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Air Transport – Commercial Aviation - An Overview

On January 1, 1914, a wealthy manufacturer named Thomas Benoist launched air service between
Tampa, Florida, and nearby St. Petersburg. Those towns were separated by Tampa Bay; the only
connections were by once-a-day boat or by railroad. His airline drew business all through the winter,
but his prospects faded with the coming of spring, when the tourist season ended. His airline shut down
then and did not resume its flights.
No one else tried to carry passengers by air for several years, and there was a reason: railroads. The
United States had a quarter-million miles of track, with rail carriers offering fast, convenient service
from downtown terminals.
Early airline builders therefore tried a different approach, by carrying airmail. The U.S. Post Office
became involved, and President Woodrow Wilson was present when the first airmail flight left
Washington, D.C., for New York. The pilot, who should have been heading north, followed railroad
tracks south and wound up in southern Maryland, but other flights were more successful.
The planes of the day were little faster than mail trains, and aviators saw that their best hope lay in
cross-country service. Flying at night, three pilots carried mail from San Francisco to New York on a
trial flight in February 1921. In 1923, the assistant postmaster general, Paul Henderson, began
installing powerful beacon lights to mark air routes for routine night flying in clear weather. Scheduled
transcontinental air service began in mid-1924.
This did not suit the railroads, which depended on income from carrying the mail. In Washington,
railroad lobbyists won passage in Congress of the Kelly Act of 1925, which turned the new airlines into
privately owned businesses. A follow-up law, in 1926, gave the government responsibility for aircraft
safety. Collectively, these acts served to create an air transport industry that was regulated by the
U.S. government and received direct subsidy through a complex set of contracts awarded to airlines to
carry the mail.
Then in 1927, Charles Lindbergh touched off an enormous surge of interest in aviation by flying nonstop
from New York to Paris. Only 5,800 passengers had flown in 1926; this leaped to 417,000 four years
later. In 1930, Postmaster General Walter Folger Brown set out to encourage this trend.
Brown disliked the Kelly Act. In his view it had provided overly generous subsidies for airmail, about $3
per pound. Some carriers were raking in the money just by paying postage to send cast-iron stoves as
airmail. Brown won passage of a new law, the McNary-Watres Act. It changed the subsidies in ways that
encouraged the airlines to carry more passengers. But airmail was still their main business, and Brown
took action in that area as well.
By law, he had the power to award airmail contracts to competing airlines. The nation's existing air-
route map was a hodgepodge of local lines, whereas Brown wanted a few strong carriers that could
serve the entire nation. Drawing on his legal powers, he awarded airmail routes to airlines that he
favored, forced others to merge to qualify for his awards, and left still others to die for lack of
business. When he had finished, he had a major north-south carrier, Eastern Airlines, along with three
coast-to-coast airlines: TWA, American, and United.
Brown's reforms worked. The airlines he selected continued to dominate the nation's air routes for the
next fifty years. In addition, because people could no longer make money by shipping cast-iron stoves,
they began to build good airliners that could carry passengers as well as mail. The best of them was the
Boeing 247 of 1932. It had a streamlined and modern look, breaking decisively with the boxy biplanes
of only a few years earlier.
However, Brown was a Republican. When the Democrats returned to Washington with President
Franklin Roosevelt, in 1933, they lost little time in declaring that Brown's actions amounted to a
scandal. He had used his powers in high-handed ways, and Democrats declared that he and the airlines
together had committed fraud. Roosevelt responded by turning the airmail over to the pilots of the U.
S. Army. It didn't work—they were unprepared, and a number of them crashed. Roosevelt had to rely on
the airlines, whose pilots knew their business. But the Air Mail Act of 1934 cut their mail pay
particularly sharply, forcing them to rely even more on passenger traffic for their income.
This meant that they needed aircraft that could make money just by carrying people. The firm of
Douglas Aircraft responded to this need with the DC-3. Introduced in 1936, it carried 21 passengers and
flew nonstop from New York to Chicago. It quickly drove competing airliners from the airways, and
went on to dominate American aviation. As late as 1958, as jet airliners were about to enter service,
the nation's airlines counted more DC-3s than any other type of airplane.
Brown left a further legacy, in the area of overseas travel. An ambitious young airline operator, Juan
Trippe, convinced Brown to give him a monopoly on the right to carry airmail to foreign countries.
Trippe's airline, Pan American World Airways, started with its 90-mile (145-kilometer) route in 1927
from Florida to Cuba and completed its conquest of Latin America in 1930, with 20,308 miles (32,683
kilometers) of airway in 20 Latin American countries.
Profits from these Latin American routes subsidized Trippe's losses as he constantly expanded his
operations. In 1935, he introduced his four-engine Clipper flying boats on a route that crossed the
Pacific, reaching from San Francisco to the Philippines. He carried few passengers—the round-trip fare
equaled a workingman's wages for an entire year—but garnered priceless publicity. Then in 1939, just
before the war, he introduced commercial service across the Atlantic.
The air transport revolution swung into full power with the building of advanced new airplanes in the
latter 1930s. Donald Douglas' twin-engine DC-3 ruled the passenger skies for much of the 1930s and
1940s, but carriers also expressed much interest in four-engine airliners. These could carry more
passengers at higher speeds, while carrying extra gasoline for longer range. Two aviation leaders
competed for advantage in this field: Donald Douglas, whose firm of Douglas Aircraft was building the
DC-3, and Howard Hughes.
Hughes was a riverboat gambler with a lot of money and a penchant for doing as he liked. His father
had made a vast fortune in oil. He started his career in Hollywood, where he discovered such stars as
Jean Harlow and Jane Russell. Turning to aviation, he built a record-breaking racing plane. Then he
bought control of TWA. His new airline needed aircraft and he decided he would provide the best.
Working with Lockheed Aircraft, he crafted the Constellation airliner.
Though designed in 1940, it looked beautiful, even by today's standards. It flew as fast as the fighter
aircraft of the day, and could cross the nation nonstop. Donald Douglas had to match it, and did so with
his own four-engine aircraft, the DC-6 and DC-7. The rivalry between these airliners and the
Constellation then spearheaded the development of advanced commercial airliners until the coming of
the jets.
The first jet engines were war babies, entering service with high-speed fighters late in World War II.
Boeing took the lead in crafting large jet bombers: the six-engine B-47 and the eight-engine B-52.
However, early jet engines gulped fuel at excessive rates, which drove up costs and limited their
range. Airline executives distrusted them. These people expected that while a commercial jetliner
would be speedy, it would lose money.
Juan Trippe had different ideas. He learned that better engines were coming along, and he had enough
money to order new engines that were better still. He proceeded to play Boeing against Douglas
Aircraft, promising each that he would place extensive orders if either could build the long-range
jetliners that he wanted. Douglas responded with the DC-8; Boeing came out with the 707. Other
airlines ordered their own jets, knowing that if they didn't, Pan Am would walk off with their
passengers. Boeing proved particularly capable at tailoring versions of the 707 that met the needs of
individual carriers, and this company surged to the lead in sales.
But during 1956, as orders for the 707 and DC-8 mounted, the nation's airways were far from ready for
the new jets. They needed radar and electronic aids to navigation, which were in short supply due to
federal budget cuts. Then in June 1956, a DC-7 and a Super Constellation collided over the Grand
Canyon, killing 128 people. This drove home the point that the air routes were unsafe even for fast
propeller-driven aircraft. Congress responded with a gush of dollars, and soon the needed equipment
was in place.
The new jets entered service in large numbers during the 1960s. Passengers responded in droves, for
these airliners were both fast and comfortable. Demand soared, leaping from 62 million passengers in
1960 to 169 million, nearly three times as many, in 1970. Juan Trippe expected that this trend would
continue, as did William Allen, president of Boeing. Together they crafted an entirely new and very
large commercial jetliner that was to serve this new era—the Boeing 747.
Both men were visionaries; the 747 was to be their legacy, flying down the long decades that lay
ahead. However, it nearly wrecked both companies. Boeing took on a great deal of debt in preparing to
build it. Then it couldn't deliver them, for the engines weren't ready. In time, Boeing indeed had 747s
ready for customers—and then orders for the new plane dried up as the nation entered a recession.
Boeing fought back by offering new and highly desirable versions of earlier jets, including the 707, and
came up with enough new sales to survive. Still, it had a very close call with bankruptcy.
Pan Am had its own problems. By 1970 it was losing money. It nevertheless took on additional debt to
purchase 747s—and found itself paying very high interest rates. The recession hurt that airline as well.
It survived, at least for a while, with help from the International Air Transport Association. IATA was a
cartel, which enforced a worldwide agreement that kept fares high. Pan Am remained weak, but it
managed to fly through the 1970s.
For half a century, the nation's airlines had been a heavily regulated industry in which competition was
more in the way of service than in fares, and this regulation prevented new airlines from entering the
market while stabilizing those already operating. These arrangements came to an end in 1978, as the
nation entered an era of deregulation. Airline executives won new freedom to introduce cut-rate fares
and to serve new routes, as well as to abandon less lucrative routes thereby limiting or ending service
altogether for some cities, while new carriers such as People Express won the right to offer service as
well. For travelers, the consequences brought a bonanza, with passengers saving $100 billion in ticket
fares during the first ten years. There was a price for this, of course, as travelers soon learned that
their travel schedules could be quite inconvenient, airline service was reduced, and flights to less
attractive destinations were unavailable.
Some of the traditional carriers did not survive deregulation. For instance, already weak Pan Am
needed new routes and new aircraft. It lacked both money and credit, and losses soon mounted. It
survived for a time by selling off its holdings, including the famous Pan Am Building on Manhattan's Park
Avenue. In 1991, it declared bankruptcy and went out of business.
A corporate raider, Frank Lorenzo, purchased control of Eastern Airlines. He worked vigorously to cut
the pay of his employees—and soon found himself in a battle with his labor unions. When the smoke
cleared, Eastern also was bankrupt. The magazine Business Week described it as "one of the few large
bankruptcies in history that won't even have enough money left to pay off the lawyers."
Other airlines also fell short. Braniff Airways gambled that new aircraft would help it recover market
share—only to fly into a time of high fuel prices, high interest rates, and a new recession that cut into
passenger demand. This airline ran out of cash and shut down. TWA was in and out of bankruptcy
before finally folding in 2001, as it agreed to sell its assets to American Airlines. As the new century
began, the nation counted only three strong surviving carriers: American, United, and Delta.
Among the planebuilders, Boeing faced an increasingly strong challenge from a European group, Airbus
Industrie. Boeing and Airbus both offered airliners in a wide array of sizes and ranges to meet the
needs of their customers. Boeing covered losses with profits from its 747; it has sold more than a
thousand of them, at prices up to $177 million. Airbus, with close ties to the governments of Europe,
has covered its own losses with subsidies.
In addition, the Europeans now are building something new: the Airbus A-380. This is to be the world's
largest airplane, with two complete decks of seats. The biggest current version of the Boeing 747 seats
421 passengers; the A-380 is to carry as many as 656.
In the United States, airline traffic topped 600 million passengers per year in 2001, for a fourfold
increase in just 30 years. New airports could help relieve this congestion, but the nation recently has
built only one large new one near Denver. Everywhere else, plans for new airports have faced stiff
competition. It has also proven difficult to build new runways at existing airports although much effort
is underway to expand on numerous airports around the nation.
T. A. Heppenheimer