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Report: FAA oversight lagging behind industry changes

• Federal Aviation Administration

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WASHINGTON (CNN) -- The Federal Aviation Administration isn't doing enough to adapt its safety oversight and inspection plans to respond to changes in the aviation industry, said a report released Wednesday.

"During the past four years, network air carriers have faced record financial losses and made unprecedented changes to their operations to regain profitability," said the report from the inspector general's office in the U.S. Department of Transportation.

Network air carriers have struggled, while low-cost ones have grown, introducing a different industry requiring a "dynamic oversight process," the report said.

"The FAA has made progress in moving to a more risk-based, data-driven air carrier oversight system designed to respond to the types of changes occurring in the industry. However, the FAA still has a substantial amount of work ahead to improve its oversight systems, especially given the magnitude of changes air carriers are making and the pace at which the changes are occurring."

The agency's oversight of airlines is inconsistent, the report said. Inspectors increased oversight on three airlines that were in or near bankruptcy, but they didn't for two other major carriers, even though all five were making similar changes to their systems.

In addition, the FAA failed to obtain growth plans or monitor risks regarding some low-cost carriers that were experiencing growth instead of losses.

The agency also needs to adapt its practices because airlines are using planes more during the day, limiting the time for inspections and maintenance, the report said.

The report made 10 recommendations for the FAA. The agency has agreed to implement five of those recommendations and will partially implement others.

But the FAA said it "disagreed with the report's inference that changes occurring in the industry are unknown and unaccounted for by FAA employees who oversee air carriers and that these industry changes represent risks requiring increased inspections."

Among the recommendations, the FAA agreed to:

Provide stronger analysis and support assistance to field offices;

Require inspectors to assess risks and adjust surveillance plans when air carriers change operations significantly;

Meet the fiscal year 2005 milestone for incorporating inspection checklists from one oversight system into another;

Make improvements to an interim system designed for oversight of 112 smaller commercial airlines; and

Determine if it can make enough efficiency gains in operations to sustain a planned cut of 233 safety inspectors beyond 2005.

The FAA also partially agreed to the following:

Clarify and expand inspector guidance regarding the use of financial and other data on airlines;

Conduct more nighttime inspections; and

Establish a goal for the number of air carriers to be added into one of the agency's data systems yearly.

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