Published in November 2015 issue
By David H. Stringer
While the Civil Aeronautics Board (CAB) grappled with how to handle the unregulated mass of companies that made up the irregular carriers, the regulated scheduled airlines made it quite clear that they wanted the non-skeds to be put out of business. The scheduled carriers estimated that they had lost at least $13 million in revenue to the non-skeds in 1948, although the large irregular carriers maintained that they had created their own traffic and had infringed not a bit on the revenue stream of the regulated airlines.
The CAB first attempted to bring some order to the irregulars by issuing letters of registration to 142 companies. At first, the Board did not define exactly what constituted ‘infrequent, irregular’ service, but eventually ruled that the term meant only three flights in some markets, and up to eight flights in others, during any one-month period.
In 1948, at the request of the US Senate’s Small Business Committee, the CAB launched a full-scale investigation into the large irregular carriers, supposedly to determine their rightful place in America’s commercial airline hierarchy. The CAB’s guidelines for its investigation were written in a memorandum by Louis Goodkind, Associate Director of the Board’s Bureau of Economic Regulation. His memo was an internal document for CAB staff, never intended for anyone’s eyes outside of the Civil Aeronautics Board. If the contents of Goodkind’s memorandum had been released, Congress and everyone else would have been made aware of the CAB’s true attitude toward the non-skeds.
When, five years later, in 1953, investigative newspaper columnist Drew Pearson made the secret memo public, it was a bombshell.
The newsman revealed that Goodkind’s sole mission, outlined in the 1948 memo, was to put all of the non-scheduled airlines out of business. To do this, the CAB would scrutinize each company, with the planned goal of denying operating authority to every applicant. In the memorandum, Goodkind had written that all letters of registration would be revoked. Each carrier would have to appear before the Board to apply for a regular Certificate of Public Convenience and Necessity, which would turn it into a certificated carrier, or for permission to continue operating as a non-scheduled airline. In Goodkind’s words: “Either procedure has the advantage of affording a means for ultimately terminating the operations of this group of carriers.”
The CAB, under pressure from the regulated scheduled airlines, had decided that it was time to bring an end to the problem of unregulated, nonscheduled airlines once and for all.
The CAB’s purge of the non-skeds began on April 18, 1949, when the Board summarily abolished authorization for all of the irregulars and began the process of having each company apply for a Certificate or for permission if they wanted to stay in business. Of the first 103 applicants to approach the CAB, the majority were turned down. The few that were approved to function as non-scheduled operators were considered too small to offer any competitive threat to the scheduled airlines.
In the Board’s defense, something had to be done. Aside from the CAB’s frustration about the carriers ignoring its complex and restrictive operating rules, companies could not be allowed to continue in business if they routinely flouted safety regulations.
As the saying goes, one bad apple can spoil the whole bunch. Unfortunately, there were quite a few bad apples among the non-skeds.
In an attempt to keep the public from confusing any of the noncertificated carriers with the reputable scheduled airlines, back in 1946 the CAB had proposed revoking the letter of registration for any large irregular carrier that used the word ‘way’ or ‘line’ in its name, “either alone or in combination with any other term, for example… airways, airlines, etc.” Although it appears that the ban on these terms was not enforced, many of the irregulars played it safe and chose names that avoided those two words.
But there were some bright, healthy apples among the rotten fruit. And just as the Civil Aeronautics Board was on the verge of putting the whole group out of business, world politics intervened and gave the more qualified non-skeds an opportunity to prove themselves. They responded by doing a stellar job.
In response to Joseph Stalin’s blockade of West Berlin, which cut off all land and water access to that part of the former German capital, from June 24, 1948, British and American military personnel began supplying food, medicine, and all the other necessities of modern life to the metropolis via air. The Berlin Airlift lasted for over a year, ending in September 1949, although the blockade had officially been lifted on May 12 of that year.
During the airlift, the US Air Force and Navy used virtually every C-54 at their disposal, most of them from the Military Air Transport Service (MATS) fleet, to keep the supply line continuously open. The aircraft made round trips between Rhein- Main Air Base, outside of Frankfurt, and West Berlin; and between Wiesbaden Air Base and West Berlin. Many of the necessary supplies had to be flown across the Atlantic to be positioned at Rhein-Main and, since the MATS C-54s were tied up flying the corridors to and from West Berlin, the commercial airlines were called upon to fly the supplies to Europe and to take over the military transport operations inside the United States that were normally handled by MATS. The bulk of this transport power, of air crews and aircraft, came from the biggest available source: the non-skeds.
Seaboard & Western Airlines operated 106 trans- Atlantic flights in support of the airlift. Transocean Airlines operated 48 round-trip DC-4 missions across the ocean, the eastbound flights loaded with coal and other commodities for Berlin. Meanwhile, Slick Airways hauled supplies domestically to Westover Air Force Base in Massachusetts, where they were transferred to the overseas flights.
The non-skeds proved how valuable their services could be to the military. The need for a large amount of excess lift on short notice, without disrupting the schedules of America’s certificated airline network, could only be met with the aid of the vast pool of aircraft and crews supplied by America’s large irregular carriers.
Consequently, the military took a more favorable view of the non-skeds than the CAB did.
As the calendar turned from 1949 to 1950, another government entity was taking serious interest in the plight of the non-scheduled airline industry: the US Congress. Members were being contacted by constituents who owned large irregular carriers. These citizens wanted to know why a government agency was deliberately trying to put them out of business. The senators and congressmen were curious. They, too, wanted to find out why American entrepreneurs were being subjected to this government-led attack. They would call upon the Civil Aeronautics Board to account for its actions. And they’d call the operators of the non-certificated airlines, too.
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YOU CAN’T FLY EVERY SUNDAY
The rules that the CAB had created to regulate the large irregular carriers out of business were truly draconian.
First, there was the limitation on the number of flights allowed per month between any two points, which varied in cases: usually three or eight, but never more than 12. There could be no implication of regularity in those flights. If a non-sked operated four flights a month between two points and those flights took place each Sunday, the Board could prosecute the carrier for operating a regular service. Even if the flights operated every fourth day, meaning they would not operate on the same day of the week each week, the CAB declared such an operation illegal because the flights operated at regularly occurring intervals; thus not making it an irregular operation.
Although it was common practice for several non-skeds to band together under the banner of a single ticketing agency, the CAB ruled this practice illegal. Thus, if one irregular airline operated between Los Angeles and New York only four times per month on different days each week, that company could be prosecuted for being in a ticketing relationship with another non-sked also operating between those two cities, if the carriers’ combined flights resembled a regular operation.
Likewise, the Board outlawed the issuance of exchange orders by non-certificated airlines or their agents. These orders allowed tickets sold by one carrier to be endorsed over and accepted for transportation by another. This was common practice among the non-skeds until the CAB clamped down.
The orders banning regular or frequent service were aimed at breaking the route operations of the large irregular carriers altogether. Any airline that operates transport aircraft over selected routes needs to establish some kind of regularity and reliability, even if in concert with other operators, if it hopes to attract customers. It has to organize provisions for aircraft maintenance, crew changes and other regular facets of airline operation. That was barely possible under the Board’s frustrating rules.
Having decreed that every large irregular carrier must petition the Board for a Certificate of Public Convenience and Necessity (a petition it wouldn’t approve) or for registration to continue operating as a non-certificated airline, the Board then dragged out these proceedings. Often, after weeks of testimony had elapsed, it would tell the representatives of the carriers that they would have to return to present their arguments in yet another case. The Board knew the cash-strapped non-skeds could ill-afford the attorney fees and other expenses involved in repeated and prolonged appearances before the CAB in Washington.
Then there was the issue of aircraft. Because operating large transport aircraft is expensive, the irregular carriers leased some of their C-46s and other types for short periods. As a congressional committee noted, “An operator simply cannot afford to take a long-term lease on a large aircraft that he is permitted to fly but some four or five times a month between two points.” And yet the CAB had created a regulation making it unlawful for a nonscheduled airline to operate any aircraft if it did not have a lease or agreement for exclusive use of that aircraft for at least six months.
The Board also thwarted the purchase of newer, more modern airliners—planes that would have better customer appeal. In 1952, the North American Airlines group, a consortium of carriers that constantly fought back against the CAB, tried to order two factory-fresh, pressurized DC-6s for transcontinental service. The US Air Coordinating Committee, established by President Harry S Truman in 1946, had to approve the allocation of materials to build commercial aircraft. Although approval was usually just a formality, North American’s request for the two new DC-6s was denied. One member of the CAB sat on the Air Coordinating Committee (at the time it was Oswald Ryan, chairman of the Board). At the insistence of that lone CAB member, the committee refused to approve the purchase, stating that North American was unable to justify its need for such an aircraft.
Effectively blocked from buying new airplanes, the non-skeds were stuck with fleets of DC-3s (converted C-47s), DC-4s (converted C-54s), and ungainly C-46s, the type that became synonymous with the non-certificated airlines. But the CAB saw to it that the process for acquiring even these outdated aircraft was made difficult for the large irregular carriers.
The US Air Force, which leased its unneeded C-46s to the non-skeds, maintained a wait list for operators who wanted to secure the airplanes as they became available. When Peninsular Air Transport, a non-certificated carrier, reached the top of the list, the Air Force refused to lease any more Commandos to the company. The Civil Aeronautics Board had intervened, asking the Air Force not to lease to Peninsular because the carrier was operating too frequently. The same thing happened to non-sked Caribbean American Lines.
Having locked the irregular carriers into operating nothing but old aircraft, most of them unattractive C-46s, and even trying to stifle the acquisition of those, the now Board took one more stab at the non-skeds, hoping it would be fatal.
The CAB took the unusual step of issuing a safety regulation, effective January 1, 1952, that substantially reduced the allowable gross takeoff weight for C-46s in commercial operation. Up till then, there had been no indication that weight had been a factor in any large irregular carrier C-46 crash, but the Board issued the measure in the belief that no one would question an edict which supposedly promoted safety. In the non-skeds’ defense, two members of the five-man Civil Aeronautics Board dissented (Josh Lee and Joseph P. Adams), but the other three voted to pass the regulation. And so it did.
“The availability to the military air services of commercial transporttype aircraft in as large numbers as possible to serve as auxiliary military airlift is essential. These aircraft should be in commercial service in order that this auxiliary airlift may not be a burden upon the national defense budget in time of peace.”
That statement, issued by the Aviation Policy Board of the US Congress in 1948, was the stay of execution that kept some large irregular carriers alive.
Many of the non-skeds folded or went bankrupt in trying to follow the CAB’s complex rules, but the stronger among them managed to survive and prove their worth during the Berlin Airlift.
After that success, came the Korean conflict, which kept US personnel and materiel crossing the Pacific Ocean en masse from 1950 to 1953. Commercial operators were not allowed into the war zone, so the non-skeds flew missions between the USA and Japan, whereupon MATS took over, taking personnel and supplies on to Korea.
During the conflict, one of the irregulars, Transocean Airlines, carried 9,960,095 tons of cargo and 20,000 passengers across the Pacific in support of the US military, in addition to bringing 7,112 dead and wounded back home. Overseas National Airways, another irregular operator, kept its entire fleet of four Douglas DC-4s in constant rotation between the US, primarily Travis Air Force Base, and Japan, transporting troops and cargo. At final tally, the non-certificated carriers provided 50% of the lift over the course of the war.
Concurrent with Drew Pearson’s 1953 exposé of the Goodkind Memorandum, the US Senate’s Select Committee on Small Business held hearings to determine the future of irregular airlines in air transportation. It was the second time that Congress had met with airline executives from both certificated (scheduled) and non-certificated airlines to hear their opinions. Foremost on the senators’ agenda was why one government agency (the CAB) was trying to annihilate an entire group of air transport companies that the US military had declared essential?
The answer was that the CAB believed that the certificated airlines could handle all of the needs of the military and fulfill the desire of the public for air coach and charter services as well. The certificated scheduled airlines represented order, regulated by the Board. In the view of the CAB, the non-scheduled airlines represented unregulated chaos. Of course the certificated airlines themselves would be happy to see this sector of the industry, which they vowed was stealing passengers away from them, completely eliminated.
But, in reality, the scheduled airlines could not fully meet the needs of the military during emergencies without disrupting their own commercial traffic. In addition, the Air Coach concept had been created and developed by the non-skeds—not by the certificated carriers, most of which dragged their feet when it appeared they would have to establish their own Coach services. Late in 1951, the CAB had to force United Air Lines and TWA to inaugurate transcontinental Coach service between San Francisco and the East Coast; the board was embarrassed that no certified carrier had such a service after declaring that the scheduled airlines were accommodating the needs of all passengers seeking Coach Class travel.
Representatives of the non-skeds presented their case to the senators, outlining the injustices that they had been subjected to by the CAB, and emphasizing that none of them received a penny of government aid, a fact that should have brought discomfort to the executives of the subsidy-reliant scheduled airlines in attendance.
It proved a sweet moment for the upstarts. Just when it appeared that the CAB would finally succeed in executing them, the US Senate stepped in and reprimanded the Board for their handling of these underdog airlines, derisively called non-skeds, fly-bynights, or simply ‘irregulars’— but which had certainly proven their worth by aiding the military, by filling the commercial needs of freight shippers and civilian charter groups, and by bringing air travel to the masses with the creation of Air Coach.
The ultimatum from Capitol Hill was clear: instead of trying to kill the non-skeds, the CAB needed to create a place for them among the nation’s commercial airlines.
The strongest and the scrappiest among the large irregular carriers had survived and, despite the Board’s interference, were thriving. In 1954, the large irregular carriers generated 1,252,680,000 revenue passenger miles and 54,249,000 cargo ton miles.
They had met the charter needs of the public and the lift demands of the military that the certificated carriers could not accommodate.
It appeared that the non-skeds were coming into their own and that, finally, turbulence was giving way to blue skies.