Transportation in this country has been revolutionized. The economic deregulation of our nation's airlines, railroads and trucking companies has saved American manufacturers and consumers billions of dollars and enormously enhanced our competitiveness in the world economy.

Airline travelers alone have benefited by about $6 billion per year in lower costs and more frequent flights. Airline travel is now within the financial reach of millions of Americans of modest means who never thought they would have the money to fly. The federal role in transportation also has been dramatically reshaped, as we've sold two railroads, including Conrail, transferred two airports out of the federal government and launched a whole new private-sector space industry to compete globally with the French Ariane, the Chinese and the Russians.

A revolution of this magnitude does not occur overnight, nor should we expect it to be painless and problem-free. For the aviation industry in particular, the transition from a sluggish, heavily regulated industry into a vibrant, dynamic one has posed real challenges.

Keeping ahead of the ever-increasing demand for air travel has been a top priority during my tenure as secretary of transportation. Even as the industry has been revolutionized, we in turn have been revolutionizing the way the Federal Aviation Administration does its business.

My Safety Task Force, composed of technical experts and program analysts, began its probing examination of all transportation modes with the FAA. As a result, the airline safety inspection process has been totally overhauled. We broke up any potential for the ''buddy'' system between FAA inspectors and the carriers they inspect. We conducted 14,000 additional in-depth inspections of the nation's airlines, added hundreds of additional safety inspectors, and levied unprecedented fines for safety violations.

In 1985 and again in this Congress, I proposed legislation increasing fines for maintenance violations from $1,000 to $10,000. We are rebuilding the air traffic controller work force in the wake of the 1981 PATCO strike. The number of fully qualified controllers has increased by 67 percent since 1983. We are asking for an additional 580 new air traffic controllers for fiscal year 1988 and another 860 for FY 1989. I have increased the FAA's budget by 50 percent during my tenure, when budgets overall have been trimmed.

A number of initiatives were taken to ensure that small airplanes do not cross the path of commercial airliners. I issued requirements that small aircraft operating near the nation's busiest airports carry altitude-reporting transponders -- devices that enable an air traffic controller to ''see'' an airplane on his or her screen -- by Dec. 1. The department also plans to tighten the controls at the country's nine fastest-growing airports and require installation of new collision avoidance warning systems in commercial aircraft. In addition, we proposed a rule that would require all commercial airplanes to be equipped with a system providing wind shear warnings to pilots and instructing them on how to handle such emergencies.

We are overseeing a 10-year, $12 billion program, the most complex nonmilitary project since the Apollo space program, to completely replace the hardware and software of the air traffic control system. With five years completed and 85 percent of the contracts in place, the complete installation of this state-of-the-art technology will mean not only increased safety but also increased system capacity and thus fewer air traffic delays as well.

To address airline delays and other service problems in the near term, we've undertaken action on many fronts. As a result, delays were down 23 percent this August from last. We launched investigations of airline scheduling practices at major airports, culminating in tough agreements in August with carriers to require improved on-time performance. A truth-in-airline-scheduling rule strikes at the heart of consumer concerns by requiring large air carriers to publicly disclose key information on flight delays and baggage problems. Enforcement actions, new flight paths and changes in air traffic control procedures at individual facilities have all helped to alleviate this problem.

The last three years saw the safest level of air travel in U.S. aviation history; 1985 and 1986 share the record for the lowest automobile fatality rate ever; and 1986 broke the record for railway safety. These records are not just coincidences. They happened because we worked at it. We expanded and updated safety regulations across all modes. We worked hard for legislation to provide incentives for states to enact Age 21 minimum drinking laws. Forty-nine states have taken this step, and involvement of young people age 18-20 in fatal accidents is down 33 percent.

After 20 years of debate, the department's automatic occupant protection rule is saving lives for the first time. The rule has spawned 29 state safety belt laws, while 25 percent of the new car fleet will be equipped with passive restraints beginning this year. Belt use has increased from 12 to 42 percent. Nearly 1,500 lives have been saved. Our rule also preserved air-bag technology, thus enabling 10 auto companies to offer that option on 1988 model-year cars for those who want this safety device. To reduce the risk of rear-end collisions -- accidents that can range from minor fender-benders to fatalities, I required in 1983 high-mounted stoplights for all new cars. We estimate that the lights will prevent approximately 900,000 accidents annually when all vehicles are equipped with them, prevent 40,000 injuries and save approximately $434 million annually in property damage.

To ensure that the American people have a transportation system that is drug-free, the department this month became the first civilian department to administer random drug testing to all senior appointees and 30,000 employees in critical safety and security positions. We are in the process of extending random testing to those we regulate in safety and security positions such as pilots, mechanics, rail engineers and brakemen.

Accommodating the demands of a rapidly growing and constantly changing, dynamic system will be a challenge to my successors for years to come. We have laid a strong foundation upon which others can build.