Why the golden age of flying is never coming back — and it might not be a bad thing
From pricey parking to pat downs at security and long lineups everywhere you turn, air travel these days can be unpleasant.
“I get on a plane now at least once a month and to me, it’s like riding on a bus in the sky. Herd me on, sit me down, get me off. They’ve taken away the lure of the travel,” said Susan Barnes, 75, of Halfmoon Bay, B.C., who has been a frequent flyer for more than half a century.
Barnes, who was a flight attendant in the 1960s and ’70s, says she remembers when flying was like a Mad Men cocktail party in the sky. She jetted around the globe pouring free champagne for passengers flying CP Air, a carrier that operated until 1986 when it was taken over by Pacific Western Airlines (PWA) and then, Canadian Airlines.
Barnes said her job was to provide top notch treatment to every passenger, even those sitting in economy. That meant handing out hot towels before and after every meal. Breakfast, lunch and dinner were served on real china, with silverware and cloth napkins — then out came coffee, tea and a fruit basket.
“We were treating these people as if they were in a first-class establishment. We just happened to be in the air,” Barnes said.
Barnes and other retired CP Air, Canadian and Air Canada flight attendants interviewed by the Cost of Living described flying back then as “a pleasure.”
It’s a far cry from the experience thousands of Canadians had with airlines this past holiday season. Staff shortages, weather issues and computer outages resulted in lost baggage, cancelled flights and stranded passengers who are now battling air carriers for compensation.
This, along with a summer of major travel disruptions due to COVID-19 labour shortages, has the federal government promising to overhaul Canada’s airline passenger bill of rights.
If you’ve been caught in that tangled web of travel chaos, you may be asking yourself what happened. Experts say it comes down to costs, and competition — and that we’re unlikely to ever return to that golden age of flying.
Keeping prices competitive meant airlines had to be more ruthless about the bottom line, said Fred Lazar, an associate professor of economics at York University.
“Here’s a fare, it gets you a seat from A to B. Anything else costs more.”
What most Canadians remember as the golden age of flying was the era when commercial aviation was regulated, explained Lazar. It was a time when airlines didn’t have to cut costs to stay competitive, because the federal government didn’t allow them to compete with one another.
“So it was essentially the government saying this is where you can fly, when you can fly and these are the prices.”
Up until 1986, the two big players were private carrier CP Air and government-owned Air Canada (formerly Trans-Canada Airlines), said Lazar, and the government did not allow much overlap on routes.
In the absence of competition, experts say Canadian carriers were guaranteed to attract customers and make money, which meant they could afford to offer perks on their flights to passengers.
According to Julie LeBlond Parker, who started as a flight attendant for CP Air in 1968, airlines also invested in their staff. She received extensive training in “decorum” and “finesse” before taking to the sky.
“The service was based on old European service. It was a very high standard,” said LeBlond Parker, who now lives in South Surrey, B.C.
Domestic and international flight prices, 1959 vs. 2023
But the golden age of air travel was also out of reach for many Canadians. Fare schedules from collectors and the archives of the Canada Aviation and Space Museum reveal that throughout the 1940s, ’50s and ’60s, flying was incredibly expensive.
In 1950, a return flight on Trans-Canada Airlines from Vancouver to Johannesburg, South Africa, cost over $21,000 when adjusted for inflation. Flying Toronto to Vancouver in 1962 on CP Air was roughly $1,900.
With prices like that, LeBlond Parker, said the regulars on her flights were business travellers, not vacationers. Leisure travellers were usually newlyweds, couples and families embarking on a once-in-a-lifetime trip.
“What was really amazing about it is that they all dressed up. They probably got a new outfit just to fly because it was special. It was a very special thing.”
Goodbye blankets, hello bargains
Barry Prentice, the director of the Transport Institute at the University of Manitoba, said Canadians saw a “tremendous drop” in airfares south of the border when the U.S. deregulated its airlines in 1978.
“They went from $700 to $200, or something. And everybody in Canada was sitting there, you know, wondering, ‘well, why don’t we have that?’
Prentice said the Canadian government followed the U.S., loosening its grip on the airline industry throughout the 1980s and ’90s. During that time, Air Canada became privatized and more carriers entered the Canadian market. As competition ramped up, airfares went down.
But that’s not the only reason flying became cheaper, explained Prentice.
Advances in aviation technology meant planes became more fuel efficient and larger, which increased air cargo and passenger capacity. Prentice said that — along with the 1980s oil glut, brought down the price per seat.
Even when crude prices rebounded, legacy airlines like Air Canada couldn’t go back to charging passengers as much for flights as they did before deregulation because they were up against the à la carte pricing model of no-frills carriers, said Lazar.
“Many people said, ‘We didn’t have to pay for bags, we got food for free, we didn’t have to pay for earphones,” Lazar said.
“Well now, in the lowest-fare categories, you do, because the airlines want to compete with the ultra low-cost carriers. And that’s the only way they can do it.”
Lazar, who has also worked as a consultant for Qantas, Air Canada and Porter Airlines, said stripping away the luxuries and packing more seats on planes is a “major contributing factor to making flying in economy much less comfortable and attractive, yet much more affordable.”
Snafus at security
While Canadians often blame airlines for a lousy flying experience, chaos at airport security and gates can also contribute to the overall unpleasantness of air travel. Experts say that’s because airports aren’t designed for the realities of today’s travel.
Between 1973 and 2008, Anthony Wade-Cooper was a flight attendant for CP Air, Canadian and Air Canada. He says before 9/11, he could make it from the check-in counter to the gate in 20 minutes.
“It was just so different. You just walked into the airport and you got on a flight,” he said Wade-Cooper, who is now retired in a town called Mooloolaba on Australia’s Sunshine Coast.
Nowadays, airlines ask passengers flying domestic to arrive at the airport two hours in advance and Wade-Cooper said he often spends most of that time standing in a queue.
Security snafus are also a result of a steady increase in air travel over the last decade — peaking in 2019 with nearly 163 million passengers passing through Canadian airports, according to Statistics Canada.
According to Lazar, most airports were not built for a post-9/11 world where every traveller has to take off their belt and shoes. There are also design problems when passengers arrive at gates. Lazar says some airports are designed like malls — a lot of shops and restaurants but not a lot of seating.
“There’s no place to sit. You know, if you have long delays, where are you going to go?”
But what we get in exchange for fewer perks and busier airports, said Prentice, are cheaper flights — and that means more people than ever can afford to fly. Which he thinks is a “really good thing.”
“More families can travel and, over time, families have split up wider and wider. My grandchildren are in Montreal and I’m in Winnipeg and I wouldn’t see them very often if it weren’t for air travel.”
If you’re wondering if there’s a way to get back a bit of the elegance or at least the enjoyment of flying, Lazar said you can’t expect to pay rock bottom prices.
He said the only way back to the golden age of travel is to fly first class or rent a private jet.
“Otherwise, just accept the fact that air travel is really the same as travelling on a bus. Except it gets you from A to B much more quickly.”
Credit Suisse, UBS shares plunge after takeover announcement – CTV News
Shares of Credit Suisse plunged 60.5 per cent on Monday after banking giant UBS said it would buy its troubled Swiss rival for almost US$3.25 billion in a deal orchestrated by regulators to try to stave off further turmoil in the global banking system.
UBS shares also were down nearly 5% on the Swiss stock exchange.
Swiss authorities urged UBS to take over its smaller rival after a central bank plan for Credit Suisse to borrow up to 50 billion francs ($54 billion) last week failed to reassure investors and customers. Shares of Credit Suisse and other banks had plunged last week after the failure of two banks in the U.S. raised questions about other potentially weak global financial institutions.
“Only time will tell how this shotgun wedding is received,” said Neil Shearing, group chief economist for Capital Economics.
Markets remained jittery Monday despite efforts of regulators to restore calm. In the U.S., the Federal Deposit Insurance Corp. said late Sunday that New York Community Bank agreed to buy a significant chunk of the failed Signature Bank in a $2.7 billion deal.
Global stock markets sank, with European banking stocks dropping more than 2%. Wall Street futures were off 1%.
Many of Credit Suisse’s problems were unique and unlike the weaknesses that brought down Silicon Valley Bank and Signature Bank in the U.S. It has faced an array of troubles in recent years, including bad bets on hedge funds, repeated shake-ups of its top management and a spying scandal involving UBS.
Analysts and financial leaders say safeguards are stronger since the 2008 global financial crisis and that banks worldwide have plenty of available cash and support from central banks. But concerns about risks to the deal, losses for some investors and Credit Suisse’s falling market value could renew fears about the health of banks.
“Containing crises is a bit like a game of whack-a-mole — with new fires starting as existing ones are extinguished,” Shearing said. “A key issue over the next week will be whether problems arise in other institutions or parts of the financial system.”
Credit Suisse is among 30 financial institutions known as globally systemically important banks, and authorities were worried about the fallout if it were to fail.
“An uncontrolled collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system,” Swiss President Alain Berset said as he announced the deal Sunday night.
UBS is bigger but Credit Suisse wields considerable influence, with $1.4 trillion assets under management. It has significant trading desks around the world, caters to the rich through its wealth management business, and is a major mergers and acquisitions advisor. Credit Suisse did weather the 2008 financial crisis without assistance, unlike UBS.
Switzerland’s executive branch passed an emergency ordinance allowing the merger to go through without shareholder approval.
As part of the deal, approximately 16 billion francs ($17.3 billion) in higher-risk Credit Suisse bonds will be wiped out. That has triggered concern about the market for those bonds and for other banks that hold them.
The combination of the two biggest and best-known Swiss banks, each with storied histories dating to the mid-19th century, strikes at Switzerland’s reputation as a global financial center — putting it on the cusp of having a single national banking champion.
The deal follows the collapse of two large U.S. banks last week that spurred a frantic, broad response from the U.S. government to prevent further panic.
In a bid to shore up the global financial system, the world’s central banks announced coordinated moves to stabilize banks, including access to a lending facility for banks to borrow U.S. dollars if they need them, a practice widely used during the 2008 crisis.
Credit Suisse Chairman Axel Lehmann called the sale to UBS “a clear turning point.”
“It is a historic, sad and very challenging day for Credit Suisse, for Switzerland and for the global financial markets,” Lehmann said Sunday, adding that the focus is now on the future and on what’s next for Credit Suisse’s 50,000 employees — 17,000 of whom are in Switzerland.
Colm Kelleher, the UBS chairman, hailed “enormous opportunities” from the takeover and highlighted his bank’s “conservative risk culture” — a subtle swipe at Credit Suisse’s reputation for more swashbuckling gambles in search of bigger returns. He said the combined group would create a wealth manager with over $5 trillion in total invested assets.
UBS officials said they plan to sell off parts of Credit Suisse or reduce the bank’s size.
To support the deal, the Swiss central bank is providing a loan of up to 100 billion francs and the government is providing another 100 billion francs of support as a backstop if needed.
European Central Bank President Christine Lagarde lauded the “swift action” by Swiss officials, saying they were “instrumental for restoring orderly market conditions and ensuring financial stability.”
She reiterated that the European banking sector is resilient, with strong financial reserves and plenty of ready cash. The Credit Suisse parent bank is not part of European Union supervision, but it has entities in several European countries that are.
Last week, when the ECB raised interest rates, she said banks “are in a completely different position from 2008” during the financial crisis, partly because of stricter government regulation.
Investors and banking industry analysts were still digesting the deal, but at least one analyst suggested it might tarnish Switzerland’s global banking image.
“A country-wide reputation with prudent financial management, sound regulatory oversight, and, frankly, for being somewhat dour and boring regarding investments, has been wiped away,” Octavio Marenzi, CEO of consulting firm Opimas LLC, said in an email.
McHugh reported from Frankfurt, Germany. Associated Press writers Jamey Keaten in Geneva, Ken Sweet in New York, Frank Jordans and Emily Schultheis in Berlin, Barbara Ortutay in Oakland, California, and Chris Rugaber in Washington contributed
Investors punish UBS after Credit Suisse rescue, shares plummet
Banking stocks and bonds plummeted on Monday after UBS Group sealed a state-backed takeover of troubled peer Credit Suisse Group AG, a deal that was orchestrated in an attempt to restore confidence in a battered sector.
In a package engineered by Swiss regulators on Sunday, UBS Group AG will pay 3 billion Swiss francs ($3.23 billion) for 167-year-old Credit Suisse Group AG and assume up to $5.4 billion in losses.
Credit Suisse’s recent history is filled with controversy
Credit Suisse shares slumped 62% in premarket trade to a new low while UBS lost 7.1%. Those sharp moves followed a day of heavy selling in Asian financial markets as early investor optimism about official efforts to stem a banking crisis quickly evaporated.
In particular, investor focus has shifted to the massive hit some Credit Suisse bondholders would take under the UBS acquisition, which has added to anxiety about other key risks including contagion, the fragile state of U.S. regional banks and the challenges for central banks as they seek to contain inflation and financial risks.
“It should be clear that after more than a week into the banking panic, and two interventions organised by the authorities, this problem is not going away. Quite the contrary, it has gone global,” said Mike O’Rourke, chief market strategist, Jones Trading.
“The reports that UBS is acquiring Credit Suisse will likely magnify Credit Suisse’s problems by moving them to UBS.”
Under the deal, the Swiss regulator decided that Credit Suisse additional tier-1 bonds – or AT1 bonds – with a notional value of $17 billion will be valued at zero, angering some of the holders of the debt who thought they would be better protected than shareholders in the takeover deal announced on Sunday.
Credit Suisse’s Additional Tier 1 bonds dropped sharply in early European trade with a number of dollar-denominated issues being bid at 2 cents on the dollar, Tradeweb data showed.
The Swiss banks’ share tumble comes on top of what was already a rough day for banks, as investors shrugged off earlier promises by top central banks over the weekend to provide dollar liquidity to stabilise the financial system.
Standard Chartered Plc and HSBC shares each fell more than 6% in Hong Kong on Monday to more than two-month lows, with HSBC facing the possibility of posting its largest one-day drop in six months. The MSCI index for financial stocks in Asia ex-Japan was down 1.3%.
The shotgun Swiss banking marriage is backed by a massive government guarantee, helping prevent what would have been one of the largest banking collapses since the fall of Lehman Brothers in 2008.
Pressure on UBS helped seal Sunday’s deal.
“It’s a historic day in Switzerland, and a day frankly, we hoped, would not come,” UBS Chairman Colm Kelleher told analysts on a conference call. “I would like to make it clear that while we did not initiate discussions, we believe that this transaction is financially attractive for UBS shareholders,” Kelleher said.
UBS CEO Ralph Hamers said there were still many details to be worked through.
“I know that there must be still questions that we have not been able to answer,” he said. “And I understand that and I even want to apologize for it.”
In a global response not seen since the height of the pandemic, the Fed said it had joined central banks in Canada, England, Japan, the EU and Switzerland in a co-ordinated action to enhance market liquidity. The European Central Bank vowed to support euro zone banks with loans if needed, adding the Swiss rescue of Credit Suisse was “instrumental” in restoring calm.
On Monday, Credit Suisse’s banking operations appeared to be business as usual at its major offices in Asia.
Monetary authorities in Singapore and Hong Kong, where Credit Suisse hosts large regional offices, separately said the Swiss bank’s business continued without interruption.
And Credit Suisse urged its staff to go to work, according to a memo to staff seen by Reuters.
In a separate memo, the bank said as part of the takeover if job cuts proved necessary it would be communicated to staff as per guidelines. The bank will also pay bonuses as communicated before and as per schedule, the memo added.
Credit Suisse staff arriving to work in Hong Kong and Singapore on Monday morning, however, fretted about retrenchments and retaining business.
Problems remain in the U.S. banking sector, where bank stocks remained under pressure despite a move by several large banks to deposit $30 billion into First Republic Bank, an institution rocked by the failures of Silicon Valley and Signature Bank.
On Sunday, First Republic saw its credit ratings downgraded deeper into junk status by S&P Global, which said the deposit infusion may not solve its liquidity problems.
There are also concerns about what happens next at Credit Suisse and what that means for investors, clients and employees.
In the memo to employees, Credit Suisse said that once the takeover is complete wealth management clients may want to consider moving some assets to another bank if concentration was a concern.
The deal will also make UBS Switzerland’s only global bank and the Swiss economy more dependent on a single lender.
“The Credit Suisse debacle will have serious ramifications for other Swiss financial institutions. A country-wide reputation with prudent financial management, sound regulatory oversight, and, frankly, for being somewhat dour and boring regarding investments, has been wiped away,” said Octavio Marenzi, CEO of Opimas, in Vienna.
UBS chairman Kelleher told a media conference that it will wind down Credit Suisse’s investment bank, which has thousands of employees worldwide. UBS said it expected annual cost savings of some $7 billion by 2027.
The Swiss central bank said Sunday’s deal includes 100 billion Swiss francs ($108 billion) in liquidity assistance for UBS and Credit Suisse.
Credit Suisse shares lost a quarter of their value last week. The bank was forced to tap $54 billion in central bank funding as it tried to recover from scandals that undermined confidence.
UBS to buy Credit Suisse in effort to create stability, Swiss president says
Banking giant UBS is buying its smaller rival Credit Suisse in an effort to avoid further market-shaking turmoil in global banking, Swiss President Alain Berset announced on Sunday night.
Swiss president Alain Berset, who did not specify a value of the deal, called the announcement “one of great breadth for the stability of international finance. An uncontrolled collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.”
Credit Suisse is designated by the Financial Stability Board, an international body that monitors the global financial system, as one of the world’s globally systemic important banks. This means regulators believe its uncontrolled failure would lead to ripples throughout the financial system not unlike the collapse of Lehman Brothers 15 years ago.
Sunday’s news conference follows the collapse of two large U.S. banks last week that spurred a frantic, broad response from the U.S. government to prevent any further bank panics. Still, global financial markets have been on edge since Credit Suisse’s share price began plummeting this week.
The 167-year-old Credit Suisse already received a $50 billion (54 million Swiss francs) loan from the Swiss National Bank, which briefly caused a rally in the bank’s stock price. Yet the move did not appear to be enough to stem an outflow of deposits, according to news reports.
Still, many of Credit Suisse’s problems are unique and do not overlap with the weaknesses that brought down Silicon Valley Bank and Signature Bank, whose failures led to a significant rescue effort by the Federal Deposit Insurance Corporation and the Federal Reserve. As a result, their downfall does not necessarily signal the start of a financial crisis similar to what occurred in 2008.
The deal caps a highly volatile week for Credit Suisse, most notably on Wednesday when its shares plunged to a record low after its largest investor, the Saudi National Bank, said it wouldn’t invest any more money into the bank to avoid tripping regulations that would kick in if its stake rose about 10%.
On Friday, shares dropped 8% to close at 1.86 francs ($2) on the Swiss exchange. The stock has seen a long downward slide: It traded at more than 80 francs in 2007.
Its current troubles began after Credit Suisse reported on Tuesday that managers had identified “material weaknesses” in the bank’s internal controls on financial reporting as of the end of last year. That fanned fears that Credit Suisse would be the next domino to fall.
While smaller than its Swiss rival UBS, Credit Suisse is considered a globally systemically important bank. The firm has significant trading desks around the world, caters to the rich and wealthy through its wealth management business, and is a major advisor for global companies in mergers and acquisitions. Notably, Credit Suisse did not need government assistance in 2008 during the financial crisis, while UBS did.
Despite the banking turmoil, the European Central Bank on Thursday approved a large, half-percentage point increase in interest rates to try to curb stubbornly high inflation, saying Europe’s banking sector is “resilient,” with strong finances.
ECB President Christine Lagarde said the banks “are in a completely different position from 2008” during the financial crisis, partly because of stricter government regulation.
The Swiss bank has been pushing to raise money from investors and roll out a new strategy to overcome an array of troubles, including bad bets on hedge funds, repeated shake-ups of its top management and a spying scandal involving UBS.
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