The last time gas prices were this high, Northwest Airlines had a hub in Memphis
Quick summary
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History doesn't repeat itself, but it rhymes. Is it too cliche to summarize the current state of gas prices that way? Maybe so. In this case, the reasons for runaway gas prices may be different than in the past. However, the fear and uneasiness around gas prices today feels eerily similar to 2008.
Back then, we were also worried whether our 401(k) accounts would turn into vapor. Businesses made quick decisions to react to the shifting landscape. Some of those decisions led to long-standing changes in travel. Today's rash decisions may lead to turbulent flights tomorrow, and for quite a while.
The high gas prices of 2008 started travel trends that still exist today
The last time gas prices were this high was certainly an interesting time for the travel industry and airlines in particular. Airlines were dealing with crushing increases in the cost of jet fuel. The answer? Fees. You could say that the current environment of a la carte pricing in the airline industry dates back to the decisions airlines were forced to make. It's also important to recall that not all airlines were forced to make these sorts of decisions.
While the big airlines each took turns adding fees for services like checked bags, one airline took a different tack. Due to an incredibly successful (at the time) fuel hedging program, Southwest Airlines actually chose to double down on their strategy of "bags fly free" while paying significantly less for fuel than all of their major competitors.
Southwest was hammering home the point about value while their competitors were figuring out how to charge for many of the items we used to take for granted. Checked bags weren't the only thing to get price tags. US Airways, still years away from a merger with American Airlines, decided to try to charge for water and soft drinks on flights. As they soon found out, there are some lines that should not be crossed. (But later on, ultra-low-cost airlines like Spirit, Frontier and Allegiant would get away with those beverage fees.)
The resulting outcry from customers, along with the fact that no other airline chose to adopt this fee, caused it to disappear pretty quickly. Heck, it would only be a couple of years before Spirit Airlines broke the other way and started charging fees for carry-on bags.
History has shown that these fees, originally seen as a way to help the airlines in a time of high fuel prices, were mostly around to stay. U.S. airlines collected $5.8 billion worth of baggage fees in 2019, the last full year prior to the pandemic. What started out as a modest $15 fee to check a bag has risen to double that for the first bag on American Airlines, and almost triple that for a second checked bag.
Until recently, the current price of jet fuel was significantly lower than in 2008, and that's before adjusting for over a decade of inflation. What started as a way to cope with a hardship became a set of fees customers came to accept as the new reality.
In fact, until United Airlines' CEO Scott Kirby announced that the carrier was permanently eliminating change fees on most tickets, the game was more about the airlines copying each other on new fees. Those with short memories might see Kirby as a champion of the consumer and a first-mover on the elimination of change fees. Yet Kirby served as president at US Airways in 2008 when it made the decision to charge thirsty customers for a glass of water.
Another strategy that became commonplace in the months after checked bag fees rose to prominence was the introduction of a "co-pay" when redeeming miles in certain circumstances. No, this wasn't like those fees you pay when you take your 10-year-old to the doctor for a sore throat.
Instead, if you wanted to use miles to upgrade a revenue ticket from economy class to first class, the airline would charge you an additional fee to do so. Since there wasn't really any added expense for the airlines associated with many of these new fees, these fees really helped bolster their bottom line.
Related: Best cards with airline-fee credits
The rise of carrier-imposed surcharges
Even the most optimistic and uninformed see a term like "carrier-imposed surcharges" and get an uneasy feeling in their stomach. The more accurate term is "fuel surcharges," and this practice saw the light of day well before 2008. Unsurprisingly, in the face of extremely high jet fuel pricing, the practice of adding surcharges to airline tickets became more commonplace.
Since these surcharges didn't correlate much with the actual price of fuel, it became something of a game to figure out exactly how much a "free" award flight was on certain carriers based on the surcharge. What started as an easy way for airlines to balance a rapidly changing fuel market morphed into another fee that airlines felt they could impose on customers.
Related: How to avoid fuel surcharges on award travel
Resort fees have entered the chat
It's hard to pinpoint when the first hotel charged a resort fee to a guest. But, there's no question the practice started to spread widely around 2008. Hotels suffered alongside airlines during a global recession. Many chose to institute resort fees as a way to keep their advertised rates low while quietly increasing the total amount a customer paid each night.
Absent the legislation airlines faced to display more inclusive pricing, resort fees became increasingly commonplace and even took on new names. Hotel marketing teams pivoted from catchy campaigns meant to increase occupancy to coining terms such as "urban destination fee," "residence fee" and "sustainability fee."
These fees turned something that used to be completely free (redeeming points for a free night) into a situation where a customer could end up with hundreds of dollars in fees when they checked out of their so-called free hotel stay. The practice became so widespread that numerous lawsuits popped up.
One hotel chain, Hyatt, chose to take a page out of Southwest Airlines' book and go the other way, waiving resort and parking fees on award reservations. Hilton also chose to carve a path where "free" still meant free, adopting a policy where resort fees are waived on award bookings.
Additionally, in potentially the first sign of legislation to mandate some transparency on resort fees, Marriott entered into a settlement agreement with the state of Pennsylvania to provide much-needed clarity on such fees during the booking process. We still have yet to see the ultimate result of that settlement, but there's cautious optimism the fees themselves will see more light of day going forward.
Related: Here's how to avoid paying resort fees
Insanely lucrative loyalty programs and promotions followed
As the price of travel increased and we waded into recession, travel was still a way for folks to forget their problems. The use of points and miles to defray the cost of travel started to explode around this time. Prior to 2008, strategies for "free" travel were discussed on bulletin boards such as FlyerTalk and on a small handful of travel blogs, such as View From The Wing. Brian Kelly, the founder of The Points Guy, would begin thinking about starting a website to share these strategies more broadly. Earning and burning frequent flyer miles would explode in popularity.
Seemingly mythical stories about a guy buying thousands of cups of pudding to earn airline miles would become real-life stories of consumers purchasing hundreds of stickers from a now-defunct company to earn thousands of US Airways Dividend Miles in the annual Grand Slam promotion.
While some took these strategies to an excessive level (notably folks who contracted with armored car services to move tens of thousands of dollar coins), it became much more commonplace for consumers to carry a card in their wallet that allowed them to drastically reduce the cost of travel. For the first time in history, many of those credit cards weren't issued with a specific airline's or hotel chain's logo on the card.
While American Express Membership Rewards had been around for quite some time, Chase was poised to shift our wallets in a profound way with the launch of the first Sapphire cards. Flexible points and miles quickly became the gold standard, allowing customers to earn valuable points but wait to determine exactly how to use them. Armed with this flexibility, consumers could shop around to find the best value at the time they were ready to redeem.
When one airline program increased the number of miles necessary for an award or instituted a new fee, consumers now had more flexibility to search for value. In some cases, it meant employing strategies like transferring to a loyalty program for an airline you'd never flown to redeem on yet another airline's flights (did someone say LifeMiles?). With the realization that fees were around for the long haul, consumers were forced to adapt to keep travel affordable.
Related: How to book travel (and save points) with the Chase Ultimate Rewards portal
How to 'protect' your travel wallet
It might be tempting to grab a cash-back card to help defray the cost of fuel when you see the eye-popping prices at the pumps. Nobody knows what the price of gas will be next week -- let alone next month. While that may be the best strategy for some folks, it still seems likely that credit cards with generous bonus categories and a flexible currency will be key for many. For example, earning 10 miles per dollar booking travel with the Capital One Venture X Rewards Credit Card can help defray some pretty significant travel costs. Even if cash back is what you seek, you may need to consider a variation of cash back, such as the Costco Anywhere Visa® Card by Citi.
Meanwhile, don't sleep on ways to save serious money when the opportunity presents itself. The announced merger of Spirit and Frontier likely means ultra-low-cost carriers will weather the current storm and provide incredible value for travelers. Don't be ashamed to fly on Frontier. Instead, celebrate airline tickets cheaper than a tank of gas to beach getaways like The Confidante in Miami Beach, Florida (transfer those Chase Ultimate Rewards points to Hyatt for a free stay).
With gas prices in the U.S. reaching all-time highs, we don't necessarily expect to see new fees pop up from airlines. Airfare should go up, though. Also, when you land on your next vacation, chances are the rental car, Uber, margarita and dinner will all hit your pocket a bit harder. That may lead even the most conventional among us (author included) to consider a vacation rental or other nontraditional path to our next vacation.