The charter wars
For a time in the 1960s and ’70s, the only way to get a cheap seat to
Europe was to book a bogus charter. And to the great chagrin of some
scheduled airlines and government officials, thousands of passengers did
exactly that.
Arthur Frommer’s “Europe on $5 a Day” helped usher in an era of
burgeoning demand for European travel, but there were few airfare bargains in the ’60s. There were, however, supplemental or charter-only airlines that were only too happy to get into the mass market by chartering
to so-called “affinity groups”; i.e., groups of people with some prior affinity, such as a church group or social club.
Scores of “clubs” with names such as the “Scottish-American Society,”
with little or no pretense about membership, soon became known on
college campuses and elsewhere as a cheap way to cross the pond.
Federal officials denounced bogus affinity operators and staged the occasional crackdown, but not enough to suit some agents. West Coast retailer Martha Fink made headlines in 1971 by signing up Civil Aeronautics Board Chairman Secor Browne and his enforcement chief, Richard O’Melia, on allegedly member-only flights.
The CAB later adopted progressively “liberal” rules that eventually allowed operators to
charter aircraft for air-only trips that could be ticketed individually by travel agents.
Gradually, affinity charter abuses went away and legitimate charter operators blossomed. In 1976, Travel Weekly reported that more than a third of peak-season travelers to
Europe moved on charter flights.
But the charter boom didn’t last. Scheduled airlines eventually mastered the art of yield
management and were able to parry the charter threat with excursion fares and bulk rates
for wholesalers.
TRAVEL WEEKLY’S 50TH ANNIVERSARY
TIMELINE
March 1995
Denver International Airport opens, the first new U.S. airport built from
scratch since Dallas/Fort Worth in 1974.
December 1995
Alaska Airlines becomes the first U.S. airline to take direct bookings and
credit card payments over the Internet.
May 1996
The fatal ValuJet crash in the Florida Everglades sparks renewed concern
over the safety of low-fare and new-entrant airlines. ValuJet suspends service
and undergoes a top-to-bottom safety review. The airline later merges with,
and adopts the name of, the regional operator Air Tran.
July 2000
An Air France Concorde strikes debris on the runway and crashes on takeoff
in Paris, the first crash in the aircraft’s 24-year history. Investigations reveal
that the fuel tanks ruptured too easily and both British Airways and Air
France ground their Concorde fleets. After modifications, the aircraft return
to service in 2001 and are finally retired in 2003.
December 2002
United, the world’s second-largest airline, files for bankruptcy and reveals
that it’s losing $20 million a day. It doesn’t emerge until early 2006, the larg-
est and longest airline bankruptcy proceeding in history.
August 2006
Authorities in London foil a plot by terrorists who planned to blow up U.S.
airliners by mixing bomb ingredients en route. U.S.-U.K. air service is dis-
rupted as officials hurriedly improvise new baggage security rules, eventually
agreeing to standardize restrictions on liquids and gels.
October 2007
A mere 49 years after the jet age began, Airbus takes the size prize by
delivering the first A380 superjumbo to Singapore Airlines.
Pay cuts
The airlines dealt
the retail agency
community a severe series of shocks
over a seven-year
period beginning
in 1995 by capping,
cutting and eventually eliminating
base commissions.
It began in February 1995 when
Delta capped domestic commissions at $25 one way, $50 roundtrip; most major lines matched. At the time, the base rate
was 10%, and many agents did not impose service fees on basic air transactions. Agents
cried “foul,” went to court and complained to Congress, but a relentless process had begun.
Various incentives and individual deals remained in place, but the base rate was doomed.
United cut domestic and international rates to 8% in September 1997 and capped
international pay at $50 and $100 in November 1998. As before, the major players matched.
In October 1999, United led a cut in the base rate to 5%.
As traffic softened in 2001, American cut its domestic caps to $10 and $20 in August.
Finally, in the downturn that followed the 9/11 attacks, Delta took the ultimate step and cut
the base rate to zero.
JUNE
16, 2008
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