There's no way to prettify it: 2008 has been an annus horribilis, probably the worst economic mess since the Great Depression of the 1930s.
It was a year dominated by the three Fs: fuel, fees and fear. The mortgage crisis morphed into the credit crisis. Once-venerable financial institutions like Lehman Brothers hit the skids. A jaw-dropping 1.9 million jobs were lost.
And U.S. industries and retailers learned once again that unemployed people do not spend a lot on Christmas presents, nor do they take a lot of trips. Neither do people who fear they may become unemployed any minute now. Meanwhile, the year began with the cost of oil crossing the $100-per-barrel mark for the first time on Jan. 2. It didn't stop there, reaching a high of $147 in the summer, and some pundits (and traders) predicted that it would reach $200.
The airlines began to bleed. By midyear, U.S. carriers had lost $2.48 billion. In September, IATA predicted that the industry worldwide would lose $5.2 billion in 2008.
The word "overcapacity" resurfaced, despite high load factors. The airlines didn't have more seats for than passengers who wanted to fly; they had more seats than passengers who were willing to pay sustainable fares. Massive capacity cuts were announced for the fall season. Fares rose. But the airlines didn't stop there. Citing record fuel prices, they tacked on steep "fuel surcharges" (which, in the U.S., must be included in the advertised fare), raised fees for everything from itinerary changes to unaccompanied minors.
They also instituted new fees for checked bags, a practice heretofore limited to low-cost carriers. United led the way. In January, it announced that it would charge $25 each way for a second checked bag. The grousing by passengers was nothing compared to the dismay that greeted American's announcement in May that it would charge $15 each way for the first checked bag.
In August, US Airways began charging $2 for soft drinks and bottled water, raising another outcry from travelers. The phrase "full-service" carrier was rendered hollow by the new fees. The remaining differences between the "major" carriers and their low-cost competitors were their hubs and their first and/or business class cabins. A new lexicon took shape; now we need the definitions. The airlines said the new fees were part of the trend toward the "unbundling" of fares a trend that was accompanied by "bundled" fares (also known as "fare families") and something called "merchandising" (which may or may not include bundling or unbundling), along with other things called "a la carte pricing" and "ancillary revenues."
The new buzz words were trotted out for all occasions, and it was apparent that even some airlines were mixing them up. It's little wonder that more than a few passengers were angered by the execution of concepts that the airlines did not seem to grasp fully.
For the most part, passengers understood that fuel costs were severely damaging the airlines, and they were receptive to the idea of picking and choosing the services that were important to them. They were less receptive to the idea of paying for things that used to be included in the price of the ticket.
Just when you thought the GDS-airline waters had calmed: Lufthansa threw a grenade into the relationship with the announcement of its Preferred Fares program in January.
In a nutshell, the carrier and its Swiss subsidiary said they would impose hefty fare hikes for flights departing Germany and Austria beginning in July and Switzerland and Liechtenstein beginning in October. Passengers could avoid the hikes by booking direct. Agents could avoid them by paying a surcharge that Amadeus said was higher than the GDS segment fees that Lufthansa was paying. People involved with corporate travel were appalled. The Business Travel Coalition, which represents large corporate travel departments, is still waging the battle against the program, saying it introduced "new inefficiencies" into the marketplace.
On a brighter note, innovation is alive and well. Several new consumer Web sites, such as UpTake and TravelMuse, went beyond the air-hotel-car formula of the first wave of online travel. Travel search engines such as Kayak (which bought competitor SideStep late last year) introduced nifty new tools for shopping without a definite destination. TripIt did a deal with LinkedIn, the professional network. Farewells: Not surprisingly, the economy and fuel costs brought several airlines to their final days. Among them were Aloha, ATA, Eos and Skybus, along with regional carriers Big Sky and Air Midwest.
We also said goodbye to G2 SwitchWorks, the would-be "GDS New Entrant" whose assets were bought by Travelport to form the foundation of its new agent desktop. (The other GNE, ITA Software, is still at work on building Air Canada's new reservations system.) Last but not least, we said goodbye to paper tickets. There are still a few floating around in remote corners of the world, but electronic tickets are now the norm, 14 years after their debut.