Code-sharing  is a marketing arrangement in which an airline places its designator code  on a flight operated by another airline and sells and issues tickets for that  flight. Although  that legislation was not enacted, in 2000, DOT’s Office of the Secretary and  FAA established the Code-Share Safety Program, which included the  development of guidelines for U.S. carriers to follow in auditing the safety  of their foreign code-share partners as a condition of DOT’s authorization  of code-share passenger services. DOT’s Office of International Aviation Relies on FAA for Safety Assessments and TSA for Security Assessments to Authorize Code-Share Arrangements

DOT’s Office of International Aviation within the Office of the Secretary of  Transportation authorizes U.S. airlines’ code-share arrangements with  foreign airlines after considering, among other things, safety and security  information from FAA and TSA. For its  program, DOD reviews many of the same safety audit reports on foreign  airlines that FAA reviews for the Code-Share Safety Program. According to DOT officials, on 270  occasions, from February 2000 through the end of fiscal year 2004, DOT  authorized or reauthorized U.S. airlines to establish or maintain code-share  arrangements with foreign carriers and did not suspend any arrangements  during that time. However, FAA officials also said that U.S. airlines have  occasionally decided not to pursue code-share arrangements with foreign  airlines because they expected FAA would object. According to FAA officials, if FAA has safety  concerns, it puts a hold on its review of the proposed code-share  arrangement, allowing time for the safety issues to be resolved; and on four  occasions, from February 2000 through September 2004, U.S. airlines  suspended their code-share arrangements with foreign carriers because  FAA was questioning the capabilities of the civil aviation authorities under  which the foreign carriers were operating. Code-Share Safety Program Incorporates Auditing Standards, but FAA’s Oversight of the Program Lacks Certain Management Controls

The Code-Share Safety Program incorporates selected government auditing  standards involving independence, professional judgment, and  competence. These controls are related to establishing reviewers’  qualifications, documenting the closure of safety audit findings, verifying  corrective actions taken in response to the findings, and documenting  reviews. U.S. Airlines Are Auditing Foreign Partners’ Safety, and Partners Are Taking Corrective Action, but Documentation of Corrective Actions Is Often Lacking

The eight U.S. airlines participating in the Code-Share Safety Program have  conducted the safety audits of their foreign code-share partners and have  monitored the safety of their code-share partners between audits, as  specified under the guidelines. However, on the basis  of our review of a sample of the audit reports, we estimate that, for 68  percent of the identified findings, the documentation was insufficient to  demonstrate that the findings had been closed or were resolved. In developing the mechanisms, FAA  should consider standardizing the qualifications and training needed  for agency staff to review the airlines’ safety audit reports; identifying  ways to document its reviews of the airlines’ safety audit reports;  increasing the scrutiny of audit reports that have an unusually high or  low number of findings, periodically selecting a sample of safety audits  to conduct a comprehensive review of the underlying documentation  collected; and collecting and analyzing information on the audit  findings for the foreign code-share partners of U.S. airlines so that the  data can be more easily quantified and analyzed to spot possible trends  and anomalies, should FAA decide such analyses are needed. To accomplish this, we reviewed (1) the extent to which the  Department of Transportation’s (DOT) authorization of U.S. airlines’ code- share arrangements with foreign airlines is designed to consider safety and  security, (2) how well FAA has managed the Code-Share Safety Program,  and (3) the extent to which U.S. airlines have implemented the Code-Share  Safety Program, and the results of their efforts.
Why GAO Did This Study

U.S. airlines are increasingly relying on code-share partnerships with foreign carriers to provide additional sources of revenue. Code-sharing is a marketing arrangement in which an airline places its designator code on a flight operated by another airline and sells and issues tickets for that flight. To determine whether the foreign code-share partners of U.S. airlines meet an acceptable level of safety, in 2000, the Department of Transportation (DOT) established the Code-Share Safety Program, which requires U.S. airlines to conduct safety audits of their foreign code-share partners as a condition of code-share authorization. GAO's objective was to assess the federal government's efforts to provide reasonable assurance of safety and security on foreign code-share flights. GAO reviewed (1) the extent to which DOT's code-share authorization process is designed to consider safety and security, (2) the Federal Aviation Administration's (FAA) management of the Code-Share Safety Program, and (3) the implementation of the program by airlines and the results.

What GAO Found

In considering U.S. airlines' requests to establish code-share arrangements with foreign carriers, DOT's Office of International Aviation reviews, among other things, any safety and security objections from FAA and TSA. FAA assesses the safety of foreign civil aviation authorities and reviews reports of the safety audits that U.S. carriers have conducted of their foreign airline partners. From fiscal years 2000 through 2004, DOT (1) authorized U.S. airlines to establish or maintain code-share arrangements with foreign carriers 270 times and (2) did not suspend any arrangements because of known safety concerns. According to FAA, however, U.S. airlines occasionally have decided not to pursue code-share arrangements with foreign carriers because they expected FAA would object, and FAA sometimes puts its reviews of proposed code-share arrangements on hold if the agency has safety concerns. FAA and TSA did not object to any of the authorizations during that period for safety or security reasons. Although not involved in the code-share authorization process, the Department of Defense (DOD) reviews the safety of foreign airlines that transport DOD personnel. For their separate programs, FAA and DOD are reviewing many of the same safety audit reports on foreign carriers. The Code-Share Safety Program, which calls for U.S. airlines to conduct periodic safety audits of their foreign code-share partners, incorporates selected government auditing standards involving independence, professional judgment, and competence. However, FAA's reviews of the safety audit reports lacked management controls for reviewers' qualifications, documenting the closure of safety audit findings, verifying corrective actions taken in response to findings, and documenting reviews. Eight U.S. airlines with foreign code-share partners have implemented the DOT program by conducting safety audits of their foreign partners. According to our review of a random sample of audit reports that FAA reviewed from fiscal years 2000 through 2004, the largest numbers of safety findings identified were in the categories of (1) flight operations and (2) maintenance and engineering. GAO estimates that for 68 percent of the findings, the documentation was insufficient to demonstrate that the findings were closed or were resolved. Airlines are beginning to adopt a new safety audit program that requires the documentation of findings and corrective actions.