2.1 Onward and Upward
2.1.1 Technology and Early History
development grew out of the military use of aircraft. The German all-metal Junkers F13 monoplane is considered to be the world’s first practical civilian transport airplane.
Airmail came next. Using a large number of war-surplus planes, the US Post Office began airmail service in 1917 and, by 1919, had begun to provide segments of transcontinental shipment by air. The government then moved to transfer airmail service to the private sector through the 1925 Contract Air Mail Act (Kelly Act), which provided the impetus for creation of a private US airline industry. The core of several major carriers, including United Airlines, American Airlines, and TWA (as well as the ultimately defunct Pan Am and Eastern), grew from the roots of the winners of the initial five contracts. Also in 1925, the predecessor of the Federal Aviation Administration (FAA), the Morrow Board, was established to recommend national civil aviation standards. Congress adopted the Morrow Board recommen- dations in passing the Air Commerce Act of 1926. With this, the government began to pay private mail carriers according to the weight carried rather than a percentage of the postage paid.
Development in Britain followed a similar path. In 1917 the Royal Flying Corps ferried mail across the channel and, by 1918, the services run by the Royal Air Force (RAF) had established the framework for what ultimately became an exten- sive international network of civilian air carriers led by the companies Air Trans- port & Travel and Handley Page. Then there was the famous Sopwith Camel, a British single-seat biplane fighter with powerful rotary engines and twin
1910 1930 1950 1970 1
Airline Industry Milestones
990 1890
Paris Convention – sovereignty over air space
Chicago Convention - International tariffs & rights
Bermuda - bilateral agreement (U.S. & U.K.)
First turbo-jets First fuel crisis
Airline Deregulation Act passed by Congress
CAB ends Second fuel crisis
First trans-Atlantic flight (Lindbergh) DC-3 introduced by American Airlines
Civil Aeronautics Act passed
Big Four (American, Eastern, United, and TWA) emerge
Interstate Commerce Act, 1887
First flight (Wright Bros.
``Kitty Hawk")
Widebody Boeing 747 and DC-10 and L-1011 begin service Southwest Airlines begins service
Supersonic service (Concorde) begins
American Airlines Sabre sustem introduced
People Express begins service PATCO (air controllers) fired
American introduces first 'frequent-flyer' plan
Eastern Air-Shuttle begins
Pan Am buys National Airlines for $374 million
Continental declares bankruptcy
United buys Pan Am Asia routes for $750 million United pilots strike, Delta buys Western Airlines for $860 million
People Express fails Laker Airways low fares over North Atlantic
American introduces 'yield management'
Eastern bankrupt after machinists' strike British (Imperial) Airways begins
Braniff fails
United and BA begin code-sharing Virgin Atlantic begins
Pan Am bankruptcy
United & American buy Heathrow rights ($400-$445 million)
Delta buys Pan Am Atlantic rights ($1.3 billion) United buys Pan Am Latin American routes ($135 million)
European de-regulation Northwest buys Continental stake
Marketing alliances (Star, OneWorld, Wings) begin to form
Lilienthal gliders prove principles of flight
Heathrow opens
First commercial flights over North Pole by SAS First scheduled flights
First airmail Contract Air Mail Act
Air Commerce Act Continental Airlines founded
American buys Eastern's L. American routes for $300 million
Piedmont Airlines begins
USAir buys Piedmont for $1.6 billion
2010
UAL bids $4.3 billion for US Airways, then nullifies deal in July 2001
Start-ups (Legend, JetBlue, National) appear American buys bankrupt TWA ($742 million)
Airbus A380s begin service
Terrorists attack U.S., Aviation and Transportation Security Act US Airways bankruptcy (and again in Sept. '04) Federal Aviation
Act forms FAA
United bankruptcy Air France and KLM merge
US Airways & America West merge ($1.5 bn) Delta, Northwest bankruptcy
New Open Skies deal for US & EU Delta & Northwest merge
2010
Iceland volcano disrupts traffic United and Continental merge
2030 US Airways & American Merge
DOJ probes collusion BA parent IAG buys Aer Lingus
Fig. 2.1 Airline industry milestones, 1890–2014
2.1 Onward and Upward 49
synchronized machine guns that was introduced in 1917 and credited with shooting down more enemy aircraft than any other fighter of the war.
French companies, with the help of government subsidies, also sprang into competition around this time, connecting Paris and London. By the early 1920s, Brussels and Amsterdam were also becoming routine destinations. And in Ger- many, Junkers and another company were merged in 1926 and provided with annual subsidies in support of what became Lufthansa. Because of its near- monopoly position and government support, the early Lufthansa, unlike many other European carriers, was highly profitable. As a result, it was able to open the first air service to China in 1930, even though China at that time had no aerial maps, repair stations or airports, and only primitive landing strips.
As in the United States and Germany, however, the government was soon enmeshed in the affairs of the British civilian industry, especially through efforts of the Civil Air Transport Subsidies Committee, otherwise known as the Hambling Committee. This committee decided on the need for a British national flag-carrier, named Imperial Airways Limited, to be formed via merger of several smaller companies that would receive subsidies and that would purchase British-made aircraft and engines. Yet subsidies notwithstanding, Imperial ultimately failed to adequately service connections to Europe and it was eventually absorbed through a forced merger in 1938 with British Airways, a company that had originated in 1935.
It was not until the 1974 merger of British Overseas Airways Corporation (BOAC) with British European Airlines, that the modern British Airways was formed with a critical mass of equipment, routes, and service.
Charles Lindbergh’s historic first nonstop flight from New York to Paris across the Atlantic Ocean in 1927 was most significant in that it fully captured the public’s imagination and began to attract to this industry many millions of dollars of private investment on both sides of the Atlantic. With capital now being injected more rapidly, technological development of aircraft and aviation systems accelerated.
Airlines began to attract more passengers away from the railroads, engines and cockpit instruments improved, and better radio communications equipment made it possible to fly at night or in poor weather conditions.
Radio beacons became operational in 1932 and the first air traffic control tower was constructed at Newark International Airport in 1935. Development of Britain’s Heathrow Airport—opened in 1946 on the site of a former World War I grass- runway airstrip (with the first terminal building constructed in 1955)—was also notable as Heathrow quickly became (because of location, time zones, etc.) the leading international airport with few rivals until 1990.
The 1930s also brought political scandal in the form of the Watres Act passed by Congress in 1930 and the subsequent “spoils conference” based on this act. In the spoils conference, smaller airlines were purposely shut out of bidding for govern- ment airmail contracts in the expectation that promotion of larger, stronger airlines would be in the national interest. But the issue of unfairness to the smaller lines raised political pressure that led to the Air Mail Act of 1934 and a more competitive structure for the private carriage of mail. In Canada, Trans-Canada Air was
legislated into existence in 1936 as a subsidiary of CN Rail, whose shares were owned by the federal government.
Modern passenger aircraft also advanced rapidly at this time, with United Airlines in 1933 buying 60 Boeing 247s, each of which could accommodate 10 passengers and cruise at 155 miles per hour. Not to be outdone, TWA bought an alternative model from Douglas aircraft, the DC-1, which was equipped with the first efficient wing flaps and autopilot. Rapid improvements on the initial model then led to the DC-3, which American Airlines introduced in 1936 and which—
being the first aircraft that enabled airlines to make money carrying passengers—
became the workhorse of the industry. The DC-3 had 21 seats, was equipped with hydraulic landing gear, and could go coast-to-coast in 16 h, an impressive speed for that time. And by 1940, the Boeing Stratoliner, a derivative of the B-17 bomber, provided another technological leap, with its pressurized cabins allowing flights to go as high as 20,000 feet and at speeds of 200 miles per hour.
Things also began to move faster on the regulatory front with the establishment of the Civil Aeronautics Authority (CAA) by way of the Civil Aeronautics Act of 1938. The act was unusual from today’s perspective in that the airlines actually wantedgreater government regulation through an agency empowered to regulate airline tariffs, airmail rates, mergers, and routes while sheltering them from unbri- dled competition. Congress then also created, in 1940, a separate agency, the Air Safety Board, which was combined with the CAA into an agency known as the Civil Aeronautics Board (CAB).
Aviation also played an important role in World War II, a time of especially rapid technological progress in systems and equipment. The fighter and bomber planes and radar designs that came out of the war were soon applied to the civilian segment, with jet engines being the most important of these innovations. Jet engines for the first time made it possible to visit and/or view the earth’s entire surface and their introduction forever redefined and changed commerce, leisure, arts, and culture (as well as war and peace). An early-model British-made passenger jet, the Comet, flying from London to Johannesburg in 1952 could now fly at speeds up to 500 miles per hour.2
But the true coming of the passenger-jet age (surveyed by Verhovek 2010), however, did not appear until 1958, when Boeing introduced its 707 model, which could carry 181 passengers at a speed of up to 550 miles per hour (and initially flown by Pan Am). Jets became dominant because they could fly at heights that are usually above turbulent weather and at speeds about three times faster than aircraft powered by piston-driven gasoline engines. Later, the Boeing 737 became the best- selling aircraft in history, with more than 5,000 put into service. And by 110 years after the Kitty Hawk’s first wobbly flight, the Airbus A380 had become the largest
2At around the same time (1951), the Japanese flagship carrier, Japan Airlines (JAL), was formed, with its first aircraft, a DC-4, entering service in September 1952 on a Tokyo-Osaka-Fukuoka route. Shortly thereafter, in 1953, the Japan Airlines Law was enacted.
2.1 Onward and Upward 51
commercial plane—capable of holding up to 800 passengers, flying faster than 600 miles per hour (960 kph), and going 8,500 nautical miles without refueling.
Yet it also ought not to be forgotten that aviation was tragically brought to a practical standstill by terrorist attacks (on September 11, 2001) using hijacked civilian commercial aircraft against the World Trade Center in New York and the Pentagon in Washington, DC: 3,000 innocent people were murdered. Global airline passenger traffic and tourism then subsequently declined so steeply that many airline companies required extensive government guarantees and subsidies of various types so that services could be resumed.3