Dead Airlines And What Killed Them

By Jean Folger | June 22, 2010 AAA

On December 17, 1903 in Kitty Hawk, North Carolina, Wilbur and Orville Wright made history when they completed the first controlled, sustained flight in a heavier-than-air craft. The flight lasted only 12 seconds and the "Wright Flyer" as it was known went only 120 feet, but it was the one of the most important achievements of the century.

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Since then, 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. We'll take a look at a few memorable airlines that helped shape the history of commercial flight.

Northwest Airlines
Northwest Airlines (NWA) began operations in 1926 as Northwest Airways. Like most early airlines, its focus was on transporting mail for the U.S. 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. (Why is the airline industry synonymous with ongoing losses and insolvency? Find out in 4 Reasons Why Airlines Are Always Struggling.)

Competition from low-cost carriers and increased labor 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 Air Lines. On January 31, 2010 the merger formed the world's largest airline and the Northwest Airlines brand was discontinued.

ATA Airlines
American Trans Air (ATA), based in Indianapolis, Indiana, was launched in 1973 and became a low-cost scheduled service and charter service airline. Its scheduled flight routes focused on the U.S. mainland and Hawaii, with military and commercial charter flights offered worldwide. ATA became North America's foremost charter airline, transporting more U.S. military troops than any other commercial airline.

One day after filing for Chapter 11 bankruptcy, ATA announced on April 3, 2008 that it was immediately canceling all current and future flights, citing increased fuel prices and the loss of a major military contract as the causes. (You've probably noticed that flying means pulling out your wallet a whole lot more often. Find out what's fallen off the list of airline freebies in 7 Air Travel Perks That Used To Be Free.)

Trans World Airlines
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 advancements, 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% of all trans-Atlantic passengers.

Airline deregulation during the 1980s, and TWA's lack of focus on the trans-Pacific and air cargo markets, led to financial trouble for TWA. 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
Eastern Airlines began as Pitcairn Aviation in 1926 and was headquartered in Miami, Florida. 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.

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 shares up against the bargain airlines. Deregulation, simultaneous strikes represented by the Air Line Pilots Association and Transport Workers Union, and other financial trouble led to a bankruptcy filing in March of 1989. On January 19, 1991, Eastern Airlines grounded its fleet.

Pam American World Airways
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. An important part of Pan Am's success was its highly trained staff of pilots, flight crews, mechanics and support staff. (This maligned sector is in better shape than most investors believe. Don't miss Airline Stocks Look Set To Soar.)

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.

A Competitive Industry
Commercial aviation has been a competitive industry since its inception. As with any business, expansion can lead to profits or bankruptcy. Many of the airlines that have ceased operations have done so in part due to intense growth - not only from within but also throughout the industry. Fierce competition forcing reduced fares, bad press from terrorist attacks and mechanical problems, and increasing labor and fuel costs all contributed to the demise of many of these once-flourishing airlines. The commercial airline industry is volatile, and a company's ability to adapt to changing regulations and consumer needs is paramount to its success.


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