR-21

(P.L. 106-181) that established a formal whistleblower protection program for

aviation industry employees that come forward with information regarding air safety.

The Safety Management Approach

The Aviation Safety Action Program (ASAP) was established by the FAA to

meet these mandates and to encourage air carrier and repair station employees to

voluntarily report safety-related information by protecting their confidentiality and

providing certain safeguards against disciplinary or punitive actions.19 To

complement the voluntary reporting by airline employees, the FAA has also

established a Voluntary Disclosure Reporting Program (VDRP) for airlines, allowing

them to disclose safety information to the FAA, including notification regarding

possible regulatory violations.20 To encourage openness in the exchange of this

safety-related information, the FAA provides certain protections to the airlines

against civil actions in accordance with the guidelines of the program. The ASAP

and VDRP programs are an integral part of a broader airline Safety Management

System (SMS) concept designed to create a systemwide framework for identifying

and correcting safety-related problems in maintenance and flight operations.21 The

FAA regards the SMS concept as being a proactive approach to airline safety, in

contrast to the more classical rule-based regulatory enforcement approach, which it

regards as being more of a reactive approach.22 In this regard, the SMS concept is

viewed as one of several approaches to aviation safety that respond to criticisms that

the FAA has historically been reactive in its approach, rather than proactive, stepping

in only after festering unsafe conditions have resulted in notable incidents or tragic

accidents.

The SMS approach does not, however, replace formal safety reporting

processes, compliance with FAA directives, and regulatory oversight, inspections,

and enforcement, but is meant to complement these aspects of safety regulation.

Nonetheless, some critics of the approach caution that a potentially unintended effect

of an SMS approach is the de-emphasis of these more traditional regulatory oversight

functions which, in their view, may erode important checks and balances designed

to ensure that a high level of safety and regulatory compliance is maintained.23

Others argue, however, that as a result of technology advances, safety monitoring has

19

See Federal Aviation Administration, Advisory Circular AC120-66B - Aviation Safety

Action Programs (ASAP), November 15, 2002.

20

See Federal Aviation Administration, Advisory Circular AC-00-58A - Voluntary

Disclosure Reporting Program, September 8, 2006.

21

For further reading, see Federal Aviation Administration, Advisory Circular AC-120-92:

Introduction to Safety Management Systems for Air Operators, June 22, 2006.

22

Clark, Rick. Federal Aviation Administration (AFS-220). The “Why” and “What” of

Safety Management Systems. Presented at Training Center Program Manager Conference,

March 26, 2008.

23

Air Transport World Daily News. “US FAA’s ‘collaborative’ relationship with airlines

questioned.” April 7, 2008.

CRS-13

become much more of a data-driven activity that relies on near real-time assessment

of operational conditions that have necessitated significant changes in the manner in

which airlines monitor safety and the FAA conducts its oversight activities. Under

this line of reasoning, advocates argue that meeting the changing nature of the

industry requires FAA oversight functions to be more directly focused on safetyrelated processes and functions, rather than the more specific details of regulatory

compliance.

A somewhat related concern has recently been raised, however, over the FAA’s

Customer Service Initiative. The initiative was first launched in late 2003 with the

intent of creating a more uniform and consistent approach to regulatory oversight

nationwide and be more responsive to concerns about the interpretation or

application of regulatory matters by the FAA.24 The FAA contends that

misinterpretation of this initiative led some inspectors to treat airlines more as

business clients of the FAA rather than regulated entities, resulting in lax

enforcement. The FAA has vowed to fix this misunderstanding and emphasize that

while inspectors should be respectful and responsive to airline concerns, they should

not be treating them as customers or clients.25

Data-Driven Safety Processes. To address the needs for data-driven safety

monitoring, airlines include various safety data collection and analysis tools as part

of their overall SMS approach. For example, in addition to ASAP, most major

airlines conduct some form of flight operational quality assurance (FOQA) program

to review electronically recorded data from flights to identify potentially unsafe

operational conditions as part of their overall safety management approach. To

encourage the use of these data-driven processes for identifying potential safety

issues, FOQA data is afforded nondisclosure protections, and the FAA is generally

prohibited against using FOQA data in carrying out enforcement action against an

airline or its employees, except in cases involving criminal or deliberate acts.26 The

SMS concept relies on data-driven processes, like FOQA, to target and correct safety

deficiencies, hazards, and other unsafe conditions in maintenance and flight

operations. The SMS framework serves as the airline counterpart to the FAA’s datadriven approach to oversight: the Air Transportation Oversight System (ATOS).

The Air Transportation Oversight System (ATOS). The FAA’s ATOS

system has been phased in over the past 10 years, and is now the primary tool for

managing and administering FAA oversight and inspections of Part 121 operators.

As compared to more traditional inspection methods that rely heavily on individual

inspector expertise and focus on regulatory compliance issues, ATOS is a data-driven

program that relies on risk assessments and analysis to focus inspection activities on

particular areas where safety deficiencies might be expected at a specific air carrier.

While the program’s objectives and principles are generally viewed as a positive

change for aviation safety by many, reviews of the program have revealed that its

effective implementation has been hindered by a lack of standardization; a lack of

24

Ibid.

25

Ibid.

26

See 14 CFR §13.401.

CRS-14

adequate tools to help inspectors track safety deficiencies and corrective actions;

insufficient training; and inefficient allocation of human resources. A provision in

Vision 100 (P.L. 108-176) mandated that the FAA develop an action plan to correct

existing problems with the ATOS system and extend the program to oversight at

more than 100 smaller air carriers in addition to the major passenger air carriers

currently in the program. These provisions required the FAA to: develop inspection

checklists for FAA inspectors and safety analysts; provide training in systems safety,

risk analysis, and auditing to FAA safety inspectors; ensure that inspectors are

physically located where they are most needed; and establish a strong central

leadership for ATOS that will ensure that the system is consistently implemented and

expanded. Since 2003, when Vision 100 was enacted, the ATOS program has

expanded considerably and is now in use for monitoring most Part 121 operators.

The Aviation Safety Process As A “Partnership”. Data from the ASAP

and VDRP report systems, along with airline service difficulty reports (SDRs), FAA

incident investigations, and NTSB accident investigation findings and

recommendations, complement the FAA’s primary system for air carrier oversight,

ATOS, in achieving the objective of identifying and ultimately correcting unsafe

conditions in the airline industry. A formal mandatory process exists for airlines to

notify the FAA of safety-related findings through service difficulty reports (SDRs).

Also, FAA and NTSB investigations of air carrier incidents and accidents may lead

to findings and formal safety recommendations. These can result in the direct

issuance of airworthiness directives (ADs) by the FAA outlining methods to correct

unsafe conditions, or may be communicated to the aircraft or aircraft component

manufacturer to identify a fix. Often, the manufacturers will issue a service bulletin,

which may then be incorporated by reference into an FAA-issued AD that all

operators of a particular aircraft type must fully comply with, or seek an approved

alternative method of compliance, in order to continue flying affected aircraft in

accordance with the timetables and details provided in the AD (see Figure 2). With

regard to maintenance, all civil aircraft operators, including Part 121 air carriers, are

required to maintain operational aircraft in an airworthy state by complying with all

FAA-issued ADs specifying compliance requirements to correct identified unsafe

conditions in an aircraft, aircraft engine, or other aircraft components.

The model is, and has always been, a model of shared responsibility: the airlines

have the responsibility to identify and report suspected unsafe conditions associated

with the design of an aircraft, the manufacturer has the responsibility to work toward

correcting conditions related to the design of an aircraft or aircraft component

determined to compromise safety, and the FAA has the ultimate responsibility to

regulate the process and ensure safety across the entire airline industry. The addition

of safety management systems concepts in recent years has provided an element of

increased “partnership” between the FAA and industry, providing specific tools for

encouraging the reporting of unsafe conditions and practices and technological

advances allowing airlines to conduct detailed data-driven analyses of operational

safety.

CRS-15

Figure 2. The Aviation Safety Process

FAA

NTSB

Safety

Recommendations

Airworthiness

Directives

(ADs)

Inspections

and

Audits

VDRP

ASAP

Voluntary

Disclosure

Service Difficulty

Reports (SDRs)

Employees

Service Bulletins

Manufacturers

FOQA, etc.

Airlines

Source: CRS Analysis.

Current Concerns Regarding FAA Airline Safety Oversight

Recent investigation and evidence provided by two whistleblowers in the FAA’s

Southwest Airlines Certificate Management Office (CMO) have pointed to specific

examples of aircraft being flown beyond the compliance deadline of certain ADs

related to fatigue cracking of skin panels on and required rudder checks of certain

Boeing 737 aircraft.27 These findings have raised significant questions about the

effectiveness of the above described system and processes related to airline safety

practices and FAA oversight. There has been considerable concern within Congress

and among some aviation safety experts that the pattern of regulatory non-compliance

and lax FAA oversight could be much more widespread and may be indicative of

systemic problems with either the aviation safety oversight process or the manner in

which it is being currently implemented by the FAA.

In response to the increased public and congressional scrutiny of FAA oversight

of air carrier maintenance following these incidents, the FAA has intensified its

efforts to ensure full compliance with airworthiness requirements. In early March

2008, the FAA levied a record civil penalty of $10.2 million against Southwest

Airlines as a result of its findings regarding Southwest’s noncompliance with

27

See U.S. House of Representatives, Committee on Transportation and Infrastructure.

Summary of Subject Matter: Critical Lapses in FAA Safety Oversight of Airlines: Abuses

of Regulatory “Partnership Programs,” April 1, 2008, Hearing held April 3, 2008.

CRS-16

airworthiness requirements related to the above mentioned incidents.28 Under intense

media scrutiny following this action, Southwest grounded several aircraft and

cancelled numerous flights to conduct additional inspections across portions of its

fleet.

On March 13, 2008, the FAA issued a notice directing a nationwide audit of Part

121 air carrier compliance with ADs.29 This has resulted in a recent spate of airline

flight cancellations and schedule disruptions, as the FAA uncovered various cases of

nonconformity with required maintenance procedures to comply with various ADs

as a result of this audit. In particular, various operators of Boeing McDonnell

Douglas MD-80 aircraft have cancelled flights to reinspect and correct work done to

comply with an AD issued in 2006 to address concerns over potential shorts and

arcing of electrical wiring in the airplanes’ wheel wells that could cause a fire. Some

have raised concerns that these actions — coming at a time when airlines are facing

rising fuel costs and economic conditions that make raising ticket prices to offset

these rising costs difficult — is placing significant strain on the airline industry.

Also, some noted safety experts have questioned whether these actions have had any

bearing on improving safety or whether the lapses in AD compliance constituted any

significant risk to the safety of the traveling public.30

Maintenance Outsourcing. In addition to the current focus on FAA

oversight, concerns over the degree to which air carriers outsource maintenance to

third party certificated repair stations and other facilities, including non-certificated

aircraft maintenance facilities, and the level of FAA oversight of these various

facilities has been an ongoing concern. U.S. air carriers are increasingly outsourcing

maintenance to third-party repair stations, and outsourced maintenance now accounts

for more than 50% of air carriers’ total maintenance costs.31 For airlines,

maintenance outsourcing has largely been viewed as a cost saving approach. In many

instances, airlines have contracted with foreign repair stations which can often offer

considerably lower costs because of lower labor rates in other countries. However,

outsourcing practices, both domestically and internationally, raise concerns over the

qualifications of maintenance personnel and the ability of the FAA to conduct

effective regulatory oversight. Across the contract maintenance industry, the ratio

of workers to supervisors is not regulated and often exceeds 10 to 1, raising questions

over the adequacy of supervision in contract maintenance operations. Further,

contracted maintenance workers, many of whom work part-time at repair facilities

alongside full-time regular employees, often are not required to obtain FAA

28

Jeff Bailey, “After Fine, Southwest Suspends 3 and Hires Specialist,” The New York

Times, March 12, 2008.

29

U.S. House of Representatives, Committee on Transportation and Infrastructure.

Summary of Subject Matter.

30

Pasztor, Andy, Susan Carey, and Paulo Prada. “Airline Experts Vouch for Industry’s

Safety.” The Wall Street Journal, April 11, 2008, p. A4.

31

Consumer Reports. “An Accident Waiting to Happen?” March 2007, pp. 16-19.

CRS-17

certification, and the screening and selection processes for these workers has been

described as minimal.32

With regard to the potential implications for airline safety, concerns over FAA

inspector oversight of contract maintenance practices surfaced during the NTSB’s

investigation of the March 16, 2003 crash of a US Airways commuter flight operated

by Air Midwest in Charlotte, NC. The investigation found that elevator control cables

were improperly rigged by subcontracted maintenance workers at a non-certificated

facility, and it has been suggested that FAA had a limited understanding of the

contract arrangements and minimal knowledge of the work conditions and

supervision of work being performed at this maintenance facility.33 The crash

investigation, in conjunction with growing concerns over FAA oversight of

maintenance at facilities not required to be certificated as designated repair stations,

prompted a DOT Office of Inspector General (OIG) audit of air carrier use of these

non-certificated maintenance facilities. The DOT OIG found that while these

facilities operate outside the scope of regulations pertaining to certificated repair

facilities, there are no specific limitations regarding the type and scope of work they

perform, and maintenance performed at these facilities is largely unmonitored by

FAA inspectors.34 The safety implications of outsourced maintenance work and the

FAA oversight of vendors that perform this work remains an issue of considerable

interest to Congress.

Some have also alleged that the increased use of outsourced maintenance is

contributing to flight delays, because airplanes are sometimes being returned to

service by these repair stations with work performed incorrectly resulting in

additional delays and cancellations to pull these aircraft out of service and fix them

properly.35 Analysis of airline-caused delays and maintenance outsourcing data

among 14 major air carriers in 2005 tabulated by Consumer Reports indicated a

correlation of 0.47 (on a scale with 0 indicating no relationship and 1 indicating a

perfect relationship) between the percent of maintenance outsourced by an airline and

the percent of airline-caused delays.36 While this relationship provides some

indication of a possible link between outsourcing and delays, the correlation alone

cannot establish a causal link, and the strength of the correlation only weakly

supports the notion that outsourcing and delays go hand-in-hand. Nevertheless, faced

with increasing concerns of air carrier service delays, this is another aspect of

outsourcing that may warrant further examination.

32

Crotty, Bart. “Aviation Contracted Maintenance Workers, Are They Safe Enough?”

Aviation Maintenance, July 2006, pp.14-17.

33

Ibid.

34

Department of Transportation, Office of Inspector General. Air Carriers Use of NonCertificated Repair Facilities. Report Number AV-2006-031, December 15, 2005.

35

Consumer Reports. “An Accident Waiting to Happen?”

36

CRS analysis of data presented in Consumer Reports, “An Accident Waiting to Happen?”

CRS-18

Related Legislation and Possible Options for Congress

Related congressional oversight and legislative activity have centered on options

for improving the FAA air safety inspector workforce, the manner in which this

workforce carries out its compliance audits of the airline industry, and possible

safeguards to reduce potential conflicts of interest that may compromise the

regulatory role of FAA inspection activities. Additional options are being pursued

for increasing regulatory requirements and oversight of foreign repair stations and

airline use of non-certificated repair facilities. Most of these options are being

considered within the context of pending FAA reauthorization legislation. However,

complications and delays in bringing FAA reauthorization legislation to the Senate

floor have prompted action in the House, which passed a stand-alone bill in July

2008, the Aviation Safety Enhancement Act of 2008 (H.R. 6493), specifically

addressing FAA oversight of air carrier safety.

Related Provisions in FAA Reauthorization Bills. Specifically, the FAA

Reauthorization Act of 2007 (H.R. 2881) as passed by the House includes a provision

that would restrict the use of non-certified maintenance providers, allowing only

airline employees or employees of FAA-certified repair stations to carry out

substantial and routine maintenance and complete required inspections of aircraft

used in airline service. Air carriers would also be required to provide complete lists

of their non-certificated maintenance providers, whose activities would be restricted

to non-routine, non-substantial maintenance and repair work under this provision.

The bill also adopts an amendment agreed to by the House that would extend the

requirement for drug and alcohol testing programs to safety-critical positions at

foreign repair stations working on air carrier aircraft or components. Drug testing

programs are already required for safety-critical maintenance personnel working for

airlines and repair stations servicing air carrier aircraft within the United States, and

this extension to foreign repair stations agreed to by the House was widely regarded

as closing a gap that could have potential safety implications. Implementation and

oversight of such a requirement, however, may be complicated by specific privacy

laws and rights in foreign countries that may limit the FAA’s authority to impose

drug and alcohol testing programs at facilities located in other countries that are

comparable to existing programs in the United States. The Senate began

consideration of the FAA reauthorization on April 28, 2008. It has taken up

consideration of H.R. 2881, as amended by the text of The Aviation Investment and

Modernization Act of 2007 (S. 1300) and the American Infrastructure Investment and

Improvement Act of 2007 (S. 2345). This legislation does not include similar

provisions regarding regulations or oversight of repair stations or third-party air

carrier maintenance providers.

The prior FAA reauthorization act, Vision 100 (P.L. 108-176), enacted in 2003,

directed the Government General Accounting Office (now the Government

Accountability Office, or GAO) to examine FAA inspector training and tasked the

National Academies with conducting a study of FAA inspector workload and staffing

standards. This study identified a variety of trends affecting the nature of FAA

oversight of air carriers including evolving technologies, industry trends toward

maintenance outsourcing, the increasing use of designees, and the shift to a system

CRS-19

safety approach.37 The study also concluded that the inspector workforce is expected

to change considerably over the next several years with increasing numbers of

retirements expected. Language in House-passed H.R. 2881 directs the FAA to

implement the inspector staffing model called for in this study, and it would

authorize specific appropriations to carry out the implementation of this staffing plan.

The version of S. 1300 reported in the Senate struck out an earlier provision of the

introduced bill that would have required the FAA to develop a staffing model for its

inspector workforce. However, language inserted into the Senate version of H.R.

2881 would authorize the FAA to hire 200 additional aviation safety inspectors.

Post-Employment Restriction Options for FAA Inspectors.

Legislators in both the House and the Senate have focused on options to establish a

“cooling off” period that would restrict former FAA inspectors from seeking

employment with air carriers for some period after leaving their positions at the

FAA.38 This proposed “cooling off” period is intended to reduce potential conflicts

of interest for inspectors who may go easy on air carriers they oversee in hopes that

doing so could improve their chances of landing an airline job. Various postemployment restrictions already exist for civil service employees, including FAA

inspectors. However, under these post-employment conflict-of-interest laws, nonsenior level federal employees generally have a broad range of employment options

within regulated industries they had direct dealings with as a federal employee, so

long as their post-government activities do not involve representing or advocating for

a private employer before the federal government regarding matters that the

individual had personally and substantially worked on as a federal employee (see

CRS Report 97-875, “Revolving Door,” Post-Employment Laws for Federal

Personnel, by Jack Maskell). The FAA has indicated that it too is contemplating

specific post-employment rules that would establish a “cooling off” period for FAA

inspectors, as recommended by the DOT OIG.39

The Aviation Safety Enhancement Act of 2008. On July 22, 2008, the

House passed the Aviation Safety Enhancement Act of 2008 (H.R. 6493). The bill

addresses several of the above-mentioned concerns that have been raised regarding

FAA oversight of air carrier safety. The bill would establish within the FAA an

Aviation Safety Whistleblower Investigation Office. The office director would be

appointed by the Secretary of Transportation to serve a five-year term, and would be

charged with reviewing reports of safety violations submitted by whistleblowers

within the FAA and in the airline industry, and recommending corrective actions to

the FAA Administrator while maintaining the confidentiality of a whistleblower’s

identity. The Administrator would, in turn, be required to respond to these

recommendations in writing. The Aviation Safety Whistleblower Investigation Office

would be required to report annually to Congress, providing summaries of

37

National Research Council, Committee on Federal Aviation Administration Aviation

Safety Inspector Staffing Standards. Staffing Standards for Aviation Safety Inspectors.

National Academies Press: Washington, DC, 2006.

38

Carlstrom, Gregg. “Bills Would Slow Revolving Door Between FAA, Airlines,” Federal

Times, April 15, 2008.

39

Hohmann, James. “FAA Chief Defends Cooperation With Airlines,” The Los Angeles

Times, April 18, 2008.

CRS-20

whistleblower cases handled and their disposition. The bill also seeks to redefine the

FAA’s Customer Service Initiative, by removing references to airlines as “customers”

of the FAA, and ensuring that safety is given priority over airline satisfaction. With

regard to establishing a “cooling off” period for former FAA inspectors, the bill

proposes to prohibit an air carrier from hiring or offering a promise of employment

in a position involving representing or acting as an agent on behalf of the airline in

matters before the FAA to FAA safety inspectors whose duties within the past two

years involved safety inspection and oversight of that specific air carrier. The bill

would also limit principal supervisory inspectors to maintaining a post overseeing a

particular aircraft to a five-year period, requiring them to rotate to oversight of other

air carriers at least every five years. For principal supervisory inspector posts

occupied on the day of enactment, the bill would allow individuals in these posts to

remain in place until they reach a cumulative of five years in the post, or for two

years after the date of enactment, whichever is longer. The bill would also require

the FAA to conduct headquarters-level reviews of the ATOS database on a monthly

basis to identify trends in regulatory compliance and appropriate corrective actions.

The FAA would be required to report to Congress quarterly on these ATOS review

activities.

Related Senate Provisions. H.R. 6493 has been received in the Senate,

where related provisions were included in a Senate FAA reauthorization package (see

S.Amdt. 4585 to H.R. 3881) that failed to attain cloture but has been placed back on

the Senate legislative calendar for future consideration. S.Amdt. 4585 calls for

improvements to the VDRP that would require inspectors to evaluate an air carrier’s

proposed corrective actions to ensure that they encompass all affected aircraft and

adequately correct the disclosed problem within an acceptable timeframe. The bill

would also require the FAA to establish a secondary review process to ensure that

issues disclosed under the VDRP have not been previously identified by an FAA

inspector or previously disclosed by the air carrier within the past five years. The bill

would also establish a two-year post-employment moratorium on FAA inspectors.

Under this provision, FAA inspectors would be barred from representing or

negotiating on behalf of an airline that they were responsible for inspecting in matters

before the FAA for a period of two years after leaving their FAA post. The bill would

also require the FAA to establish a system for tracking field office reviews of air

carrier compliance with ADs. It would require a full audit of all air carriers covered

under ATOS to undergo a comprehensive 100% AD compliance review every five

years. As part of these compliance reviews, FAA inspectors would be required to

conduct physical inspections on a sampling of aircraft at each air carrier to ensure

proper methods of AD compliance. The bill would also require the FAA to establish

a means for ensuring that appropriate local and regional FAA offices and the FAA

Administrator are alerted of air carrier noncompliance with an AD. The bill also calls

for an independent GAO review and investigation of safety issues identified and

reported by FAA employees, and it would require the FAA to establish a national

review team to conduct periodic, random reviews of FAA air carrier oversight and

provide annual reports of its findings and recommendations. The bill would also

require the DOT OIG to provide progress reports on the effectiveness of the FAA’s

national review team.