Federal oversight of booming regional airlines lacking, investigation finds

The Federal Aviation Administration (FAA) isn’t providing adequate oversight to regional air carriers that now account for more than 40 percent of all U.S. commercial flights, in some cases missing signs of financial distress and failing to fully scrutinize pilot training, an internal investigation found.

“FAA’s process for identifying periods of transition and growth at regional air carriers is ineffective in key areas” and “inspectors do not adjust air carrier surveillance in response to changes because the tools they have to assess risk are ineffective,” the Transportation Department’s inspector general concluded in a report released over the Christmas holidays.

The flaws in FAA’s oversight of regional carriers were so glaring that one of its manuals contained a mathematical error that artificially inflated the carrier’s financial safety scores — and no one noticed, the inspector general reported.

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“The instructions tell inspectors to evaluate air carriers in 9 categories on a scale of 1-10; those scores are then tallied for a potential total score of 9-90,” the report said. “However, the decision aid actually includes 10 categories, which means the total score should be from 10-100.

“Since a higher score indicates a lower risk of financial distress, inspection teams could inadvertently select a lower risk level than they might have if the total score included all 10 categories.”

The scoring had been used so long that FAA officials did not know “how the risk indicators were developed, why the risk indicators were weighted equally, or if these risk indicators were still valid given today’s operating environment,” the report stated.

The weak oversight has real consequences beyond scoring, the watchdog warned.

For instance, FAA inspectors failed to recognize that Republic Airways Holdings was in financial distress before the air carrier filed for bankruptcy, the report said. Signs of the financial strain that should have been detected included a “drastic decline in stock prices, a decrease in scheduled flights due to a pilot shortage, a lawsuit from one of its mainline partners for failing to complete contractually scheduled flights, and an increase in the pilot attrition rate,” the report noted.

In another instance, an FAA office received complaints regarding the quality of training and flying skills of new pilots at a regional carrier that was not named in the report.

The FAA made plans to conduct observations of new first officers and additional observations of the newly promoted captains at this carrier, but due to lack of resources they only completed a portion of the planned reviews.

As a result FAA inspectors did not address the complaint regarding the air carrier’s training program and the flying skills of its newly hired pilots, investigators found.

The current oversight system is so lax that even a serious deficiency at a carrier can go unfixed, the report said. “Even if a hazard with a high risk is identified, it is possible for inspectors to close out the process without eliminating or mitigating that risk, provided that they consider the new level of risk to be ‘acceptable,’ " the report warned.

The report quoted FAA inspectors as saying they had low confidence in the FAA's current Safety Assurance System’s ability to detect or target risks at the regional carriers.

The FAA “still has a substantial amount of work ahead to effectively implement its risk-based, data-driven oversight system and ensure that its inspectors have the tools, knowledge, and guidance they need to identify risks and adjust surveillance at regional carriers,” the inspector general found.

The FAA agreed with the inspector general’s finding and promised to implement 10 recommended improvements, ranging from changing the defective scoring system to giving inspectors stronger guidance on how to resolve issues they detect in the field.

“The FAA is revising its inspector guidance to provide more comprehensive and standardized procedures for air carrier oversight. The FAA is also improving the capabilities and performance of its risk management tools available for FAA inspectors to assess financial distress or rapid growth or downsizing risk,” the agency said in a letter to the inspector general.

“These enhancements will result in more consistent inspection practices and will improve the detection of systemic deficiencies and increase the effectiveness of air carrier safety oversight performed by the FAA,” the letter said.

The findings come as the regional airline industry has become a central cog in commercial travel.

During the 1970s, regional air carriers were used primarily to provide flights to smaller cities that were unable to support major airline service.

Now, regional carriers operate 10,000 flights a day that account for more than 40 percent of all commercial flights. And everything from the size of planes to the length of the trips has grown.

“The average plane size flown by regional carriers grew from 24 seats in 1990 to 61 in 2015, and the average trip increased from 194 miles in 1990 to 478 miles in 2015,” the inspector general report noted.