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118-567: The founding group was headed by executives largely from Air California . The Civil Aeronautics Board issued a final order finding Jet America "fit, willing and able" on June 18, 1981 and the airline began operating on November 16, 1981, with a flight from its home base at Long Beach Airport (LGB) to Chicago O'Hare International Airport (ORD). By July 1984 the airline had expanded service to Dallas/Fort Worth , St. Louis , and Oakland , and had launched its own frequent flyer program. Its fleet consisted of six McDonnell Douglas MD-82 aircraft, with

236-453: A catamaran . In 1973, PSA created a holding company, "PSA, Inc." for the airline and many non-airline subsidiaries. In late summer 1970, PSA ordered five Lockheed L-1011 widebody aircraft, deliveries starting 1972. In the next 12 months, the L-1011 engine maker, Rolls-Royce, went bankrupt , and Lockheed required a US government bailout to avoid the same. In December 1971, PSA cancelled

354-437: A 15% stake in the airline. Note, "airline profits", not the holding company, PSA, Inc., which included aircraft leasing and fuel distribution among other businesses. After some back-and-forth, employees went along with this in late 1984. Employees got to nominate four directors to the airline board. Famed retailer Sol Price of Price Club (a Costco constituent) and FedMart was one such employee director. Another requirement

472-500: A California intrastate airline . The airline's home airport was Orange County Airport, now known as John Wayne Airport . Air California was the "other" California intrastate carrier, counterpart to better known Pacific Southwest Airlines (PSA). The two airlines had very different origins. PSA was the product of a highly competitive, lightly-regulated earlier period in California intrastate airline history, while Air California

590-489: A California intrastate carrier, Air California was economically regulated by the CPUC, in contrast to most US airlines of the era, which were economically regulated by CAB. Prior to 1965, the CPUC only had the right to regulate intrastate ticket prices. So long as they followed CPUC tariffs, anyone was free to start an intrastate California airline, to enter and leave specific markets and to choose their own frequencies. But in 1965,

708-420: A bankruptcy that dramatically lowered its costs. Meanwhile, PSA was making money, but not by flying passengers. In 1982 and 1981 it sold aircraft and tax credits on aircraft to make a net profit while still producing an operating loss. In the years prior to deregulation, PSA said it must be ready for the day it was able to fly outside of California. When the day came, PSA management saw themselves as one of

826-458: A bridge too far for American, so it bought rather than built. Another factor was that Frank Lorenzo 's Texas Air was also interested and American was eager to block it. AirCal had achieved a 1985 market share on the LA Basin to SF Bay corridor market of just under 33%, second to PSA which had just less than 49%. AirCal had expanded up the coast to Canada and Alaska and as far east as Chicago with

944-467: A cheap and low-risk deal to expand into a new geography: under an eight year contract, Braniff would fly 25 to 30 727s from its Texas base with PSA colors and marketing, employing 1,500 Braniff employees (who would have to agree to lower wages and higher productivity) as well as gates and takeoff/landing slots. These slots were key Braniff assets. In the wake of the August 1981 air traffic controllers strike ,

1062-415: A fleet of 39 aircraft. American’s purchase closed May 1, 1987 and AirCal was merged out of existence on July 1. AirCal's long-time rival, PSA, was likewise swallowed by USAir . In April 1967, Air California was operating 48 nonstop Lockheed L-188 Electra propjet flights a week from Orange County (SNA) to San Francisco (SFO). It added Orange County (SNA) to San Jose (SJC) and Oakland (OAK) flights around

1180-496: A founder of Jet America Airlines ), Mark T. Gates, Jr., William L. Pereira, Jr. (son of noted architect William Pereira who designed the Theme Building at Los Angeles International Airport (LAX) ) and Lud Renick to discuss air service from Orange County to San Francisco, with the idea of Air California as the result. At the time, air service from Orange County Airport was minimal. The population of Orange County in 1967

1298-709: A further four on order; a Boeing 707 was also leased in June 1984 for charter operations, which rapidly incurred significant losses and resulted in the early termination of the lease in January 1985. Services to Detroit , Las Vegas , and Orange County, California were inaugurated in 1985. During that year, Jet America joined with Disney to advertise a direct route from Dallas/Fort Worth International Airport (DFW) to Long Beach Airport for people to visit Disneyland in its 30th anniversary year. Many of these ads were played during Texas Rangers baseball games or were placed in

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1416-453: A holding company for the airline, ACI Holdings. In November 1986, AirCal accepted a purchase offer from American Airlines for $ 225mm, $ 90mm of which would be split by Lyon & Argyros. American was in the midst of a hub expansion program, then building new (now defunct) hubs in Raleigh , Nashville and San Juan . Building a west coast presence from scratch at the same time was considered

1534-515: A home for them. PSA's troubles attracted national attention. PSA went to the CPUC asking for a fare increase to bail them out. The CPUC excoriated PSA, questioning management competency at length and especially withering about a 1974 $ 8mm share buyback. In March 1976, J. Floyd Andrews gave up the CEO position, and in May, resigned as chair of the board. As airline deregulation was being debated, for most of

1652-425: A joke. In the 1960s PSA was known for the brightly colored flight attendant uniforms, with miniskirts ; in the early 1970s the fashion changed to hotpants . A PSA flight attendant, Marilyn Tritt, wrote a book about her tenure at the company titled Long Legs and Short Nights . Throughout PSA's lifetime, the flight attendants, with their humor, over-the-top passenger service, and sense of duty, helped to create

1770-476: A late 1980 strike at PSA. AirCal was no longer protected by the CPUC or the SNA duopoly. Further, jet fuel prices increased from 40 cents/gal at the beginning of 1979 to over a dollar in 1981, related to the 1979 oil crisis . There was another factor: AirCal was squeezed at its SNA base, its historic source of profits. From 1970 to 1985, SNA capped daily average jet departures to 41/day, with AirCal having 27 during

1888-655: A looser limit for aircraft below a certain noise level, and the BAe-146 qualified. That would have given PSA a substantial advantage unless AirCal also got the aircraft, so it ordered six. In the fourth quarter of 1985 the string of profits was upset due to the entry of Continental West into California. Continental West was a short-lived Texas Air subsidiary created to take delivery of aircraft due to limits placed on Continental by its bankruptcy judge. Additional capacity cratered west coast fares once again, leading to 1986 being once again unprofitable. In June 1986, AirCal created

2006-464: A loss, its first in 11 years, in 1971. There was one immediate benefit from WCC ownership: Air California was able to take its seventh 737, delivered to WCC and turned over to Air California in September 1970. The eighth was delivered in May 1971. First-class ("Fiesta") service and Palm Springs made their debut in 1969, San Diego in 1970, though Burbank was suspended. In 1971, Sacramento was added to

2124-541: A loyal passenger following. One flight attendant, Sandy Daniels, with the help of a frequent flyer, started the "Precious Stewardess Association". Frequent fliers would bring tasty treats to the crew, particularly on morning flights. In turn, PSA started the "Precious Passenger Association", with certificates and free drinks given to friendly and helpful passengers. PSA headquarters were a windowless gray-brown building on Harbor Drive in San Diego, California . The building

2242-456: A majority owner of Western, difficult to dislodge controlling nine out of 21 seats on the board. As outlined in a section below, PSA would instead pursue a non-airline acquisition strategy. Southwest Airlines was founded in 1967, but grueling legal challenges caused its operational start to be delayed until June 1971. Founder Rollin King took inspiration from PSA. Founding president Lamar Muse

2360-511: A network on the West Coast, but by 1991 USAir had largely withdrawn from California in the face of fierce fare wars driven, in significant part, by the spread of Southwest. Today's American Airlines Group continues to protect the PSA trademark by using it as a name for a regional airline subsidiary, PSA Airlines . PSA did not survive for long after deregulation, but its influence lives on through

2478-467: A private plane before the AirCal pilot banked to avoid a collision. No crew or passengers were injured during the incident. AirCal's May 1, 1987, system timetable listed the following destinations shortly before it was merged into American Airlines: Air California/AirCal previously served these destinations during its existence: As of July 1, 1987, at the time of the merger, AirCal's fleet consisted of

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2596-466: A raft of bills to punish the carriers, even suggesting a state-owned airline, but the market had already taken care of the problem. United Airlines had already announced an increase in frequency on Los Angeles to San Francisco from 16 to 27 per day and Southwest Airlines had announced it was entering Burbank with 10 a day service to Oakland at a last-minute fare of $ 59 one way, $ 29 in advance. The resulting Los Angeles Basin to San Francisco Bay fare war

2714-479: A seat on the Board of Directors but continued as a full-time pilot for the airline. Tom astutely invested in a Toyota distributorship in the late 1960s, Gulf States Toyota , now a multi-billion dollar business run by Tom's son, Kenny's grandson, Dan Friedkin . PSA was known for its sense of humor. Founder Ken Friedkin wore Hawaiian shirts and encouraged his pilots and stewardesses to joke with passengers. Its slogan

2832-549: A smile on the nose of its airplanes, the PSA Grinningbirds . The Los Angeles Times called PSA "practically the unofficial flag carrier airline of California for almost forty years." For three quarters of its existence, PSA operated as a California intrastate airline . PSA's early success as an intrastate airline served as a model for Southwest Airlines , which did in Texas what PSA had done in California. After

2950-459: A terrible accident in 1964. PSA believed it would benefit from market stability, but observers predicted that over time the CPUC would become just as restrictive as the CAB, which, in fact, happened. From 1965 through US airline deregulation in 1978, the CPUC certified only two intrastate airlines: Air California and Holiday Airlines . From September 17, 1965, through 1978, PSA would have to apply to

3068-482: A week, Air California's CEO had resigned, and a new buyer surfaced, Westgate-California Corporation (WCC). In June 1970, WCC acquired 60% of the carrier, which was approved by the CPUC on the grounds that Air California's future was in doubt. In July 1971, WCC pumped $ 2.5mm into Air California, buying shares that increased its stake to 81%. In April 1971, Air California provided flight attendant training to Southwest Airlines during its startup phase. WCC ownership

3186-408: Is Southwest Airlines, originally a Texas intrastate airline that PSA inspired. Southwest inspired low-cost airlines globally. PSA therefore was a key company in the advent of low-cost air travel. Another legacy stems from Kenny Friedkin's son Thomas H. Friedkin , a PSA pilot in 1962 when his father died. A year later, Tom's mother (Kenny's widow) died, making him the largest PSA shareholder. Tom had

3304-491: The Airline Deregulation Act of 1978, PSA expanded to cities in other US western states and Mexico. However, PSA's performance in the new deregulated era was disappointing relative to that of Southwest and PSA's former fellow California intrastate carrier AirCal . In 1986, USAir agreed to purchase PSA, the transaction closed in 1987 and PSA was integrated into USAir in 1988. The PSA acquisition gave USAir

3422-569: The Civil Aeronautics Board (CAB), an agency of the Federal government. PSA was the exception, its intrastate status made it exempt from CAB oversight. It had used that freedom to grow from nothing in 1949 to a jet carrier in 1965, taking market share away on its California routes from much larger but less efficient carriers regulated by the CAB. Air California was designed to be like PSA but centered on Orange County. Air California

3540-530: The Federal Aviation Administration (FAA) operationally regulated PSA. As of September 17, 1965, the CPUC had new powers over California intrastate airlines of economic certification (PSA was grandfathered) route entry/exit and service quality (e.g. frequency). PSA was in favor of this. In the early 1960s, a number of new entrant California intrastate carriers had come and gone, the most notorious being Paradise Airlines , which had

3658-493: The early 1980s recession , the extended impact of the August air traffic controller’s strike , which limited airline aircraft utilization and growth and the expanding impact of 1979 airline deregulation, which spread competitors into AirCal markets, and vice versa. For instance, PSA finally broke into John Wayne Airport (SNA), after, as they noted, 15 years of trying. AirCal had entered LAX in 1980., its LAX penetration assisted by

Jet America Airlines - Misplaced Pages Continue

3776-528: The "ill-fated" Jet America experiment to a quick end. Jet America served the following destinations as of June 1987. At the time of its acquisition by Alaska Airlines, the Jet America fleet consisted of the following aircraft: Air California Air California , later renamed AirCal , was a U.S. airline company headquartered in Newport Beach, California that started in the 1960s as

3894-415: The 1980s, and yet this part of US airline history is little known. In 2015, American Airlines added to its heritage livery series a AirCal Boeing 737-800 . On Tuesday, February 17, 1981, an AirCal Boeing 737-200 crashed while attempting to land at John Wayne Airport. AirCal Flight 336 was a scheduled flight from San Jose International Airport to John Wayne International Airport. Around 48 minutes into

4012-581: The Airline Deregulation Act, the minute PSA started flying to Nevada in December 1978, it was free of the CPUC. The CPUC didn’t take that lying down. The CPUC sued in Federal court to overturn the Airline Deregulation Act , lost, appealed, and lost again. As the regulated era drew to a close, PSA suffered a terrible crash in September 1978 when a 727 collided with a small plane over San Diego, fatal to all on both aircraft and to some on

4130-478: The Bay Area and Los Angeles than any other airline. Total PSA passengers climbed from 355,000 in 1959 to 1,305,000 in 1963 and 5,162,000 in 1970. On March 16, 1962, founder Kenny Friedman, only 47 years old, died of a cerebral hemorrhage . He had lived to see his airline become a success, but it was still tiny, with only five aircraft. J. Floyd Andrews, one of Friedkin's fellow founders, took over. Andrews's era

4248-407: The CEO position himself. During this period, the historic Hughes Airwest network was being eliminated, as Hughes successor Republic withdrew from the west coast. Western Airlines intrastate service was also shrinking. AirCal was also substantially recapitalized, with the combination of an initial public offering with Lyon & Argyros converting debt they’d loaned the airline into equity. This relieved

4366-468: The CPUC for all new routes, generally in competition with Air California. Despite having total network freedom, PSA evolved its network minimally from 1949 to 1965: it served only five airports: San Diego, LAX, Burbank, San Francisco and Oakland. In 1965, Orange County Airport (later John Wayne Airport (SNA)), had a new runway. It approached PSA (among other airlines) about serving it (SNA had long-standing minimal service from Bonanza Air Lines ), and like

4484-418: The CPUC gained the right to regulate airline certification, market entry/exit and service quality for California intrastate airlines. In effect, the CPUC became a kind of mini-CAB for California intrastate airlines. Air California was unprofitable for the first five years (though it broke even on an operating basis in 1970; see table) and CPUC regulation was critical to its survival. In 1969 the CPUC said "From

4602-479: The CPUC required be flown with Electras. Air California acquired three. In 1977, still in Chapter X bankruptcy, WCC bought out Air California's minority shareholders and made it a wholly owned subsidiary, in furtherance of its intent to reorganize with Air California as its main business. In 1977-78 Air California added two 737-100 aircraft from Aloha . But Air California ended the 1978 flying to Reno, Nevada; it

4720-469: The Electras had been phased out in favor of six 737-200s. Ontario and Burbank were added. As the nearby table shows, Air California's initial financial results were poor. In December 1969 it agreed to a merger with PSA, citing its financial results. Air California shareholders approved the deal, but shortly thereafter, in May 1970, PSA withdrew from the deal, citing a "negative view" by the CPUC. Within

4838-479: The FAA had limited air traffic control capacity, so allocated each airline takeoff/landing slots at specific airports. When Braniff collapsed, those rights were temporarily allocated to others. If Braniff flew again, it could recover those rights, grounding some operations at other carriers. It was a strong competitive lever. The initial deal failed when Braniff pilots refused to agree to lower seniority than PSA pilots in

Jet America Airlines - Misplaced Pages Continue

4956-537: The MD-80s and 175 for the 727-200s. In one respect, PSA was lucky: the BAe-146 was eventually notorious for fairly significant engine problems that PSA management never had to deal with because it sold the company before they became well known. As a stopgap, the airline also acquired four 110-seat used DC-9s from Air Canada in 1983. PSA did not prioritize a single fleet type. But if looking for reasons for underperformance, management might have considered itself, since it

5074-806: The San Franciscan Hotel in downtown San Francisco. In June, PSA bought the Islandia in San Diego's Mission Bay . In June 1971, PSA committed to a to-be constructed hotel at the Los Angeles Hollywood Park Racetrack (now the site of SoFi Stadium ), and in December 1971, committed to a to-be constructed hotel within the Queen Mary attraction in Long Beach The synergies were not obvious. None of

5192-525: The Tahoe routes between Air California and PSA on an emergency basis, but required the two carriers use Electras for Tahoe. One of PSA's first actions of the deregulated era (which started January 1, 1979) was to exit Tahoe, citing the high cost of Electras in a fleet that otherwise comprised 31 727s. In 1967 PSA was finally allowed to use offshore airway V25 to San Diego, despite being an intrastate airline. An early indication that, for J. Floyd Andrews, PSA

5310-663: The acquisition had been completed. After initially attempting to operate the two airlines separately but finding its strategy for Jet America unprofitable, Jet America was merged into Alaska Airlines in October 1987. Alaska Air Group cited a $ 9 million loss for Jet America in the first nine months of 1987 prior to merging Jet America into Alaska Airlines. Alaska sold Jet America's 14 slots at Chicago O'Hare Airport and four slots at Washington National Airport to United Airlines in exchange for cash and certain west coast facilities. Alaska received praise from industry observers for bringing

5428-461: The airline and Wall Street thought it would be a winner. But in December 1978, Paul Barkley, then PSA’s chief operating officer (later CEO), spoke about the deregulated future a few weeks away. He expected something fairly sedate, quite different from the bitter Darwinistic struggle that would engulf the industry: Dallas-Fort Worth –based Braniff International Airways was the first trunk carrier to fail after deregulation. US trunk airlines were

5546-462: The airline due to lessons learned from a failed precursor airline ( Friedkin Airlines ). Reservations were initially taken at a World War II surplus latrine refitted as a ticket office. The original fare from Burbank to Oakland was $ 9.99. In July 1951 PSA added a flight to San Francisco . Oakland would be dropped in 1954, but restored to the system in 1965. DC-3s would go in and out of the fleet, but

5664-463: The airline launched its first services January 16, 1967, using two Lockheed Electra aircraft. Total capital raised prior to the first flight was $ 5.3mm, including $ 2.5mm from the stock offering. In October 1967, Air California took delivery of two more Electras, for a total of four. San Jose and Oakland were added. In 1968, the airline added two DC-9s to the fleet, but by year end both the DC-9s and

5782-466: The airline of a substantial debt load. AirCal’s fleet remained 737-200s (and two 737-100s), along with seven MD-80s, until it ordered a dozen Boeing 737-300s in 1984, with Boeing agreeing to take back the MD-80s in trade. The 737-300s were even quieter than the MD-80s, and obviously compatible with the 737-100/200s. The last of the MD-80s were gone by early 1986. SNA noise limits basically forced AirCal into buying BAe-146s ; new 1985 flight limits had

5900-456: The airline received buyout offers from Delta Air Lines and Alaska Air Group . The main interest of the carriers were Jet America's landing slots at Washington National, Chicago O'Hare, John Wayne Airport and Long Beach airports. Given Jet America's financial losses and its ever-changing route network, there was little franchise value. The airline accepted the Alaska bid and by the end of the year

6018-695: The beginning of 1968. By May 1968, the airline was operating 92 flights per week from SNA to SFO, primarily using Douglas DC-9-10 twin jets, as well as 50 flights a week from SNA to SJC, with most continuing on to OAK. By 1976, Air California was operating nonstop intrastate jet service between Orange County and San Francisco, San Jose, Oakland, Sacramento, San Diego and Palm Springs; between San Diego and Oakland and San Jose; between Ontario and Oakland and San Jose; and between Palm Springs and San Francisco, San Jose and Oakland. AirCal left almost no trace. The successors of PSA and AirCal, USAir and American, raised prices, reflecting their higher costs. In early 1990,

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6136-524: The beginning we have recognized the need to protect Air California from destructive competition, at least until it becomes a viable operator." This took four forms: (i) CPUC ensured that other than some minor routes, Air California did not compete with PSA, leaving the carriers with largely non-overlapping route networks. This left Air California free to concentrate its energies on competing with CAB carriers on its routes, which had higher costs. (ii) The CPUC approved higher airfares for Air California than for PSA

6254-488: The combination would have had an 81% market share on the Los Angeles Basin to San Francisco Bay market and even higher market shares on individual submarkets. These market shares show how successful were the California intrastate carriers in driving off the far larger CAB-regulated carriers pre-deregulation. But then, in May 1973, The U.S. Securities and Exchange Commission sued to place WCC in receivership on

6372-486: The competition were First Class only ($ 22.05); the rest carried coach passengers for $ 13.50, all fares subject to then 5% federal excise tax. In July 1958 PSA shifted some flights from Burbank to Los Angeles International Airport (LAX); that year it carried 296,000 passengers. In late 1959 PSA began flying Lockheed Electra turboprops with 92 seats and a six-seat lounge, replacing 70-seat DC-4s. In 1963 PSA got its sixth Electra; by then it carried more passengers between

6490-463: The continued success of Southwest. PSA started as an offshoot of San Diego–based Friedkin Aeronautics, the flight school Kenny Friedkin started to train returning GIs . When GI business dried up, on May 6, 1949, Friedkin started flying once a week from San Diego to Oakland via Burbank with a $ 1,000-a-month leased Douglas DC-3 . Friedkin obtained information from a travel agent upon starting

6608-539: The country, it promised lower prices. But California already had lower prices, set by the CPUC. By comparison, in Texas, Southwest Airlines set its own fares, the Texas Aeronautics Commission didn’t get involved. The concern (and expectation) was deregulation would lead to higher prices. California legislators and governor Jerry Brown wanted the CPUC to remain in charge of any airline that did over 50% of its business in California. This amendment

6726-539: The descendants of the original 16 airlines certified by the CAB and thereafter regulated to be the main US carriers. Braniff had been successful just prior to deregulation, but Harding Lawrence , Braniff’s imperious long-time leader, expanded the carrier excessively immediately after deregulation, resulting in its May 1982 bankruptcy and shut-down. Until Continental did so in 1983, no one knew an airline could recover from Chapter 11 bankruptcy . In October 1982, PSA announced

6844-405: The dominant carrier at) Orange County Airport, a lucrative duopoly that allowed Air California to prosper. Air California/AirCal had a series of unusual owners. From 1970 to 1974, it was under the control of C. Arnholt Smith , a San Diego powerbroker, later convicted of fraud. From 1974 to 1981, it was controlled by Smith's former holding company Westgate-California Corporation (WCC), while WCC

6962-405: The duopoly period that ended 1980. But the FAA insisted other airlines be accommodated. As other airlines entered, incumbent frequencies were cut to accommodate them. AirCal was the biggest incumbent, so was the biggest victim; AirCal’s average daily SNA frequencies dropped over the course of several years from 27 to 12.5. Many airlines wanted a piece of SNA and were even willing to buy MD-80s (then

7080-494: The event PSA ever merged with the PSA-Braniff operation (to ensure PSA pilots always got first pick of flying). Pride as well as pay was in play: PSA was perceived as junior-league relative to Braniff. A new deal with Braniff simply equipped a new carrier with Braniff equipment to fly under contract to PSA, sidestepping Braniff’s unions. Braniff would even loan PSA the funds. Further, the FAA noted if Braniff resumed flying it

7198-443: The eye of one observer included: Until 1965, as an intrastate airline PSA had a free hand in terms of how and where it flew within California. The California Public Utilities Commission (CPUC) was limited to regulating PSA's prices. So long as PSA stayed within the boundaries of an intrastate airline, the federal Civil Aeronautics Board (CAB), which otherwise tightly regulated US airlines, had no say, though as with any US airline,

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7316-432: The first place, when each had separately inquired. The airline that Lyon and Argyros bought came, as of April 6, 1981, with a new name (AirCal) and a new image. Landor Associates did the new livery, Mary McFadden did the new uniforms. After unbroken profitability while WCC was in Chapter X, AirCal under Lyon & Argyros was immediately unprofitable. Headwinds included the debt the two had taken on to buy AirCal,

7434-521: The fleet comprised one 727-100, 16 727-200s and nine 737s. In the late 1960s PSA also briefly had DC-9s, the justification was to train pilots of other airlines. As discussed below, the L-1011s made a brief appearance in 1974-1975, but by then PSA was shedding the 737s; the last left in the fleet in 1976. In 1975, Lockheed Electras returned to support flights to Tahoe (see below). Other than the Electras (required to operate to Tahoe), PSA settled on 727s in

7552-459: The flight, the crew received clearance for a visual approach to land on runway 19R. As Flight 336 was approaching, another AirCal flight, Flight 931, received clearance to take off from runway 19R. The controller recognized the potential danger of a collision between the two aircraft and ordered Flight 931 to abort takeoff and instructed Flight 336 to go around. Flight 931 aborted its takeoff, however, Flight 336 did not go around and instead landed on

7670-404: The flightcrew, causing the aircraft to crash, killing everyone on board. The fact pattern of a (former) USAir employee killing PSA crew and passengers overshadowed the last days of PSA. PSA finally merged into USAir on April 9, 1988. PS Group had long since banked what it was paid for its PSA, creating a well-funded life-raft for select former PSA executives, among which Chairman Paul Barkley. By

7788-399: The following aircraft: Air California/AirCal previously operated the following aircraft: Pacific Southwest Airlines Pacific Southwest Airlines ( PSA ) was a low-cost US airline headquartered in San Diego, California , that operated from 1949 to 1988. It was the first substantial scheduled discount airline . PSA called itself "The World's Friendliest Airline" and painted

7906-522: The former AirCal and PSA systems, throwing in the towel less than five years after offering to buy the former intrastate airlines. Despite this, in the case of PSA its indirect legacy is substantial because it was the inspiration for Southwest Airlines, and thus PSA is generally viewed as the original low-cost carrier . Air California/AirCal can't make the same claim. In fact, there's a good case to be made that Air California only survived to be sold to Lyon & Argyros because of regulation. Air California

8024-445: The ground. It was made worse for PSA by: 1978 wasn't through with PSA yet. At the end of 1978 it transpired corporate raider Harold Simmons had accumulated a 20% stake. When PSA, appealing to investors, referred to a 30-year history of success, Simmons printed ads summarizing PSA’s far-from-successful 1970s financials and noting 1977 profits were about half those of 1971, despite revenues almost twice as large. But as PSA said, Andrews

8142-612: The grounds of serious malfeasance by Smith, plus the outside auditors withdrew their certification of Air California's accounts for 1971 and 1972, and those of WCC for 1971. Trading was halted in Air California and WCC stocks. Unsurprisingly, almost exactly a year after it had been made, the PSA offer for Air California lapsed. In October, USNB was seized by the FDIC, knocking out the foundation of Smith's empire. In February 1974, WCC filed for Chapter X bankruptcy. Chapter X bankruptcy

8260-546: The hotels were located at airports, none of them were value-oriented. In 1973, CEO Andrews called the hotels "a complete flop" and in 1974 gave three of them to Hyatt to run. It took years for PSA to extricate itself. In 1979, PSA finally sold the San Franciscan but had yet to sell the Queen Mary hotel. In August 1970, PSA started buying radio stations. By 1975, its four stations were for sale. PSA also bought

8378-443: The last-minute roundtrip fare from Los Angeles to Sacramento was $ 456, over $ 1000 in 2024 dollars. State legislators were increasingly irate, finally proposing a raft of bills to punish the carriers, even suggesting a state-owned airline. They didn't notice that the market had already taken care of the problem. United Airlines had already announced an increase in frequency on Los Angeles to San Francisco from 16 to 27 per day. More to

8496-460: The late 1970s, acquiring used 727-100s as well as additional new 727-200s. PSA entered Tahoe after Holiday Airlines collapsed. Holiday basically served nowhere other than Tahoe, a choice that that sealed its fate . PSA applied to the CPUC for Holiday's routes in 1974 Holiday said it couldn’t afford to defend itself in front of the CPUC and went out of business in February 1975. The CPUC split

8614-405: The most turbulent eras in US airline history would seem rather slim. But that's what happened. And then they had the good sense to sell the airline at a healthy profit (since it appears that the vast majority of their purchase money was funded by a loan from Wells Fargo) and apparently never again dabble in airlines. They might have had the single greatest return on investment of any airline owners in

8732-407: The natural beneficiaries of deregulation (see prior sections). But in fact, PSA did poorly. As the nearby table shows, AirCal’s nominal growth from 1978 (the last year of regulation) to 1985 was double that of PSA, Southwest was nearly triple. Perhaps most striking was the comparison of PSA with Piedmont Airlines , which pre-deregulation had been a local service airline regulated by the CAB. Piedmont

8850-491: The network. In mid 1972, WCC agreed to sell Air California to PSA. WCC told the CPUC that Air California showed no signs of making money and WCC would not further support it. In February 1973 the CPUC agreed, against heavy opposition, including from its own legal staff, to allow the merger to proceed. But by then the merger also faced opposition from the US Department of Justice on anti-trust grounds. For instance,

8968-425: The new group won, with a bid of $ 61.5mm, $ 57.5mm of which was financed by Wells Fargo . This was AirCal Investments, a vehicle for two Orange County real estate developers, William Lyon and George Argyros . WCC's trustee didn't bother to hide his satisfaction with the outcome. He preferred local ownership. He had been angered by the surprise bid by Air Florida to buy WCC, had in fact put Argyros and Lyon together in

9086-417: The order, but Lockheed said it couldn't. In September 1972, PSA signed a new order, deliveries starting 1974. PSA grounded its two L-1011s after eight months. A 300 seat aircraft never made sense in a business model that depended on quick aircraft turnarounds. Economics presented to the CPUC showed L-1011 per-seat costs no better than a 727 despite being twice as large. PSA refused the last three aircraft and

9204-405: The others, PSA demurred. This was a mistake: PSA tried to buy Air California twice: PSA’s fleet changed constantly in the 1960s and 1970s. The 1960s started with Electras, then Boeing 727-100s arrived in 1965, PSA's first pure jet. The last Electra flight was September 1968 By 1969, PSA was swapping out 727-100s and replacing them with bigger 727-200s plus 737-200s. At the beginning of 1970,

9322-521: The point, Southwest Airlines had announced it was entering Burbank with 10 a day service to Oakland at a last-minute fare of $ 59 one way, $ 29 in advance. The resulting Los Angeles Basin to San Francisco Bay fare war was brutal, made worse when Iraq invaded Kuwait thereby spiking oil prices, collapsing demand for international travel and tipping the US into the Gulf War . In January 1991, in announcements only two weeks apart, American and then US Air gutted

9440-399: The quietest narrowbody available) to do so. For instance, Frontier ’s decision to get MD-80s was SNA-driven. AirCal came close to failure, but was saved by a combination of cost savings, with substantial layoffs, a 10% wage reduction for those who remained, a realignment of its route network, concentrating on increasing frequency on important routes like LAX to San Francisco. Lyon took over

9558-536: The rise in fuel prices, which PSA also blamed) and too labor intensive (given its three person cockpit vs two places for the MD-80). 727s were a big factor in driving the company to ordering 20 BAe-146 aircraft in late 1983, which were both smaller and extremely quiet (an advantage in California where noise politics was a factor at airports like Orange County, Long Beach and Burbank). PSA may have overcorrected – PSA ultimately configured BAe-146s with only 85 seats vs 150 for

9676-416: The role the CPUC played in the 1975 demise of Holiday Airlines . PSA also played a special role at the CPUC. It was assumed to be the most efficient carrier, therefore CPUC fares were set relative to what would make the highest permissible profit for PSA – all other carriers operating in California then had to toe that line. So PSA had ample reason to regret its support of that 1965 legislation. However, under

9794-509: The runway with the landing gear retracted. The aircraft left the runway surface around 900 feet (275 m) past the runway threshold, skidded another 1,170 feet (360 m) before finally coming to rest 115 feet (35 m) to the right of the centerline. All passengers and crew members survived the crash. The Boeing 737-293 aircraft, registered N468AC, was damaged beyond repair and consequently written off. On June 5, 1986, an AirCal 737 flying from Los Angeles to Portland came within 100 feet of

9912-417: The spring of 1987, as part of Alaska Air Group, the airline was operating direct flights between the west coast and the east coast of the U.S. including a round trip multi-stop flight with a routing of Orange County (SNA) - Portland (PDX) - Seattle (SEA) - Minneapolis/St. Paul (MSP) - Washington, D.C. (DCA) as well as a Long Beach (LGB) - Chicago (ORD) - Washington, D.C. (DCA) round trip flight. Late in 1986,

10030-507: The team's programs and calendar. In the summer of 1986, Jet America was operating a small hub at the Las Vegas McCarran International Airport (LAS) with nonstop jet service to Burbank (BUR), Chicago (ORD), Dallas/Ft. Worth (DFW), Long Beach (LGB), Milwaukee (MKE), Ontario (ONT), Orange County (SNA) and St. Louis (STL) as well as direct one stop flights to Detroit (DTW) and Washington, D.C. (DCA). In

10148-487: The time owned only Air California, plus a Puerto Rican tuna cannery, but Air Florida would have to wait until WCC completed its reorganization and in the meantime, the WCC trustee was still in charge, with a mandate to get the best deal for WCC investors. The losing bidder in the WCC auction thus bid for Air California at a price that would give a better return for WCC investors. And when the dust settled on that auction in May 1981,

10266-463: The time the merger was consummated, PS Group had used some the PSA money to buy a stake in a travel agency business, to go along with its aircraft leasing and oil & gas interests. The successors of PSA and AirCal, USAir and American, raised prices, reflecting their higher costs. In early 1990, the last-minute roundtrip fare from Los Angeles to Sacramento was $ 456, over $ 1000 in 2024 dollars. State legislators were increasingly irate, finally proposing

10384-404: The total number was never more than four. PSA was one of eight California intrastate carriers that started flying in the 13 month period from January 1949 through January 1950 - but only California Central Airlines (CCA) and PSA lasted longer than a year. CCA started in January 1949 and through its demise in February 1955 was larger, and flew better equipment ( Martin 2-0-2s ) than PSA. But CCA

10502-503: The windows to make them resemble the more modern Douglas DC-6 . In January 1958 PSA scheduled 37 DC-4s a week Burbank to San Francisco (29 of which originated in San Diego) and four nonstops San Diego to San Francisco; United Airlines , Western Airlines and TWA then scheduled a total of 241 nonstop flights each week from Los Angeles to San Francisco, plus 49 flights a week from Burbank to San Francisco. About half of these flights by

10620-419: Was "The World's Friendliest Airline", and its recognizable trademark was a smile painted on the nose of each plane and an accompanying advertising campaign declaring "Catch Our Smile". Because of the major San Diego flight schedule and its discount fares, military personnel nicknamed PSA the "Poor Sailor's Airline." After PSA was bought by USAir, ex-PSA mechanics would occasionally paint smiles on USAir planes as

10738-534: Was San Diego International Airport's commuter terminal until 2015 when it was converted into administrative offices of the San Diego County Regional Airport Authority. There were other attempted hijackings which resulted in no injuries and the surrender of the hijacker(s). These incidents are not included. The following are notable hijackings because of fatalities or because the aircraft flew to another country: PSA served

10856-697: Was a mixed blessing. WCC's owner was C. Arnholt Smith , a powerful San Diego businessman and banker, owner of the San Diego Padres baseball team, a close associate and funder of President Richard Nixon and owner of the United States National Bank of San Diego (USNB), largest bank in that city and the 10th largest in California. Smith was highly controversial, accused of lining the pockets of his family and friends through self-dealing (including with WCC, USNB and others) of making illegal campaign contributions, and more. WCC made

10974-479: Was a product of the post-1965 CPUC and the Orange County duopoly, and thus not a good argument for deregulation. That makes AirCal's success under Lyon and Argyros even more anomalous. The chance that two Orange County real estate barons, airline industry outsiders, could buy an apparently healthy airline, have it immediately fall on hard times, but quickly turn it around and make a success of it during one of

11092-415: Was a separate publicly-traded stock for the airline. On July 28, 1986, there was an initial public offering for the airline (1.8mm shares at $ 7). Meanwhile, to eliminate confusion, the parent company (which retained its own stock listing) was renamed "PS Group, Inc.". In the midst of this activity, the holding company continued to diversify. In September 1985, it added to its oil and gas investments. 1986

11210-452: Was about 1.2mm, up from only 216,000 in 1950; Orange County was the fastest growing in the country. Air travel in California was then dominated by Pacific Southwest Airlines (PSA). Air California was designed to do what PSA would not: serve Orange County. Airport officials had asked all major west coast carriers to serve Orange County Airport and none were interested. At the time, all significant US airlines but one were tightly regulated by

11328-414: Was authorized on similar routes. (iii) The CPUC stopped the further new entry of intrastate airlines. (iv) in at least one case, the CPUC restrained PSA growth with the explicit goal of helping Air California. In fact, from 1965 onward, the CPUC certified only one other carrier, Holiday Airlines , which for some reason chose to fly only to Lake Tahoe . Since its parent company was mired in bankruptcy, it

11446-433: Was born into a later, far more regulated California environment. The California regulator explicitly aimed to ensure Air California's success by shielding it from PSA competition, in particular at Orange County Airport, from which PSA was excluded. Air California was further protected by Orange County itself. From 1967 through 1980, Orange County ensured Air California was one of only two mainline airlines to have access to (and

11564-413: Was brutal, made worse when Iraq invaded Kuwait thereby spiking oil prices, collapsing demand for international travel and tipping the US into the Gulf War . In January 1991, in announcements only two weeks apart, first American and then USAir gutted the former AirCal and PSA systems, throwing in the towel less than five years after offering to buy the former intrastate airlines. The indirect legacy of PSA

11682-479: Was driven by lack of facilities. It's hard to overstate how important this was: in the mid-1970s, Air California relied on Orange County Airport for up to 75% of its passengers. In 1979, the FAA determined that this was, unsurprisingly, discriminatory, leading to the airport opening to other airlines. In February 1975, Holiday Airlines collapsed, with Air California and PSA both getting emergency CPUC authorization to back fill for Holiday at Lake Tahoe Airport , which

11800-509: Was eliminated in a 1978 bankruptcy reform, but under it, WCC operated under the control of trustees, who managed it in the interests of shareholders. The bankruptcy dragged on for eight years, with WCC selling pieces of itself along the way, until it was finally liquidated in 1982. Therefore, from 1974 until it was sold in 1981, Air California was in the odd situation of being owned by a bankrupt company run by trustees rather than conventional management. Prior to 1979 US airline deregulation , as

11918-614: Was entitled to its takeoff/landing slots, but a new airline that just happened to use Braniff assets was not. The deal died in March 1983. A second iteration of Braniff did start flying in 1984 without PSA help, ultimately without success, possible due to Texas already being home to Southwest (which, expanding westward, had already entered PSA’s home city of San Diego in January 1982), American Airlines (which viewed Dallas-Fort Worth as its own, having moved its headquarters there in 1979) and Continental Airlines , which in 1983 would go through

12036-413: Was expressed monetarily: in 1978, Southwest management and directors owned 6% of PSA, while PSA directors and management owned 10% of Southwest. In July 1968, PSA bought rental car company Valcar, a former Hertz subsidiary with a west-coast presence. Like PSA, Valcar had a budget orientation, but PSA couldn't make it work and shut it down in 1971, after failing to sell it. In April 1969, PSA bought

12154-613: Was gone. Simmons evinced no desire to "destroy" PSA, seeing it instead as a takeover candidate from which he could profit. PSA won a shareholder vote to implement takeover defenses with just a bit more than 50% but the company had post-dated the shareholder record date to ensure Simmons couldn’t vote his whole stake. Simmons said he’d sue. In the end, PSA paid him off by giving him some aircraft in exchange for his stake. To be fair, notwithstanding Flight 182, PSA’s 1978 financials were somewhat better, but significantly flattered by an accounting change. As PSA headed towards deregulation, both

12272-415: Was in an extended period of bankruptcy run by a court-appointed trustee. From 1981 to 1987, AirCal was controlled by two California real estate developers, who, despite the turbulent nature of the industry at the time, made a success of the airline, before selling it to American Airlines . Following the federal Airline Deregulation Act in 1978, Air California expanded beyond its namesake state. The airline

12390-511: Was incorporated on 12 April 1966 and the same month, applied to the California Public Utilities Commission (CPUC) to be a California intrastate airline for its first route, from Orange County Airport to San Francisco Airport at a fare of $ 14.85. The CPUC approved the application in September, requiring a minimum of five frequencies per day. In December, Air California had an initial public offering and

12508-434: Was minimal. The purchase closed May 29, 1987, but PSA and USAir pilot union chapters fought over transition agreements, delaying the merger of PSA into USAir beyond the original January 1, 1988, date. PSA thus still existed under USAir ownership when on December 7, 1987, a fired USAir employee used his credentials (which had not been recovered from him) to sneak a gun on board PSA Flight 1771. En-route, he shot, among others,

12626-492: Was no longer an intrastate airline. With out-of-state expansion spurring it on, Air California ended 1979 with 11 737s and had 16 at the end of 1980, but by then the Electras were gone. In October 1980, Air Florida announced it had purchased interests in the to-be-reorganized WCC from two WCC creditors. This kicked off a bidding war for post-reorganization WCC, which Air Florida ultimately won in November for $ 47mm. WCC at

12744-493: Was not as focused as PSA (which stuck just to the San Diego to Bay Area route) and ultimately went bankrupt. PSA bid on CCA in the bankruptcy auction, but lost to a group composed of Allegheny Airlines and Southwest Airways (no relation to today's Southwest Airlines ) which shut CCA immediately, leaving PSA as the only intrastate competitor. In 1955, four Douglas DC-4s replaced the DC-3s, with PSA painting rectangles around

12862-517: Was not enough came in December 1968 with an audacious bid for Western Air Lines , then under attack by Kirk Kerkorian . Western was four times the revenue of PSA, and as an interstate carrier, regulated by the CAB. It was unclear how this would work, putting together two airlines with different regulators, whether CAB approval would be forthcoming. PSA pulled the bid in April 1969, citing deteriorating Western results. By that time, Kerkorian was, while not

12980-772: Was of long-standing. William Shimp, CEO and Chairman from 1976 to 1984, joined PSA in 1949. Paul Barkley, who succeeded Shimp, had been a C-suite officer at PSA since 1967. Notwithstanding the disastrous experience of the 1970s, management never lost its taste for diversification, diverting corporate attention from the airline. PSA, Inc.'s 1983 annual report noted energy subsidiaries involved in fuel supply and distribution and oil and gas exploration and production, as well as aviation-related subsidiaries providing engine maintenance, aircraft leasing and flight training. In 1984, following another poor year in 1983, PSA asked for wage givebacks from airline employees. Employees would reduce pay by 15% in exchange for 15% of pre-tax airline profits and

13098-495: Was open about the debt to PSA, saying "we don't mind being copycats of an operation like that", including hotpants. PSA hosted King and Muse for a four day visit in 1971 and gave them a copy of PSA's FAA operating manuals, from which Southwest created its own in what Muse said was "primarily a copy-and-paste procedure". PSA helping Southwest made sense in 1971, with each airline strictly limited to flying within its state and seemingly no prospect of that ever changing. Mutual admiration

13216-473: Was renamed AirCal in 1981 and merged into American Airlines in 1987. By that time, AirCal flew as far east as Chicago and as far north as Seattle , Anchorage , and Vancouver, BC . But less than four years later, American gutted the former AirCal network, leaving little to show for its purchase. Air California originated in a December 1965 meeting in Corona del Mar by William Myers, Alan H. Kenison (later

13334-485: Was smaller than PSA in 1978 but well over twice its size in 1985. Piedmont also had an unbroken string of profits since deregulation. A July 1984 Los Angeles Times article noted PSA had been hanging fire since deregulation; management always waiting for some obstacle to clear. For instance, waiting to swap out the 727 fleet it had at deregulation (yet the abortive 1982/1983 Braniff deal would have doubled-down on 727s), which were too large and too fuel inefficient (given

13452-506: Was stuck paying a 15-year lease on the first two. It entered into years of litigation with Lockheed. By 1975, losses from diversification and L-1011s brought PSA to the brink of bankruptcy. Operating losses on rental cars, radio stations and hotels through 1974 (not including cost of acquisition) were almost $ 9M. Through 1977, PSA lost another $ 1M on discontinued businesses and recognized $ 18mm in L-1011 losses. In 1982, PSA took another $ 4.2M loss against its two L-1011s, still unable to find

13570-433: Was the year of the airline merger – Republic into Northwest , Ozark into TWA , Western into Delta Air Lines and others. In November, AirCal accepted an offer from American Airlines. On December 8, USAir announced an agreement to purchase PSA for $ 400mm. The combination had its skeptics: USAir’s pre-PSA California presence was 12 flights per day to Pittsburgh and Indianapolis so its brand awareness among Californians

13688-414: Was timely that Air California's fortunes took a turn for the better, becoming solidly profitable from 1973 onward. In this, Air California was helped not only by the CPUC, but also by its duopoly at Orange County Airport. From 1967 until late 1980, the only two carriers at Orange County were Air California and Bonanza Air Lines (and Bonanza's successors, Air West in 1968 and Hughes Airwest in 1970). This

13806-735: Was tumultuous, PSA achieving a high national profile. This was the era of hot-pant clad flight attendants on pink-liveried aircraft, a classic image of California in the late 1960s and early 1970s. As discussed below, PSA became utterly dominant in the intra-California market, but also overreached to the point it almost went bankrupt. Less than a year later, PSA went public, with a February 14, 1963, initial public offering , 313,000 shares (100,000 of them primary ) at $ 19. Preparations had been underway for some time. PSA had an unusual corporate structure, with its aircraft owned through three companies owned by founders (Friedkin and others). In January 1962, these were merged into PSA. Prospectus facts that caught

13924-522: Was voted down in the relevant US House of Representatives subcommittee by one vote. Instead, deregulation as passed included strong Federal preemption – states had little say over an airline with a Federal certificate. By then, the CPUC had become the restrictive bureaucracy observers had predicted when it was given additional powers in 1965, second-guessing (in glacial and burdensome processes that could and did last for years) everything California intrastate carriers did, and even itself, as exemplified in

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