The Changing Airline Industry

In response to a congressional request, GAO updated an earlier report on the airline industry, specifically focusing on the effects deregulation has had on airline traffic, fares, profits, productivity, air service patterns, and the safety records of domestic passenger airlines.

GAO found that, since deregulation, airline traffic has increased substantially. While air fares have also increased, they fell again in 1982. GAO noted that, in 1982, a Civil Aeronautics Board index of airline costs rose slightly and the domestic airline industry's rate of return on investment fell to a 7-year low. Although a declining economy and inflation adversely affected the industry in 1980 and 1981, productivity improved in 1982. In analyzing air service patterns, GAO found that: (1) weekly departures and available seats have increased at all but the smallest communities; (2) growth in air service was marked by renewed gains in 1982; and (3) changes in service have not affected all geographic areas equally. Studies by the Secretary of Transportation show no evidence that air safety has been adversely affected in the first three years following deregulation. However, two major accidents in 1982 raised that year's fatality rate significantly above the 1981 rate.