If you missed part 1, you can read it here.
The History Special is about 10 major airlines of the past.
Olympic Airways
Greece was more stylish back in the day when there was only one national airline. Olympic Airways was founded in the mid-1950s. The locals of Greece were particularly distrustful of air travel and Olympic operated short familiarisation flights in DC-3 props for free to convince them of the viability of flying. The de Havilland jets were placed into service in 1960 after Onassis ordered them. By 1966 Olympic 707s were flying nonstop to New York, followed by Chicago, Montreal, and Singapore in 1969 and 1972, respectively. Some flights had piano players entertain passengers in first class. The airline was flying fast.
Alexander, the president of Olympic Aviation, died in a plane crash at Athens airport in 1973. By April 1975, as a result of the tragedy, Aristototle had sold his stake in Olympic Airways and died of a broken heart. The airline flew on, adding half a dozen 757s for long haul to North America and Australia and a new route from Athens to Tokyo via Bangkok, followed by a fleet of A300s for heavily traveled European routes. The airline took up the feel of a stated-owned utility that had passed its prime, but the brass decorations on the bulkheads and old school lounges in Athens were reminders of the glories of the past.
Olympic might have continued for a while, but for a wind blowing in from the east, which meant that the A340s were replaced by the 747s. The location of the Persian Gulf allowed the airline to create a mega hub that connected Europe with Asia, and eventually every single continent. Olympic couldn't compete on the Asia and Australia runs because of the market dominance of Emirates.
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The Greek government could have written off the airline's debt, but European Union membership made subsidy of airlines illegal, which made other airlines in the market an unfair disadvantage. The last Olympic Airlines flight landed in Athens, Greece, on September 29, 2009, after state bail-outs were impossible.
Alitalia.
Alitalia had nine lives. Italy was devastated by World War 2 and the airline was part of the country's post-war reconstruction. The four-engined Savoia-Marchetti SM2.95 propliner was built in Italy. Douglas DC-8 jets were used on long range routes including North and South America, and British-built Viscount jets were used throughout Europe.
In the 70s and 80s, Alitalia flew widebody jets as far away as Australia, Buenos Aires, Tokyo, New York, Bangkok, and San Francisco. The industry was largely regulated, keeping fares high and competition low. It is customary for the Pope to return home on the national airline of the country he has visited when he is on an official trip abroad.
By the 2000s, the long haul was threatened by the Persian Gulf carriers who were cheaper than the bloated state-owned airline that was paying European level wages, and short-haul was threatened by the Persian Gulf carriers who were cheaper than the bloated state-owned airline that was paying European level
A lot of money and resources were wasted moving Alitalia's hub from Rome to Milan, Italy's industrial heart and in theory a more lucrative market than the capital and geographically closer to the rest of Europe to pick up extra connecting traffic. It was the culture and romance of Rome that made travellers think of Italy and Alitalia, not the factories and fashion studios of Milan. After a few years, the focus returned to the capital city, but only after a lot of wasted time and money.
Campagnia Aerea Italiana, a new company formed by friends of former prime minister Berlusconi, took over the profitable parts of Alitalia in 2008. The Italian taxpayer was stuck with the rest.
The new Alitalia had a number of financial catastrophes along the way. In the year of 2014, the Abu Dhabi-based company bought a 49% stake in the airline for half a billion dollars.
The airline continued to fly even after another bankruptcy wiped out its shareholding. Only Covid 19 could bring the party to an end, with the airline shutting down and going out of business in October 2021. In Italian, arrivederci means until we meet again. It seems likely that we will meet again. The old AZ code and Skyteam membership are intact, and the new flag carrier in Italy is called ITA Airways.
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Air Berlin.
West Germany was administered by the United States while East Germany was administered by the Soviet Union. The former capital, Berlin, was inside East Germany, but that city was divided into two parts, one of which was West Berlin, with air and road corridors linking it to the rest of West Germany. The airlines that serve West Berlin had to be from the United States, the United Kingdom or France, according to the post-war settlement. The only German airline that could operate a flight to West Berlin from 1945 to 1990 was the German airline. Air-Berlin USA, an Oregon-based airline founded in 1978 with two ex-employees, was one of the airlines that operated flights to and from West Berlin.
In the early 1980s, Air-Berlin USA operated a short-lived trans-Atlantic schedule, but for most of the 80s they only operated one or two Boeing 757s on short-haul charter flights.
Air Berlin became a German company in 1990 and with local investment bought ten Boeing 737-800s, the first to receive blended winglets for increased fuel efficiency. Air Berlin was more of a full-service hybrid than a true low-cost airline because they offered complimentary meals and seat reservations, unlike their direct competitors.
Air Berlin went on a buying spree, initially acquiring small airlines such as Germania and dba and 75 new Boeing 757s, followed by the German leisure giant LTU which added a large long haul network and made Air Berlin the fourth-largest airline in Europe.
The biggest blow to Air Berlin came from the delayed opening of Berlin's new airport, which was due to design flaws. Air Berlin was to have been a true rival to the two airlines in terms of technology, and was to have been built on the grounds of Berlin Schonefeld, the old gateway to East Germany. Air Berlin was stuck at West Berlin's old Tegel airport, a charming little concrete hexagon that was only ever intended to be a spoke, not a hub, because of serious deficiencies in the terminal design.
In the 2000s, Berlin experienced a boom in commerce, politics and tourism, but the expansion of Tegel and Air Berlin was not done. They had to rely on the LTU hub in Dusseldorf for their long-haul network which included 78 flights a week to the United States, as well as daily flights to Abu Dhabi and Bangkok. The airline showed its technical skills and ability to innovate with its annual sightseeing flights from Germany to the North Pole via Spitsbergen and eastern Greenland.
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Air Berlin joined the oneworld alliance in the year after the purchase of 29.1% of Air Berlin by Etihad Airways. The airline has obvious status and size. Restructuring efforts included shutting regional bases and unprofitable routes such as Berlin to Chicago.
Air Berlin lost over a billion dollars in the last three years. These numbers were unsustainable. The airline went bust in October. easyJet took on 25 A320s and a further 1,000 staff, and the airline agreed to buy 81 Air Berlin planes.
Air Berlin had a smart and likable brand, some unique features such as heart-shaped chocolates for passengers, and an interesting history of the postwar division of Germany. Some of the blame for its failure can be placed at the feet of the management, who persued a full service product with low cost pricing and unclear market positioning. If Air Berlin could have moved into a fully functioning Brandenburg International in 2011 as planned, where would they be now?
Swissair and Sabena.
Swissair is the most surprising airline bankruptcy of all time. Swissair was the only airline that was known as the Flying Bank. The airline was profitable for a long time due to the wealth of its home country and the high yield business traffic to it from other parts of the world.
The first airline in Europe to operate American aircraft was theCSA of Czechoslovakia, which was the first to use a Ford Tri motor. The first flight attendant in Europe was tragically killed in a crash. In 1947, Douglas DC-4s and DC-7Cs began long-haul flights to New York, South America, and Tokyo.
Douglas DC-8s, Caravelles, Convair CV-990As and Douglas DC-9s were used by Swissair in the 1960s. Swissair was the launch customer for the DC-9 series -30, -50, and -80, which became known as the MD-80. It was the launch customer for the A310. Swissair was able to charge a substantial premium on certain routes because of the country's political neutrality, and it was possible to serve exotic ports in Africa and the Middle East. The money was being printed.
Wanting access to other markets, and aspiring to be a major player in European aviation, Swissair embarked on what became known as Hunter Strategy, devised by management consultants McKinsey & Co. Air Europe in Italy was a profitable acquisition, but not all of them were.
In the summer of 2000, Swissair and Sabena were each losing three-quarters of a million dollars per day, plus another million dollars per day at LTU and another million dollars per day across the French portfolio. The situation was intolerable before the terrorist attacks in the United States. The impossible happened on October 1 of the same year, when no more loans from the principal bank of the day, UBS, were forthcoming. The Flying Bank was shut down.
The airlines in which Swissair had a stake survived because of the desperately needed investment promised by Swissair.
The Swiss government drafted Crossair to take over Swissair's routes and fleet. The country had a new flag carrier called Swiss International Airlines, and Belgium did the same. Swiss International struggled in its early years, but with new ownership, it was able to return to some of its former glories, flying a long-haul fleet of A330s, A340s and later, the Boeing 777s to five continents.
Malev Hungarian Airlines.
Some of the earliest air taxi operators in Europe were in Hungary. The Civil Air Transport Joint Stock Company, also known as Maszovlet, was the sole owner of the Li-2s after World War 2. In 1965, four engined Il-18 turboprops came online, followed by Tupolev Tu-134 jets in 1968 and the Tu-154 in 1974.
Malev wanted to get rid of its Soviet era hardware as soon as possible. By the late 1980s and 1990s, those jets had fallen behind in terms of technology and appearance, and were not as efficient as Western planes of their era.
The first Boeing to join Malev was the 737-200 in 1988, followed by the Tu-154 in 2001. The Boeing 767s opened nonstop routes to New York, Toronto and Bangkok. The airline operated back-of-the-clock flights to Amman, Beirut, Cairo, Damascus, and other ABCDs with no night curfew. The flights left Budapest at night and arrived at their destinations around three in the morning, not a dealbreaker for a price-sensitive customer, getting back to Budapest around six in the morning in time to connect to the first wave of morning flights to western Europe.
The airline was privatised in 2007. At one point, a controlling share in Malev was owned by Aeroflot. Malev was renationalised in 2010 because of its poor performance in the European aviation market. The rules of the European market brought about the end of the airline and its storied history, as EU rules forbade government subsidy to discourage unfair competition.
The authorities insisted that Malev pay back $170 million, which was equivalent to its entire 2010 turnover and an impossible amount. Malev ceased flying on February 3, 2012 and Hungary no longer had a national airline. After the shutdown of Malev, passenger numbers at Budapest fell by 5%, but low cost airlines such as easyJet and Wizz Air came in to fill the void, and Hungary remained connected to the world.
Summary.
The narrative of these stories can be depressing, as the hard work of thousands of dedicated individuals isn't enough to counteract enormous commercial forces such as the rise of the ME3 or the LCCs, or bad decisions made in the boardroom; but it's a lot of fun to remember
The airline business is difficult to make money in. The tenth richest person in the world, Warren Buffet, told The Telegraph that if a capitalist had been present at Kitty Hawk, he should have shot Orville Wright. He would have saved money for his children. The business of airlines has been great. Over the past century it has eaten up capital like no other business because people keep coming back to it. You have huge fixed costs, strong labor unions and commodity pricing. That isn't a great recipe for success. If I get the urge to buy an airline stock, I use the 800 number. I call at two in the morning and say that I am an Aeroholic. They talk me down.
Those investors keep coming. Even though air travel is almost completely stopped because of the Covid 19 Pandemic, airlines are ordering new planes and new airlines are starting up. Expect some new and interesting airlines to fly on, some of which will end up being discussed in articles like this.
British Airways: History Special.
Swissair Heritage/Dieter Ens is the cover image.
