The Changing Airline Industry

GAO discussed the changing nature of the airline industry due primarily to the effects of the Airline Deregulation Act of 1978. GAO compared airline operations before and after the act's passage, focusing on traffic trends, fares, profits, productivity, and air safety. In the first 2 years after deregulation, economic indicators were rising and the airline industry experienced moderate airfare increases, substantial air passenger travel growth, and broad-based gains in departures, available seats, and flight frequencies compared with the years before deregulation. Despite the beneficial effects of deregulation, the recession, rapidly rising fuel costs, and the 1981 air traffic controllers strike have lead to a decline in the airlines' profitability. GAO noted that 1982 air fares fell below 1981 levels, while airline costs rose slightly. In addition, although air traffic, weekly departures, available seats, and load factors all turned upward, the airline industry suffered financial losses in 1982.