ROME, 1966: A FARE WAR TO REMEMBER
By Martin B. Deutsch
May 8, 2008 -- The fare watcher Rick Seaney says that airfares and fuel surcharges have increased at least 10 times in the first 100 or so days of this year. In fact, Seaney and his Fare Compare.com service have rocketed to media ubiquity for their ability to track, and alert us to, the millions of fare changes that the airlines load into their computers over the course of a month.
It's all too fast and too furious for me. I remember when fare changes were a matter of global import, secret discussions and glacial decision-making. Of course, that was when human beings, not computer programs, made fare decisions. I've recently been reviewing material from the great global fare summit of 1966--a stage upon which I was a bit player--and the action was much more colorful, much more dramatic and, frankly, much more personally satisfying.
In early December of 1966, international air carriers convened an emergency meeting to discuss developments that threatened to destroy the rigid unanimity on tariffs that had been enforced without significant challenge for many years. The cartel in question, the International Air Transport Association (IATA), was openly uneasy about the efforts by a major member, Pan American World Airways, and a smaller carrier, Israel's El Al, to encourage travelers to fly year-around rather than just in the peak summer season.
IATA meant to deal with this perceived threat by calling a closed-door fare meeting at the Cavalieri Hilton, a swanky hilltop resort in one of Rome's swankiest residential neighborhoods. The convocation of airline bigwigs would drag on for 11 amazing days.
Pan Am and El Al had introduced low excursion fares using a newfangled tariff called Group Inclusive Tours (GITs), an unwieldy vehicle at best, but one that would permanently affect promotional airfares. GITs have led to generation after generation of excursion fares designed to equalize flight loads and bring price-conscious leisure travelers to air travel. The unintended consequence of GITs? They would forever ensure that must-fly business travelers would subsidize more flexible vacation customers.
Although IATA officials made it clear that the press was not welcome, I flew over on Alitalia to hang around the fringes and see what I could ferret out. I knew quite a few of the executives participating in the meeting and I was certain that I could cobble together enough information to find a worthwhile story or two.
At the opening session, I was told later that day, my presence had been duly acknowledged. IATA decreed that I was to be shunned, both socially and professionally, by the airline delegates. The cold shoulder only lasted a few days, however. Even before I arrived in Rome, I had made contact with several senior airline executives and they all promised to talk to me, at least informally.
On the first evening of the conference, I began calling my sources in their rooms. I picked up some scraps of information on what had transpired that day. Sometimes I got grudging hints, or derogatory remarks, about what their competitors were proposing. I would then call those competitors, pass on certain parts of what I had just heard, and prompted them to respond. With the telephone as my chief instrument of discovery, I would make the rounds as contacts went out for, or returned from, dinner. Other times, I sat in the lobby or in the hotel's public relations office and IATA attendees would either nod to me--or ignore me--whenever they walked by.
On the second or third night of the meetings, I was invited to dinner by Jim Montgomery, Pan Am's senior vice president of marketing. We took a taxi to the Piazza di Santa Maria in Trastevere, which had achieved worldwide fame as one of the most picturesque settings in Fellini's 1960 classic, La Dolce Vita. We ate outdoors at a wonderful local restaurant called Sabatini, itself now world famous.
On the third or fourth morning, IATA's Director General, Knut Hammarskjold, the nephew of the late Dag Hammarskjold, first Secretary General of the United Nations, stopped by my lobby perch. He invited me to drop in during coffee breaks and even stick around for several of the group's private lunches. No one, he emphasized, would be able to fill me in on what was going on. But I guessed that he guessed that I had a pretty fair idea of what was going on. In fact, by the end of the 11-day marathon, IATA was even scheduling press briefings to update the world on its deliberations.
The importance of this fare-fixing conference was underscored by the fact that The New York Times covered the conclaves at least twice. The paper's Rome bureau chief, Robert C. Doty, arrived at the press briefings by chauffeur-driven limousines. He was immaculately attired in three-piece suits, bowler hats and, if memory serves me, matching cravats and pocket squares. Doty and I spoke several times and I was impressed by his diligence in covering what must have been, for him, an esoteric subject.
Doty wrote that the proposals being considered by IATA "may lead to the opening of a 'Pandora's box of complications' according to informed sources…' " Several months earlier, at an IATA meeting in Honolulu, Doty explained, an agreement to maintain the existing airfare structures until March, 1968, was vetoed by El Al. Since IATA required unanimity in all tariff-related matters, El Al's veto made the Rome conference mandatory.
Then Doty hit the nub of the issue "There is a great range of opinion on how, when and by how much to change the present basic New York to London fares of $399 for economy class (going up to $485.50 in peak season) and $300 for a 21-day excursion. Sources in the airline group indicated that it would probably be a long and difficult task to get the necessary unanimity on the proposed new structure."
Eleven days later, the 19 IATA airlines finally reached their accord. As Doty wrote in his follow-up story, the carriers had "agreed to the lowest fares they have ever offered for groups of persons taking inclusive-cost tours."
IATA's decision did add lower fares--and more complexity--to the international fare regimen. Using New York-London as the primary example, the new GIT roundtrip fare, effective January 1, 1967, would be $230, or $40 below the lowest fare then available in that high-profile market. But the $230 rate would only be available if the passenger also agreed to spend a minimum of another $40 for expenses such as transfers and accommodations. Also required: At least 15 passengers would have to travel together and stay at the same hotel.
(Incidentally, a first-class roundtrip airfare between New York and London at that time was $712.50. Today's New York-London price in first: $15,457.52 roundtrip. There was no business class in those days, of course.)
Besides my daily trade reporting for Travel Weekly, I also covered GIT fares in a monthly consumer column I wrote for Argosy magazine. You can read that column by clicking here.
Just to give you an idea of the approach I took 41 years ago, I wrote beneath a headline proclaiming "The Big Budget Bonanza." But I warned that the new fares were "bewildering in terms of variety, seasonal restrictions, special requirements and a host of other facts. You'll need a computer, a great deal of patience and the assistance of the best travel agent available in your community."
That much, at least, hasn't changed about airfares.
ABOUT MARTIN B. DEUTSCH Martin B. Deutsch created Frequent Flyer magazine in 1980 and was editor-in-chief and publisher for 15 years. He also wrote a column called "Up Front" for Frequent Flyer during those years. In a 50-year career, he created, published and edited dozens of other travel publications. Deutsch is based in New York.
THE FINE PRINT Joe Brancatelli makes this space available to Martin B. Deutsch in the spirit of free speech and to encourage editorial diversity and the wider discussion of important travel issues. All of the opinions and material in this column are the sole property of Mr. Deutsch. This column may not be reproduced in any form without the permission of Mr. Deutsch.
This column is Copyright © 2008 by Martin B. Deutsch. JoeSentMe.com is Copyright © 2008 by Joe Brancatelli. All rights reserved.