I remember my wife was on a charter flight with 3 initial letters many years ago (in Europe). And when I tried to look up the arrival, many systems could not handle the flight number.

Now slightly unsure whether I did not dream up the whole episode, I did a web search and found https://travel.stackexchange.com/questions/157429/what-is-th...

So IATA seems to have formally introduced that in 1994. (Whether they have abandoned it again later I don't know.) So big airlines could just get a additional 3rd letter(s). The first 2 would not have to change, which makes it easier for humans.