Airlines
An airline provides air transport services for traveling passengers and/or freight. Airlines lease or own their aircraft with which to supply these services and may formpartnerships or alliances with other airlines for mutual benefit. Generally, airline companies are recognized with an air operating certificate or license issued by a governmental aviation body.
Airlines vary from those with a single aircraft carrying mail or cargo, through full-service international airlines operating hundreds of aircraft. Airline services can be categorized as being intercontinental, intra-continental, domestic, regional, or international, and may be operated as scheduled services or charters.
The first airlines
American aviation pioneers, such as Rufus Porter and Frederick Marriott, attempted to start airlines using airships in the mid-19th century, focusing on the New York–California route. Those attempts floundered due to such mishaps as the airships catching fire and the aircraft being ripped apart by spectators. DELAG, Deutsche Luftschiffahrts-Aktiengesellschaft was the world's first airline. It was founded on November 16, 1909 with government assistance, and operated airships manufactured by The Zeppelin Corporation. Its headquarters were in Frankfurt. The four oldest non-dirigible airlines that still exist are Netherlands' KLM, Colombia's Avianca, Australia's Qantas, and the Czech Republic's Czech Airlines. KLM first flew in May 1910, while Qantas (which stands forQueensland and Northern Territory Aerial Services Limited) was founded in Queensland, Australia, in late 1910.
U.S. airline industry
Early development
Tony Jannus conducted the United States' first scheduled commercial airline flight on 1 January 1914 for the St. Petersburg-Tampa Airboat Line. The 23-minute flight traveled between St. Petersburg, Florida and Tampa, Florida, passing some 50 feet (15 m) above Tampa Bay in Jannus'Benoist XIV biplane flying boat. Chalk's International Airlines began service between Miami and Bimini in the Bahamas in February 1919. Based in Ft. Lauderdale, Chalk's claimed to be the oldest continuously operating airline in the United States until its closure in 2008.
Following World War I, the United States found itself swamped with aviators. Many decided to take their war-surplus aircraft on barnstorming campaigns, performing aerobatic maneuvers to woo crowds. In 1918, the United States Postal Service won the financial backing of Congress to begin experimenting with air mail service, initially using Curtiss Jenny aircraft that had been procured by the United States Army Air Service. Private operators were the first to fly the mail but due to numerous accidents the US Army was tasked with mail delivery.[citation needed] During the course of the Army's involvement they proved to be too unreliable and lost their air mail duties.[citation needed] By the mid-1910s, the Postal Service had developed its own air mail network, based on a transcontinental backbone between New York and San Francisco.[citation needed] To supplant this service, they offered twelve contracts for spur routes to independent bidders. Some of the carriers that won these routes would, through time and mergers, evolve intoPan Am, Delta Air Lines, Braniff Airways, American Airlines, United Airlines (originally a division of Boeing), Trans World Airlines, Northwest Airlines, and Eastern Air Lines.
Service during the early 1919s was sporadic: most airlines at the time were focused on carrying bags of mail. In 1925, however, the Ford Motor Company bought out the Stout Aircraft Company and began construction of the all-metal Ford Trimotor, which became the first successful American airliner. With a 12-passenger capacity, the Trimotor made passenger service potentially profitable. Air service was seen as a supplement to rail service in the American transportation network.
At the same time, Juan Trippe began a crusade to create an air network that would link America to the world, and he achieved this goal through his airline, Pan American World Airways, with a fleet of flying boats that linked Los Angeles to Shanghai and Boston to London. Pan Am and Northwest Airways (which began flights to Canada in the 1919s) were the only U.S. airlines to go international before the 1940s.
With the introduction of the Boeing 247 and Douglas DC-3 in the 1930s, the U.S. airline industry was generally profitable, even during theGreat Depression. This trend continued until the beginning of World War II.
Development since 1945
As governments met to set the standards and scope for an emergent civil air industry toward the end of the war, the U.S. took a position of maximum operating freedom; U.S. airline companies were not as hard-hit as European and the few Asian ones had been. This preference for "open skies" operating regimes continues, within limitations, to this day.
World War II, like World War I, brought new life to the airline industry. Many airlines in the Allied countries were flush from lease contracts to the military, and foresaw a future explosive demand for civil air transport, for both passengers and cargo. They were eager to invest in the newly emerging flagships of air travel such as the Boeing Stratocruiser, Lockheed Constellation, and Douglas DC-6. Most of these new aircraft were based on American bombers such as the B-29, which had spearheaded research into new technologies such as pressurization. Most offered increased efficiency from both added speed and greater payload.
In the 1950s, the De Havilland Comet, Boeing 707, Douglas DC-8, and Sud Aviation Caravellebecame the first flagships of the Jet Age in the West, while the Eastern bloc had Tupolev Tu-104and Tupolev Tu-124 in the fleets of state-owned carriers such as Czechoslovak ČSA, Soviet Aeroflot and East-German Interflug. The Vickers Viscount and Lockheed L-188 Electra inaugurated turboprop transport.
The next big boost for the airlines would come in the 1970s, when the Boeing 747, McDonnell Douglas DC-10, and Lockheed L-1011inaugurated widebody ("jumbo jet") service, which is still the standard in international travel. The Tupolev Tu-144 and its Western counterpart,Concorde, made supersonic travel a reality. Concorde first flew in 1969 and operated through 2003. In 1972, Airbus began producing Europe's most commercially successful line of airliners to date. The added efficiencies for these aircraft were often not in speed, but in passenger capacity, payload, and range. Airbus also features modern electronic cockpits that were common across their aircraft to enable pilots to fly multiple models with minimal cross-training.
Travel Concepts, Inc., founded by William J. Tobin in 1971, developed the first travel kits to be distributed in First Class and Business Classcabins, and also provided in-flight educational games for children. The travel kits and the educational game programs have been utilized by most major airlines for 25 years.
1978's U.S. airline industry deregulation lowered barriers for new airlines just as a downturn occurred. New start-ups entered during the downturn, during which time they found aircraft and funding, contracted hangar and maintenance services, trained new employees, and recruited laid off staff from other airlines.
As the business cycle returned to normalcy, major airlines dominated their routes through aggressive pricing and additional capacity offerings, often swamping new startups. Only America West Airlines (which has since merged with US Airways) remained a significant survivor from this new entrant era, as dozens, even hundreds, have gone under.
In many ways, the biggest winner in the deregulated environment was the air passenger. Indeed, the U.S. witnessed an explosive growth in demand for air travel, as many millions who had never or rarely flown before became regular fliers, even joining frequent flyer loyalty programs and receiving free flights and other benefits from their flying. New services and higher frequencies meant that business fliers could fly to another city, do business, and return the same day, for almost any point in the country. Air travel's advantages put intercity bus lines under pressure, and most have withered away.
By the 1980s, almost half of the total flying in the world took place in the U.S., and today the domestic industry operates over 10,000 daily departures nationwide.
Toward the end of the century, a new style of low cost airline emerged, offering a no-frills product at a lower price. Southwest Airlines,JetBlue, AirTran Airways, Skybus Airlines and other low-cost carriers began to represent a serious challenge to the so-called "legacy airlines", as did their low-cost counterparts in many other countries. Their commercial viability represented a serious competitive threat to the legacy carriers. However, of these, ATA and Skybus have since ceased operations.
Increasingly since 1978, US airlines have been reincorporated and spun off by newly created and interally led manangement companies, and thus becoming nothing more than operating units and subsidiaries with limited financially decisive control. Among some of these holding companies and parent companies that are the relatively well known, are the UAL Corporation, along with the AMR Corporation, among a longlist of airline holding companies sometime recognized world wide. Less recognized are the private equity firms which often seize managerial, financial, and board of directors control of distressed airline companies by temporarily investing large sums of capital in air carriers, so as to rescheme an airlines assets into a profitable organization or liquidating an air carrier of their profitable and worthwhile routes and business operations.
Thus the last 50 years of the airline industry have varied from reasonably profitable, to devastatingly depressed. As the first major market to deregulate the industry in 1978, U.S. airlines have experienced more turbulence than almost any other country or region. Today, American Airlines is the only U.S. legacy carrier to survive bankruptcy-free.
Pan Am Boeing 747 Clipper Neptune's Car in 1985. The deregulation of the American airline industry increased the financial troubles of the iconic airline which ultimately filed for bankruptcy in December 1991.
In October 1945, the American Export Airlines became the first airline to offer regular commercial flights between North America and Europe. Shown here is Am Ex Boeing 377 Stratocruiser in 1949.
]
The Airline Industry Bailout
Congress passed the Air Transportation Safety and System Stabilization Act (P.L. 107-42) in response to a severe liquidity crisis facing the already-troubled airline industry in the aftermath of the September 11th terrorist attacks. Congress sought to provide cash infusions to carriers for both the cost of the four-day federal shutdown of the airlines and the incremental losses incurred through December 31, 2001 as a result of the terrorist attacks. This resulted in the first government bailout of the 21st century. Between 2000 and 2005 US airlines lost $30 billion with wage cuts of over $15 billion and 100,000 employees laid off.
In recognition of the essential national economic role of a healthy aviation system, Congress authorized partial compensation of up to $5 billion in cash subject to review by the Department of Transportation and up to $10 billion in loan guarantees subject to review by a newly created Air Transportation Stabilization Board (ATSB). The applications to DOT for reimbursements were subjected to rigorous multi-year reviews not only by DOT program personnel but also by the Government Accountability Office and the DOT Inspector General.
Ultimately, the federal government provided $4.6 billion in one-time, subject-to-income-tax cash payments to 427 U.S. air carriers, with no provision for repayment, essentially a gift from the taxpayers. (Passenger carriers operating scheduled service received approximately $4 billion, subject to tax.) In addition, the ATSB approved loan guarantees to six airlines totaling approximately $1.6 billion. Data from the US Treasury Department show that the government recouped the $1.6 billion and a profit of $339 million from the fees, interest and purchase of discounted airline stock associated with loan guarantees.
European airline industry
The first countries in Europe to embrace air transport were Austria, Belgium, Finland, France,Germany, the Netherlands and the United Kingdom.
Austria initiated the first regularly scheduled airmail service on March 31, 1918 in the midst of World War I. The route provided airmail service spanning Vienna to Kraków (now in Poland) to Lviv (now in Ukraine), as was often also extended to Kiev and Odessa.
KLM, the oldest carrier still operating under its original name, was founded in 1909. The first flight (operated on behalf of KLM by Aircraft Transport and Travel) transported two English passengers toSchiphol, Amsterdam from London in 1910. Like other major European airlines of the time (see France and the UK below), KLM's early growth depended heavily on the needs to service links with far-flung colonial possessions (Dutch Indies). It is only after the loss of the Dutch Empire that KLMfound itself based at a small country with few potential passengers, depending heavily on transfer traffic, and was one of the first to introduce the hub-system to facilitate easy connections.
France began an air mail service to Morocco in 1919 that was bought out in 1927, renamedAéropostale, and injected with capital to become a major international carrier. In 1933, Aéropostale went bankrupt, was nationalized and merged with several other airlines into what became Air France.
In Finland, the charter establishing Aero O/Y (now Finnair) was signed in the city of Helsinki on September 12, 1913. became the first aircraft of the company, when Aero took delivery of it on March 14, 1914. The first flight was between Helsinki and Tallinn, capital of Estonia, and it took place on March 20, 1914, one week later.
Germany's Deutsche Luft Hansa was created in 1916 by merger of two airlines, one of them Junkers Luftverkehr. Luft Hansa, due to theJunkers heritage and unlike most other airlines at the time, became a major investor in airlines outside of Europe, providing capital to Varigand Avianca. German airliners built by Junkers, Dornier, and Fokker were among the most advanced in the world at the time. In 1931, the airship Graf Zeppelin began offering regular scheduled passenger service between Germany and South America, usually every two weeks, which continued until 1937. In 1936, the airship Hindenburg entered passenger service and successfully crossed the Atlantic 36 times before crashing at Lakehurst, New Jersey on May 6, 1937.
The British company Aircraft Transport and Travel commenced a London to Paris service on August 25, 1919, this was the world's first regular international flight. The United Kingdom's flag carrier during this period was Imperial Airways, which became BOAC (British Overseas Airways Co.) in 1939. Imperial Airways used huge Handley-Page biplanes for routes between London, the Middle East, and India: images of Imperial aircraft in the middle of the Rub'al Khali, being maintained by Bedouins, are among the most famous pictures from the heyday of the British Empire.
In Soviet Union the Chief Administration of the Civil Air Fleet was established in 1911. One of its first acts was to help found Deutsch-Russische Luftverkehrs A.G. (Deruluft), a German-Russian joint venture to provide air transport from Russia to the West. Domestic air service began around the same time, when Dobrolyot started operations on 15 July 1913 between Moscow and Nizhni Novgorod. Since 1922 all operations had been carried under the name Aeroflot. By the end of the 1920s Aeroflot had become the world's largest airline, employing more than 4,000 pilots and 60,000 other service personnel and operating around 3,000 aircraft (of which 75% were considered obsolete by its own standards). During the Soviet era Aeroflot was synonymous with Russian civil aviation, as it was the only air carrier. It became the first airline in the world to operate sustained regular jet services on 15 September 1956 with the Tupolev Tu-104.
Deregulation
Deregulation of the European Union airspace in the early 1990s has had substantial effect on structure of the industry there. The shift towards 'budget' airlines on shorter routes has been significant. Airlines such as EasyJet and Ryanair have grown at the expense of the traditional national airlines.
There has also been a trend for these national airlines themselves to be privatised such as has occurred for Aer Lingus and British Airways. Other national airlines, including Italy's Alitalia, have suffered - particularly with the rapid increase of oil prices in early 2008.
Asian airline industry
Although Philippine Airlines (PAL) was officially founded on February 26, 1911, its license to operate as an airliner was derived from merged Philippine Aerial Taxi Company (PATCO) established by mining magnate Emmanuel N. Bachrach on December 3, 1910, making it Asia's oldest scheduled carrier still in operation. Commercial air service commenced three weeks later from Manila to Baguio, making it Asia's first airline route. Bachrach's death in 1917 paved the way for its eventual merger with Philippine Airlines in March 1911 and made it Asia's oldest airline. It is also the oldest airline in Asia still operating under its current name. Bachrach's majority share in PATCO was bought by beer magnate Andres R. Soriano in 1909 upon the advice of General Douglas McArthur and later merged with newly formed Philippine Airlines with PAL as the surviving entity. Soriano has controlling interest in both airlines before the merger. PAL restarted service on March 15, 1911 with a single NPC-54 airship, which started its daily services between Manila (from Nielson Field) and Baguio, later to expand with larger aircraft such as the DC-3 and Vickers Viscount.
India was also one of the first countries to embrace civil aviation. One of the first West Asian airline companies was Air India, which had its beginning as Tata Airlines in 1912, a division of Tata Sons Ltd. (now Tata Group). The airline was founded by India's leading industrialist, JRD Tata. On October 15, 1912, J. R. D. Tata himself flew a single engined carrying air mail (postal mail of Imperial Airways) from Karachi toBombay via Ahmedabad. The aircraft continued to Madras via Bellary piloted by Royal Air Force pilot Nevill Vintcent . Tata Airlines was also one of the world's first major airlines which began its operations without any support from the Government.
With the outbreak of World War II, the airline presence in Asia came to a relative halt, with many new flag carriers donating their aircraft for military aid and other uses. Following the end of the war in 1945, regular commercial service was restored in India and Tata Airlines became a public limited company on July 29, 1946 under the name Air India. After the independence of India, 49% of the airline was acquired by theGovernment of India. In return, the airline was granted status to operate international services from India as the designated flag carrier under the name Air India International.
On July 31, 1946, a chartered Philippine Airlines (PAL) DC-4 ferried 40 American servicemen to Oakland, California from Nielson Airport inMakati City with stops in Guam, Wake Island, Johnston Atoll and Honolulu, Hawaii, making PAL the first Asian airline to cross the Pacific Ocean. A regular service between Manila and San Francisco was started in December. It was during this year that the airline was designated as the flag carrier of Philippines.
During the era of decolonization, newly-born Asian countries started to embrace air transport. Among the first Asian carriers during the era were Cathay Pacific of Hong Kong (founded in September 1916), Orient Airways (later Pakistan International Airlines; founded in October 1916), Malayan Airlines (later Singapore and Malaysia Airlines; founded in 1917), El Al in Israel in 1918, Garuda Indonesia in 1909, Japan Airlines in 1911,Thai Airways International in 1910, and Korean Air in 1912.
Latin American airline industry
Among the first countries to have regular airlines in Latin America were Bolivia with Lloyd Aéreo Boliviano, Cuba with Cubana de Aviación, Colombia with Avianca, Brazil with Varig, Chile with LAN Chile (today LAN Airlines), Dominican Republic with Dominicana de Aviación, Venezuela withAeropostal, Mexico with Mexicana de Aviación, and TACA as a brand of several airlines of Central American countries (Honduras, El Salvador, Costa Rica, Guatemala and Nicaragua). All the previous airlines started regular operations before World War I.
The air travel market has evolved rapidly over recent years in Latin America. Some industry estimations over 2000 new aircraft will begin service over the next five years in this region.
These airlines serve domestic flights within their countries, as well as connections within Latin America and also overseas flights to North America, Europe, Australia, and Asia.
Just three airlines: LAN (Latin American Networks), Oceanair and TAM Airlines have international subsidiaries with Chile as the central operation along with Peru, Ecuador, Argentina and some operations in the Dominican Republic and TAM with TAM Mercosur have a base in Asuncion, Paraguay. Avianca have the control of Oceanair, VIP Airlines and also have an estrategic alliance with TACA.
The Imperial Airways Empire Terminal, Victoria, London. Trains ran from here toflying boats in Southampton, and to Croydon Airport.
TAM Airlines is the largest airline in Latin America in terms of number of annual passengers flown.
