[030710.EN.AIR] Airlines : Once Famous But Now Dead Carriers And What Killed Them

SINCE the Wright brothers first flight in Kitty Hawk, North Carolina, thousands of airline companies worldwide have come and gone, some packing up within a year or two; others remaining in business for decades before leaving behind a legacy in a once-pioneering industry.
Looking back, the San Francisco Chronicle, drawing heavily on Investopedia material, found a common thread in their demise, often linking bankruptcies and mergers with the deregulation of the industry, prompting the growth of budget carriers, in 1978 combined with the oil crisis, terrorism and union troubles.

Northwest Airlines (NWA) began operations in 1926 as Northwest Airways. Like most early airlines, its focus was on transporting mail for the US Post Office.

NWA began scheduled passenger flights in 1927. Headquartered in Eagan, Minnesota, NWA serviced domestic and international airports. NWA grew to become the world's sixth largest airline in terms of passenger miles flown.

But competition from low-cost carriers and increased labour costs forced NWA to initiate cutbacks in 2001. The September 11, 2001 terrorist attacks caused further financial trouble for the airline.

After attempting to restructure, Northwest Airlines announced on April 14, 2008 that it would be merging with Delta. On January 31, 2010 the merger formed the world's largest airline and the Northwest Airlines brand was discontinued.

American Trans Air (ATA), based in Indianapolis was launched in 1973 and became a low-cost scheduled service and charter service airline. Its scheduled flight routes focused on the US mainland and Hawaii, with military and commercial charter flights offered worldwide.

ATA became North America's foremost charter airline, transporting more US troops than any other commercial airline.

But one day after filing for Chapter 11 bankruptcy, ATA announced on April 3, 2008 that it was immediately cancelling all current and future flights, citing increased fuel prices and the loss of a major military contract as the causes.

Trans World Airlines (TWA) was founded in 1925 as Western Air Express. The famed aviator Howard Hughes invested heavily in the airline, and eventually gained a controlling interest in 1941. Among other noteworthy advances, in 1961 TWA became the first airline to offer in-flight movies.

TWA expanded to include more domestic and international routes, and in 1988 carried more than 50 per cent of all transatlantic passengers.

But with airline deregulation in the 1980s, and TWA's lack of focus on the transpacific and air cargo markets, led to financial trouble. The July 17, 1996 explosion of TWA Flight 800 led to pronounced media coverage of its aging fleet. In December 2001 TWA was acquired by American Airline's parent company.

Eastern Airlines began as Pitcairn Aviation in 1926 in Miami. In 1938, World War I flying ace Eddie Rickenbacker purchased the airline from General Motors, and grew the company with his innovations.

It became the most profitable post-war era airline. Eastern Airlines became in 1971 the official airline of Walt Disney World, an alliance that proved to be successful for Eastern Airlines as well as Walt Disney World.

But again the Airline Deregulation Act of 1978 forced the airline to adapt to become competitive with low-cost airlines. Marketing itself as a quality airline with highly experienced pilots, it was unable to secure enough market share.

Deregulation, union trouble led to a bankruptcy filing in March of 1989. On January 19, 1991, Eastern Airlines grounded its fleet.

Pan American World Airways (Pan Am) was founded in 1927 as a scheduled airmail and passenger transport carrier servicing routes between Florida and Havana, Cuba. Pan Am's use of jet aircraft, jumbo jets and an advanced reservation system helped shape the commercial airline industry.

The 1973 energy crisis impacted Pan Am, with higher fuel costs and a decreased demand for air travel. The 1986 hijacking of Pan Am Flight 73 in Pakistan and the 1988 terrorist bombing of Pan Am Flight 103 above Lockerbie, Scotland did irreparable damage to the airline's reputation.

The Gulf War, which began in 1990, further decreased demand for international air travel and Pan Am began selling off its most profitable routes. Unable to continue a profitable business, Pan Am ceased operations in December, 1991.

Source : HKSG, 03.07.10.