Summary: GAO discussed the Department of Transportation's (DOT) oversight of the airline industry to determine how it: (1) developed and implemented its policy for approving airline mergers; (2) protected airline passengers from unfair and deceptive trade practices; and (3) maintained databases needed for industry oversight. GAO found that: (1) DOT developed its merger policy using the same dated assumptions about the industry's competitive conditions that the defunct Civil Aeronautics Board used; (2) DOT used these assumptions to approve 20 airline mergers between 1985 and 1987; (3) since deregulation, airlines have developed competitive tools, such as frequent-flyer programs and computerized reservations, to concentrate the industry and make it more difficult for new airlines to develop; and (4) in a 1987 merger case, DOT considered a fuller range of factors that better reflected the realities of today's industry. GAO also found that: (1) while DOT provided airline consumers with a complaint process, it did not systematically follow up cases to ensure that their actions satisfied consumers; (2) DOT did not coordinate its complaint process with states; (3) because DOT did not adequately plan its database transfer, train the replacement staff or allow rewriting of programs before changing systems, the accuracy and timeliness of industry data was reduced; and (4) DOT returned its data functions to the original operations unit to bring the databases up to date and improve accuracy.
