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What Did Airlines Do During The 1970's Oil Crisis?  
User currently offlineB6MoneyGuyJFK From United States of America, joined Jun 2006, 231 posts, RR: 0
Posted (6 years 3 months 6 hours ago) and read 12484 times:

Up until recently, oil's record high prices, adjusted for inflation, took place in the 70's. I realize that the industry was regulated, so I am curious how the airlines dealt with it back then. Were prices raised across the board to cover the rise in fuel, or was it even an issue? Are there any lessons that were learned back then that would be useful today?


Opinions are like @ssholes. Everyone has one, and everyone thinks everyone elses stinks!
56 replies: All unread, showing first 25:
 
User currently offlineIsitsafenow From United States of America, joined Feb 2004, 4984 posts, RR: 23
Reply 1, posted (6 years 3 months 5 hours ago) and read 12388 times:

In 1974 and 1975, because of regulation, the airlines, with the CAB's permission, raised their fares.
It was a simple process back then because there was only three fares to mess with..

First
Coach or Y
and what was know as Excursion....where you stay a while like a Saturday night and buy a RT ticket. F and Y were one ways.
There were a FEW exceptions but that was the fare structure of the past...before dereg.
They did cut a flight or two here and there but not enough to notice unless it was your small town USA. No removing the pillows, cutting off peanuts or meals or charging for some seats..
None of that stuff. Just an increase in fares.........
safe



If two people agree on EVERYTHING, then one isn't necessary.
User currently offlineTAN FLYR From United States of America, joined Aug 2000, 1906 posts, RR: 0
Reply 2, posted (6 years 3 months 4 hours ago) and read 12256 times:

IIRC, a number of carriers did some changes, primarly first generation 4 engine jets were retired
by the end of 74 by many carriers and by 76 by almost all that were operating pure jets, or even such models as the DC-8-33 /43 , B720's, etc. These aircraft were designed and engined in the days of 12-15 cent per gallon Jet-A. I think by the time the embargo ended in April 74, Jet-A was around 30 cents per gallon or more making those early 4 engine models money losers.


User currently offlineJmc1975 From Israel, joined Sep 2000, 3270 posts, RR: 15
Reply 3, posted (6 years 3 months 4 hours ago) and read 12252 times:



Quoting TAN FLYR (Reply 5):
I think by the time the embargo ended in April 74, Jet-A was around 30 cents per gallon or more making those early 4 engine models money losers.

Just imagine how they would be with $4/gallon Jet-A.



.......
User currently offlineMOBflyer From United States of America, joined Sep 2007, 1209 posts, RR: 4
Reply 4, posted (6 years 3 months 3 hours ago) and read 12113 times:



Quoting Jmc1975 (Reply 6):
Just imagine how they would be with $4/gallon Jet-A.

That $0.30 would be $1.31 today. Still quite different than $4, but not quite as bad as it appears.


User currently offlineBCAL From United Kingdom, joined Jun 2004, 3384 posts, RR: 16
Reply 5, posted (6 years 2 months 4 weeks 1 day 21 hours ago) and read 11813 times:

IIRC back in the 1970s most air fares were regulated by IATA rather than the airlines, and many non-US airlines were still owned by the governments of their respective countries. Deregulation had then not firmly set in in the US, so there was limited competition on US domestic flights.

In the UK, BA (or rather BOAC and BEA as it was in the early 70s) still under state ownership received subsidies from the UK Government that were simply increased as their fuel bill rocketed, but for the UK independent airlines there was no such lifeline and the going was tough (even tougher than today), so some airlines folded. Other UK independent airlines relied on support at the IATA conventions, and trimmed other overheads over which they had control - i.e. staffing, axing of unprofitable routes etc.



MOL on SRB's latest attack at BA: "It's like a little Chihuahua barking at a dying Labrador. Nobody cares."
User currently offlineBurkhard From Germany, joined Nov 2006, 4396 posts, RR: 2
Reply 6, posted (6 years 2 months 4 weeks 1 day 21 hours ago) and read 11800 times:

I remember high fuel-surchages.

User currently offlineMEA-707 From Netherlands, joined Nov 1999, 4325 posts, RR: 36
Reply 7, posted (6 years 2 months 4 weeks 1 day 20 hours ago) and read 11766 times:

Indeed airlines quickly retired their least fuel efficient types
Delta and TWA withdrew their Convair 880s around 1974,
United did away their 720 nonfans by 1974.
Transavia ordered more 737-200s to quickly get rid of their Avon engined Caravelles.

The second oil crisis of 1979 hastened the withdrawl of the 707 with Pan Am and American for instance, even with turbofans it became too inefficient with a higher fuel price.



nobody has ever died from hard work, but why take the risk?
User currently offlineSsides From United States of America, joined Feb 2001, 4059 posts, RR: 21
Reply 8, posted (6 years 2 months 4 weeks 1 day 20 hours ago) and read 11736 times:

In the 1970s, both with and without regulation, US airlines had much more pricing power to raise fares to cover the costs. In some instances, simple CAB approval was all that was necessary.

At the same time, the typical airline passenger in those days was much wealthier than today, and therefore less sensitive to changes in fares. That's not to say demand was inelastic, but most people flying back then, particularly the leisure traveler, did not view price as a significant obstacle to traveling. In addition, telecommunications technology wasn't what it is today, so flying was much more of a necessesity. Back then a business meeting generally required business travel. Today, such a meeting can be handled via conference call or videoconference much more easily and cheaply than a cross-country flight.



"Lose" is not spelled with two o's!!!!
User currently offlineXaphan From United States of America, joined Apr 2003, 129 posts, RR: 2
Reply 9, posted (6 years 2 months 4 weeks 1 day 19 hours ago) and read 11636 times:

Delta grounded all CV 880s. The flight engineers (who were fully rated pilots at Delta) were reassigned to operations. They drove tugs, worked the bagroom, and generally worked side by side with other Delta ground personnel, making the same wages and benefits as their co-workers made. In some cases this was a raise! As the newer, more fuel efficent aircraft (727-232s) arrived, they were put back on flight duties, many of them promoted to first officer. None were laid off. To my knowledge, Delta was the only airline that did (or could do) this, since with the exception of of pilots and dispatchers, there were no unions.

User currently offlineAirbazar From United States of America, joined Sep 2003, 8322 posts, RR: 10
Reply 10, posted (6 years 2 months 4 weeks 1 day 16 hours ago) and read 11441 times:



Quoting Ssides (Reply 8):
In the 1970s, both with and without regulation, US airlines had much more pricing power to raise fares to cover the costs. In some instances, simple CAB approval was all that was necessary.

As opposed to what today? What power to increase fares did airlines lose? All they have to do is say so. If they can't make money it's they're own damn fault and no one else's.


User currently offlineBCAL From United Kingdom, joined Jun 2004, 3384 posts, RR: 16
Reply 11, posted (6 years 2 months 4 weeks 1 day 16 hours ago) and read 11406 times:

I also remember that in the early 1970s UK Charter airlines added a fuel surcharge that they collected at check-in on the day of travel, even though you had already paid the full holiday price to the tour operator. The amount varied - it could be GBP 5 one day and GBP 15 the next day for the same flight - and there were many scenes at the airports. The amount of fuel surcharges was staggering, bearing in mind that for some short trips (e.g. LGW-PMI) the amount of the holiday price that went to the charter airlines could be as little as GBP 15 per passenger.

Remember that in the early 1970s UK exchange controls were in place, and UK tourists were only allowed to take a fixed amount with them on holiday (the amount was entered in their passports) - at one time the maximum amount of foreign currency that they could take was the equivalent of GBP 50 per person/per trip. Also, credit cards had not really taken off so the majority of UK tourists had a fixed amount of travellers' cheques. To be asked to pay the fuel surcharge before you could board the plane therefore really dipped into holiday spending money - some passengers even had to abandon their holiday at the airport, as payment of the fuel surcharges left them with little or no spending money.

There were many protests and the following season some tour operators had to guarantee that there would be no fuel surcharges once the final invoice had been issued, usually 8 weeks before departure, to attract business. The consumer organisations also fought the issue, forcing the UK's Trading Standards to make it illegal to add any surcharges after the final price had been paid.



MOL on SRB's latest attack at BA: "It's like a little Chihuahua barking at a dying Labrador. Nobody cares."
User currently offlineB6MoneyGuyJFK From United States of America, joined Jun 2006, 231 posts, RR: 0
Reply 12, posted (6 years 2 months 4 weeks 1 day 16 hours ago) and read 11371 times:



Quoting Airbazar (Reply 10):
As opposed to what today? What power to increase fares did airlines lose? All they have to do is say so. If they can't make money it's they're own damn fault and no one else's.

I don't claim to be an expert but it seems to me that then, because prices were regulated, they were raised in unison. Today, the pricing power is lost because if the airlines talk to each other and raise them at the same time, thats collusion and is a no-no. By the same token, now, one airline will let the other raise its prices, and can attract customers with the lower price. And yes, I know that full planes do not equall profits. Right now its not so much survival of the fitest, but survival of the longest, hoping a competitor will drop out.



Opinions are like @ssholes. Everyone has one, and everyone thinks everyone elses stinks!
User currently offlineMauiman31 From United States of America, joined Sep 2007, 450 posts, RR: 0
Reply 13, posted (6 years 2 months 4 weeks 1 day 16 hours ago) and read 11358 times:
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A lot of the same things as now -- capacity cutbacks, employee downsizing --- I was a very low senior FA then still on reserve and got furloughed. Called back in less than 3 months.

User currently offlineRJdxer From , joined Dec 1969, posts, RR:
Reply 14, posted (6 years 2 months 4 weeks 1 day 16 hours ago) and read 11294 times:



Quoting Airbazar (Reply 10):
As opposed to what today? What power to increase fares did airlines lose? All they have to do is say so. If they can't make money it's they're own damn fault and no one else's.

Not necessarily true. Back then you had to apply for a permit to fly between city pairs. There was more control over the fare structure that way. Now, if you raise fares you risk having your competitor jump in and start flying the same route. It's both good an bad. Good for the flying public in terms of ticket price, bad for the passenger in terms of amenities offered.

I remember in the second oil crisis Delta started using the "dive bomber" approach into Atlanta. Several times I flew in to Hartsfield we would stay at cruise altitude until the airport was almost in sight and then the power came off and down you went. The only thing that seemed to be missing was a siren tacked onto the bottom of the fuselage.  laughing 


User currently offlineWA707atMSP From United States of America, joined Oct 2006, 2222 posts, RR: 8
Reply 15, posted (6 years 2 months 4 weeks 1 day 15 hours ago) and read 11158 times:

One of the biggest changes in the mid 1970s oil crisis was a sharp cutback in wide body service by the US Domestic airlines.

CO, DL, and National all grounded their fleets of 747s, American grounded eight of their 16 747s (selling five, and converting the other three into freighters), and TWA also sold off several 747s. All of these aircraft were sold for much less than what the airlines had originally paid for them.

United cancelled 15 DC-10 orders, and most airlines allowed their options on additional wide body aircraft to lapse.

Like today, US airlines also reviewed their route networks, and pulled out of destinations that were uneconomic with the higher fuel prices. National, for example, had been awarded SFO-ATL in 1969, their only route to ATL. This route was dropped during the energy crisis.

The US Government helped the airlines, by allowing a series of international route swaps in cases where two US airlines served an overseas destination that could only support one airline. American had been awarded routes from ORD/JFK/BOS/STL to Australia and New Zealand via Hawaii in 1970 that were very unprofitable. AA was allowed to swap these routes to Pan Am, for Pan Am's authority from New York / Boston to Bermuda, Barbados, and the Dominican Republic. Pan Am and TWA also had a major route swap, with Pan Am swapping their routes to France, Portugal, Spain, and Morocco, and London - Chicago / Washington, for TWA's routes to Germany and Mumbai, and TWA's agreement to suspend the California-Hawaii-Taiwan-Hong Kong-Bangkok-Mumbai-Middle east portion of their "round the world" route.

The US Government also allowed the airlines to coordinate schedules on transcontinental routes, so they would not feel the need to operate more flights than the routes could support to maintain market share. The government subsequently "allowed" airlines to coordinate schedules on JFK-SJU, because Eastern was afraid AA would move 747s that had been freed up from transcontinental routes thanks to the government sanctioned schedule reductions onto JFK-SJU.



Seaholm Maples are #1!
User currently offlineMayor From United States of America, joined Mar 2008, 10398 posts, RR: 14
Reply 16, posted (6 years 2 months 4 weeks 1 day 15 hours ago) and read 11109 times:



Quoting WA707atMSP (Reply 15):
CO, DL, and National all grounded their fleets of 747s, American grounded eight of their 16 747s (selling five, and converting the other three into freighters), and TWA also sold off several 747s. All of these aircraft were sold for much less than what the airlines had originally paid for them.

I believe the only reason DL got rid of their 747's was because of the arrival of the DC-10's and Tristars. The last 747 was given up in '77. I don't remember DL ever grounding the 747's and we still operated flights all thruout that period.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlineMayor From United States of America, joined Mar 2008, 10398 posts, RR: 14
Reply 17, posted (6 years 2 months 4 weeks 1 day 14 hours ago) and read 11097 times:

Quoting MEA-707 (Reply 7):
Delta and TWA withdrew their Convair 880s around 1974,

Delta's 880's were gone by the end of '73, prompted more by the arrival of the 727 in the fleet than a fuel crisis that hadn't started yet.

[Edited 2008-06-05 08:03:11]


"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlineSsides From United States of America, joined Feb 2001, 4059 posts, RR: 21
Reply 18, posted (6 years 2 months 4 weeks 1 day 14 hours ago) and read 10993 times:



Quoting Airbazar (Reply 10):
What power to increase fares did airlines lose? All they have to do is say so. If they can't make money it's they're own damn fault and no one else's.

It's not that simple.

Even after deregulation, there was not near the capacity in the system that there is now. Today, if an airline raises its fares, one of many airlines will come in to undercut them -- leaving them to fly planes half-empty and lose even more money.

The issue is not one of "fault," it's simply one of economic reality and balance.



"Lose" is not spelled with two o's!!!!
User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 19, posted (6 years 2 months 4 weeks 1 day 14 hours ago) and read 10907 times:

1. Some first generation jets like CV-880s at TWA and Dleta got parked in 1974. Turbojet Dc-8s and 707s and the original 720 were parked. Fan jet Dc-8s, 707s and 720Bs survived till the next crisis in 1979-81. The 720B in Y configuration was a favourite of WA to Hawaii

2. The CAB had a tight control on capacity. No new airlines and there was a moritorium on new route awards after the 1970 recession

3. The 1969-70 recession actually prepared the airlines for 1973-75, cuz growth was very limited

4. To save fuel, the CAB and DOJ allowed UA/AA/TW to get together and colluded on capacity reductions.

5. Nixon flew UA instead of AF1..

6. No mroe 747s to Florida on EA. NA, DL and NW.


The A300 was a Godsend for LH and AF...Airbus probably got more orders thanks to the 73-75 energy crisis/recession


User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 20, posted (6 years 2 months 4 weeks 1 day 14 hours ago) and read 10897 times:

Two big differences between now and then besides deregualtion:

1. oil prices rose more quickly and it was more of a shock. Oil was $3 in Aug 1973 and $14 Mar 1974. That woudl be like going from $30 to $140 in 8 months instead of 7 years.

2. There was a physical shortage of oil in 1973-74, unlike today where it is just pricey


User currently offlineSsides From United States of America, joined Feb 2001, 4059 posts, RR: 21
Reply 21, posted (6 years 2 months 4 weeks 1 day 14 hours ago) and read 10877 times:



Quoting EXAAUADL (Reply 20):
2. There was a physical shortage of oil in 1973-74, unlike today where it is just pricey

Not to split hairs, but there actually wasn't a "real" shortage in the 1973 and 1979 oil shocks - it was very much in perception only due to the OPEC threats.

Today, it is very much a perceived shortage, but (like in the 1970s), it all has to do with supply relative to demand. Oil supplies have been increasing over the past 5-10 years, but demand from China and India has by far outstripped that supply.



"Lose" is not spelled with two o's!!!!
User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 22, posted (6 years 2 months 4 weeks 1 day 14 hours ago) and read 10870 times:



Quoting Ssides (Reply 21):
Not to split hairs, but there actually wasn't a "real" shortage in the 1973 and 1979 oil shocks - it was very much in perception only due to the OPEC threats.

In the US there was an actually shortage...it was caused in part by the US govt price controls but also due to OPEC which lifited the embargo in Mar 1974. Of course oil is fungible and if OPEC boycotted the US, you can still resell OPEC oil to the US.


User currently offlineRichierich From United States of America, joined Nov 2000, 4248 posts, RR: 6
Reply 23, posted (6 years 2 months 4 weeks 1 day 13 hours ago) and read 10755 times:



Quoting Mauiman31 (Reply 13):
A lot of the same things as now -- capacity cutbacks, employee downsizing --- I was a very low senior FA then still on reserve and got furloughed. Called back in less than 3 months.

This was kind of the answer I was thinking of as well. Back then, airlines merged and/or went out of business, just like they are now.



None shall pass!!!!
User currently offlineMayor From United States of America, joined Mar 2008, 10398 posts, RR: 14
Reply 24, posted (6 years 2 months 4 weeks 1 day 13 hours ago) and read 10738 times:



Quoting EXAAUADL (Reply 19):
1. Some first generation jets like CV-880s at TWA and Dleta got parked in 1974. Turbojet Dc-8s and 707s and the original 720 were parked. Fan jet Dc-8s, 707s and 720Bs survived till the next crisis in 1979-81. The 720B in Y configuration was a favourite of WA to Hawaii



Quoting EXAAUADL (Reply 19):
6. No mroe 747s to Florida on EA. NA, DL and NW.

Please refer to my replies #16 and #17.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
25 FlyPIJets : Other things aitlines did.. Eastern went to the bare metal hockey stick livery in an effort to save weight. Before the energy crunch of the 70;s SOP w
26 Panova98 : Neither a historian nor an economist here, but I don't think there is a not a lot in common today with the 70s. This from an American perspective. In
27 Ssides : Very true -- I had forgotten about that. In terms of the entire world's daily oil supply, however, the numbers only reduced slightly ... something li
28 WA707atMSP : NW continued to fly 747s to Florida into the 1980s, including, ironically, the two ex-NA aircraft, which NW purchased in 1976. NW even flew from Miam
29 EXAAUADL : really on what route? The original 747-100s in 1970 in addition to flying JFK-ORD-MSP-SEA-ANC-HND-HKG also went MSP-ORD-TPA/MIA. The latter eneded in
30 Atlanta : As I recall ( don't know if this is true ) wasn't that for noise abatement Atlanta
31 SWABrian : Also, Flight Attendants worked in ground positions like Reservations and Cabin Service that provisioned and cleaned aircraft. When I hired on with DL
32 WA707atMSP : I checked the Feb 15, 1985 OAG at DepartedFlights.com. In Feb 85, NW flew 747s 2x week MSP-MCO, and 2x week MSP-MIA. NW's June 9, 1983 route map show
33 Viscount724 : IATA itself didn't regulate fares, and of course had no involvement in domestic fares. The member airlines did agree fares at IATA meetings whiich wa
34 Mayor : DL wasn't even an IATA member back then, I don't believe.
35 MakeMinesLAX : Perhaps you both are right. According to my November '78 OAG, MSP-MIA on NW was operated with DC-10s and 727s - actually only two flights daily. Appa
36 TN757Flyer : I'm still reading the book "Rapid Descent" and it referred to the 70's oil crisis and high oil prices. No mention is made of what those prices were, b
37 Post contains links and images Ssides : Wow, at first I thought you were wrong, but then I found this: This really puts things into perspective. Until last year, even with a run up in price
38 PHLBOS : During the late 70s, just before deregulation; I remember seeing a T.V. ad with actor George Kennedy (still fresh from his Joe Patroni days) stating,"
39 VV701 : I have two books entitled "Air BP Book of IATA Airlines". One gives data for all IATA members for 1957, the other for 1961. Delta Air Lines features
40 Mayor : As usual, my memory has failed me. Thanks for clearing that up.
41 PGNCS : Yes, some DL pilots worked on the ramp; DL didn't furlough pilots until 1993. Your logic is highly suspect and appears to have an obvious anti-union
42 Mayor : I don't have any exact knowledge of what the other airlines did but I expect that the union contracts at the other airlines would not allow it. Just
43 EXAAUADL : The original 747 routes in 1970-71 winter season were deployed on JFK/EWR to MIA, some ORD flights as well. National definitely dumped their 747s in
44 Mayor : When I started in '71, we were running ORD-MIA and ORD-ATL. I also believe they were operating ATL-LAX and ATL-SFO, both via DAL.
45 EXAAUADL : Yeah, youre right, my old OAG has DL 747s stopping in DAL before going west to LAX. I have a 1976 OAG with MIA-ATL-DAL-LAX-DAL-ATL-MIA. I think there
46 Mayor : I never collected any of that stuff. My ex would have just lost it, anyway. I'm lucky I've been able to keep what I do have.
47 WA707atMSP : Not many people know that DL was the first airline to fly scheduled 747s out of DTW. Beginning in Dec 1970, DL flew 747s 1x day DTW-ATL, and 1x day D
48 Isitsafenow : Ooohhh, you remember that. You're right, not many do. Most think it was PA or BOAC(British). safe
49 PSA53 : In late 1973,Pacific Southwest Airlines(PSA) announced that with rise in oil prices by Shell that the Locheed L-1011 purchases no longer would make mo
50 Post contains links N702ML : I have the Northwest Orient timetable dated August 1, 1982 and it states: "Service Beginning September 26, 1982: Miami-Copenhagen...Nonstop. Miami-Ha
51 SWABrian : Actually, DTW was one of the last holdouts for narrowbodied aircraft across the Atlantic for both airlines. When I worked at DTW in 1976, BA was flyi
52 EXAAUADL : I dont think BA had D10s until after the BC merger...Do you mean V10s?
53 Isitsafenow : British/BOAC flew about everything except the Concorde on a scheduled route into DTW. DC7,Brittania, 707, L 1011, DC 10, VC 10, 747,767,777...At lot
54 SWABrian : Yes sorry VC-10s. I would see the VC-10s at the old International Building in DTW. I think DTW may have been one of the last US destinations for this
55 SWABrian : Yes, sorry, I meant the VC-10. This may have been on of BA's last US destinations for this beautiful airliner.
56 EXAAUADL : BTW, I use to see BCal DC-10s in STL in the 1970s? How do you think the ydid without a major hub at either end? Of course in those days interlining wa
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