Air Florida was an American low-cost carrier that operated from 1972[2] to 1984, from 1972 to 1978 as an intrastate airline. In 1975 it was headquartered in the Dadeland Towers in what is now Kendall, Florida in unincorporated Miami-Dade County, Florida.[3][4]
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Founded | September 1972 | ||||||
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Commenced operations | 27 September 1972 | ||||||
Ceased operations | 3 July 1984 | ||||||
Hubs | Miami International Airport | ||||||
Fleet size | 58 | ||||||
Destinations | 99 | ||||||
Parent company | Air Florida System, Inc.[1] | ||||||
Headquarters | Miami-Dade County, Florida | ||||||
Key people | Eli Timoner (President) Ed Acker (CEO) |
Air Florida's IATA code is now used by Bamboo Airways of Vietnam.
Air Florida was based at Miami International Airport. Air Florida was initially organized as an intrastate airline by a group including Miami native Eli Timoner as chairman, Bill Spohrer as president, Jim Woodman as VP, Robert Bussey as Secretary and Reed Cleary as chief pilot. Spohrer came from APSA which may account for the initial focus on a 149-seat Convair 990 as an aircraft, to be leased from Modern Air Transport. The inspiration was Pacific Southwest Airlines, the long-established California intrastate airline.[5] Later the focus changed to an Eastern Air Lines DC-8[6] before settling on a Pan Am Boeing 707,[7] purchased for $1.1mm.[2] The inability to settle on an aircraft delayed Federal Aviation Administration (FAA) approval and thus start of the carrier.
FAA approval was needed for operational authority. As an intrastate airline, Air Florida avoided economic regulation by the Civil Aeronautics Board (CAB), the Federal regulator for interstate air travel, then extremely rigid. Prior to 1972, there was no economic regulation of intrastate carriers in Florida. Such regulation started October 1, 1972. Air Florida, having started service on September 27, was grandfathered. Thereafter, for as long as it remained an intrastate airline, Air Florida would be economically regulated by the Florida Public Service Commission (PSC) as to matters like route entry and fares.[8]
Ted Griffin, a former marketing director of Eastern Air Lines, became operational head starting from mid 1972,[7] ultimately taking the president title.[9] The airline operated its first flights on September 27, 1972,[2] offering twice-daily service in Florida between Miami (MIA), Orlando (MCO) and St. Petersburg (PIE) on "triangle" routings of MIA-MCO-PIE-MIA and MIA-PIE-MCO-MIA with a one way introductory fare of $12.00.[10][2] By May 15, 1973, The airline acquired three Lockheed Electra turboprop aircraft, replacing the Boeing 707.[11]
Air Florida was unprofitable for most of its intrastate existence. In 1972 it attempted $3.2mm initial public offering,[12] but the market was unfavorable and it had to withdraw.[13] The airline was acquired by a publicly-listed company, "Centree" controlled by Timoner as a way to give it a stock price.[14] The airline was chronically underfunded and unable to upgrade from Electras to jets. The issue was widely noted: there were segments of the market that avoided Air Florida because it did not fly jets, which left Timoner constantly scrambling to finance losses.[9]
In December 1976, a group of investors led by Ed Acker, previously a Braniff executive but at that time at an insurance company, made an investment as part of a recapitalization of Air Florida. Acker's group put in $1.5mm, some creditors agreed to take stock in exchange for $2mm in debt, other creditors agreed to a standstill. Better still, Air Florida could now acquire jets, including DC-9s.[15][16] Three of the DC-9s were financed by Carl Lindner's American Financial Corp, which bought them from Air Canada, leased them to Air Florida in exchange for low-priced stock and warrants that, in early 1980, provided Lindner with a huge payoff.[17] In mid 1977, Acker became CEO and chairman, Timoner became president and COO, and Ted Griffin left the company.[18] By February 1978, the turnaround was apparent. High-frequency jet service finally worked to make Air Florida relevant in a way it had not been before. The fleet comprised five DC-9s, with three more on the way. September 1977 passenger traffic was up over 400%, in October up over 600%, for November 1977 thru January 1978, up over 350%. Calls to the call center were up over 100% year over year.[19]
YE July 31 | YE December 31 | |||||||
---|---|---|---|---|---|---|---|---|
USD 000 | 1976 | 1977 | 1978 | 1979 | 1980 | 1979 | 1980 | |
Operating revenue | 4,877 | 7,814 | 21,507 | 44,234 | 114,285 | 62,794 | 161,175 | |
Operating expense | 5,230 | 9,772 | 21,259 | 41,025 | 107,829 | 58,304 | 151,771 | |
Operating result | (353) | (1,958) | 248 | 3,209 | 6,456 | 4,490 | 9,404 | |
Operating margin | -7.2% | -25.1% | 1.2% | 7.3% | 5.6% | 7.2% | 5.8% | |
Net income | (748) | (2,145) | (109) | 2,413 | 5,070 | 3,624 | 5,708 | |
Net margin | -15.3% | -27.5% | -0.5% | 5.5% | 4.4% | 5.8% | 3.5% |
In 1978, Congress passed the Airline Deregulation Act, which phased out Federal regulation of the airline industry starting in 1979. The act allowed Air Florida to fly outside of Florida starting in 1979, but in fact the CAB used its administrative discretion to allow Air Florida to jump the gun, and by year end 1978, Air Florida was already flying to Washington, DC, and, in the Bahamas, Rock Sound and Nassau.[1][20][21]
Acker-era Air Florida was one of the most aggressive of the small carriers:
Target | Timeframe | Disposition |
---|---|---|
Piedmont Airlines | June 1979-March 1981 | Bought 4.9% of Piedmont, which refused to engage.[22] Sold stake to help finance Air California bid[23] |
Air California | October 1980-May 1981 | Bought investor interests in to-be-reorganized Air California parent company, Westgate-California Corporation (WCC), then operating in bankruptcy, giving Air Florida a 26% stake.[24] Won a bidding war for WCC, only for the other bidder to launch a bid for Air California itself, which Air Florida lost[23] |
Western Airlines | July 1981-November 1982 | Bought stock in Western in part with WCC proceeds.[25] Air Florida sold the stake at a "sizeable loss" in 1982.[26] |
On August 27, 1981, Ed Acker left Air Florida to take up the CEO position at Pan Am, saying that Cunard told him the position of captain of the Titanic was no longer available, so he was seeking a comparable challenge.[27][28] Timoner once again became chairman and CEO.[29]
On January 13, 1982, Air Florida suffered a devastating fatal crash in Washington DC, with the Boeing 737 aircraft hitting a bridge and ending in the Potomac River. Video of rescue efforts were captured in real time and widely broadcast, as was an iconic image of the broken tail of the Air Florida aircraft being pulled from the river. Air Florida reservations dried up.[30] Even worse, later in the year the National Transportation Safety Board placed the blame squarely on the Air Florida pilots.[31]
Air Florida's fortunes had turned for the worse even before the crash. A substantial financial loss in the fourth quarter of 1981 was driven by fierce fare wars,[32] including by Pan Am now run by Ed Acker.[33] Heavy losses continued into 1982, despite which, Air Florida continued to focus on possible mergers and acquisitions, specifically around the future of Braniff, which was in obvious distress as it headed towards what would be its May 1982 bankruptcy and grounding.[34] It's hard to overstate how bad the environment was, both generally and for airlines.[35] To make matters worse, in July, Timoner suffered a debilitating stroke, leading to the elevation to CEO of David Lloyd-Jones, an American Airlines veteran who lost out to Bob Crandall and had joined Air Florida as president.[36][37]
Aside from the crash, the economy and its overexpansion, Air Florida competed on Florida routes with, among others, Pan Am and Eastern Air Lines. These two airlines were in decline (both would go out of business in 1991) but were larger, so had more staying power. By December 1982, Air Florida was soliciting merger interest.[38] Losses in 1982 were catastrophic, $93mm on revenue of $282mm.[39] On April 1, 1983, unable to recover from his stroke, Eli Timoner resigned as Chairman, his last remaining position, in favor of Lloyd-Jones.[40] Timoner was 54. Air Florida's accountants also gave a going concern warning in their audit for 1982.[41]
The crash of Flight 90 on January 13, 1982, coupled with Air Florida's high financial leverage and reliance on foreign currency trading for profits, led the company to declare bankruptcy and cease operations on July 3, 1984, despite an effort by new head Donald Lloyd-Jones (an alumnus of American Airlines) to save the company. When operations ceased, Air Florida had over 18 months of unprocessed credit card ticket purchases and dozens of flight crews idle at home because management had failed to renew leases on their DC-10-30 aircraft. Midway Airlines acquired most of the assets of Air Florida for $53 million while the airline was in Chapter 11 bankruptcy protection.[42]
Air Florida Commuter was not an airline, but a system of affiliated commuter and regional air carriers that fed traffic into Air Florida's hubs. In an arrangement commonly known as code-sharing, each airline painted their aircraft in Air Florida colors and their flights were listed in reservations systems as Air Florida flights. Air Miami became the first affiliate in 1980 and over a dozen other airlines became part of the system, including: Air Sunshine, Marco Island Airways, Florida Airlines, Key Air, Southern International, Skyway Airlines, North American Airlines, National Commuter Airlines, Gull Air, Pompano, Finair, Slocum, Atlantic Gulf, Skyway of Ocala and others. As Air Florida became financially strapped, the commuter system was dismantled in early 1984.[43]
Air Florida sponsored Southampton Football Club, an English Football League side, during the 1983-84 season, in which Southampton were league runners-up. The deal was cancelled after one season due to Air Florida's insolvency.[citation needed]
City | Feb. 1979[44] | Dec. 1981[45] | Sep. 1982[46] | Jan. 1984[47] |
---|---|---|---|---|
Bermuda | X | |||
Boston | X | X | X | |
Brussels | X | X | ||
Burlington | X | X | ||
Chicago O'Hare | X | |||
Chicago Midway | X | |||
Cincinnati | X | |||
Cleveland | X | |||
Columbus | X | |||
Daytona Beach | X | |||
Detroit | X | |||
Fort Lauderdale | X | X | X | X |
Fort Myers | X | X | ||
Freeport | X | X | X | |
Gainesville | X | X | X | |
George Town | X | X | ||
Grand Turk | X | X | ||
Guatemala City | X | X | ||
Hyannis | X | |||
Indianapolis | X | |||
Jacksonville | X | X | X | X |
Key West | X | X | X | |
Kingston | X | X | X | |
London Gatwick | X | X | X | |
Marathon | X | |||
Marco Island | X | |||
Marsh Harbour | X | X | X | X |
Miami | X | X | X | X |
Montego Bay | X | X | X | |
Nantucket | X | |||
Newark | X | |||
New Orleans | X | |||
New York JFK | X | |||
New York LaGuardia | X | X | X | |
North Eleuthera | X | X | X | X |
Ocala | X | X | X | |
Orlando | X | X | X | X |
Oslo | X | |||
Panama City, FL | X | |||
Pensacola | X | X | X | X |
Philadelphia | X | X | ||
Port-au-Prince | X | X | X | |
Puerto Plata | X | X | X | |
Rock Sound | X | X | X | X |
Saint Croix | X | X | ||
Saint Thomas | X | |||
San Jose (C.R.) | X | X | X | |
San Pedro Sula | X | X | X | |
San Salvador | X | X | X | |
Santo Domingo | X | X | ||
Sarasota | X | X | ||
Shannon | X | X | ||
Stockholm | X | |||
Stuart | X | |||
Tallahassee | X | X | X | |
Tampa | X | X | X | X |
Tegucigalpa | X | X | X | |
Toledo | X | X | ||
Treasure Cay | X | X | X | X |
Washington National | X | X | X | X |
West Palm Beach | X | X | X | X |
White Plains | X | X | X |
Some of the above destinations in the U.S. and the Bahamas were served by commuter air carriers operating Air Florida Commuter service with prop and turboprop aircraft via respective code sharing agreements.
Air Florida also served Belize City, Belize; Charleston, South Carolina; Chicago (Midway Airport), Illinois; Dallas/Ft. Worth (DFW Airport), Texas; Düsseldorf, Germany; Frankfurt, Germany; Houston (Hobby Airport), Texas; Paris, France; Madrid, Spain; Providence, Rhode Island; Providenciales, Turk and Caicos Islands; St. Petersburg, Florida; San Juan, Puerto Rico; Savannah, Georgia; and Zürich, Switzerland with mainline jet service at various times during its existence.[48] In addition, Air Florida Commuter served Lakeland, Florida in early 1983.[49]
When Air Florida ceased all operations, the airline was operating the following mainline jet aircraft:[50]
Aircraft | Total | Orders | Notes |
---|---|---|---|
Boeing 737-100 | 2 | — | |
Boeing 737-200 | 8 | — | |
Boeing 757-200 | — | 3 | [51] |
Douglas DC-8-62 | 1 | — | Leased from Rich International Airways |
McDonnell Douglas DC-10-30CF | 1 | — | |
Total | 12 | 3 |
Air Florida also operated the following aircraft in its mainline fleet, but retired these types before the demise of the airline:[52]