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Non-skeds: The story of America´s supplemental airlines Part III

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Non-skeds: The story of America´s supplemental airlines Part III

Non-skeds: The story of America´s supplemental airlines  Part III
May 26
11:25 2016

Published in December 2015 issue

By David H. Stringer

RESILIANCE, RESURRECTION AND DEFEAT

The Civil Aeronautics Board had a different makeup and a different philosophy by the end of 1955. Two of the five members of the Board had been replaced. In an order adopted December 29, 1955, the CAB stated: “The irregulars represent a significant part of the nation’s air transport system and there is a continuing need for their services… They have rendered invaluable service to the military… The growth of the operations of the irregulars has not had an adverse effect upon the certificated carriers…The Board’s policy toward these carriers should be directed toward their survival and continued healthy growth, subject to the overall objectives of The Act [Civil aeronautics Act of 1938] and a proper relationship to the certificated air carrier system.” This was a far cry from the Board’s Goodkind Memorandum of 1948, which had outlined the steps necessary to eliminate the non-skeds.

No longer would they be burdened with the unwieldy title of large irregular carriers, or the less-than-inspiring term, “irregulars”. The group was given a new classification. From that point on they would officially be known as America’s supplemental airlines.

With all of this new attention came yet another licensing process. But this time the carriers deemed fit, willing and able would receive an actual Certificate of Public Convenience and Necessity for Supplemental Air Service. The terms of their authority were made clear. The approved carriers could operate commercial and military charters. They could also offer supplemental scheduled service with a maximum of 10 flights per month in each direction between any two points in the United States, including Alaska and Hawaii.

Fifty-four companies applied for certification. In January 1957, the CAB’s examiners ruled that 31 of the applicants were qualified; 23 were not. When the certificates were finally issued on October 1, 1959, the pool of selected carriers had dwindled to 25. But these were the survivors. These would be the twenty-five supplemental air carriers legally certificated and protected under the law. It seemed that after 14 years of fighting, these non-skeds were finally going to have their day in the sun.

That sunny day did not last for long. Almost immediately United Air Lines filed suit against the Civil Aeronautics Board for overstepping its bounds. How could the Board permit these outfits to fly on a schedule between any cities they pleased up to 10 times per month when the scheduled airlines were strictly relegated to flying only their certificated routes? In 1960, the United States Court of Appeals in the District of Columbia agreed and the whole situation was turned over to Congress. The House of Representatives issued a law allowing the supplementals that had been certificated the previous year to continue operating with “interim authority” while they sorted the situation out.

With regard to the supplemental carriers, Congress was once again faced with the question, “What are we going to do with you?” And, as if on a cue in some dramatic play, tragedy struck and an accusing finger was once again pointed at the non-skeds. After several years of safe operations without a single passenger fatality among the supplementals, a World Airways DC-6A, carrying military personnel and their dependents, crashed into a mountain after take-off from Guam on September 19, 1960. Eighty people lost their lives. The accident was ascribed to pilot error.

Then, on October 29th, the California Polytechnic State University (Cal Poly) football team was set to return from a game in Ohio to their campus in San Luis Obispo. For the trip they had chartered a C-46 belonging to supplemental carrier, Arctic-Pacific Airlines. In zero visibility, the Commando began its take-off run at Toledo Express Airport. The port engine began to lose power just as the craft became airborne. According to an article in the Toledo Blade looking back on the accident fifty years after the fact, the aircraft fishtailed some 100 feet above the ground, fell back to earth, flipped tail over nose and was soon engulfed in flames on the edge of the main east-west runway. Twenty-two of the forty-eight aboard perished, including sixteen of the team’s players. It was revealed that the pilot-in-command, who had made the decision to take off in fog, was flying with a revoked license but he was allowed to continue flying pending his appeal process. The crew had been on duty for 26 hours. The engine that failed had been improperly installed and the aircraft was loaded 2,000 pounds above its allowed maximum takeoff weight.

Shortly after the crash, LIFE Magazine published an article entitled “Campus Overwhelmed by a Team’s Tragic Flight”. All of the bad publicity that once haunted the non-skeds now came back to roost. Arctic-Pacific’s certificate was rescinded.

On September 10, 1961, a DC-6B belonging to President Airlines, which had taken over the certificate of California Eastern Aviation, crashed after takeoff from Shannon Airport in Ireland on a flight from Dusseldorf to Chicago via Shannon and Gander. All 83 aboard were killed. Instead of making a right hand turn after takeoff, as instructed, the crew banked left to 90° and the aircraft fell into the River Shannon. In addition to possible mechanical failure, crew fatigue was indicated as a contributing factor.

Then on November 8th, an Imperial Airlines Lockheed 069 Constellation with 74 army recruits aboard crashed while attempting an emergency landing at Richmond, Virginia. Both starboard engines on the Connie had suffered fuel starvation, followed by the no. 1 engine on the port side faltering as the crew attempted a go-around. All 74 of the recruits perished. A scathing article in TIME Magazine the following month stated that it was a wonder that Imperial’s Constellation had managed to get off of the ground in the first place. The article stated that the 29-year-old pilot-incommand had failed 3 flight tests previously in his career; the Constellation’s fuel was contaminated by rust sediment; a fuel pump motor had been repaired by using a brush cut down from a 1954 Mercury automobile engine; one pilot had asked the flight engineer to open an emergency fuel valve but the other pilot told him not to. The airline’s “incredibly slipshod methods of maintenance” were exposed when the FAA’s Miami inspector stated that half of his time was taken up dealing with Imperial’s maintenance discrepancies.

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After an impressive period of safe operation in the late 1950s, the supplemental airlines were once again faced with the problem of a few rotten apples among all of the healthy fruit. Another TIME Magazine article stated that it was “statistically… 30 times as dangerous to fly on a non-sked as on a scheduled airline.”

Congress delivered its decision on the non-sked situation, issued as Public Law 87-528, on July 10, 1962. Once again, the supplementals would have to apply for a new license. They had exactly one month to do so. Two companies missed the filing deadline (Transocean and Imperial… Transocean by less than 24 hours), and both lost their chance for recertification. In addition to Transocean and Imperial, eight other applicants were denied certificates. This time around only 15 companies made the cut. A 16th, Argonaut Airways, requested and was granted a certificate for just a brief period in order to fulfill contracts and wind up affairs.

There would now be strict oversight of every aspect of each company’s business. As the Civil Aeronautics Board stated, “…Public Law 87-528 clearly indicates the concern of Congress over operations by unfit supplemental air carriers and its desire to restrict operations in the supplemental field to only those carriers clearly establishing, among other qualifications, financial stability and fitness to be entrusted with interim authority.” The supplementals selected to receive certification would have to be fully covered with liability insurance and their financial health would be scrupulously examined by the CAB.

The non-skeds would have to operate strictly as charter outfits, earning their living from civilian and military contracts. As for the 10-flights per month permitted for scheduled individually ticketed flights between any two points, supplementals that were still offering such “route type” services had two years to transition fully to all-charter operations. Scheduled individually-ticketed flights would no longer be permitted after July 10, 1964.

Continuing its explanation of why the remaining supplementals were getting yet another lease on life the CAB reported, “The Board is aware that for a substantial period of time the supplemental carriers and their predecessors have made a major contribution to the transportation needs of the Department of Defense under both routine and emergency conditions. It is clear that, in substantial part, their efforts in this regard were the basis for Board and Congressional interest in legislation which would assure them of legal operating status.” In other words, the CAB was telling the surviving non-skeds to be grateful that the military needed them to transport its troops and their families and its materiel.

In what would become fodder for conspiracy theorists, starting in 1962, Military Air Transport service (MATS) contracts were awarded primarily to a group of supplemental carriers represented by a gentleman named Coates Lear, who was a partner in the Washington, DC law firm, Zuckert, Scoutt & Rassenberger. The Zuckert in the practice’s name was Eugene M. Zuckert, who had recently been appointed Secretary of the Air Force. It certainly appeared that the military contracts were being awarded to a select group of ‘good old boys’.


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Lear was the president of a newly-formed organization called NACA, the National Air Carrier Association. NACA served as an agent for its seven members, American Flyers Airline Corp., Capitol Airways, Modern Air Transport, Overseas National Airways, Saturn Airways, Southern Air Transport, and World Airways, booking civilian charter groups aboard the member airlines’ aircraft when they were not tied up with military charters.

The possibility of receiving a military contract was becoming more and more remote for many of the supplemental carriers who were not “on the inside”. Ralph Cox, president of United States Overseas Airlines, claims that he approached Coates Lear, asking to be represented by him and requesting future MATS contracts. Lear supposedly replied to Cox that USOA was a fit company and had proven itself over the years as a professional military contractor deserving of a contract. But several days later, according to Cox, Lear came back and apologized stating that “The rest of the boys do not want you. They do not want me to represent you. I cannot do it.”

To make the story more intriguing, Coates Lear was found dead in 1963, shortly before President Kennedy was assassinated. Although the verdict was that Lear committed suicide, there was speculation among those aforementioned conspiracy theorists that the two deaths were linked.

Then the military spoke up. MATS issued a directive, effective May 1, 1964, stating that a minimum of 30% of any carrier’s revenue must be derived from commercial sources in order to qualify for a military contract in fiscal 1966. In other words, a non-sked could not rely solely on the military for its breadand- butter.

Then MATS dropped another ultimatum: In the future, contract operators would be required to use jet equipment. It was time for the final weeding-out process to take place among the large irregular carriers.

As the deadline to end scheduled operations approached, only one of the supplementals was still offering this type of service. United States Overseas Airlines (USOA – see sidebar), which relied heavily on its scheduled services both domestically and across The Pacific, did not transition successfully to the required all-charter operation and was shut down by the CAB in late 1964.

Without MATS contracts, all but the handful of supplementals that still qualified under the military’s rules were forced out of business. USOA’s Cox referred to the surviving carriers as the “MATS mistresses”.

In the military’s defense, the United States was becoming embroiled in the Vietnam War and there was no place for an unreliable contractor among the airlines selected to transport troops. There had been too many instances of crashes caused by mechanical failure or incompetent piloting, and too many accidents in which crew fatigue or improper loading had contributed. Now only a trusted few would get contracts. But some reliable, professional companies were thrown by the wayside along with the “fly-by-nights”. The era of the scrappy non-skeds, fighting for their existence, was over.

Supplemental airlines continued to come and go during the remainder of the Sixties and into the Seventies, but not in the numbers that existed before 1964. As the Seventies progressed and the CAB became more bogged down in its attempt to control the airline network of the United States, some in government started to call for more freedom in airline operations and an end to the bureaucracy that was the Civil Aeronautics Board.

In 1976, the United States Senate once again held hearings on the subject of irregular airlines. This time the committee’s interest was in “The Decline of Supplemental Air Carriers in the United States.” One final time, Orvis Nelson (Transocean Air Lines), Ralph Cox (USOA), and others got a chance to tell the tale of how their businesses had been treated by the CAB and by the military. All of this testimony was part of the process leading up to the Airline Deregulation Act of 1978.

After the act was passed, the category of supplemental airlines became superfluous. The Civil Aeronautics Board was slowly disbanded and all airlines gained more freedom to enter and leave markets and to offer scheduled services. Many of the companies testing the waters of this newfound freedom quickly realized that running an airline in a deregulated environment was tough business. Bankruptcies and mergers multiplied throughout the industry.

But the legacy of the once-burgeoning group of airlines known as “non-skeds”, “irregulars”, “fly-by-nights”, and “supplementals” remained alive until March 27, 2014; that is when the last of the remaining airlines that had started life as a large irregular carrier, World Airways, ceased operations after filing for bankruptcy.


TRANSOCEAN AIR LINES

Orvis Nelson was a captain for United Air Lines (UA) and a vice-president of the Air Line Pilots Association (ALPA), the US pilots’ union, in the early 1940s. After World War II, the entrepreneurial spirit grabbed him and he left the security of his job at United to become his own boss by starting a non-scheduled airline.

Within a few years, Nelson had built Transocean Air Lines (TAL or TALOA) into the largest of the irregular carriers, engaging at its peak 6,700 employees at 57 bases worldwide.

With the company motto, “We will fly anything, anywhere, anytime”, Nelson built an incredible resume of service. The airline first established maintenance bases at its headquarters airport in Oakland, California, and in Windsor Locks, Connecticut, later expanding to other locations as the need arose.

Transocean was contracted to help war-decimated and developing countries establish their new national airlines in the late 1940s and early ’50’s. Among these ventures were Japan Air Lines (JL), Philippine Air Lines (PR), Pak-Air or Pakistan Airways, Air Jordan (AJ), Air Djibouti (DY), and Iran Air (IR). The company was also hired to train pilots and to supply navigators to the re-forming Lufthansa (LH), the West German airline, in 1954 and ’55.

In service to the US government, Transocean transported thousands of military personnel, civilian defense workers, engineers, civil servants, and their families on contracts worldwide. The company operated a commercial service within the Trust Territory of the Pacific Islands, under the auspices of the US Department of the Interior and the United Nations, from 1951 through 1960.

Tens of thousands of refugees were relocated via humanitarian aid programs on flights operated by Transocean, and the company pioneered the transportation of passengers to Mecca in hajj pilgrimage airlifts.

Transocean was the first airline to initiate aircoach service between the US mainland and Hawaii and, in 1956, began operation of limited scheduled services under its supplemental certificate. Nelson’s airline purchased most of BOAC’s fleet of Boeing 377 Stratocruisers when that company upgraded to Britannias and Comet IV’s, and flew the double-deck piston-engined aircraft on its restricted scheduled network stretching from New York to Okinawa, via the continental US, Honolulu, Wake, and Guam. Pan American World Airways and United Air Lines both fought vigorously, using their influence at the CAB, to keep Transocean’s service to Hawaii in check.

Despite all of this success, Transocean suffered from the same problem affecting the other supplementals: a lack of outside investment from financiers who were afraid that the airline’s operating authority could be revoked by the CAB at any time.

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In 1958, Orvis Nelson accepted funding from Atlas Corporation, the same company that held a controlling interest in certificated carrier Northeast Airlines. Atlas’s influence led to the dismemberment of the Transocean Empire, which included maintenance operations and related support companies, leaving the airline a shell of its former self. The carrier hurtled toward bankruptcy and dissolution, which became a reality in 1960.

Orvis Nelson tried to revive Transocean several times after the 1960 financial collapse but the airline never got off the ground again.

During the course of its existence, Transocean operated a total of 146 aircraft, including 16 Curtiss C-46s, 68 Douglas DC-4s (C-54s), nine DC- 3s, one DC-6B, 13 Martin 202s, eight Boeing 377 Stratocruisers, three Lockheed L-749A Constellations, and two L-1049H Super Constellations. At the time of its bankruptcy and liquidation, negotiations were underway for the acquisition of three Boeing 707s, two of which had originally been ordered by the Cuban airline, Cubana.


 

NORTH AMERICAN AIRLINES

The late airline historian R.E.G. (Ron) Davies claimed that Stanley Weiss was the first person to operate an air coach flight, on January 17, 1946, when his DC-3 full of veterans returning home from war lifted off from the Long Beach, California, airport bound for Kansas City, Chicago, and New York. Davies’ claim may be hard to verify but one thing is certain: Stan Weiss played a significant role at the very beginning of the air coach phenomenon.

Weiss and his business partner, Col. Charles Sherman, had formed their company, Fireball Air Express, the previous month. They intended to fly cargo on contract. When they realized there was money to be made by flying GIs home, they decided to fly people instead of freight. Prudently changing the name of the company to Standard Air Lines in 1946, Weiss and his new business partner, James Fischgrund, began raking in cash by charging a low one-way fare of $99 coast-to-coast.

A competing irregular air coach carrier, Viking Air Lines, was charging the same fare over the same route. Weiss and Fischgrund came to terms with Viking’s leaders, Ross Hart and Jack Lewin, merging the two companies in 1949 to create a stronger airline but retaining the two separate operating licenses. The partners then founded the North American Airlines Agency and acquired the licenses of four more large irregular carriers: Twentieth Century Airlines, Trans-American Airways, Trans-National Airlines and Hemisphere Air Transport. The consortium operated several coastto- coast flights per month under each carrier’s separate license, allowing it to offer a regular service under the banner of North American. It was an attempt to circumvent the CAB’s restrictive rules, which limited the number of monthly schedules permitted by one licenseholder between any two points. In 1949, the North American fleet consisted of 14 DC-3s and one DC-4.

The Civil Aeronautics Board was not pleased and tried repeatedly to put the operation out of business. But Stan Weiss fought back. Calling his coast-to-coast service ‘The Ninety-Niner’, in reference to the fare, North American’s flights were operating full, loaded with passengers who could not afford, or would not pay, the certificated airlines’ high fares. North American was making money even though it did not have the luxury of receiving pay for flying the mail or getting subsidy payments from the government. After the Congressional investigations of 1951 and 1953, during which the legislative body chastised the CAB for trying to put the large irregular carriers out of business, the Board temporarily backed off from its harassment of North American.

By 1954, with more DC-4s in the fleet, Stan Weiss’s popular conglomerate was carrying just shy of 200,000 passengers per year.

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North American Airlines tried to enter the ranks of the fully certificated scheduled carriers by applying for routes in the Denver Service Case, and later applying for trans-Atlantic scheduled air coach authority. Of course, the CAB denied the organization’s applications every time, but unlike smaller, cash-strapped supplemental carriers, North American could afford the attorneys’ and clerks’ fees necessary to continually appear in Washington before the Board.

After the CAB thwarted North American’s first attempt to buy DC-6s early on, the company placed a second order, in 1954, for seven of the more-advanced model DC-6Bs. According to Davies, this time around Donald Douglas, Sr. told his salesmen, “If Stan Weiss has the money, you sell him the airplanes.” Needless to say, the certificated carriers were not pleased when North American put its 102-seat, pressurized DC-6Bs into service on the transcontinental route effective May 1, 1955, offering an even lower fare of $88 one way.

Although the Civil Aeronautics Board’s attitude toward the supplementals would appear kinder and gentler by late 1955, the Board had had enough of Weiss’s operation and its flagrant disregard for the CAB’s rulings and ultimatums. North American’s resounding success was an embarrassment to the Board, which revoked all of Weiss’s licenses on July 1, 1955, citing serious and willful violations of the CAB’s economic regulations. Appeals through the court system allowed the company to function while it continued to apply for certificated routes much to the consternation of the CAB. North American’s passenger count for 1955 approached 275,000.

Aircraft manufacturer North American Aviation filed suit, claiming that North American Airlines could not trade under a name so similar to its own, and the US Circuit Court of Appeals agreed. On May 12, 1956, North American Airlines was forced to officially change its name to Trans American Airlines (TAA).

Trans American continued to operate while the war between the company and the CAB played itself out within the judicial system. Stan Weiss ultimately lost the battle and Trans American Airlines ceased operations on January 19, 1957. His company had been too popular and too much of a threat to the regulated industry.


United States Overseas Airlines (US0A)

Civil aeronautics Board (CAB) did an excellent job of creating and nurturing America’s scheduled airline network of trunk and local carriers, but on the opposite side of that coin was its disregard for the best of the supplemental operators, an attitude encouraged by the certificated airlines. In the late 1950s, it appeared that the CAB was trying to rectify its mistreatment of these carriers by selecting the strongest of them for supplemental certification. Among the 25 licensed in 1959 was United States Overseas Airlines (USOA) founded by Dr. Ralph Cox, Jr. after World War II.

Trained as a dentist in Pittsburgh, Pennsylvania, in the 1930s, Cox went on to earn his pilot’s license in the Navy. He worked for American Export Airlines (AEA), which became American Overseas Airlines (AOA) after World War II. Following the same call to entrepreneurship that resounded with Orvis Nelson and Stanley Weiss, Ralph Cox started his own large irregular carrier, Ocean Air Tradeways. He changed the company name in 1950, incorporating it as United States Overseas Airlines.

USOA grew over the years, offering safe, reliable service to the military and to the United States government, as well as to civilian groups. USOA provided transportation during the Korean conflict; in support of building of the DEW Line (Distant Early Warning) project; and transported Hungarian refugees to all parts of the world following the 1956 uprising. USOA had a contract with the US Navy, providing lift for the Quicktrans program, and operated flights for the Military Air Transport Service (MATS) throughout the world.

In 1957, following the CAB’s formal allowance of individually ticketed route authority under the 10 flights per month maximum rule, USOA began scheduled service along the traditional route flown by the supplementals: New York-Chicago- Burbank-Oakland, expanding the following year to Honolulu. In 1959, USOA carried 19,379 passengers between the Mainland and Hawaii on individually ticketed services.

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Following the demise of Transocean Airlines in 1960, USOA took over that carrier’s service beyond Honolulu to Wake, Guam, and Okinawa. By 1961, Ralph Cox’s company was number three in terms of passengers carried by a US flag carrier between the Mainland and Hawaii and across The Pacific, flying its DC-6Bs in competition with the certificated carriers’ jets. The company employed a total of 500 personnel and operated a sophisticated maintenance base at its headquarters airport in Wildwood, New Jersey, plus a second maintenance installation at Oakland, California. USOA maintained ticket offices and airport facilities in New York, Miami, Detroit, Chicago, Dallas, Los Angeles, San Francisco, Honolulu, Guam, and Okinawa. The company owned most of its own aircraft, including 12 DC-4s dedicated to military service, and had an excellent safety record.

But USOA was not one of the airlines selected to enjoy military contracts after Congress passed Public Law 87-528. In 1962, the CAB decreed that all supplemental airlines must end individually ticketed scheduled route services by July 10, 1964.

USOA was the last of these carriers to continue operating scheduled flights and its service across the Pacific was an important link for residents of Okinawa. Without military contracts, the scheduled operation had become USOA’s primary source of income. The carrier failed to suspend service by the July deadline as Cox argued the case for continued operation.

Ralph Cox insisted that the CAB’s Jacob Rosenthal had a personal vendetta against his airline, claiming that Rosenthal was trying to find any reason to shut the carrier down. Rosenthal was successful. On September 24, 1964, USOA was ordered to quit flying at midnight. The airline was being put out of business by the Board on grounds of financial insufficiency. Cox claimed that the CAB’s representative took the unusual step of asking FAA administrator, Najeeb Halaby, to compose an affidavit informing government agencies that a carrier having financial problems ‘might be unsafe’.

Dr. Cox’s successful supplemental carrier never got airborne again.

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David H. Stringer

David H. Stringer

In charge of the magazine’s 'Airchive' section and the occasional Airways Special feature. I work with a great team of contributors. After a 32-year career in in-flight service, I’m fulfilling my passion for researching, writing, and preserving airline history. I love this job!

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