By Reginald E. G. Davies, 2011 (461 p.)
This is a comprehensive book that provides the history of the airline industry, from its beginnings early in the 20th Century through the modern era of transcontinental airliners and deregulation. It provides detailed and thorough stories of hundreds of airlines around the globe, including their founders, geo-political contexts, business strategies, and the aircraft they flew. Packed with pictures and maps, it also serves as a precious reference guide to an important industry that continues to make the world smaller. At 461 pages, the hard copy sells on Amazon for $51.88, while the Kindle version goes for $39.99, but for anyone who enjoys reading about airlines and their airplanes, it is definitely worth the price. In the spirit of full disclosure, my opinion may be biased, for I am an aerospace engineer by training, worked as an airline securities analyst for nearly a decade, and several of my close family members spent most of their adult life in the industry, including my father, two of my cousins, and my brother, who flies the 787 Dreamliner for American Airlines.
The author, R.E.G Davies, was born in 1921 and died shortly after the publication of this seminal book, aged 90. He had a long career in the aircraft manufacturing business, where he worked for BEA, Bristol Aerospace, de Havilland, and Douglas Aircraft. He published many other books on the industry during his long career, including illustrated issues on Pan Am (1987), Delta (1991), TransBrasil (1997), Charles Lindbergh (1997), and Howard Hughes (2006). This website (link) profiles Davies and several of his other works. Needless to say, he is an authority on the subject.
Reginald Edward George Davies
What I liked most about the book was how it provides the context for one to draw critical inferences about how the industry developed and where it may be headed. A major insight was that the deregulation that swept the globe in the late 1970s had the opposite impact of what was intended. Instead of creating greater competition and lower fares, it led to many failures, massive consolidation, and, ultimately, higher fares. While government backing and equipment selection were crucial determinants of survival pre-deregulation, it wasn’t until the mushrooming of the low-cost-carrier (LCC) model that companies like Southwest in the US, Ryanair and EasyJet in Europe, and Air Asia in the East transformed the industry by making air travel more accessible. “For almost two decades,” Davies writes, “the annual increase in passenger-miles in the United States had averaged about 15%, which meant that the total volume doubled every five years. When the Jet Age began, the figure was 40 billion. In 1970 it was 170 billion. The numbers for the first-class market hardly changed, but for all other classes of travel, in sheer numbers alone, the airline industry had undergone a metamorphosis. Air travel for the masses had arrived.” The success of the new model was a boon for the jetliner and engine manufacturers, most notably Boeing, Airbus, General Electric, Rolls Royce, and Pratt & Whitney. While thousands of Boeing’s 7-series and Airbus 3-series wide body jets were sold, the Boeing 737 and Airbus 320 narrow bodies sold in the tens of thousands, making them by far the most ubiquitous aircraft on the planet.
Another interesting insight is how many of the big airline collapses happened as a result of hubris and over-expansion. Even among the low cost carriers, demise was a result of loss of focus. Conversely, the big success stories were led my managements who stuck to their knitting. For example, both Southwest and Ryanair have focused on secondary airports and a fanatical devotion to keeping costs low, not only through frugality, but also simplicity. Sticking to strategies like one aircraft type, one class seating, no frills service, and point-to-point flying, was crucial to these airlines’ success and dominance over the decades. When we were happy shareholders of Ryanair during my days at the Dreyfus Corporation, circa 2000, I was delighted to discover during a visit to their Dublin headquarter that CEO Michael O’Leary’s office had cement flooring. Now that’s the kind of frugality one doesn’t see too often!
A final insight is that one of the biggest beneficiaries of the rapid growth in commercial aircraft deliveries that occurred post-deregulation is the aftermarket parts industry. Heico Corp. (HEI), which is one of the Outstanding Companies in our portfolio, is a leader in this attractive end market. Heico makes FAA-approved generic aircraft parts and sells them to practically every airline in the world – over one thousand, carrying more than five billion passengers annually. With Asia – and China in particular – still behind but growing rapidly, and with the average age of aircraft in service surpassing ten years, the need for aftermarket parts should continue to grow briskly for decades to come. Heico is by far the largest non-OEM supplier, with over twenty thousand parts in its catalog, but they also provide distribution and niche repair services as well as specialty parts for the OEMs themselves. The stock has been compounding in the 20’s for decades and we see little reason why this should change. Incidentally, on Wednesday, April 19, 2023, at 10:00 NY-time, we will be conducting a one-hour webinar on Heico, so if you have an interest in learning more about this amazing company and the industries they serve, here is the registration link. An expiring link to the replay will be available to those who request, but I’ll stop here on this timely commercial.
In closing, this was a worthwhile book that I would recommend to not only those who are fascinated by airlines and airplanes, but also world history and business strategy. While the book was not necessarily easy to read, I feel smarter about the aerospace industry and the important role it plays in shaping world history.
Part One: Piston-Engine Prelude
Chapter 1: Air Transport Infancy
During the first few years after the epoch-making flight of the Wright brothers on 17 December 1903, little thought was given to the idea that heavier-than-air flying machines (airplanes, or aeroplanes) could earn an honest living by carrying people or goods, for peaceful purposes or for war, at any time during the then foreseeable future.
Starting with the LZ 10 Schwaben on 15 July 1911, four Zeppelin airships flew within Germany until the outbreak of the Great War of 1914–18. They carried 34,028 passengers (of whom 10,179 paid for the privilege) on 1,588 flights, either on local sight-seeing jaunts or sometimes between German cities.
The question of “which was the first airline?” has to be qualified by precise definitions. Omitting the qualification of a sustained operation, i.e., more than a few months’ service duration, pride of place must go to the St. Petersburg-Tampa Airboat Line, founded by Percy Fansler in St. Petersburg, Florida, toward the end of 1913.
In Russia, a far-sighted designer, Igor Sikorsky, with the cooperation of Mikhail Shidlovsky, chairman of the Russo-Baltic Wagon Company at St. Petersburg, built the world’s first four-engined aircraft.
Then, on 30 June 1914, with a crew of three, Igor flew from St. Petersburg to Kiev, a distance of 660 miles, with one stop, arriving in triumph in the afternoon of the next day.
A month after the flight to Kiev, the Great War broke out.
By a remarkable coincidence, the first cautious steps toward the foundation of a great new industry were made in two cities of the same name: the first regularly scheduled airline in St. Petersburg, Florida, and the first successful load-carrying airplane, as a transport vehicle, in St. Petersburg, Russia.
Chapter 2: Airline Adolescence
By the mid-1920s, air transport in the United States was effectively non-existent, except for the Post Office air mail system, which did not carry people.
With the realization that air transport could lead to big business, after the Kelly Act and especially after the sudden enthusiasm for and promotion of aviation by Charles Lindbergh’s dramatic solo flight across the Atlantic Ocean in 1927, airlines converged into amalgamations and affiliations, and airline stocks sold at a premium. The resultant corporations survived the Wall Street Crash of 1929, and the largest ones became a trio of powerul transcontinental airline systems. Their financial backing and consequent stature was considerable, and their combined strength enabled the United States to overhaul other countries. By 1929, U.S. airline traffic went from strength to strength to dominate the world.
The transcontinental trio that emerged from all the infighting consisted of: (1) United Air Lines, formed by the amalgamation of four of the contract mail carriers. Backed by the Boeing Company, its coast-to-coast route linked San Francisco directly with New York via Chicago and intermediate points, using, predictably, Boeing aircraft types. (2) American Airways, the merger, under the control of the Aviation Corporation of America (AVCO), of three airline groups, each of which had been formed by the merger of, or as subdivisions of, several smaller mail contract carriers. Aircraft used were of many different types, from many manufacturers. (3) Transcontinental and Western Air (T.W.A.) was the result of the merger of Western Air Express and Transcontinental Air Transport (T.A.T.) because Walter Brown, the Postmaster General, would not approve mail contracts to two airlines competing on the same route.
Boeing had produced what aviation historians agree was the first “modern” airliner. The Boeing 247 incorporated several refinements. It had only two engines, which, however, produced the same power as the Ford Tri-Motor’s three, and eliminated the excessive vibration and noise in the cabin caused by the engine in the nose of the fuselage. The engines were mounted into, rather than attached to the wing, and this feature alone added about 25 mph to the speed because the landing gear could be retracted, reducing the airflow drag.
the Boeing 247 was about 60% faster than the Ford, which was quickly seen to be obsolescent.
The winner of this special competition was Douglas Aircraft Company, with its DC-1, a prototype that quickly went into production as the Douglas DC-2. It had 14 seats, compared to the 247’s 10, flew just as fast, and its cabin was far more comfortable, mainly because the wing spars did not go through it. If the 247 was the first modern transport airplane, the DC-2, with its comfortable cabin, was the first that could justify the use of the word airliner.
While the European nations were linking their empires with their respective homelands, the United States had adopted—or had been cajoled into the acceptance of—a “chosen instrument” to develop an overseas network. The instrument was Pan American Airways, an airline that had been formed and expanded, with remarkable efficiency and élan, by Juan Trippe, entrepreneur extraordinary. It had been founded in 1927 and made its first scheduled mail flight from Key West, Florida, to Havana, a 90-mile hop, on 28 October 1928.
For the west coast (Pacific) route, an agreement was made with the W.R. Grace shipping and trading company to form the Pan American-Grace Corporation (PANAGRA), and the line reached Buenos Aires, the Argentine capital then known as the “Paris of South America,” on 12 October 1929. Meanwhile, however, a rival enterprise, the New York, Rio and Buenos Aires Line (NYRBA) had pioneered the east coast (Atlantic) route, also to Buenos Aires, and with superior equipment.
In the late 1920s, Pan American Airways encircled the Carribbean Sea with flying boats, because landing strips in Central America and in the islands were inadequate. The initial aircraft were Sikorsky S-38s,
With the Sikorsky S-42, Pan American Airways made the world’s first trans-ocean airline survey flight in 1935.
One of the most famous flights in air transport history: Pan American’s Martin 130 flying boat, the China Clipper, opened Trans-Pacific air mail service in 1935, and passenger service in 1936.
Germany had had to surrender all its colonies, and Deutsche Luft Hansa (D.L.H.) had been handicapped in its route development by the political and social effects of the aftermath of the First World War. Its technical prowess was unmatched.
One of the first countries in the world to establish scheduled air services was Australia. The reason for its success was simply a matter of geography. The vast emptiness of the “outback” precluded surface transport, which was near to being non-existent.
Surprisingly, the colonial nations did nothing to develop air transport in China, except, as early as 1920, two British companies made a few attempts, but were frustrated by the belligerent activities of the many local war-lords.
Frustrated by bureaucratic procrastination, Curtiss had had to set up China Airways Federal and started service on 21 October 1929 up the Yangste River as far as Hankow, but had to terminate this on 15 December. Finally, a compromise was devised to satisfy all parties. A new C.N.A.C. was incorporated on 8 July 1930 and it proceeded to develop air routes between the main cities of China.
The French lost the political game in Brazil, when the German Condor Syndikat started some experimental flights, called the Linha da Lagôa, on 3 February 1927, in the southernmost state, Rio Grande do Sul, in which much of the population had German roots, and many were German-speaking. This line developed to become the Syndicato Condor, which began operations on 1 July 1927, and soon expanded northward. Additionally, German immigrant interests founded Viação Aérea Rio-Grandense (VARIG), which took over the Linha route and concentrated on local services within the southern State, starting on 22 June of the same year. These airlines used Junkers or Dornier equipment.
Promoted aggressively by Ralph O’Neill, and obliged to set up a Brazilian subsidiary, NYRBA got under way on 1 August 1929, with a shuttle service across the River Plate, and finally completed its route to Miami (not New York) on 25 February 1930. O’Neill introduced the fine Consolidated Commodore flying boats, but was outmanuevered by the wily Juan Trippe of Pan American Airways, which absorbed NYRBA on 15 September, and changed the name to Panair do Brasil on 21 November of the same year.
Within Brazil, the only other airline of consequence before the Second World War was Viaçâo Aérea São Paulo (VASP), founded by the City, the State, and the Bank of the rapidly growing metropolis of São Paulo. It too used German aircraft, introducing the ubiquitous Junkers-Ju 52/3m to Brazilian air travelers.
Chapter 3 Wartime Hiatus – And Opportunity
On 3 September 1939, when the world was poised to consolidate an inter-connecting airline system, the nations divided themselves into warring factions, extending far beyond the confines of Europe.
When the Second World War broke out in Europe, Pan American had just begun scheduled services across the North Atlantic, and it continued to expand during the next two years.
A group of the largest U.S. airlines had sponsored the design of a large airliner as early as 1936. The result was the Douglas DC-4E, which United Air Lines put into experimental service, briefly, on 1 June 1939.
On 10–11 July 1943, the Australian QANTAS Empire Airways inaugurated the world’s longest nonstop air route, one that would keep that record for many years.
All routes beyond the Mediterranean and those to the west of the western frontier of Germany were immediately suspended in 1939.
During most of the Second World War, Deutsche Lufthansa could carry important passengers to northern Norway and to Portugal and the Mediterranean.
Chapter 4: Post-War Recovery
In the first full post-war year, passenger traffic doubled, from six million boardings in 1945 to 12 million in 1946. The five leading trunk airlines were each boarding more than a million each every year. American Airlines, United Air Lines, and T.W.A. controlled the transcontinental skies; Eastern Air Lines dominated the area east of the Mississippi; and Capital Airlines, which emerged in the northeast, was a substantial competitor. Meanwhile, under Juan Trippe’s brillant leadership, Pan American Airways dominated intercontinental air routes.
In Brazil, for example, most of the country, larger than the U.S. 48 States, with inadequate railroads, still awaited the benefits of air transport. To service the small communities throughout the land, where airfields were usually short dirt strips, the veteran DC- 3s were welcome. Many airlines were formed by inventive entrepreneurs to supplement the established VARIG, Cruzeiro do Sul, and VASP inter- city networks. Redes Estaduais Aéreas, Ltda. (REAL), in fact, vigorously promoted by Linneu Gomez, expanded everywhere until the construction of a connecting road, and before its demise and acquisition by VARIG, its number of boarding passengers, often to fly only a few miles, climbed to rank tenth in the world.
Chapter 5: Worldwide Expansion
The designs were as good as, if not better than, the Americans’ but the mass production capability was inadequate. Even worse were the shortcomings in product support.
Except for the Atlantic, many of the British routes in the post- war recovery period were still flown by flying boats.
Until the latter 1960s, almost the entire continent of Africa was under colonial rule. Only Liberia, which had been founded with the support and instigation of the United States (but was commercially dependent on it because of its rubber industry), and Ethiopia, which had suffered Italian colonial rule for a few pre- war years, had enjoyed political independence since the “Struggle for Africa” in the latter years of the 18th century.
With the exception of South Africa, a thriving British dominion, rich in minerals, including gold and diamonds, Africa had never had an indigenous airline. When the Second World War ended, the entire continent, except, as previously noted, Liberia and Ethiopia, was still under European colonial rule. In many ways, ranked among all the continents, Africa had been something of a poor relation, with the Europeans and their airlines interested only in serving their overseas administrations, businesses, affluent safari hunters, and armed forces. Except for Johannesburg, not a single city south of the Mediterranean hinterland could be regarded as a viable destination in its own right. But a new infrastructure had been established, partly because of wartime necessity. The tide of nationalism among the host of small embryo countries was to take a few years to grow in strength and momentum, but the need for efficient communications and travel for people, mail, and cargo was, during the 1950s, growing at an alarming rate. Railroad construction had lost its momentum. Promising lines drawn hopefully on the map remained broken. The ambitious Cape- to- Cairo railway was never completed. Road construction was sporadic and inadequate. The continent was thus poised for further airline development on a grand scale; and in May 1952, this is what happened, in a manner that was to be one of the most far- reaching single events in the history of air transport.
Part Two: The First Jet Age
Chapter 6: The First Jets and Turboprops
The jet engines did not use gasoline. Early experiments had quickly shown that this petroleum product, highly refined with high octane- ratings, had improved the performance of piston engines. But this was dangerous, even lethal, if used as the fuel for jet engines, which were subjected to strong compressed air pressure and ignition. The engines simply blew up. The solution was to use kerosene, a fuel that, though refined from crude oil, like gasoline, was less volatile, and more managable for the apparatus of jet engine design. Even so, the fuel consumption rates were high.
The all- important T.B.O. (Time Between Overhaul) was the criterion of technical excellence by which all engines were judged, as this was a major item of maintenance cost, one that brought the aircraft back into the hangars for days at a time, costing precious revenue.
One of the unseen yet revolutionary benefits the introduction of jet engine propulsion bestowed upon the commercial airline industry was service life that reached 12, 15, 20 years or more.
The supreme accolade came on 20 October 1952, when the great Pan American Airways, symbol of the United States’ technical supremacy across the world’s airways, placed an order for the Comet 3, a developed version of the Comet, able to cross the Atlantic Ocean. Tragedy was to come later; but for a few glorious months, de Havilland had the world at its feet.
A new phrase suddenly received much attention in the language of aeronautical terminology: metal fatigue. The phenomenon was already known, but it had hitherto never been a problem, as no case had ever been recorded of an airliner’s structure being affected by it. But the Comet was different.
Chapter 7: Turboprop Ascendancy
No doubt Canada’s commonwealth affiliation affected the decision in a small way, but the airplane sold itself, especially when it was able to comply with the strict regulations imposed on all airliners by the U.S. Federal Aviation Administration.
By mid- 1957, three- quarters of Capital’s seat- miles were flown by Viscounts, but Capital had over- reached itself. Perhaps it misjudged the traffic projections and underestimated the ability of its competitors to remain strong. More important, under the regulatory Civil Aeronautics Board authority, all new route extensions had to be argued at great length, with the incumbent airlines resisting all attempts by newcomers to penetrate their territories. Capital desperately needed longer routes. The lucrative markets to Florida were delayed until September 1958. Capital’s finances took a plunge. It could not make its progress payments to Vickers, which foreclosed on the debt. On 1 June 1961, the airline was purchased by United, which continued to fly the Viscounts for several years after the takeover.
American Airlines, under the leadership of C.R. Smith, had recognized the threat from Capital Airlines’s Viscounts on many of its prestige routes, especially New York- Chicago. It outlined the specification for a four- engined type that would outclass the British turboprop. The request was met by Lockheed, famous for its Constellations, with the four- engined L- 188 Electra, which answered Smith’s requirements. It was twice as big as the Viscount, and its Allison 501 engines made it faster— 400 mph instead of 300 mph. It was more than adequate for all the main inter- city routes of the United States, except for the transcontinental nonstops, which were the province of the Douglas and Boeing jets.
On 3 February 1959, an American Electra crashed at New York’s LaGuardia Airport, but this drew no special attention. There were soon two more crashes, by Braniff on 28 September and by Northwest on 17 March 1960. Both aircraft had broken up in flight, and the F.A.A. stepped in. There was much understandable pressure to ground the Electras, but F.A.A.’ s “Pete” Quesada surprisingly did not do so. Instead, with the problem revealed as a cyclic vibration caused by the long shaft between engine and propeller at the high speed cruise level, services were permitted to continue at a speed reduced from 400 to 316 then to 295 mph.
the Electra sales were subsequently sluggish. The Australian QANTAS bought it for the Tasman Sea route to New Zealand, and the latter’s Tasman Empire Air Lines (TEAL) had to follow suit. In Europe, only the Dutch K.L.M. joined the customer list, and in Latin America, it found favor with only the Brazilian VARIG.
Only 33 Tupolev Tu- 114s were built, but it made its mark. It was larger than the contemporary jets, with a gross weight of 170 tons, compared to the Boeing 707- 300’ s 168 tons; and for more than a decade, until the advent of the Boeing 747, it was the largest airliner in the world.
Chapter 8: The First Big Jets
The first of the famous line, the Series 100, made its first flight on 15 July 1954— while the de Havilland team was working day and night to revive the now endangered Comet— and on 13 October 1955, Boeing made its breakthrough into the commercial airline market, hitherto dominated by Douglas, Lockheed, Convair, and Martin. Previously, for different reasons, it had failed. The 1933 Boeing 247, the 1939 Boeing 314 flying boat, the post- war Boeing 377 Stratocruiser were all good airplanes, but they never sold in substantial numbers. With the Boeing 707, this was to change dramatically and permanently.
The Boeing 707- 100 made its first flight on 20 December 1957 and delivered the first one to Pan American on 15 August 1958. The airline had a dozen aircraft in service before the first Douglas DC- 8 was delivered, on 7 February 1961. By this time, Pan Am’s Boeing 707s had girdled the globe, and Trippe reduced the DC- 8 order to 19.
the Jet Age began in earnest when Pan American’s 707 started to fly every day across the Atlantic in October 1958 and the whole world rushed to jump on to the Big Jet band wagon.
By the year 2000, U.S. domestic travel reached almost saturation levels; everyone traveled by air, with long- distance railroads only a memory.
By the end of the year, eight U.S. domestic airlines were operating jets. The fourth member of the Big Four, Eastern Air Lines, had delayed its jet order, uncertain as to the choice between jet and turboprop, but finally entered the field on 24 January 1960, at long last to be on a technical par with National on the key New York- Miami route.
Before the Comet 4 and Boeing 707s made their dramatic entry on the scene in October 1958, a trans- Atlantic air journey between New York and London, Paris, or Frankfurt, even nonstop in a Lockheed Super Constallation or DC- 7C, could take between 12 or 14 hours, depending on the winds, invariably westerlies.
The introduction of jet airliners revolutionized the entire basis of trans- Atlantic service. Average speeds in excess of 550 mph permitted an eastbound journey in a comfortable seven hours, and westbound in about eight— because of the prevailing winds.
Stimulated by the introduction of Economy Fares in April 1959, North Atlantic air traffic grew by leaps and bounds. During the five years following the introduction of the jets, passenger numbers doubled, and then quadrupled in a decade.
All the airline countries of the world cheerfully laid down concrete to extend and to strengthen runways to accept the Boeing 707s and the DC- 8s.
The proliferation of jet airline services throughout the world was phenomenal. Within two or three years of the historic trans- Atlantic inaugurations of October 1958, a dozen airlines were crossing Asia and a dozen to South Africa. Almost as many were crossing the South Atlantic, eight or nine across the Pacific, the Central Atlantic, and even the North Pole.
The Boeing name became identified with the Jet Age, superseding Douglas, which ruled supreme since the DC- 2 of 1934. And apart from any technical considerations, such was its imprint on society as a whole that Boeing Boeing was a box- office success for theater- goers during the 1960s. The Seattle manufacturer became a household word, epitomizing the transport revolution that became known universally as “the Jet Age.”
The ascendancy of the turboprop generation to front- line flagship status lasted for barely a decade. By the 1960s, any airliner that was propeller- driven was regarded as old fashioned.
Chapter 9: The Short-Haul Jets
On 12 December 1959 the Brazilian airline Viação Aérea Rio- Grandense (VARIG), only the third to open service with the short- haul jet, took a gamble while waiting for delivery of its Boeing 707s. It linked its home city, Porto Alegre, with New York, with stops at São Paulo, Rio de Janeiro, Port of Spain, and Nassau, and on 20 January 1960 it consolidated the service to include Brazil’s new capital, Brasilia.
Several other airlines had followed Capital to buy the new turboprop, but there was no rush to buy Caravelles. Trans World Airlines (T.W.A.) did order 20 Mark 10A versions on 7 September 1961, but the order was cancelled in May 1962. Pressure to buy American products was strong.
Germany’s reentry into the commercial airline field took a little longer. A whole decade went by while the scars of war and the bitterness of Europe simmered down toward the country that had bred Nazi- ism. Not until 1 April 1955 did the once- familiar flying crane insignia (oldest in the airline industry, dating back to 1919) reappear in European skies. Three years later, after Convairliners, the new Lufthansa introduced the Viscount (the larger V- 800 series); in 1960, after Constellations, it introduced its first long- range jet, the Rolls- Royce- engined Boeing 707- 430. Unlike Alitalia, it deferred interest in short- range jets until 12 April 1964, when the versatile Boeing 727 went into service.
In spite of the devastating experience of the Comet 1 disasters, the lessons had been learned and the later Comet 4 Series performed creditably, in spite of being overwhelmed by the larger and more efficient Boeing 707s and Douglas DC- 8s. Rolls- Royce was still in the forefront of jet engine technology.
Eastern Air Lines put the first Boeing 727 into service on the Philadelphia- Washington- Miami service on 1 February 1964. This was followed five days later by United Air Lines, and by American Airlines on 12 April. This tri- jet was thus in service with the three largest airlines in the world even before the Trident opened service with British European Airways. Within a year, 727s were to be seen at every major airport in the United States, and the overseas sales quickly built up. Lufthansa, rapidly finding its feet again as it reestablished its preeminent European status, started 727 service on 12 April 1964.
The timing for Boeing could not have been better; during the 1960s, as Japan began to assert itself as a major industrial power, air traffic growth reached a phenomenal 20% annual growth level for several years, and often exceeded it.
During the 1960s and 1970s, the world’s average air traffic growth rate was sustained at 15%, only declining to lower levels in the 1980s. This meant a doubling of airline traffic every five years, and the world demand for new airliners was almost insatiable.
The Boeing 727 was a superb airliner, versatile in range and able to turn in a profit for its operators even at comparatively short ranges, for example, on Eastern Air Lines’s Air- Shuttle in the dense Boston- New York- Washington air corridor. Ultimately, 1,932 aircraft were delivered, almost exactly twice as many as the previously creditable record set by the 707/ 720. The Seattle manufacturer was on the crest of a wave.
De Havilland Trident sales were eclipsed by the Boeing 727, but it sold well in China, where trading with the United States was limited by the communist government. This one is at Nanning.
Although Soviet manufacturing and design technology was donated to the Chinese during the period of Sino- Soviet friendship, operational efficiency was not.
After a flirtation with Sud Aviation, with the idea of building the Caravelle under license, Douglas revived an almost- discarded project and, in April 1963, announced a twin jet, with two Pratt & Whitney JT8D engines.
In the case of the DC- 9, an additional factor was the emphasis on easy maintenance, with the ground engineer’s needs recognized to be as important as the pilot’s.
Chapter 10: Proliferation
In 1960, 13 of the top 25 airlines of the world were in North America, and these included the leading five giants: the so- called Big Four U.S. domestic companies (United, American, T.W.A., and Eastern) and Pan American, which still dominated the world’s intercontinental air routes. Nine airlines were in Europe, led by Air France, Britain’s B.O.A.C. and the Dutch K.L.M. Two others, Germany’s Lufthansa and Italy’s Alitalia, were still recovering from the effects of the Second World War but were systematically rebuilding. Australia’s QANTAS ranked 22nd, and its domestic airline Trans- Australia Airlines (T.A.A.) was 23rd. From the other continents, only Japan Air Lines (J.A.L.) appeared, ranking 24th, arising phoenix- like from the ashes of a nation severely stricken by the war. In South America, Brazil’s VARIG had dropped off the top- 25 list, and Africa’s airlines were mainly embryonic flagships of still- fragmented emerging colonies not yet able to sustain airlines of international standards.
The British Dan- Air bought every de Havilland Comet it could locate, correctly calculating that the higher direct operating costs could be offset by very low second- hand purchase prices.
Also, as in Europe, the restrictions were government controlled and fully supported by the incumbent airlines, through their lobbying group, the Air Transport Association (A.T.A.).
As Ethiopia entered the 1970s, its politics moved well to the left, and in 1971, Emperor Haile Selassie made a state visit to China. Late in that year, the first Ethiopian national was appointed general manager, and the T.W.A. management contract was terminated, altogether amicably. The airline was now completely on its own. But it faced a dramatic change in the political structure of the country. During the early 1970s, Ethiopia ceased to be a kingdom. A Marxist revolutionary party, under Col. Mengistu Haile Mariam, took over the government, and in 1974, the Emperor Haile Selassie was dethroned.
Then the Six Day War with Israel, from 5 to 10 June 1967, affected U.A.A.’ s traffic so much that it took three years to recover from the decline. In 1971, following the renaming of the country back to Egypt and the abandonment of Nasser’s dream of uniting the Arab world, U.A.A.’ s name was also abandoned; it became Egyptair. Abdel Nasser died in 1970 and was succeeded by Anwar Sadat.
Chapter 11: Emergence of the Middle East
Unlike most passengers, freight traffic does not make round trips.
Outside the British and French orbit, and until the mid- and late 1920s, most of the Arabian peninsula— as big as most of western Europe, and one- third of the size of the United States— had been almost entirely desert, much of it completely barren. The acquisitive colonial powers passed it by, as being of no apparent commercial, political, or military value. Then came the discovery of oil. Until the Second World War, Middle Eastern oil production had been mainly in Persia and, to a lesser extent, in Iraq and Bahrain. But in the late 1930s, further exploratory drilling revealed considerable resources throughout the Gulf and especially in Saudi Arabia which, by this time, had spread its sovereignty across most of the peninsula. The main beneficary of the new wells, aside from local territorial claims, was the United States. Through the giant Arabian American Oil Company (ARAMCO), it effectively exerted an economic colonialism through its leadership of the Arabian oil industry, which was itself destined to dominate the world’s production.
Chapter 12: Development of a Second Line
The Jets Shrink the World
The net result of these factors was that, during the heady years of the introduction of the Jet Age at the beginning of the 1960s, world air traffic doubled in five years then doubled again— fourfold in 10 years. In the past, even the immortal Douglas DC- 3 did not bring air travel to the masses, but in the 1960s, jet airliners introduced the whole world to a vast new market. English coal miners went to the Canary Islands, bank clerks climbed the pyramids in Egypt, civil servants from Bonn enjoyed California’s Disneyland, and back- packers from Brooklyn climbed the Eiffel Tower. At no time in history had the nations of the world, whether on business, in politics, or on vacation, come closer together. Jet airliners had made the world smaller.
Chapter 13: The Commuter Airlines
For many years, the United States Civil Aeronautics Board (C.A.B.) had listed, right at the end of the various airline categories such as trunk, local service, territorial, freight, and supplemental, a miscellaneous group—“Other”—for which special exemption from the normal certification process was given.
By this time, the U.S. Federal Aviation Administration (F.A.A.) had begun to keep records of them, under Part 135 of the regulations, for navigational and safety needs.
By the early 1960s, the widely spread scheduled air taxi operators had established themselves sufficiently to be recognized as a distinct group, and it was left to the journalists to give them an identifiable name.
During the 1960s, a few F.B.O.s found that their customers chartered flights at regular times every day, except on weekends. The clientele consisted mostly of businessmen, so that these routes became the basis of what at first were termed Scheduled Air Taxi, or “third level” operators.
The Scheduled Air Taxi airlines expanded rapidly during the 1970s, both in numbers and in the density of operations. By the 1980s, they comprised the commuter airline industry, and few communities were without a service.
Chapter 14: Restoring the Balance
The system was no different than taking a journey by rail, with the same operational simplicity, and Laker called this service, appropriately, Skytrain.
Finally, President Carter, an advocate of airline deregulation, signed the necessary legislation on 15 June 1977, and Skytrain was finally launched on 26 September of that year, using 345- seat DC- 10s, charging a London- New York single fare of £ 59. The public flocked to Victoria Station. Some slept all night at Gatwick, happily exchanging the luxury of a reserved seat for all the money they saved. On 3 June 1978, Laker was knighted, to become Sir Freddie Laker. He made huge profits, extended Skytrain to Los Angeles on 26 September 1978, and placed large orders for more DC- 10s and Airbus A300s. The Duke of Edinburgh was heard to remark that “Freddie Laker is at peace with his Maker, but with the folks at IATA he’s persona non grata.”
There will probably never be another Skytrain. Laker perfected an air traffic system that the once- denigrated non- scheduled charter airlines had campaigned for during many years. More than any other single airline entrepreneur, Sir Freddie Laker and his Skytrain provided the incisive revolutionary spur that transformed the world airline industry from a business- driven to a popular leisure- driven transport activity.
Freddie Laker, who was later knighted for his contributions to British commercial aviation, introduced a no- reservations trans- Atlantic air service in 1977. Reacting to this competition, the incumbent airlines persuaded his bank to foreclose his account and Freddie’s airline closed down. He later sued those airlines under American law. The case was settled out of court for several million dollars. (Davies)
Part Three: The Second Jet Age
Chapter 15: Wide-Bodied Jets
Nowhere did the urge to fly on the big airliner catch on more than within the United States. By the end of the year of Pan American’s inauguration, nine U.S. domestic operators were advertising the Boeing 747 on their main trunk routes, led by T.W.A., which started on the New York- Los Angeles route on 25 February. American Airlines followed on 2 March, but did not retain it as its front- line fleet.
Hawker Siddeley then joined Sud Aviation, which became Aerospatiale, to form the Airbus consortium, which then concentrated on the Airbus A300, with design leadership centered at Toulouse. At first, the British and French were the two equal partners, but this was soon modifed to allow the entry of Germany, now fully recovered from the penalties of wartime destruction of its industry. By 1970, the shares were 40% France (Sud), 40% Great Britain (Hawker Siddeley), and 20% Germany (Deutsche Airbus, based in Munich). Then, in an astonishing decision by the Heath government, the British insisted that the A300 should have Rolls- Royce engines exclusively or it would withdraw. The French disagreed, very sensibly, as other engine manufacturers would be only too happy to oblige, and they did. Only by the alertness of Hawker- Siddeley’s president, Sir Arnold Hall, did Britain retain a stake (17%) in Airbus, by subcontracting to build the wings. The British shareholding is now 20%, and many Airbuses do have Rolls- Royce engines. Other countries have minor stakes in the European answer to American dominance. Spain and Italy have minority shares, to underscore the developing industrial and political trends toward non- nationalistic Europeanization.
The A300 made its maiden flight on 28 October 1972 and went into scheduled airline service with Air France on 23 May 1974. But much time had been lost. The manufacturers in the United States were no slouches when it came to accepting a technical and marketing challenge. Their DC- 10 and the L- 1011 TriStar contenders duly appeared on the scene in 1970, soon after the Boeing 747’ s entry into service and two years before the Airbus A300 made its first flight.
Air France began a 240- seat A300 service in 1974.
The first DC- 10, Series -10, was aimed primarily at the United States domestic market, and while its normal 8- or 9- abreast seating could not quite match the 747’ s possible 10- abreast, this was not significant. In the traveling public’s eye, the aircraft was certainly wide- bodied. In less than a year after its maiden flight, the DC- 10- 10 went into service, when American Airlines introduced it on its Los Angeles- Chicago route on 5 August 1971, to give it a good head- start over its rival tri- jet, the Lockheed L- 1011 TriStar and the European Airbus.
American Airlines introduced the Douglas DC- 10- 10 wide bodied tri- jet in 1971.
Three engine manufacturers, all with solid records of technical prowess, competed for the wide- bodied airlines market. Boeing’s 747s were powered mainly by four 47,000- lb. thrust Pratt & Whitney JT9Ds, and Douglas’s DC- 10s were powered almost exclusively by 40,000- lb. General Electric CF6- 6Ds.
Competing with Douglas for the wide- bodied tri- jet market, Lockheed suffered a severe setback when its engine supplier, Rolls- Royce, almost went bankrupt.
Chapter 16: Supersonic Digression
During the 1950s, the world’s air transport industry made the biggest technological leap forward during its 30-odd-year history. The infant years were the 1920s; adolescence in the 1930s; coming of age in the 1940s; and maturity achieved with the jets in the 1950s.
By November 1956, under Morgan’s chairmanship, the Supersonic Transport Aircraft Committee (S.T.A.C.) was able to report that it had nationwide support to launch the project, although it distorted the development cost estimates optimistically at a mere £150 million (ultimately the figure was to be at least £1 billion for Britain’s share alone).
Much larger than the original designs, the Concorde would weigh 200 tons, of which half would be fuel.
Cost estimates escalated to £835 million, and in 1964, the Labour government’s Harold Wilson tried to cancel the aircraft, but Charles de Gaulle, intent on regaining France’s prestige in the commercial and technological world, refused.
But by the late 1960s serious doubts had emerged concerning basic physics that turned out to be inescapable. Every time any aircraft accelerated to and continued to fly at more than the speed of sound, the resultant shock wave—the so-called Sonic Boom—left a path of potentially destructive vibration on the ground all along the supersonic aircraft’s flight path. In spite of hopes that design modifications could ease the problem, “the Sonic Boom was a physical phenomenon that no sleight of aerodynamic hand could eliminate.” These conclusions were confirmed by extensive testing by the U.S. Federal Aviation Administration (F.A.A.) at Oklahoma City and in Nevada (see below). The effect on the potential customers was devastating. The market was restricted to routes that did not fly over land, and this eliminated about 90% of the world market.
With tremendous aplomb, enormous promotion and publicity, and much flag waving, the world’s first supersonic airliner made its first flight on 2 March 1969, from Toulouse, with the second on 9 April, from Bristol. It went into service on 21 January 1976, with Air France flying from Paris to Rio de Janeiro and British Airways from London to Bahrain.
the Anglo-French Concorde had made its first flight on 2 March 1969,
Not a single Concorde was ever sold. As some British observers gloomily commented, Britain and France waved their flags, but Boeing laughed all the way to the bank.
Chapter 17: Development of the Breeds
The project office at Douglas was still not satisfied. It went on to produce a design for the ultimate “stretch” of the fuselage, by no less than 14 feet. This DC-9-80 (the number chosen to coincide with the year of introduction) could carry, in all-economy class, 172 passengers, an astonishing achievement—more than double the capacity of the first DC-9-10. It was renamed the MD-80, to reflect the consolidated merger between McDonnell and Douglas.
The swan-song of this highly successful range of twin-engined jets came during the mid-1990s. Interestingly, the launch customer for the MD-95 (only 100 seats) was AirTran, a low-fare, no-frills newcomer to the eastern United States airline scene, which had taken over ValuJet, a fellow competitor that had been put out of business when one of its DC-9s crashed because of an exploding oxygen container. This DC-9 variant was not only the last of the breed; it was to lose its designation.
On 4 August 1997, the biggest merger (or takeover) in the history of the aerospace industry was to take place, surpassing even the Lockheed-Martin amalgamation. The great Boeing Company of Seattle acquired the McDonnell-Douglas Corporation and proceeded to consolidate the various production assembly lines of both companies.
The 737-100 series made its first flight on 9 April 1967 and went into service on 10 February 1968.
The German Lufthansa welcomed the 737 as its City Jet, natural partner to its Boeing 727 Europa Jet. Including those delivered to its non-scheduled/charter associate, Condor Flugdienst, Lufthansa would eventually have more than sixty 727s and top this with ninety 737s of various later models.
The 737 was essentially a reengined short-fuselaged 727, with exactly the same fuselage cross-section. The manufacturer thus enjoyed the commonality of component parts and other aspects of production; it also meant that the 737 offered comfortable six-abreast seating, whereas the DC-9 could only manage five. Boeing built only 30 of the -100 series (of which Lufthansa had 22) but followed Douglas’s example of rapid development of the type.
In 1981, Boeing announced its “second-generation” 737-300 series, once again lengthening the fuselage by almost nine feet, with 22,100-lb. thrust GE/SNECMA CFM56 engines replacing the 15,500 lb. Pratt & Whitney JT8Ds.
By the year 2010, more than 6,000 Boeing 737s have been ordered. It has been, in terms of financial turnover, the most successful airliner ever produced.
Throughout the 1950s and into the 1960s, the British industry suffered from illusions of grandeur. Its designers and technicians were the equal of any in the United States, but it completely failed to recognize the levels of production that the likes of Boeing, Douglas, and Lockheed could achieve, once a decision was made to go full steam ahead with an aircraft type. Boeing could build and deliver as many 727s in a week as de Havilland/Hawker Siddeley could in three months. The after-sales service, too, was not up to the American standards—even in the 1970s, Douglas would claim to be able to deliver a needed item for any of its in-service aircraft to anywhere in the world within 48 hours.
Chapter 18: Redefining the U.S. Second Line
The Civil Aeronautics Board (C.A.B.), established in 1938, was the guardian of such standards in the commercial arena, while the Civil Aviation Authority (C.A.A.)—later the U.S. Federal Aviation Administration (F.A.A.)—watched over navigational and operational requirements—which it still does today, even after deregulation.
United Air Lines, American Airlines, T.W.A., and Eastern Air Lines came to be called the “Big Four”—they accounted for about 75% of the seat-mile output of all U.S. domestic airlines. The Local Service airlines wanted a term that was not diminutive and decided on “Regionals.”
In most cases, the introduction of jet airliners into the U.S. regional airlines’ fleets coincided with important mergers as the bigger fish swallowed the smaller ones. The most important was the merger between Allegheny Airlines and Mohawk Airlines on 12 April 1972, to create a larger Allegheny which, on 30 October 1979 was renamed USAir.
Allegheny could trace its history (as All-American Aviation) back to the experimental aerial pick-up mail service of 1937.
Over a period of several decades following the end of the Second World War, the United States Local Service airlines either merged or were absorbed by trunk airlines. During the 1980s they were called Regionals, and by the end of the 20th century they had disappeared altogether.
It went straight from the piston-engined Martin 404 (and, of course, the trusty DC-3) to Douglas DC-9s, which it put into service on 15 June 1967. By the time it merged with North Central on 13 July 1978, its network, now linking Chicago and Washington with Miami, was, like its peer airlines, no longer local service and well justified the adoption of the term regional. The merged company was also no longer solely north-central, nor was it southern, and it became Republic Airlines, with its main base remaining at Minneapolis. The first integrated schedules under the new name started on 1 October 1979.
Northwest Orient Airlines, operating cheek-by-jowl from its own hub at the Twin Cities (Minneapolis-St. Paul) did what all the big fish did in the ocean of competiton: it swallowed the smaller fish. On 23 January 1986, it announced that it had purchased Republic for $884 million. The route networks were combined that year on what had become a traditional date, 1 October.
Once the cold realities of airline deregulation in 1978 had obliterated the comparative security of a regulated fare structure, the aggressively promoted, almost ruthless, momentum toward low fares jeopardized the chances of profitability by small or even medium-sized companies. In the new economic environment, oligopolistic policies alone could florish, and the economics of sheer size now prevailed in the U.S. airline industry and would not change until a new and different threat to a time-honored corporate establishment emerged in the 21st century.
Lorenzo had always believed in the multiplier theory that the extra traffic generated by the low fares more than compensated for the lower yield per seat.
Lorenzo had been increasing his Continental shareholdings and by the fall of 1981, he was in effective control.
Chapter 19: Regional Airlines Worldwide
Brazil has, since the late 1920s, been one of the most air-minded nations in the world.
As 90% of Canada’s population was within about two hours drive from the U.S. border, the same percentage of Brazilians lived only two hours from the Atlantic Ocean.
When the Jet Age arrived, Brazil’s air transport was in good shape, with VARIG as its respected flag carrier and Sâo Paulo’s VASP and Rio’s Cruzeiro do Sul as strong domestic airlines, providing efficient service between all the main cities and to all the provincial towns. Of the smaller domestic airlines at the second level, Omar Fontana’s Transbrasil had survived the process of “survival of the fittest,” and on 22 May 1975, VARIG had acquired Cruzeiro do Sul, which continued to operate it as a separate entity. They had all profited from the incentives to air transport and travel as Kubitschek’s dream of a Federal Capital emerged. With astonishing drive and initiative, the planning and construction of the city of Brasília was accomplished with phenomenal success. Among other domestic immigrants, tens of thousands of civil servants moved in from Rio de Janeiro.
On 19 August 1969, at São José dos Campos, about 75 miles east of São Paulo, the Empresa Brasileira de Aeronáutica (Embraer) was founded as a joint stock company, with the government holding 51%, to produce the airplane in quantity.
Embraer’s designers and engineers quickly recognized that the IPD-6505 needed to be larger. The redesigned EMB 110 Bandeirante was the result. It made its first flight on 9 August 1972, and the first commercial version, the 110C, went into service with Transbrasil on 16 April 1973, soon followed by VASP on 4 November, for service to smaller communities in the southern states of Brazil.
The “Bandits,” as the Bandeirantes became known—as an indication of affection and respect when they went into service in overseas markets—served to consolidate and unify Brazil. It has been a brilliant example of how aeronautical technology can contribute to the basic economy of a whole nation. In the production of commercial aircraft, Brazil was to become an exporter, not an importer, and a positive element in the annual balance-of-trade reports. By the early 2000s, Embraer had built 494 Bandeirantes, together with 350 of the 30-seat EMB 120 Brasilias, and had moved on from turboprops to pure jets with the ERJ 145 family of regional jets.
Its total population was only about one-tenth of that of the United States (or about the same as California’s), and 90% of that was within 100 miles of the U.S. border. Traditionally served by two excellent transcontinental railroads, Canada did not even have a national trunk airline until Trans Canada Air Lines (T.C.A.) was founded in 1937—by Canadian National Railways, the government-supported railroad.
The fragmented individuality was rationalized in 1942 when they were amalgamated to become Canadian Pacific Airlines (C.P.A.), owned by the railroad of that name, which had purchased control of Canadian Airways in 1933.
Part Four: Airline Deregulation
Chapter 20: The United States Sets the Pace
For almost two decades, the annual increase in passenger-miles in the United States had averaged about 15%, which meant that the total volume doubled every five years. When the Jet Age began, the figure was 40 billion. In 1970 it was 170 billion. The numbers for the first-class market hardly changed, but for all other classes of travel, in sheer numbers alone, the airline industry had undergone a metamorphosis. Air travel for the masses had arrived.
The managements of the certificated scheduled airlines were reluctant to recognize this profound change. Through their Air Transport Association (A.T.A.) lobbying group, and with the compliance of the Civil Aeronautics Board (C.A.B.), the traditional process of setting fares, dating back to 1938, was perpetuated.
Under the 1977–81 Carter Administration, there was no patching up a wounded leg suspected of approaching gangrene; the leg was cut off. There was no reorganizing of the respected C.A.B., which, for 40 years, with a maximum of only about 800 staff, had ruled over half of the world’s airline productivity. In one piece of legislation, the C.A.B. was to be phased out over five years.
The onslaught came on 15 October 1978, when the U.S. Congress enacted into law the Airline Deregulation Act of 1978, which was signed by President Carter on 24 October.
In a ruthless survival-of-the-fittest environment, almost all the brash newcomers soon went under. Only one complete newcomer survived into the next century. This was America West, often on the brink of failure, but able to exploit the demographic advantage of its base in Phoenix, the most rapidly growing urban area in the United States. Another star that emerged with conspicuous success was one of the previous intra-state airlines, Southwest Airlines, which, under the driving leadership of the popular Herb Kelleher, steadily grew to become, within two decades, one of the nation’s largest.
The annual 15% per year growth level was a thing of the past. By the early 1980s, almost everyone who wished to fly by air was already doing so.
Chapter 21: The Airline World Deregulates
One major difference between the airlines of the United States and those of the rest of the world is that all the U.S. airlines were completely privately owned. In Europe, Asia, Africa, Australasia, and Latin America, the major airlines were either privately owned, but at the same time regarded by their governments as “chosen instruments” thus given special privileges; alternatively, they were jointly owned by private investors and their governments, or they were completely government-owned.
In 1980, by Act of Parliament, British Airways ceased to be a national corporation. The stock offering ended on 6 February 1987, with buyers oversubscribing more than 11 times.
Following the end of the Second World War, with few exceptions, most of the world’s airlines had united to form IATA.
In the late 1970s, the United States had plunged into a deregulated airline environment in which the immediate consequences were neither immediately apparent nor achieved. The Japanese airlines and their regulators, however, took a different course. This was partly because Japan is a much smaller country and less amenable to regional airline viability, but also because the authorities recognized airlines as a public utility and not simply as just another form of business. The outcome was almost a textbook example of an economic axiom: that the benefits of competition can be realized with only two or, at the most, three competitors.
The small airlines were handicapped by the acute shortage of pilots, because of the depredations of the war, during which more than 1,500 had turned themselves into human bombs as kamikazes.
Chapter 22: Russian Metamorphosis
Transaero’s wide-bodied Ilyushin II-86, with business-class seats, was unprecedented in Russia. The airline then trumped its own ace with Boeing 747s.
Chapter 23: Decline of the American Giants
When Alfred Kahn oversaw the Airline Deregulation Act of 1978 (see Chapter 20), the way seemed clear for a new era to begin. The consequent liberalization would encourage private enterprise and individual creativity, particularly by permitting all airlines to operate routes wherever they wished and to charge whatever fares they chose.
Making the same mistake that others had made, the new management stressed its “high-class” marketing strategy, to combat the presumed “low-class” of its local competitor, Southwest Airlines.
On 4 December 1991, the inevitable end came. United Airlines emerged as the winner of the auction for Pan Am’s assets, paying $135 million for its Latin American routes. The last service was an emotional affair.
On 16 January 1991 the Gulf War erupted, and two days later, Eastern Air Lines closed its doors, 19,000 employees lost their jobs, and Shugrue’s only task was to preside over the sale of assets during the long-drawn-out liquidation process.
After a bizarre offer to buy Pan American Airways, T.W.A.’s proud status on the North Atlantic was devastated. On 21 January 1991, Icahn announced the halving of all services to Europe, and furloughed 2,500 employees. On 14 March, American Airlines bought the routes to London from New York, Los Angeles, and Boston. T.W.A.’s last flight into London’s Heathrow Airport was on 1 July 1991, and the effect of the sale was only a temporary reprieve. On 31 January 1992, it filed for Chapter 11 bankruptcy.
On 10 January 2001, after several rumors of various approaches, American Airlines offered to buy T.W.A. for $500 million, provided it file for Chapter 11 bankruptcy, which it did on the same day.
On 11 August 2002, US Airways filed for Chapter 11 bankruptcy protection, and further economies of staff were made, but a life line appeared from David Bronner, whose Retirement Systems of Alabama offered to take a 37.5% stake in the airline—quite a bargain, as the stock had deteriorated to about $4.00 a share.
The end was in sight. US Airways either had to cease operations or it had to merge or be absorbed by another airline, and in the latter case, it had no cards to play. In the spring of 2005, offers were made by speculative investors, and on 19 May, after discussions that had begun tentatively as early as July 2004, a merger was announced between US Air and Phoenix-based America West.
Chapter 24: Birth of the Low-Fare Generation
One of the cornerstones of Southwest Airlines’s operating policies was becoming evident. Instead of challenging the established airlines head-on at their fortress main-line airports, it nibbled away at secondary or satellite airports.
Sadly, on 19 June 2001, Herb Kelleher was obliged to step down due to ill health as chairman of the airline that he had built into an industry leader.
Baltimore was already a Southwest hub, and the airline was now carrying more individually boarded passengers than any other airline in the United States. The airline that had started with one route in Texas in 1971 had become an industry leader.
ValuJet was incorporated in Nevada in July 1992 by a triumvirate of Robert Priddy, chairman, Lewis Jordan, president, and Maurice Gallagher, vice chairman.
In February 1999, David Neeleman announced plans for a new airline, provisionally named New Air, certainly an apt choice. Already with airline experience, he had sold Salt Lake City–based Morris Air to Southwest Airlines in 1993 and had been involved with the success of the low-fare Canadian airline WestJet.
Contrasting with Southwest’s policy of a single-type fleet, however, and only two months later, the reason for the apparent reduction was revealed. JetBlue ordered 100 100-seat Embraer 190s, for $3 billion, to diversify the airline’s seat capacity according to the potential demands on individual routes.
With Southwest heading the pack, and with AirTran and relative newcomer JetBlue not far behind, by the year 2005 the new bargain-basement airlines had made a severe encroachment upon the preserves of the legacy airlines. The formerly protected preserves were up for grabs; the 1978 Airline Deregulation Act had opened up commercial airline operations to any entrepreneur who wished to risk his or her venture capital. About 150 aspirant challengers to the establishment had applied to the Department of Transportation for scheduled operating authority, but only about 40 managed to begin service.
By 2005, the new breed of low-fare airlines was collectively accounting for about one-third of the passenger boardings in the United States.
on 27 September 2010, Southwest Airlines announced it would acquire AirTran,
Part Five: Transformation in Europe
Chapter 25: Low-Fare Revolution
Finally, in July 1992, the door was opened wide, and beginning in January 1993, almost all restrictions were removed. Not only were the Five Freedoms made completely effective; the rule of cabotage, hitherto a form of national protectionism, was abandoned in April 1997. A German or British airline could henceforth operate, for example, between Milan and Rome, or Air France between London and Glasgow. In practice, however, there was no rush. European countries were too small to permit profitable domestic routes, and the improvements in road and rail transport, notably the introduction of high speed rail networks, emphasized the problem.
Kenny Friedkin of Pacific Southwest Airlines in California and Herb Kelleher of Southwest Airlines in Texas had revolutionized the air transport scene in the United States. Tony Ryan, the Irishman who founded an airline that carried his name, did more than that. Within a single decade, he had put Ryanair in a position of near-supremacy in the whole of Europe—prevented from absolute domination only by an English company, easyJet, started shortly afterward by Stelios Haji-Ioannou.
There is an economic axiom that claims that all the benefits of competition can be achieved with only two competitors, and that a third participant in an identifiable market is redundant or superfluous, and in any case is doomed to failure or, at best, also-ran status.
Others That Tried One such aspirant was Debonair, founded in January 1994 by Franco Mancassola, who had several years of experience in independent airlines.
the Virgin Group acquired 90% of the Brussels-based Euro-Belgian Airlines for $60 million and appointed Jonathan Ornstein, ex-president of Continental Express, to head it under the new name, Virgin Express.
In Great Britain, the national airline, British Airways, with unmatched industrial strength—it was the world’s leading international flag carrier at the time—decided to take this unorthodox course by forming a low-fare subsidiary, Go, which would prove to be an unfortunate name choice.
On 1 April 2003, the now-dominant Ryanair acquired Buzz, including its 14 BAe 146s and Boeing 737s, for €24 million ($25.6 million).
Chapter 26: British Airways Ascendancy
The first step toward the complete amalgamation of the two British state-owned airlines was the creation, on 1 April 1972, of the British Airways Board, which assumed ownership of B.E.A. and B.O.A.C. and their subsidiaries.
With national frontiers no longer a barrier to the policy of “open skies,” British Airways took advantage of the term to make it their own. This is one of its Boeing 757s.
Chapter 27: France Consolidates
Air France ordered the first Airbus A320s in 1981. It was to become an outstanding success world-wide. By 2010 more than 5,000 of this wide-bodied twin-jet had been ordered.
On 21 December, facing the inevitable trends in the air transport industry that demanded worldwide international groupings, the U.S. Department of Transportation tentatively approved an alliance of Air France, Delta, Alitalia, and the Czech C.S.A., to be known as Skyteam, and including agreements with AeroMexico and Korean Air.
Air France’s financial problems during the late 1900s did not prevent the maintenance of high operational standards. Its fleet of Boeing 747-400s (left) and Airbus A340s (right) ensured that its intercontinental services were among the world’s best.
Chapter 28: Germany Regains a Leading Role
To start a national airline again, completely from scratch, was no easy task, and a decade was to pass after the end of the war before the new Lufthansa (German Airlines) got into its stride.
The next announcement from the Cologne headquarters clearly confirmed that, for all its support for the products of Boeing and Douglas, Lufthansa was—in consort with the German manufacturing participation in the French, Toulouse-based Airbus—solidly European. On 20 December 1972 it ordered three twin-engined 240-seat wide-bodied Airbus A300Bs, plus four more on option.
Lufthansa’s solidly established organization enabled it to maintain its airline ascendancy as a world leader. Like Air France, its aircraft, such as the Boeing 747-400s, matched all competition.
Chapter 29: European Airline Attritions
From the very beginning of the air transport industry, every country in Europe aspired to own a national airline, as a symbol of their industrial and commercial stature.
The final nail in SABENA’s coffin came soon after the terrorist attack in New York on 11 September.
Still confident, K.L.M. established a low-cost subsidiary, Buzz, based at London’s Stansted Airport, in January 2000.
Chapter 30: Jet Wings Over the Mediterranean
Europe took many years to recover from the devastation of the Second World War, and even neutral countries were not exempt from the struggle. Among these was Spain, which although technically neutral, was widely regarded as a Nazi sympathizer, under fellow traveler General Franco, who had only just won a civil war when hostilities broke out in September 1939.
Chapter 31: Farthest North with the Scandinavians
As events unraveled, the S.A.S. emerged as the world’s only completely successful airline consortium. Geographically, Scandinavia includes only Norway, Sweden, and Denmark, but Finland and Iceland are also included in the context of the historical review in this book.
In 1959 also, severe labor disputes had led to the suspension of most S.A.S. services, which demanded substantial financial help from the three national owners in 1961.
Chapter 32: Europe Unites
The 15-seat Embraer Bandeirante is just the right size to serve the small communities in the north of Finland.
Part Six: Rise of Asia and the Pacific Rim
Chapter 33: The Growth of China > Location 9583
On 4 August 1985 C.A.A.C. put the first of 28 147-seat “stretched” Shanghai-built MD-82s into service.
In April 1985, Shen Tu was succeeded by Hu Yishao, who faced an unprecedented challenge: how to keep up with the growth of Chinese air traffic, at home and overseas, now doubling every two years, reflecting the exploding growth of Chinese industry.
Chapter 34: India Awakes
The first “fly by-wire” Airbus A320 entered service on 1 July 1989,
The low-fare market that Captain Gopi unleashed then exploded. The example set by Air Deccan spread throughout India like wildfire. In May 2005, Spice Jet, at New Delhi, and GoAir, at Mumbai, entered the LCC (Low-Cost Carrier) arena, followed by IndiGo Airlines, also at New Delhi, founded in August 2006. These companies did not start cautiously with a handful of aircraft. IndiGo stole some headlines at the Paris Air Show in June 2007 by announcing an order for 100 of the Airbus A320/321 series. But the momentum did create its own problems.
Even by the 21st century, only 1% of India’s 1.1 billion population had ever flown by airline.
Traffic is already growing at an unprecedented high rate and shows no sign of abating. Led by innovative and visionary entrepreneurs, India will start to regain, at long last, the respected global status that began to evaporate after the leadership of J.R.D. Tata was cast aside.
Chapter 35: The Subcontinent Fragments
In a mountainous land with no railroads and few roads, an airline is an essential element of the country’s economy.
Chapter 36: Eastern Asia Emergent
Singapore Airlines was the first airline to introduce the double-decked Airbus A380 in 2007.
Chapter 37: Budget Fares for Southeast Asia
Until the late 20th century, air travel for the indigenous peoples was a seldom experienced luxury. Air Asia has sponsored the beginning of a social revolution.
On 8 December 2001, 28-year-old Tony Fernandes, who had watched the success of Ryanair and easyJet in Europe, and with three other partners, purchased almost the whole Air Asia stock and its two 737s for 27 cents a share, but assumed $10 million of debt. On 15 January 2002, he launched aggressively a “low fares, no frills” policy, changing the airline livery, and extending the network with more 737s. In April, he introduced ticketless travel, promoted the use of the Internet, and adopted the slogan “Now Everyone Can Fly.”
By 2007 the bargain-basement empire was flying to 75 destinations with a fleet of 50 Boeing 737s and Airbuses, and carried 18 million passengers during the year. In January 2008, the A320 order was doubled to 200, a truly astonishing decision for an airline only six years old.
The one-way fare to Chiang Mai was US$15.00. It had to be, with Fernandes setting the pace. But with Thailand’s 65 million people growing in prosperity and with vacation resorts increasingly popular among overseas visitors, the market is a gold mine for all the participants.
In April 2005, Fernandes introduced China to the world of bargain fares with a route to Xiamen.
On 9 December 2003, with 49%, Singapore Airlines organized Tiger Airways. The shares were divided equally between Temasek Holdings (the Singapore government had its airline investments well placed everywhere), Indigo Partners, and Tony Ryan’s Irelandia Investments.
During the following years, orders were firmed up, and on 18 June 2007, at the Paris Air Show, this Indonesian newcomer raised the order to 100, including forty 737-900ERs, of which model it was the launch customer. Lion Air was participating in a minor revolution in air transport across southeastern Asia.
Part Seven: The Commonwealth Adjusts
Chapter 38: Airlines of Australia
With the absorption of the Dutch K.L.M. by Air France in 2004, Australia’s national airline, QANTAS, can now claim to be the oldest in the world with a continuous record of independent and uninterrupted scheduled operations. The reason for its early foundation, in 1919, was the result of demography: the distribution of population in a large country—a continent—that had no integrated railroad system.
Australia’s flag carrier, QANTAS (Queensland and Northern Territory Aerial Services) was founded in 1919 to connect outlying stations with railheads. The “outback” was so sparsely populated that rail extensions would have been uneconomical to build or to operate. An air service, however infrequent, irregular, and expensive to maintain, justified government support. Because of the distances involved, especially in Western Australia, the conditions were ideal for the expansion of airline services. During the early decades of the 20th century, this ex-colony, now a vigorous self-governing dominion, became the most individually traveled nation in the world.
On 14 January 1958, it had become the first airline in the world to operate a scheduled service completely around the globe, with the Super Constellations (Pan American could not operate across the continental U.S.A.).
The Electra’s first route was to Tokyo via Darwin and Manila, on 18 December. Lockheed’s problems with that airliner did not seriously affect Qantas as it operated below the speed limits set by the F.A.A.; but the fleet had to be reengineered and the first flight to Auckland under its own name was on 3 October 1961 (see TEAL, below).
Chapter 39: New Zealand and the Pacific
Chapter 40: Canada Reorganizes
Part Eight: A Continent Made for Air Transport
Chapter 41: The Sleeping Giant Awakes
In Colombia, for example, the oldest airline in all the Americas, AVIANCA, is directly descended from SCADTA, founded in 1921. Argentina started, in the same year, an international airline (across the River Plate) that lasted for a few years, whereas the world’s first airline in 1914 in Florida lasted only three months. By the 1940s, in Rio de Janeiro, the downtown airport was within walking distance of the business center, as was the one in Buenos Aires.
Brazil’s Viação Aérea São Paulo (VASP) was operating turboprops before any airline in the U.S.A., and Aerolíneas Argentinas was operating Comet jets to New York in 1959.
in July 1958, the Rio de Janeiro-São Paulo Ponte Aérea set an example as the world’s first no-reservation air shuttle service.
When the Jet Age arrived, Latin America was fully prepared.
Pre-war airlines, such as Syndicato Condor, VASP, Panair do Brasil, and VARIG, were recognized and respected overseas. During the immediate post-war years, with fleets composed largely of war-surplus aircraft, they had reached out to every community in the country. One airline, REAL (Redes Estaduais Aéreas, Ltda), had grown prodigiously by absorbing several small ones. Its fleet included 86 Douglas DC-3s, the largest fleet of its type in the world, and during the late 1950s, it ranked, by passenger boardings, as the tenth largest airline in the world. On 3 May 1957, with a Convair 240, it began the first scheduled service to Brasília.
VARIG’s first Boeing 707-441 (the Rolls-Royce powered variant) started to fly nonstop from Rio to New York on 28 June, with Brasília included on 2 July.
on 2 September, VARIG put the first of its 100-seat Lockheed L.188 Electra turboprops into service on the coastal route, and was able to operate them from the downtown Santos Dumont airport, where jets were not allowed. For almost the next 30 years, these reliable airliners also became the standard aircraft for the Ponte Aérea (see above), with the revenues and costs shared between the contributing airlines, but with VARIG supplying the fleet.
Transbrasil had been founded, as Sadia, in 1955 by Omar Fontana: a man who could truly be described as a maverick. He flew fresh meat from his father’s packing plant in the state of Santa Catarina to the high-class butchers in São Paulo, he changed its name in June 1972.
The airline did not necessarily have to be state-owned (though many were) but its important role as a public utility was recognized. Concessions were made, or privileges granted, to guarantee its position as a national standard-bearer. Brazil’s choice, partially the result of political influence in the corridors of power, was VARIG. At the end of the Second World War, it was the smallest of the pioneers, but its home State, Rio Grande do Sul, populated largely by German immigrants, was affluent and efficient. More important, one of its sons, Getulio Vargas, had become President of Brazil, and for several decades, the VARIG management could always count on a favorable nod from the government.
Gomes’s oversight and financial control of his airline did not live up to his ambition, although his staff struggled to sustain it. REAL outgrew its strength and had to reduce its network, first the Chicago route then a half share of its international division to VARIG on 2 May 1961. A few months later, on 16 August, VARIG bought the whole airline,
With this impressive and creditable record of representing its country in one of the most internationally competitive world industries, the surprising collapse of Panair do Brasil was tinged with a degree of suspicion. On 10 February 1965, all its flights were cancelled, and VARIG took over the operation at three hours’ notice.
In May 1966, Panair’s appeal to the Brazilian Supreme Court was denied. It was a sad end to a flagship airline that had done so much for Brasil’s prestige overseas, and which had built much of the infrastructure all across the country, including the vast reaches of the Amazon.
VARIG’s next step was to eliminate the major domestic competition. This was from Cruzeiro do Sul, the airline whose name had changed from the German-sponsored Syndicato Condor on 16 January 1943.
On 8 September, VARIG’s affiliated regional airline, Rio-Sul, began service, directed by João Lorenz, who had been Rubem Berta’s economic director, and one of the team from Porto Alegre who had laid a firm foundation for this great airline.
Berta, VARIG’s long-term president, had died on 14 December 1966. His successor, Erik de Carvalho, retired because of illness in February 1979, and Helio Smidt took over on 30 April 1980.
VARIG seemed to be weathering all the economic storms that were part of the Brazilian way of life.
But the apparent wave of prosperity did not last. Smidt’s successors had to face increased foreign competition, and the late 1980s witnessed a financial decline, even though the government’s latest currency rescue effort, the Real Plan, drastically cut the inflation rate, then 50% per month. In 1994, facing an almost $2 billion debt, this prestigious airline cut its staff by almost 4,000, eliminated most of its international routes, closed offices everywhere, and cancelled orders for eight 747s. Acquiring Uruguay’s national airline, PLUNA, in March 1997, and joining the Star Alliance on 26 October, did little to stem the negative tide. In 1998, a new government policy, effectively deregulation, did not help either. Until then, the major inter-city routes had been operated by only the four main airlines. Now, newcomers were not only allowed to enter these hitherto privileged markets, but also permitted to offer heavily discounted fares. Another currency devaluation on 12 January 1999 led to VARIG repeating the drastic measures of 1994, cutting overseas routes again, and trimming aircraft fleets to only three types, most of them leased. To add to all these disasters, the 11 September 2001 terrorist attacks in the U.S.A. created a drastic reduction in international ai traffic worldwide. For VARIG it compounded a situation that was already approaching a crisis level. In 2002, the workforce was again reduced, by 30%, and 20 leased aircraft were returned to the lessors. The only segment of VARIG’s entire network still profitable was the Ponte Aérea shuttle service. An attempt in 2003 to merge with TAM, which had been a major discount intruder on the shuttle with Airbus A330s, came to nothing. A rescue plan from Portugal’s T.A.P. early in 2005 also failed, a sad commentary on the fate of an airline that a decade or two earlier could easily have swallowed T.A.P. The Brazilian equivalent of the U.S. Chapter 11 bankruptcy proceedings were started in December 2005. In April 2006, VariLog, VARIG’s former cargo subsidiary that was sold to Volo do Brasil, offered to buy its former parent company for $350 million.
The final blow came in April 2007 when GOL (see below) bought control of the airline for $98 million, plus 6 million shares.
Other than the post-war REAL in 1961, VARIG had absorbed the pre-war Panair do Brasil and Cruzeiro do Sul in 1965 and 1975, respectively.
VARIG, VASP, Cruzeiro do Sul, and Panair do Brasil had shared in the pre-war establishment of the industry But toward the end of the 20th century, their combined dominance was threatened with collapse. As narrated above, VARIG had been favored as a chosen instrument, taking over Cruzeiro, which, however, continued to operate for a few years under its own name.
Stepping boldly into VARIG’s territory, TAM opened service to Miami on 10 December 1998 and to Paris on 2 April 1999.
Fly and Brasil Rodo Aéreo (BRA) struggled to survive—unsuccessfully; but GOL Linhas Aéreas Inteligentes succeeded beyond its wildest dreams. It was established on 1 August 2000 by the Aurea Group, Brazil’s biggest highway bus operator (11,000 buses), headed by Constantino de Oliviera. His son, Junior, was president of the airline.
Well capitalized, GOL bought new aircraft, starting on 15 January 2001 with an inaugural flight from Brasília to São Paulo. With an initial fleet of six Boeing 737-700s, the no-frills newcomer was soon linking six State capitals with three flights a day to each city.
With its low-fares policy, GOL quickly grew from strength to strength. On 17 May 2004, it ordered 43 Boeing 737-800s, to add to its existing fleet of 20 -700s and -800s. On 24 June, a public stock offering raised $281 million additional capital.
Within a period of only a few years, GOL had usurped the entire airline establishment to claim air transport leadership in Brazil.
Chapter 42: Down Mexico Way
Chapter 43: Around the Caribbean
Close to the steep hillside, severe turbulence is common, and every Winair pilot used to spend a year in the right-hand seat, under instruction from an ex-Free French Spitfire pilot, Captain “La Pipe” Dormoy. To counteract the turbulence, his advice for the DHC-6 Twin Otter pilots who replaced the Dorniers’ was: “Approach the runway from about 50° to the left of the runway heading. Keep this diagonal approach, and pass about 200 feet to the left of the runway, aiming for the parking apron. With airspeed at about 66 knots, with full flaps, you will touch down on the runway immediately. Put the engines into reverse, and careful braking will give you a ground roll of about 250 feet.”
Chapter 44: Central America
Chapter 45: Airlines of the Andes
Chapter 46: Farthest South
Part Nine: Africa
Chapter 47: Across the Mediterranean
Chapter 48: Sub-Saharan Contradictions
Chapter 49: End of the Empire Airlines
Chapter 50: To the Cape and Beyond
Part Ten: Transitions
Chapter 51: The Third Jet Age Begins
The first Jet Age began in 1952 with the introduction into service of the first pioneering (but short-lived) British de Havilland Comet 1 then of Aeroflot’s short-haul Tupolev Tu-104. It was consolidated in 1958, by the larger and far more successful four-engined “big jets” from the United States, followed by the western short-haul jets, beginning with the French Caravelle. At the same time, turboprop airliners were introduced by the Vickers Viscount, and again followed by larger turboprops from the U.S.A., Britain, and the Soviet Union. All the airliners of this generation had four or five-abreast seating. The second Jet Age began in 1970, with the Boeing 747 wider-bodied jets, followed by Douglas and Lockheed tri-jets. These long-haul twin-aisled types were followed by short-haul wide-bodied aircraft, led by Airbus, as the formerly over-fragmented European aircraft industry combined to create an organization that could match the volume and efficiency of the Americans.
In almost every category, developed variants of initial airliner designs were invariably better than their predecessors, mainly because their bigger—“stretched”—fuselages produced better economics, judged by lower seat-mile costs and more seats sold. Jet engine efficiencies progressed beyond all expectations. By the 21st century, range was no longer a problem. Boeing (which acquired Douglas) and Airbus airliners could fly half-way around the world, and thus connect any pair of major cities with nonstop service.
During the closing decades of the 20th century, world-wide passenger traffic grew at an astonishing rate. In the 1960s and 1970s, annual increases averaged as much as 15% per year (doubling the total volume every five years). To cope with the ever-increasing demand, the airlines demanded—and were presented with—ever larger aircraft. By the 1990s Boeing 747-400s were carrying 450 passengers on long-haul routes, and in the more densely traveled routes in Japan, they were carrying up to 530. By the 21st century, to cope with this unremitting requirement for more seats on the world’s major inter-city routes, an even bigger airliner was needed.
Chapter 52: A New Competitor: High Speed Rail
Chapter 53: A New Age Beckons
The problem facing air transport today is thus not in the air but on the ground. The airliners cannot fly any faster, nor can the manufacturers or the operators make them any more comfortable, except at the expense of economy and therefore higher fares. The outstanding success of bargain-fare airlines in the United States, Europe, southeast Asia, and Brazil (and the failure of most of the airlines that have emphasized luxury) has demonstrated what the mass market will prefer and accept.
Except for long-distance trans-ocean or transcontinental travel requirements, airlines should no longer concentrate on direct competition with surface transport on the ground, either from high speed roads or high speed trains. Cooperation should be the main criterion for long-term development. Intermodality of transport systems must be increasingly recognized as the ultimate solution to solving the problem of moving the world’s population, estimated to reach eight billion within the Third Jet Age. People will be increasingly more affluent, and anxious to see the world—the whole world—in which we live. The airlines will not be able to do it alone.
A Fourth Jet Age Measurable improvements in air travel in the future can be achieved only by innovative cooperation on the ground. This author remembers a journey in 1988 from Washington to Cologne, when the Lufthansa connecting rail journey from Frankfurt was a coupon on the air ticket. Airlines should be in partnership with the railroads and be able to code-share with them. When airline passengers everywhere can disembark from an aircraft and walk to a railroad or subway platform (as in London, Zurich, Frankfurt, and Washington’s Reagan National Airport today), and travel onwards using the same ticket, we may witness the beginning of a new era. When airlines and railroads cease to compete, but energetically cooperate, and the policy of intermodality is universally accepted, this could signal the advent of a Fourth Jet Age.