Deregulation

In response to a congressional request, GAO compared the economic expectations of airline deregulation with the actual changes in the industry's structure, conduct, and performance.

Because many factors have affected the airline industry since 1978, GAO could not quantify direct cause-and-effect relationships between deregulation and the industry's current status. However, GAO found that increases in competition and changes in fares, service, and profits were generally consistent with economists' expectations of deregulation. GAO found that: (1) the number of interstate airlines increased from 30 in 1978, to 37 in 1984; (2) larger airlines have been losing passengers to smaller, new airlines; (3) the average fare paid per mile has fallen; (4) there has been an increasing use of discount fares; (5) service has improved for most passengers, but some small communities have lost air service; (6) profits varied widely among airlines; (7) the industry is becoming more efficient due to lower operating costs, and offers travellers more choice in fares and service; (8) the airlines have made many changes to adapt to a competitive environment, but further change and competition are likely; and (9) federal policies to control airport access can affect competition in the industry.