PAMANTASAN NG LUNGSOD NG MAYNILA
PLM Business School
Department of Hospitality Management
Module 4: TRANSPORTATION SECTOR
MODULE OBJECTIVES
I. Transportation and Travel Evolution
ITM 1204 MICRO PERSPECTIVE OF TOURISM AND HOSPITALITY
By the end of the module students will:
1. trace the evolution of transportation and travel;
2. discuss the historical development of transport systems;
3. explain the selection of transport mode;
4. discuss the role of international rail transportation;
5. identify the reasons for the growth and decline of ship travel;
6. explain the importance and scope of the bus/motor coach industry;
7. describe the impact of private car ownership on the tourism industry;
8. enumerate the dynamics of the worldwide car rental industry; and
9. discuss the role of the airline industry in the development of tourism.
Transportation and travel have undergone many changes. A review of the history of transportation and
travel shows that their evolution took seven eras. These are the pre-industrial travel system era, the
early-industrial travel system era, the mature-railway system era, the express-travel system era, the
automobile-based travel system era, the modern-tourism travel system era, and the post-mobility
adjustment era.
A. Pre-Industrial Travel System Era
This was the period before the widespread industrialization in Europe and North America. It was before
the development of railways in the two continents. There were few common carriers. There were
almost no regularly scheduled transportation services. There was little travel. Travelers made their own
arrangements with several suppliers. It was the era of the stagecoach and the wayside inn. Only few
people had the money and the reason to travel.
B. Early-Industrial Travel System Era
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During the era, road improvements such as railways, canals, and steamship services were brought about
due to rapid industrialization and advances in transportation technology. Common carriers came into
existence and began to offer regularly scheduled transportation services. Travel increased because
more people who had money traveled.

C. Mature-Railway System Era

This era was characterized by railways which expanded their operations by running hotels and providing
other travel-related services. The railways began to market their services more aggressively. Travel
agencies and tour companies were formed. Thomas Cook, an innovator in this field during this era,
began his company's activities in the United Kingdom in 1840. More people traveled in this era than in
the previous one.

D. Express-Travel System Era

During this era, express service increased. Trains and other forms of transportation did not stop at every
station or terminal but only at the major ones. This increased the speed of travel and encouraged more
travel than before.

E. Automobile-Based Travel System Era

This influence of the privately owned automobile was enhanced in North America and Europe from the
1920s onward. Car ownership boomed in North America. Motorways, interstate highways, and other
trunk highways were developed in the latter half of this era which was from 1920 to 1974. The
automobile was predominant over other travel modes from 1920 to 1945.

F. Modern-Tourism Travel System Era

The period from 1945 to 1974 is known as the modern-tourism travel system era. Car ownership
continued to grow at a fast rate, mainly at the expense of long-distance rail travel. Mass air travel was
another post-World War I l occurrence. The introduction of wide-bodied jets in 1970 greatly increased
air travel. The "mass tourism" philosophy and marketing approaches were prevalent during the 1950s
and 1960s.

G. Post-Mobility Adjustment Era

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 This era began in 1973 to 1974 as a result of the oil embargo generated by the Organization of
Petroleum Exporting Countries (OPEC) and the resulting increase in fuel prices. The events of the energy
crisis basically changed the travel patterns throughout the world. The present era is one in which
travelers continue to look to alternative, group-oriented modes of transportation.

II. Historical Development of the Transport System
The desire to travel is stimulated with the improvement in transportation. Before World War l, it took
seven days for travelers to go from coast to coast by steam locomotive. By 1950, travelers could
complete the journey in two and a half days by train. In 1938, an airplane with the speed of 400 miles
an hour made possible nonstop coast-to-coast flights of less than eight hours. In 1950, travel time from
coast to coast was lessened to four hours. At present, the Concorde can make a flight in two and a half
hours. Table 2 shows the historical development of the transport system.

Table 2. Historical Development of the Transport System

Speed
Year Mode of Transport
(miles per hour)
6000 BC Caramel caravan 8
1600 BC Chariot 20
AD 1784 First English mail coach 10
1825 First steam locomotive 13
1890 Improved steam locomotive 100
1931 Land speed record
(Bluebird: Sir Malcolm
Campbell)
1938 Land speed record 350
(Napier-Railton car: John Cobb)
1938 Piston aircraft 400
1952 United States Liner from New 41
York to Le Harve
1958 Jet fighter aircraft 1,300
1958 Boeing 707 and DC-8 aircraft 600
1961 Spaceship (Vostok 1 orbiting) 17,560
1967 Rocket plane 4,534
1970 Fighter bomber (Mirage IV) 1,450
1970 Commercial aircraft: Concorde 1,320
1970 Boeing 747 626

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III. Selection of Transportation Mode
Source: Reason, James. Man in Motion: The Psychology of Travel. London: George Weindenfeld and
Nicolson Limited, 1996.
The development in transportation has made the world a smaller place. It is now possible to take one to
two weeks of vacation in distant places like Europe, the United States, the Caribbean, Mexico, and
South America. Now, travelers can go to any place in the world due to fast and efficient means of
transportation.
There are many reasons why people select one transportation mode over another for their business and
pleasure trips. The most common reasons are cost, traveling time, safety, convenience, comfort,
availability, frequency of trips, ground services, terminal facilities and locations, status and prestige, and
departure and arrival times. People belonging to different travel segments have different value
perceptions. For example, the time spent in traveling as well as departure and arrival times are very
Important to the business traveler while the cost of the trip is the traveler's primary consideration.
Jagdish Sheth developed a theory identifying transportation variables and the value of travelers. He
found out that travelers choose a travel mode based on how they psychologically weigh the five factors,
namely: functional, aesthetic/emotional, social/organizational, situational, and curiosity. The functional
utility of a mode is its expected performance for a specific purpose. Examples are departure and arrival
times, safety record, the directness of the trip, and the number of stops or transfers.
Aesthetic/emotional is related to such aspects as fear, social concerns, style, luxury, comfort, and other
personal feelings that the form of transportation might evoke. Social/organizational shows that the
frequent users of certain kinds of transportation are stereotyped according to sex, racial origin, income,
price/cost, and education. For example, those who take bus trips are usually perceived to be female,
either young or old, while those who take bus tours and cruises are generally retired people. Situational
refers to how conveniently located the particular mode of transportation and its terminal facilities are
for the traveler. Curiosity utility refers to the traveler's perceived need to do something new and
different. Flying transatlantic on Concorde may have a high curiosity value for many business travelers.
A. Travel by Train
Trains stimulated travel within the United States, Canada, and Europe in the 19th and early 20th
centuries. Britain had its first organized train tour in 1841 when Thomas Cook organized an excursion
between Leicester and Loughborough. In 1851, three million Englishmen boarded the train to see the
Great Exhibition in London. The train was instrumental in stimulating the development of many seaside
resorts in Britain.
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The first transcontinental route in the United States was completed in 1869. With the advent of the
steam locomotive in 1825 until after World War Il, travel by train became the primary means of
movement within the United States. During the latter part of the 1800s and the first part of the 1900s,
the train connected major population centers and popular spas and resorts such as the Niagara Falls,
Long Beach, Saratoga, New Jersey, and Las Vegas. This dependence on the train is shown in the
development of Las Vegas where large hotels were located downtown, a short distance from the
railroad station. This gave tourists who arrived by train quick and easy access to hotels and casinos.

In 1863, long-distance rail travel boosted when George M. Pullman built the Pullman coach, a luxury
first-class sleeping and dining facility. In 1868, the diner car was introduced on the Chicago and Alton
line. Ten years later, an elaborate meal could be obtained in all trains.

The popularity of the train lasted only for a brief period after World War Il when the automobile began
to gain more popularity as a passenger transportation mode. US railroads carried 77% of the nation's
passenger traffic. By 1950, with the rapid growth of private automobile ownership and usage, passenger
traffic declined to 46%. In an effort to save the railroad industry, the Rail Passenger Service Act became
a law in October 1970. The act created the National Railroad Passenger Corporation, now commonly
known as Amtrak, which began its operations in May 1971 and was intended to be a profit-making
corporation. Canada's equivalent of Amtrak is VIA Rail Canada, which was created in 1977.

Both Amtrak and VIA Rail have the national responsibility of providing intercity passenger rail
transportation. Since their establishment, both organizations have been successful in increasing
passenger volumes. They have done so by improving the equipment and services they offer and by
promoting the benefits of traveling by train more effectively.

Several attempts have been made to determine why travelers select the train as a transportation mode.
Four evident factors are: cost/price, comfort, safety, and the ability to see the area where the train is
passing. VIA Rail's onboard surveys of business travelers have identified user cost, convenience, travel
time, and comfort as of primary importance.

A survey of Amtrak passengers showed that travelers favored the train for the following reasons:

1. Safety;
2. Ability to look out of the train and see the interesting things en route;
3. Ability to get up and walk around;
4. Arriving at the destination rested and relaxed; and
5. Personal comfort.
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The negative factors of rail travelers are slowness in reaching the destination, inflexible departure
times, and lack of quality in food services. Promotions by Amtrak and VIA Rail have emphasized the rest
and relaxation benefits of taking the train. They have also pointed out that the downtown-to-downtown
routing of trains saves the time of the passengers.

Train travel has continued in Europe and Asia more than in the United States, particularly for long-
distance travel. The Euro City network, formerly the Trans Europe Express (TEE) network, as well as
other national lines provided excellent rail services between major cities in 10 countries. The system is
being improved. In 1987, the TEE had been replaced by a new system which includes high-speed trains,
with both first and second-class accommodations. Travel within Europe would be further improved with
the development and construction of the Eurotunnel between England and the continent. The tunnel
would create the single biggest unified rail network in the world and reduce travel time between
England and other European countries by two hours. Europeans believed that the train was a more
efficient form of transportation from city center to city center on trips up to 300 miles. Like Amtrak,
most of the better railroads of the world were subsidized by the government.

Although the importance of rail travel was reduced due to the popularity of the automobile and
airplane in many countries, railroads had been working hard to improve their facilities to accommodate
super trains with speeds between 150 to 250 miles per hour. The first sensational rail accomplishment
after World War I l was Japan's shinkansen or bullet trains which travel at speeds greater than 140 miles
per hour. The bullet trains run north and south and link major metropolitan areas. These began
operations in 1964 in time for the Olympics in Japan. They make the run of 550 miles in three hours and
10 minutes from the former time of 18 hours. They provide a ride so smooth that a passenger can leave
a cup of tea or coffee on a windowsill and not a drop will spill. A computerized control center feeds
information to a lighted board that shows the location of every train and the conditions of the track,
switches, and wires. Station stops are as short as two minutes at intermediate stations, so travelers
must be ready to move fast. The computer automatically stops the train in case of trouble, especially
during an earthquake. At present, Japan has the best railroad system in the world, with 26,000 fast and
efficient trains scheduled a day. Japan has plans for trains which travel at speeds of 300 miles per hour.
The Japanese rail system is heavily subsidized by the government.

France has its own supertrain, the Tres Grande Vitesse which travels at a speed of 175 miles per hour
between Paris and Lyons and Marseilles.

In Russia, the Trans-Siberian Railroad, the longest in the world (5,787 miles) links outlying Siberian
industrial regions and mining centers with European Russia. Railroads are important to the Russian
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economy. The Germans have a test track designed to carry passengers at a speed of 130 to 240 miles.

Tres Grande Vitesse

The popularity of the train system in Europe has increased, not only because of its quality and
efficiency, but because of the use of the Eurailpass. In 1939, a number of European countries introduced
the Eurailpass which allowed a traveler to use it for two months of unlimited second-class travel on any
of the rail systems of the European countries. Later, it included unlimited first-class service over
different periods varying from 15 days, 21 days, one month, and three months with access to many
ferries and steamer routes. They also introduce the student Eurailpass for a second-class travel. It is less
expensive than the Eurailpass ang is good only in 16 countries.

B. Travel by Ship

Travel by ship preceded travel by train but it was not until the middle of the 19th century that travel by
ocean liners began to become prominent. Ocean liners were used to provide an important link to
passengers among continents. At present, water transport has two major roles in travel and tourism-
ferrying and cruising.

The steamship era began in 1840 when Sir Samuel Cunard pioneered the first transatlantic-scheduled
liner tips. However, the introduction of the jet aircraft led to the rapid decline in the ships as scheduled
passenger transportation mode. In the late 1990s, the era of travel by ships expired. Cruise chips took
the place of regularly scheduled passenger ships. Many passenger ships were converted into cruise
ships. Those that were too old or too large were junked or scrapped. Others that had historical value
were converted into tourist attractions. For example, the Queen Mary which is permanently docked in
Long Beach, California became a tourist attraction and a hotel.

Cruises are more of a vacation experience than a transportation mode. The romance of cruising had
been strongly promoted and was aided very much by the popular television program, Love Boat. Cruises
are divided into three types depending on the duration of the trips. Short cruises are one week or less,
intermediate long cruises last one to four weeks, and long cruises go around the world and take one to
three months.

Cruise Ship

Short-duration cruises are more popular because they require less vacation time and are less expensive.

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Other reasons are travelers can satisfy their desire to experience new environments and see new
cultures and still bring with them the comfort, safety, and convenience of home. In addition, there is no
changing of hotels, airports, and food and beds which may cause sleeplessness and other problems,
Examples of short cruises are the three-night cruises from Los Angeles to Mexico and cruises on the St.
Lawrence River on vessels such as the Canadian Empress.

Cruise ships may be divided into large vessels which can accommodate 180 or more passengers and
small vessels which carry less than 100 passengers. They are called "mini-cruises" or "ultra-yachts." At
present, the trend is toward large vessels. Recently, the typical ship was built to carry 850 to 1,250
passengers but now, the average capacity of a new ship is 2,000 passengers. The large cruise ships offer
a wide array of services and amenities to guests, most of which are packed into the cruise.
Accommodations on board vary from rooms for three to four persons to lavish staterooms. The rooms
are air-conditioned and have private baths.

A cruise ship is both a floating hotel and resort because the guests are housed, fed, and entertained.
Food is offered throughout the day from seven-course meals to themed-event dinners. Cruise ships also
provide almost continuous entertainment which include charm classes, language lessons, dance classes,
bridge, table tennis, aerobics, jogging, and shuffleboard. Many ships now have fully equipped gyms,
health spas, and an athletic counselor. Cruise directors plan activities and entertainment for the
passengers which may be full-scale musical productions, live entertainment with well-known
performers, discos, bingo, gambling, courses in self-improvement, and the like. For many passengers,
the numerous opportunities to socialize on a cruise vacation is one of its major attractions. Passengers
who prefer a less active type of vacation can relax by the pool or on deck and enjoy the warm climate
and beautiful sunsets. Cruise enthusiasts prefer this type of vacation because it combines fresh air,
plenty of good food, a variety of activities, and visits to exotic places.

Cruises are promoted and sold on the basis of health, recreation, and pleasure. Theme cruises are
popular such as culinary cruises, historic voyages to less-known places, stock market seminars, movie
festivals, music festivals, as well as cruises devoted to art, golf, astrology, tennis, photography, and
beauty counseling.

The United States dominates the international cruise market by supplying more than 70% of total
passengers followed by Europe with 17%. Estimates of the total dollar income of the cruise industry are
difficult to obtain because income is earned from various sources including the scale of births, gambling,
bars, shops, and miscellaneous services. Cruise lines have also lucrative market in the United Kingdom,
West Germany, and Australia. In Europe, Russian ships sail from ports in Italy, the United Kingdom, and
Holland. They offer tower rates and good services.
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The cruise industry is largely owned by European companies which are located in Denmark, Norway,
Holland, Italy, Germany, Great Britain, and Greece, Although, the cruise ship industry is not a US
industry in terms of ownership, several United States and American territory cities serve as major ports
of cruise ships. The top ports are Miami, New York, San Juan, Port Everglades, Los Angeles, San
Francisco, Seattle, and New Orléans.

The Caribbean is the world's largest cruise destination Cruise passengers for destinations within the
Caribbean comprise 50% of total visitor arrivals. Other major cruise destinations include the
Mediterranean, Scandinavia, Alaska, and the Pacific, Cruises are announced several months before the
departure and are also sold mostly by travel agents as packages. The fly cruise package has grown in
popularity because it combines the speed and efficiency of jet travel with the relaxing, romantic
attribute of cruise ships. One significant marketing strategy used by the cruise industry is to offer heavily
discounted or free air flights to the port of embarkation. As an added convenience for cruise
passengers, some cruise line agents greet passengers at the airport and then transport them to the
ship's pier. in order to attract more families, other cruise lines have begun to provide children's
activities and offer lower rates for a third or fourth passenger in a cabin. Several cruise lines have also
designed cruise packages which cater to the single segment and those interested in health and fitness.

Younger people prefer the three- to seven-day cruises. Older people take cruises of seven days or less.
The elderly usually joins the round-the-world cruise, Cruise passengers tend to be repeat customers.
Once they experience a cruise, they begin planning for the next. Like destination resorts, cruise lines
have successfully developed their own loyal repeat clienteles with an average of 30 to 40% of the total
passenger volumes.

Another role of the ship travel and tourism is ferrying or the use of ferry boats. These are used in the
English Channel, the Irish Sea, the Hebridean Islands of Scotland, the North Sea, the Maritime provinces
and British Columbian coast in Canada, and on the Great Lakes. Short duration sightseeing cruise ship
attractions are abundant in North America. These cruises last for one day or even a shorter length of
time. Example of these are steamer and riverboat cruises in the Mississippi River and Thousand Islands
(New York, Ontario). The appeals of steamer sightseeing cruise are seeing the scenic beauty of the area,
learning about the history of the surrounding area, and using its dining/bar service.

The demand for cruising is expected to increase. Only a small part of the North American population has
taken a cruise. Market research shows that there are 24 million potential passengers with sufficient
time and money. In addition, satisfaction level is high for cruise passengers which would result in a high
percentage of repeat cruise goers. Foreign markets should also be seen as big potential markets.
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Europe, Japan, and Latin America, particularly Venezuela and Brazil, are good potential markets.
Overcapacity is the major problem for the industry at present. However, the growing incentive-travel
cruise market, which now accounts for approximately 15% of all births, is expected to help overcome
the effects of overcapacity.

C. Travel by Automobile

The real inventor of the automobile was Carl Benz of Mannheim, Germany. In 1885 to 1886, he
combined the bicycle and the international combustion engine and designed the complete vehicle
engine consisting of the engine, chassis, and transmission. Then came Henry Ford who, in 1908,
produced his Model T car built with an assembly technique for mass production. The price of the Model
T car decreased from $825 in 1908 to $260 in 1925. The automobile industry grew rapidly. However, it
was only after World War Il that the popularity of the automobile increased significantly.

The introduction of the automobile brought about the decline of the train's popularity in most
developed countries. The advent of the automobile spread the benefits of tourism more widely and
enabled people to travel individually or in private smaller groups. The automobile brought about a more
random pattern of travel movements, opened up new destinations, and hastened the development of
elaborate networks of automobile-oriented facilities and services along highways and roads. Example of
new facility types that developed in the United States and Canada after World War Il were the tourist
court and the motor hotel or motel.

Traveling by automobile is now the chief travel mode in North America. Many travel surveys have
shown that automobile trips comprise 90% or more of the pleasure/ personal and business trips of
Canadians and Americans. Surveys show that the automobile is the most popular mode of vacation
travel because it provides travelers greater freedom in the choice of route, destination, and timing of
the journey. Family auto travel is also the most inexpensive and convenient form of travel in the United
States.

The growth of car ownership necessitated road improvements. The United States federal government
participated in the construction and maintenance of roads when it passed an act in 1916, matching
state appropriations for new roads, dollar to dollar. It was climaxed by the interstate act in 1949 which
allowed travelers to move coast to coast and border to border without a traffic light or stop sign. The
first turnpike was built in Pennsylvania in 1940. In 1954, the federal government, in order to encourage
road construction, increased its share of the highway construction to 90%, During the 1930s, the
Germans constructed their network of autobahn. These four-lane divided highways were the world's
first high-speed roads.
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The automobile stimulated tourism by creating attractions along tourist routes made accessible by the
automobile. Examples are homes of historical figures, scenic areas, and historic shrines and
monuments.

Two important aspects of automobile travel are recreational vehicles and car rentals. These two areas
have developed so extensively in North America and elsewhere that they are now significant elements
of tourism. The recreation vehicle or RV was an extension of the preference of North America for the
automobile. Ownership of recreation vehicles has increased since 1979. A survey conducted by the
Research Center of the University of Michigan indicated that approximately 906,000 Canadians and 6
million US households owned one or more recreation vehicles in 1980.

Since World War Il, camping has become popular in North America and elsewhere. The United States
has more than 14,000 public and private parks and commercial campgrounds containing approximately
one million campsites. The increasing popularity of the recreational vehicle led to the establishment of
new campgrounds during the 1970s, including the franchised condominium and timesharing
condominium campgrounds. Many European visitors to Canada and the United States rented these
vehicles for cross-continent trips. Many companies have been formed to provide this service to
overseas pleasure travelers.

Related to the growth of the automobile has been the growth of the car rental market in the 1960s and
1970s. The car rental industry began in 1918 when a Chicago Ford dealer started to rent secondhand
model Ts. In 1924, the company was bought by John D. Hertz, the founder of the Yellow Cab Company.
Avis, the biggest competitor of Hertz, was founded in 1946 by a retired US Air Force officer, Warren E.
Avis. Initially, Avis specialized in airport rental locations. In 1948, Avis started downtown rental
locations. It was during the same period that National Car Rental was organized, By the late 1950s, car
rental companies were found in all major airports.

The car rental business is a worldwide industry. Four companies dominate the US market with 85%
market share. These are Hertz, Avis, Budget, and National. These four companies also represent the "Big
4" within the international markets. The Big 4 rental firms continue to be challenged in the US and
abroad by companies like Alamo, Dollar, Thrifty, and General. Another group of car rental companies
consists of firms that rent used cars at lower prices. Examples are Rent-a-Wreck, Ugly Duckling, and
Rent-a-Dent. The car rental industry over the past 20 years is highly competitive. Individual companies
claim to be the first in various innovations such as rent-it-here, leave-it-here service. Each company,
through its advertising, claims to be the first or the best in providing new service.

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The growth of the industry in the late 1960s and early 1970s can be attributed to the introduction of the
fly/drive concept. It encouraged travelers not to drive their personal car to their destination but to
travel by plane and rent a car on arrival. The fly/ drive concept became very popular in the Florida
market, the birthplace of many new car rental companies. The highest utilization of rental cars takes
place on Mondays to Fridays usually by business travelers which comprise about 75% of the total
business. The demand on weekends comes mainly from pleasure travelers. A high percentage of car
rentals takes place at airport terminals. Thus, it is understandable that the success of this business is
closely related to the airline industry.

Some car rental firms have added cellular car telephones for business travelers. Another amenity is
giving computerized driving instructions to customers. In order to overcome low profits or losses, auto
rental companies have employed a number of different strategies such as higher prices, flat-free
commissions for travel agents, and mileage limitations.

D. Travel by Bus/Motor Coach

Bus travel is the most flexible and economical form of transportation. In the United States, buses were
first used to carry passengers intercity in the early 1900s. There was little intercity travel before the
1920s. In 1928, the Greyhound Company, the largest privately-owned bus company in the world, was
established. By this time, buses traveled from New York to Los Angeles in about five days. With road
improvements before World War Il, cross-country trip time was reduced to 90 hours.

The terms "bus," "coach," and "motor coach" are used interchangeably. In North America and
elsewhere, the bus performs two major roles. The first is to provide a regular schedule of intercity
passenger transportation services. The second is to provide charter and tour services. Intercity service is
indirectly competitive with private auto, rail, and air service. Discount airfares have proven to be a
major competition for intercity bus Service. Thus, intercity bus service has declined, while charter and
tour services have grown. Bus ridership patterns also changed to short-haul distances of 250 miles or
less. Continental Trailways and Greyhound Lines Inc. are the two major intercity companies, with
Greyhound accounting for 60% of the market.

The main reasons for selecting bus travel over other modes of travel are convenience and economy.
Few people choose the bus for business travel. Bus riders tend to be older and have less income. Bus
service is available in practically every town of 1,000 people or more, and a passenger station or ticket
agent for bus service is at hand in each of these communities. Most people do not choose bus travel for
long trips. Surveys have shown that women bus riders outnumber men. Recent advertising indicates
that bus companies are targeting their marketing programs toward the family summer vacation market,
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young couples, older people on summer vacation, and the retired people.

Charter and tour service is the fastest growing segment of the bus or motor coach industry. Several tour
packages are developed by tour brokers who charter buses and arrange all the other components of the
tour, including the itinerary, lodging, sightseeing, admission, tour guides, meals, and the like. These
packages are usually sold through travel agents.

Motor coach tours usually last five to six days and are limited to a particular geographical area. The two
principal markets for charter and tour services are school-age children and senior citizens. Other
markets include international visitors. Gambling tours by motor coach to the casino centers of Las
Vegas, Reno, and Atlantic City are very popular.

The increasing demand for motor coach tours, coupled with the improvement of buses, could result in
the future expansion of the bus charter and tour segment of tourism. The present coaches are wider,
have more leg room, more baggage space, lavatories, climate and noise controls, better lighting, more
sophisticated public address system, and panoramic view windows.

E. Travel by Air

The airplane had a revolutionary impact on tourism from World War Il onward. The history of air
transportation can be divided into three parts—Pre-World War Il, World War Il, and Post-World War Il.
On December 17, 1903, the Wright Brothers took a flight on a beach in North Carolina which lasted 12
seconds with a distance of 120 feet. In 1927, the air industry developed regularly scheduled passenger
trips between Boston and New York. Other governments helped this growth in the 1920s by subsidizing
air companies.

In the United States, almost all early airlines started by carrying mail for the post office. One of the first
was Varney which began in April 1926 and later became United Airlines, Western Airlines began its
passenger service on April 17, 1926 when it carried a woman passenger along with the mail. Pan
American Airways had the first international flight in 1927 when it carried mail from Key West, Florida
to Havana, Cuba.

World War Il influenced the development of the airline industry. It helped further improve airplanes by
accelerating technological research to improve their size and speed and by using the knowledge gained
by thousands of servicemen who became familiar with planes and air travel.

The tremendous time-saving aspects of air travel and its cost effectiveness, when compared to other
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modes of transportation such as the train, ship, and automobile, aided the growth of the airline industry
during the post-World War I l years. In the late 1950s and early 1960s, commercial jet aircrafts were
introduced, increasing the speed of travel and creating smoother flights and greater seating capacity for
passengers. The commercial airline industry improved further in the 1970s with the introduction of
wide-bodied aircrafts such as the Doughlas DC-10, Boeing 747, the Lockheed Tristar 1011, and the
European Aerobus. These planes further increased passenger comfort as well as seating and freight
capacity.

As the airline industry grew, the travel industry depended on it more, Cruise lines, rental car companies,
airport hotels, and ground transportation operators depended on the airline industry to generate the
bulk of the business. Executive business travel and international tourism are dependent on it. The
impetus of air travel to people traveling on business is its time-saving advantage; for the pleasure
traveler, it is the affordable price that has the greatest impact.

The 1980s had witnessed still further improvements in aircraft technology with the introduction of the
DC-9-80 and Boeing 757 and 767 designed for fuel-efficient operation offering approximately 30% lower
fuel consumption for passenger than the older models. The introduction of the longer-range Boeing
747-400 that has a range of 8,000 miles and seating capacity of 418 will change travel patterns. Almost
all jetliners were built by Boeing, with headquarters in Seattle, Washington; McDonnell Douglas in Long
Beach, California; Lockheed in Burbank, California; and the A-300, the Airbus, built by a consortium of
European countries and assembled in Toulouse, France. The three American Companies produced
about 75% of the world's commercial jet planes. Boeing was the dominant company in jetliner business
with sales between $6 to $7 billion a year.

The Boeing 747 jumbo jet is a long-haul plane. The tail stands 63 feet and 5 inches tall, about as high as
a five-story 'building. It weighs 775,000 pounds and cruises at 625 miles per hour, with some models
having a range of 6,210 miles without refueling. It is distinguished by the hump on the nose that houses
the flight crew and an upper lounge for the first-class passengers. Each 747 costs approximately $90
million, depending on spare parts and extras ordered. It is safer and gives a smoother ride because its
huge size lessens its reaction to air turbulence. It carries cargo in its belly.

Food service on the large planes is speeded by the use of modules, similar to cargo modules. These are
snapped into place on a lower level in the aircraft. The galley modules contain prepared foods that are
heated in flight by convection and microwave ovens located near the module storage area. Elevators
raise the food to the passenger deck when it is ready.

The factors associated with the recent boom in air travel include the world economy, rising standard of
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 living, and the quality of air service. Growth in the airlines has been at an annual rate of 5% since 1959.
The industrial nations, which account for the majority of air travel, had a growth rate of 7% from 1960
to 1970. The standard of living in the world increased by 5% and the per capita income rose to 3%. The
per capita constant dollar gross domestic product (GDP) of industrial countries increased faster than the
GDP of developing countries. While the economy of the United States grew at an average rate of 3.3%
from 1960 to 1970, the GDP of other major industrial nations grew at a faster rate. The GDP of Japan
rose to 10% per year for the past two decades. In addition, airfares throughout the world decreased to
9% between 1960 to 1970. The average airfare in constant dollars decreased at an average of 26% a
year from 1960 to 1970 and continues to decrease. Because of these factors, air travel is no longer
considered a luxury but a necessity.

The introduction of charter services further pushed down the prices of airfares. Charter services are an
alternative to regularly scheduled services. They offer lower rates for two reasons. First, they do not
have the large personnel investment required an airline with regularly scheduled flights. Second, by
flying with a full load of passengers, the charter companies are able to fly their planes for less cost per
passenger. The growth of charter flights was impressive. Freddie Laker, a British entrepreneur,
introduced a London-New York route, selling it for one-half the normal airfare. Other countries and
airlines followed with economy fares to and from European cities.

Since 1950, incomes have increased rapidly while airfares have declined. This made air travel more
attractive than ever. While the price of an airline ticket decreased, the quality of service with regard to
speed, size, and comfort improved.

IV. Airline Regulation International tourism requires a system of international air transportation. This system requires
negotiations among nations and carriers in the form of bilateral agreements. Overflight privileges must
be obtained from all nations over which an airline will cross during international flights. Airlines are or
may be assessed overnight charges for the privilege of flying over other nations including countries
which do not have formal diplomatic relations with each other like Cuba and the United States. Lending
rights, fuel purchase agreements, maintenance provisions, and other considerations require bilateral
negotiation.

Governments throughout the world have agreed that a complete free market for international air travel
is not possible. The original idea for a worldwide system of airline regulation took place in the Chicago
Convention of 1944 and the Bermuda Agreement of 1946.

The Chicago Convention marked the beginning of continuous dialogue about various freedoms of the air

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but was not successful in establishing a multilateral system of commercial aviation rights. The Bermuda
Agreement established the first worldwide model for future bilateral agreements regarding the exercise
of the eight freedoms of the air:

1. First Freedom: The right of an airline to overfly one country to get to another;
2. Second Freedom: The right of an airline to land in another country for a technical
stopover (fuel, maintenance, etc.) but does not pick up or drop off traffic;
3. Third Freedom: The right of an airline, registered in country X, to drop off traffic from
country X to country Y;
4. Fourth Freedom: The right of an airline, registered in country X, to carry traffic back to
country X from country Y;
5. Fifth Freedom: The right of an airline, registered in country X, to collect traffic in country
Y and fly on to country Z, so long as the flight either originates or terminates in country
X;
6. Sixth Freedom: The right of an airline, registered in country X, to carry traffic to a
gateway—a point in country X—and then abroad. The traffic has neither its origin nor
ultimate destination in country X;
7. Seventh Freedom: The right of an airline, registered in country X, to operate entirely
outside of country X in carrying traffic between two other countries; and
8. Eight Freedom: The right of an airline, registered in country X, to carry traffic between
any two points in the same foreign country; also known as cabotage.

Only the first two technical freedoms have been widely accepted. The third, fourth, fifth, and sixth
freedoms are still subject to bilateral bargaining. The seventh and eighth freedoms are usually allowed
only in special circumstances.

The bilateral air agreement concepts which resulted from these meetings meant that airline service
could not be offered between a nation of origin and one of destination unless there was a specific
agreement between the two nations regarding the details of the service. Bilateral agreements were
established to provide for the orderly development of the international air transportation industry. The
need for bilateral agreements was intensified because small nations felt that they should have their
own national airline or flag carrier. A large number of flag carriers are government-owned enterprises.
Some are subsidized by the government because of national pride, fear of dependency on foreign
carriers, as a means of supporting economic development, and to ensure air freight for export products.
Airlines of the United States and other countries are owned and operated by private enterprises and
must operate for a profit.

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 The use of the bilateral air agreements was not enough to meet the need for cooperation between
international airlines with different profit orientation. After the Chicago Conference, several scheduled
carriers met in Havana and the International Air Transport Association (IATA) was formed to ensure
cooperation among international carriers. IATA is a democratic organization whose membership is open
to any member of the United Nations. It is supported by dues from 140 active and associate member
airlines. It links together with many non-IATA carriers throughout the world in Multinational Interline
Traffic Agreement. This agreement allows passengers to use a single ticket and travel by several carriers
around the world, it also makes the movement of air freight worldwide easier.

The primary purpose of IATA is to establish a system of international rates and fares. Through IATA, the
airlines enter into agreements concerning rates, conditions of services, and routes to be given to each
airline. The agreements are subject to the approval of their respective governments.

Chapter Activities 1. Conduct a study on the importance of safety and security in all forms of travel.
2. As the vice president for marketing of an airline, what programs would you undertake
to even the peaks and valleys in demand?
3. Research on the significant appeals of cruising.

REFERENCES Romeo D. Lim, Micro Perspective of Tourism and Hospitality, Mindshapers Company, Inc., 2019

Micro Perspective of Tourism and Hospitality, 3G E-Learning LLC, 2019

Zenaida Lansangan-Cruz, Micro Perspective of Tourism and Hospitality, REX Bookstore, 2019

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