The U.S. economy depends on the air cargo industry for the delivery of small, time-sensitive packages under 100 pounds, freight of 100 pounds or more, and mail. Air cargo carriers fall into two distinct categories: (1) all- cargo carriers that transport only cargo and (2) passenger carriers that transport cargo as belly freight in passenger aircraft. For the most part, all- cargo carriers can be categorized according to three business models: (1) large carriers, such as United Parcel Service (UPS) and FedEx, which operate large narrow-body and wide-body aircraft under part 121 of federal aviation regulations; (2) feeder carriers, which operate midsize and small aircraft (e.g., Cessna Caravans, Mitsubishi MU-2B-60s) under part 135 or part 121 on regularly scheduled flights in support of large cargo carriers; and (3) ad hoc carriers, which operate small aircraft (e.g., Cessna 401s, Beech Bonanzas) under part 135 and are individually contracted to haul cargo out of smaller airports while not necessarily operating on a regular schedule. Throughout this report, we use the term “small carriers” when referring to both feeder carriers and ad hoc carriers. Some carriers operate under both part 121 and part 135, and one large carrier leases aircraft to small carriers to provide feeder operations. (See fig. 1 for an illustration of a large carrier feeder-ad hoc relationship.) FAA estimated that as of May 6, 2009, the large all-cargo fleet contained 471 narrow-body and 593 wide-body aircraft and the small carrier all-cargo fleet contained 1,515 aircraft. Several federal transportation agencies play significant roles in air cargo safety. These agencies are FAA, the Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA), and NTSB. Two FAA offices in particular have important responsibility for the oversight of air cargo carriers. First, FAA’s Flight Standards Service oversees cargo carrier operations conducted under parts 121 and 135. For each carrier, Flight Standards assembles a team of inspectors (known as a “certificate management team”) led by principal inspectors who focus on avionics, maintenance, or operations. For large carriers, dedicated teams of inspectors use the risk-based Air Transport Oversight System (ATOS) to carry out their duties. Under ATOS, inspectors develop surveillance plans for each carrier based on data analysis and risk assessment, and adjust the plans periodically in accordance with inspection results. For feeder and ad hoc carriers operating under part 135, inspectors—who unlike ATOS’s dedicated inspection teams may be assigned to multiple air carrier and other certificates—use the National Flight Standards Work Program Guidelines (NPG) to ensure that carriers comply with safety regulations. For NPG, Flight Standards annually identifies a minimum set of required inspections to be undertaken. In addition, individual inspectors determine annual sets of planned inspections based on their knowledge of and experience with the carriers they oversee. Second, FAA’s Office of Security and Hazardous Materials enforces hazardous materials (hazmat) safety policies and conducts annual inspections of cargo and passenger carriers. Inspectors in this office work exclusively on issues related to compliance with hazmat requirements. When violations of statutory and regulatory requirements are identified, FAA has a variety of enforcement tools at its disposal with which to respond, including administrative and legal sanctions. In addition, PHMSA ensures the safe transport of hazmat by air and other modes. PHMSA promulgates regulations concerning the types and amounts of hazmat that can or cannot be transported by air—often differentiating between what hazmat can be carried on all-cargo versus passenger aircraft—and maintains its own database of hazmat incidents as well as a portal that pulls together hazmat data from other databases. NTSB investigates and determines a probable cause for each U.S. aviation accident, which is defined as “an occurrence associated with the operation of an aircraft which takes place between the time any person boards the aircraft with the intention of flight and all such persons have disembarked, and in which any person suffers death or serious injury, or in which the aircraft receives substantial damage.” NTSB makes transportation safety recommendations to federal, state, and local agencies and private organizations to reduce the likelihood of recurrences of transportation accidents but has no authority to enforce its recommendations. NTSB also conducts annual reviews of aircraft accident data and determines U.S. aviation accident and fatal accident rates. NTSB also periodically holds public hearings and forums, and issues special studies on various transportation safety topics. From 1997 through 2008, air cargo accidents and fatal accidents each declined by about two-thirds. Despite this decline, small cargo carriers consistently experienced the largest shares of accidents and, especially, fatal accidents. Annually, air cargo accidents decreased 63 percent, from 62 in 1997 to 23 in 2008. Average annual air cargo accidents declined from the first to the second half of our review period, from an average of 45 accidents per year from 1997 through 2002 to an average of 28 accidents per year from 2003 through 2008. Fatal air cargo accidents also decreased over our 12-year review period, falling from 12 in 1997 to 4 in 2008. In addition, from the first to the second half of our review period, fatal cargo accidents dropped from an average of 10 per year to an average of 6 per year. The fluctuation in annual air cargo accidents could be the result of a number of factors, including the general decline in aviation activity after September 11, 2001; a fluctuation in overall U.S. aviation accidents; and other factors. (See fig. 2.) Ad hoc carriers experienced the largest decline in accidents, with 28 fewer accidents—dropping from 36 to 8—followed by large carriers, with 9 fewer accidents—dropping from 14 to 5 from 1997 through 2008. Feeder carrier accidents fluctuated during this period, reaching a high of 17 accidents in 2003 compared to a low of 7 accidents both in 1999 and in 2007. We do not know why the spike occurred in 2003. Large carriers had 3 fatal accidents during our review period, which occurred in 1997, 2000, and 2004. (See fig. 3.) Without actual data on the number of flight hours, however, we cannot determine an accident rate, and thus we do not know if the decline in ad hoc carrier accidents represents a better safety record for that sector of the air cargo industry. The small carriers (feeders and ad hoc) in our review experienced 79 percent of the air cargo accidents. Ad hoc carriers accounted for about half of accidents while the feeders were involved in over a quarter of them. (See fig. 4.) Feeder and ad hoc carriers averaged 29 accidents per year while large carriers averaged 8 accidents each year. Small air cargo carriers accounted for 96 percent of the fatal air cargo accidents that occurred from 1997 through 2008. Ad hoc carriers accounted for the majority of fatal accidents and feeders for over one-third of fatal accidents. (See fig. 5.) Together, feeder and ad hoc carriers averaged 8 fatal accidents per year while large cargo carriers experienced a total of 3 fatal accidents from 1997 through 2008. The accident rate per departure for large air cargo carriers has fluctuated over the last 25 years, but the overall trend has been downward, and in 2007 was roughly the same as for passenger carriers. It is possible to calculate these rates because FAA requires those carriers to report operational data (e.g., flight hours or departures). However, FAA does not require small on-demand carriers operating under part 135 to report operational information, and the majority of feeder and ad hoc cargo carriers fall into this group. In 2003, NTSB recommended that FAA collect this type of data and, according to NTSB, FAA is still reviewing the costs and benefits as well as options for collecting and processing the data. However, the lack of data about the flight hours for small on-demand carriers precludes calculation of the industry’s current accident or fatality rates or changes in the rates over time, making it difficult to determine whether the industry is becoming more or less prone to accidents. Instead, FAA relies on an annual survey of aircraft owners to form the basis for estimates of small carrier operations, but this survey does not distinguish between passenger and cargo operations, making it impossible to use the survey estimates to calculate cargo or passenger accident rates for on- demand operations or for the cargo industry as a whole. Even though operational data are not available for small air cargo carriers, their fatal accident rates would exceed those of large carriers for the latter part of our review period. From 2005 through 2008, there were no fatal accidents among large cargo carriers, so their fatal accident rate for those years was zero. However, there were 17 fatal feeder and ad hoc accidents over the same period, meaning that their fatal accident rate, if it could be determined, would be higher than zero—though it is unclear how much higher. This logic would not hold for air cargo accidents in general because large carriers had accidents in each year from 1997 through 2008, though they had fewer accidents than the feeder and ad hoc carriers. The lack of data makes it difficult for FAA and industry to target further improvements to the areas with the highest risk. Our review of NTSB and FAA air cargo accident and incident data as well as our interviews with industry officials and analyses of industry documents revealed that pilot performance was a prominent factor in air cargo accidents. Additionally, we concluded that accumulated risk, challenging operating conditions in Alaska, and undeclared hazmat were also prominent contributors to air cargo accidents. Our review of NTSB reports for 417 completed air cargo accident investigations found that pilot performance was cited as the probable cause for about 59 percent of them. Specifically, we found that NTSB cited pilot performance as the probable cause for about 53 percent of non- fatal and about 80 percent of fatal air cargo accidents. (See fig. 6.)