Some airlines reflect their country, state, geographical region, and even airport of origin in their names. One reflected its city in both name and logo: New York Air, brainchild of Frank D. Lorenzo.
Originally employed by TWA and Eastern in their finance departments in the early-1960s, he subsequently formed Jet Capital Corporation with a partner, issuing shares to himself for only pennies and then using it as a method of financing small, but fledgling interstate Texas International Airlines. Although he became its president in 1972, the youngest of any US carrier to do so, the event became only the beginning of his airline establishment and hostile takeover strategies.
Formation of the Big Apple Airline
Eight years later, he formed Texas Air Corporation, a holding company that owned Texas International, but he was hardly satisfied with its single concern. In fact, he was hungry to take a bigger bite—in this case, of the big apple.
“Using Texas Air, Lorenzo took the no-frills concept to the East Coast, to New York City, and started a new subsidiary airline called New York Air to compete with the Eastern shuttle between Washington and Boston,” according to Harry Lawrence in Aviation and the Role of Government (Kendall/Hunt, 2004, p. 191).
Taking advantage of deregulation’s newly-afforded freedoms, he sought to achieve profitability with lower fares, principally by acquiring used aircraft and employing a lower-wage, nonunion workforce.While limited takeoff and landing slots at New York’s LaGuardia Airport would have otherwise posed an obstacle, he had the political connections to circumvent the restriction.
The carrier was pieced together in record time. Founding President Neal F. Meehan, once a senior manager of Continental and Texas International, assembled his own team and within a 90-day period hired, trained, and uniformed the required cockpit crew, flight attendants, ground operations personnel, and reservations staff, using an antiquated American Airlines hangar at La Guardia as his administrative and maintenance headquarters. New York Air was approved, after being listed as an extension of Texas International’s operating certificate.
Acquiring former Swissair and Texas International DC-9-30s, it inaugurated service between New York and Washington National with nine daily rotations on December 19, 1980, expanding to Boston two months later, on February 15.
As the first deregulation carrier to challenge Eastern’s long-established air shuttle, it offered lower fares, reserved seating, five-abreast cabins (as opposed to the six-abreast ones on Eastern’s 727-200s), a continental breakfast, and drinks and peanuts the rest of the day. But Eastern guaranteed accommodation to every passenger who showed up at the gate with backup aircraft, even if it dispatched with only a single one onboard.
New York Air’s inaugural flight did so with fewer more than that, however. Only five, in fact, occupied the more than 100 seats on its DC-9 that day.
“New York Air was launched to great fanfare in New York, and the fare wars with the Eastern shuttle commenced, to the delight of the traveling public,” continues Lawrence (ibid, p. 191). “New York Air was the first in a long line of airlines that would come to be known as ‘Upstarts.’”
Because of the bright red paint schemes of its aircraft and the stylized apple logos on their vertical tails, it was sometimes referred to as “the big apple airline.” But not everyone viewed this shiny red apple in a positive light. Some found it rotten to the core.
Lorenzo’s concern for labor was less than overwhelming as he strove toward profitability by means of pitiful wages. Instead of investing Texas Air Corporation financial resources into union Texas International’s expansion, they were rechanneled into its lower-cost New York Air subsidiary, sparking the ire of soon-to-picket Texas International pilots. The Air Line Pilots Association (ALPA) similarly established a campaign to prevent the carrier’s growth. And the 1981 Professional Air Traffic Controllers Organization (PATCO) strike, mandating slot restrictions to counter the manpower shortage, became the final obstacle to its early expansion. Eastern was able to substitute larger-capacity, widebody Airbus A300 aircraft, which New York Air did not have. Nevertheless, its low-fare formula attracted passengers and it managed to chart a course of slow growth.
Its February 15, 1982 flight schedule advertised “Where smart money goes” and then pointed out that it went to the 11 cities of Baltimore, Boston, Buffalo, Cincinnati, Cleveland, Detroit, Louisville, Newark, New York-La Guardia, Orlando, and Washington-National.
It listed its executive class fares in black and pleasure class fares in red. Examples of these were, respectively, $55.00 and $35.00 between New York and Washington, and it noted that “New York Air utilizes DC-9 jets with seating for 120 passengers.”
It continued to emphasize its low-fare structure at the end of the year in its December 19, 1982 system timetable, in which it advertised, “Compare New York Air.”
Strategy Change
While fares attracted leisure passengers, they were not always successful in doing so when it came to the business ones, and they failed to generate the financial lift that the wings on its airplanes did. New York Air lost $11 million in 1981 and fared little better in 1982. Texas Air cash injections, revolving bank credit, and share sales kept it in the air, but deregulation-permitted low tariffs failed to consider the market it was trying to serve. What was needed was a strategy change.
That came from Michael E. Levine, who became the struggling carrier’s chairman after Meehan resigned in July of 1982. He targeted the business traveler with improved service and higher fares that still undercut those of the incumbents.
“New York Air: It’s a nice place to visit,” it advertised. “At New York Air, we think flying business shouldn’t be hard work. That’s why on every weekday flight, we give you lots of amenities you won’t find anywhere else, like coffee at the gate, a New York-style breakfast, and The New York Times and The Wall Street Journal on weekday mornings. Mixed drinks, New York-style snacks, and fine wines all day. Not to mention seat selection, extra legroom, and 80% window and aisle seating on every flight.” With it, it introduced a new slogan, “New York Air: The airline that works for your business.”
Offering what was often referred to as “the flying nosh,” it featured orange juice, bagels and cream cheese, and coffee on morning flights, and selections such as croissants, rolls, breadsticks, assorted cheeses, and monthly “wine tastings” during the rest of the time, on apple-emblem cloths that covered the pull-down tray tables. It even introduced its own inflight publication, Skylines. That this was a competitive strategy aimed at the Eastern air shuttle was emphasized.
“New York Air gives you the strength to face the Eastern shuttle,” it proclaimed. “On every New York Air morning shuttle between La Guardia and Washington, you get a complimentary breakfast. On every Eastern morning shuttle, you get hunger pains.”
The strategy was successful. Passenger numbers steadily rose—from 1.5 million in 1981 to 1.7 million in 1982 to 2.1 million in 1983—the first year it recorded a small profit.
In an attempt to bypass the larger hubs in the southeast, such as Charlotte (a Piedmont stronghold) and Atlanta (controlled by Delta and Eastern) and facilitate quick, hassle-free transfers, it established its own in Raleigh/Durham, North Carolina, enabling passengers to connect to cities such as Greenville/Spartanburg, Knoxville, and Savannah from Boston, New York, and Orlando.
Operating 15 DC-9-30s and two 172-passenger MD-80s by March of 1984, it served the 12 destinations of Boston, Charlottesville, Detroit, Fayetteville, Greenville/Spartanburg, Knoxville, Lynchburg, Newark, New York-La Guardia, Orlando, Raleigh/Durham, Roanoke, Savannah, and Washington-National. Nonstops from Newark included those to Detroit, Orlando, Raleigh, and Washington, and from La Guardia to Boston, Raleigh, and Washington—the latter with 15 per day, every hour on the half-hour.
1985 was marked by two expansion strategies: it began taking delivery of eight of the 24 Boeing 737-300s that Texas Air Corporation had ordered for Texas International, and it established its second hub at Washington-Dulles International Airport in July, after constructing a $3.6 million concourse complete with an Apple Club restaurant. By the end of the year, it operated 35 daily departures from it, eventually offering nonstop flights to Boston, Charleston, Cleveland, Detroit, Ft. Lauderdale, Greenville/Spartanburg, Hartford, Islip, Jacksonville, Knoxville, Miami, Minneapolis, Newark, New York-JFK, New York-La Guardia, Orlando, Philadelphia, Raleigh/Durham, Rochester, Tampa, West Palm Beach, and White Plains.
From a third, or mini-hub, in Newark, it offered its hourly, and signature “super shuttle” flights to Boston and Washington, as well as those with reduced frequencies to Cleveland and Detroit.
Consolidation
The shuttle operation, transferred from La Guardia, was part of the Texas Air Corporation plan implemented in 1986 to acquire Eastern Airlines—a goal it could not achieve with a monopoly in the Boston-New York-Washington corridor, as long as New York Air still served that Manhattan-proximity airport. As a result, Pan Am purchased the routes and its New York operations were shifted to Newark.
Echoing the Darwinian philosophy of “survival of the fittest,” Texas Air Corporation’s “survival of the largest” in deregulated skies was reflected by the initial coordination of Continental, Texas International, and New York Air subsidies, and ultimate consolidation of them, along with Frontier and PEOPLExpress, into surviving Continental.
As a result, New York Air, which attempted to take a bite out of the Big Apple and compete with its Eastern-synonymous air shuttle, ceased to exist on February 1, 1987 after a half-decade challenge.
