From deregulation to automation to online – 40 years of distribution

Deregulation of the US Airline Industry in 1978 brought enormous change to the US travel landscape, making entry into new markets accessible and entry as a new airline much more feasible.  Deregulation took us from 60 airlines in 1970 to 90 in 1978 all the way to 192 airlines serving the US in 2010.

From 1978 to today, the average round trip domestic airfare grew 70% from $186 to $316.  During that same time frame, a ticket to an NFL game increased 691% from $9.67 to $76.47 and an average gallon of gas grew 316% from $0.67 per gallon to $2.79 per gallon.  For an interesting full comparison of other products to air travel, click HERE.


Travel Agency Growth 1978 – 2010

One of the most striking comparisons between 1978 and 2010 is in the travel agency landscape.  In 1978 there were 14,804 travel agencies, the largest of whom were beginning to experience the use of a new tool, known then as central reservation systems (CRS).    

Agency Automation, which came on the scene along with deregulation led by American and United, drove both productivity and growth, with the number of agencies catapulting to 47,286 in 1996. 

Nearly 4 decades later, if we looked solely at the number of agencies, we would not see this growth story, as in 2010, we ended the year with just 14,795 agencies, 9 less than 1978. 

But when you look at agency sales per location, the story is quite different.  

In 1978, the average agency produced just $772k annually in sales of airline tickets.  Travel Agents produced just 19% of all airline tickets sold in the US.


By 2010, while the number of agencies had reset back to the number that we had in 1978, the makeup of those agencies were quite different. 

Yet, even taking into account the economic crisis, the average agency produced $5.2m in annual air ticket sales, making up 59% of all airline tickets sold in the US. 

This jump in average sales was largely due to the entrance of the pure play online agencies (Expedia, Travelocity and Priceline) in the late 90s and Orbitz in the early 2000s. 

In 2010, online agencies represented 33.3% of all domestic agency ticket sales and 17.7% of international agency ticket sales. 

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