Aerospace in 1988: U.S. Airlines

Aerospace in 1988: U.S. Airlines

Aerospace in 1988: Industry observers had not expected 1988 to be a good year for U.S. airlines. But a healthy economy kept travelers aloft—passenger traffic was almost as heavy as in 1987, a record year—and airline profits did not suffer nearly as much as feared. In 1987 the airlines had carried 447 million passengers, a 7 percent increase over 1986. Air cargo services for freight, mail, and express packages also prospered, setting a new record of 6.6 million tons. The Federal Aviation Administration (FAA) predicted continued growth.

Besides fairly strong passenger traffic (down only about 5 percent during 1988), several reasons were offered by analysts for the airlines’ favorable profit reports. The major airlines had highly sophisticated computer systems in place, allowing them to efficiently correlate available seats with routes and peak demand. As a result, far fewer discounted seats were sold, adding to profits. Moreover, after ten years of deregulation, several mavericks (such as People Express) who had sparked fare wars had disappeared from the scene, while the established carriers had cut costs and spiked the competition through acquisitions and mergers. By 1988, each of the principal hub cities across the United States was dominated by one or two carriers, who were able to regularize fares and get their operational costs under control. A decline in fuel prices represented an added bonus. Aerospace in 1988: U.S airlines saw alterations in flight at different times.

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