Objectives, Scope, and Methodology

The Chairman, Subcommittee on Investigations and Oversight, House
Committee on Public Works and Transportation, asked us to (1) deter-
mine the Federal Aviation Administration's (FAA) level of inspection
effort for air taxis and (2) provide information on the Office of the Sec-
retary of Transportation's (OST) economic fitness standards as applied to
air taxis. To meet these objectives, we performed work at FAA and OST
headquarters in Washington, D.C.; FAA's Eastern Region in New York
and Southwest Region in Texas; and FAA district offices in Maryland and
Pennsylvania. We interviewed FAA district and regional office inspectors
and managers and OST officials who are responsible for air taxi over-
sight. We also interviewed National Air Transportation Association
officials.

In addition, we reviewed FAA's and OST's regulations, policies, and proce-
dures governing oversight of air taxi operators. We analyzed FAA's emer-
gency revocation orders on 38 air taxis and other documents, including
air taxi operating certificates, maintained in district and regional office
files. We also analyzed FAA inspection records contained in its Program
Tracking and Reporting System (PTRS) and its predecessor Work Pro-
gram Management System data bases. We did not assess the reliability
of FAA's data bases. FAA is assessing the reliability of PTRS, but officials
could not estimate when they would complete this activity.

We supplemented data from FAA data files and data bases with information obtained through discussions with FAA inspectors knowledgeable about each air taxi emergency revocation order to include information on the effect of the company's financial condition and compliance attitude. Because of the age of some revocations, FAA's data bases did not show inspection information on the air taxi operator. Therefore, we relied solely on inspectors' recall of previous inspection activity that, in some cases, occurred 4 or 5 years ago. We discussed with OST officials the issues concerning requiring air taxis to meet economic fitness standards.

We reviewed several studies that used statistical analysis to determine the relationship between an airlines' financial condition and safety performance. All but one of these studies used accidents, incidents, or maintenance expenditures rather than violations to measure safety. Also, none of the studies examined the relationship between air taxi financial distress and safety.

We conducted our work from May 1991 through September 1991 in accordance with generally accepted government auditing standards.