1992: The year the passengers spoke loudly and changed airfares forever
Our previous article discussed how the way we pay for air travel has changed over the past 25 years. However, the actual price we pay has taken quite a ride too. In 1992 an event happened in the U.S. that will live forever in airline pricing infamy. It was a novel pricing idea that came back to the ground faster than an aborted takeoff in bad weather on a short runway. American Airlines introduced “Value Pricing.” The idea was to create just four fares. That’s it: two first class fares and two coach fares—each with a walk-up rate and an advanced purchased rate. This sent the industry into a frenzy as competitors scrambled to come up with their own versions of the same idea.
Northwest Airlines (now merged with Delta) responded by offering a “buy one, get a companion for half off” fare. It wasn’t a new pricing philosophy like American’s, but the intention was designed to disrupt the largest carrier’s efforts. American Airlines then countered with a BOGOF deal, buying a ticket and getting the second for free instead of half. Northwest shot back with half-off all fares.
As other airlines jumped on the fare-wars bandwagon, American went toe-to-toe with a fare sale to end all fare sales. American Airlines decided to honor all tickets previously purchased and let passengers trade them in for the half price tickets, complete with refunds.
The industry lost more money that year than it had in all the combined years since the beginning of commercial air travel. But the people had spoken. Pricing was going to drive their purchase decisions more than anything an airline could offer. Twenty-five years later, it’s still a major factor.
Compared to fares decades ago, airline tickets today are cheaper when adjusted for inflation. The trade-off is that planes are full and the largest airlines have introduced ancillary fees to protect their revenue while fending off low-cost carriers. In 1992, you probably received a meal and one or two checked bags within the price of your airfare.
Today, it’s all been unbundled (meaning you’re likely to pay for each amenity separately) and even re-bundled into groups of amenities that carry a fee, like a snack and a free checked bag for an add-on price. The idea of paying for a bag or even a choice of seats once belonged to the ultra-cheap carriers who kept failing and getting absorbed by the bigger airlines.
Today, some airlines are a mixed bag, offering ultra-luxury seating in one end of the plane while squeezing in budget flyers with no option for overhead space into the back of the cabin. Can airlines really be all things to all passengers? We may need another 25 years to find out.
If we had a quarter century for every change that ended where it started
So how fast does a quarter century pass? There’s no need to look in the mirror, past photos, your wardrobe, your blog, MySpace or Facebook history: just look at the airline industry. In 1992, commercial aviation itself was only 65 years old. There were still people alive who'd been around when the Wright Brothers took their brief, but historic jump into aviation lore in 1903. Historians will point out that civil aviation actually first took hold in Britain with the launch of the world’s first international scheduled passenger service between London and Paris. Once passengers became as important as cargo back in 1927 there was no turning back (though some might argue there is sometimes little difference). Service jokes aside, in 25 short years, airlines went from being mail-only carriers to passenger vessels.
Airline deregulation in the United States took hold in the late 1970s and early 1980s. By 1992, many upstart carriers had failed. Some had set out to “democratize” air travel by bringing affordable fares to the masses. Airlines like Laker SkyTrain and PeoplExpress flew jumbo jets across the Atlantic at unheard-of prices. But, they too either failed or were folded into larger airlines with the financial means to absorb their competitors.
Today, we’re again down to a few airlines in many markets. Yes, upstarts still abound, but when it comes to controlling a majority of “lift” between important cities, the major airlines haven’t had it better since the days before deregulation. It’s enough to make you wonder if the 40-year journey that deregulation has taken us through has been worthwhile, since we seem to have landed right back where we started in terms of competition. But there’s much more to be happy about. The fact that we can Tweet our disdain for our seat pitch or our joy at getting free Wi-Fi, or our longing for the days before deregulation is a testament to how far we’ve come.
No movie on this flight? No problem
Advancements in technology over the last 25 years haven’t just made commerce easier, but have kept us entertained. Twenty-five years ago, if you had a long enough flight, you might get a movie on board—usually just one, edited for airline consumption, and played from a VHS cassette tape. Going back further in time, you might have been entertained by movies recorded on proprietary film cartridges that would be inserted behind a projector that would show the movie on a large screen. “Shades down, everyone.”
Later, these screens would give way to multiple CRT screens (heavy television monitors) that would dangle from above seats every few rows apart. Then these evolved into headrest or hand-held displays airlines would rent out. However, this was short-lived once personal innovative devices like the iPod and iPad were introduced. In-seat headrest monitors can still be found on many planes displaying content selected by the airline, or even broadcasting live satellite television.
But don’t get too comfortable in that seat because airlines are already ditching seat back screens entirely to save weight and cost in exchange for streaming entertainment directly to hand-held devices. Wi-Fi was not even a word in our vocabulary in 1992. The internet as a commercial tool was in its infancy and the only hand-held devices you brought on board were probably a portable CD player and a pager.
It’s OK to look back, but don’t forget to look up
Flying is easier and more accessible today than ever before. Air travel in the then-modern era of 1992 was the safest and fastest way to get from one big city to another. It still is today. Those that long for the glory days of air travel probably want to take their nostalgia in 25-year bites. There will always be change just as there will always be a longing for how things used to be. As frequent flyer programs change to favor price over distance and as rows of seats get squeezed or stretched, passengers will be the drivers of what changes will next be realized only to be changed again. And, you probably won’t have to go 25 more years to see that happen.