The Changing Airline Industry

A Status Report Through 1980 Gao ID: CED-81-103 June 1, 1981

GAO was requested to update an earlier report, which compared conditions that existed in the airline industry before and in the 2 years after enactment of the Airline Deregulation Act of 1978. GAO analyzed four aspects of the industry's operation: (1) traffic; (2) fares; (3) profitability; and (4) productivity.

The review of the airline operations since deregulation began through calendar year 1980 shows: (1) increased traffic, but with significant 1978 and 1979 gains reduced by 1980 declines; (2) lower rate of increase in fares than in airline costs; (3) higher 1978 and 1979 industry rates of return on investment followed by a sharp decline in 1980; (4) significant 1978 and 1979 productivity gains, severely eroded in 1980 by declining load factors; (5) more weekly departures for all sizes of communities, but fewer available seats for most communities; and (6) no apparent adverse effect on safety.

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