The answer to this question depends upon what is meant by decline. At the end of the Cretaceous there were a few species of large pterosaurs and no apparent small pterosaurs. Birds were more numerous and it is likely that small pterosaurs could not compete with the birds. The large pterosaurs seem to be very successful and show a wide ranging distribution.
If you apply the techniques used by Roup and Sepkosky to look at pterosaur survivorship, then this may give a clue. Below is a graph of pterosaur families for each of the main geological ages during the mesozoic.
Survivorship of pterosaurs at the family level
This graph shows that the pterosaur families increased to a peak in the Upper Jurassic and then reduced in number into the Cretaceous. The graph only includes pterosaurs where a family can be assigned with confidence.
If these data are applied to individual species, then a different shaped graph is seen.
Survivorship of pterosaurs at the species level
At the species level, the graph shows a peak in species numbers in the Lower Cretaceous and a fall in species numbers in the Upper Cretaceous.
It appears that pterosaurs, as an order of animals, were in decline before the great cretaceous extinction event. The success of the large pterosaurs is most likely a result of them being able to occupy niches that the birds are unable to exploit.
Raup D. and Sepkoski J., 1986, Periodic extinction of families and genera. Science 231 (4740): 833–836
