Capitol Air


Capitol Air was a United States supplemental air carrier regulated by the Civil Aeronautics Board, the now-defunct Federal agency that, at the time, tightly regulated most US commercial air transport. From 1979, Capitol was a scheduled passenger airline. From 1964, supplemental air carriers were just charter carriers but until 1964 Capitol did a small amount of scheduled flying. The airline was founded as Capitol Airways in 1946. In the mid-1950s Capitol primarily flew for the military and was a founding carrier of the US Air Force Logair domestic freight system. In 1954–1955 Capitol operated a Tennessee intrastate airline called Volunteer Airlines. By 1960 Capitol developed commercial charter programs to Europe and for a time was the second-largest supplemental by revenue. It introduced its first jet in 1963 and became Capitol International Airways in 1967. Except for a brief period in the 1960s, Capitol's financial performance was mediocre, though the mere fact it survived the regulated era made it noteworthy. 1979 US airline deregulation coincided with the death of Capitol's founder/dominant owner, following which the airline became an unsuccessful scheduled carrier under three successive new owners before its 1984 demise. The airline adopted its final name in 1982.
A lasting impact of Capitol was from its 1974 refusal to cooperate with US govt attempts to reduce transatlantic competition to benefit financially-distressed Pan Am, then the dominant US international carrier. As a result, the CAB imposed minimum transatlantic charter fares, causing a backlash that included the first 1974–1975 hearings by Senator Ted Kennedy, kicking off a process that ultimately resulted in 1979 US airline deregulation.
In 1984, entrepreneur John Catsimatidis became a significant minority shareholder of Capitol Air shortly before its demise. In 1992, Catsimatidis started a new charter airline named Capitol Air Express with a similar livery to the final livery of Capitol Air. 1990s photos of Boeing 727s in this livery relate to this later Capitol Air Express.

History

Startup and transition to airline

Capitol Airways was founded by Jesse F. Stallings and R.R. McInnis, former American Airlines pilots who flew for the Air Transport Command in World War II. Each contributed $5000 but McInnis withdrew after about six months. Capitol was incorporated in Tennessee on 11 January 1946, and initially operated as a fixed base operator, providing flight instruction, aircraft sales and service and chartering of light aircraft at Cumberland Field in Nashville. This was a segregated business; a separate operation at the field offered services to black people. Capitol acquired a Lockheed Lodestar aircraft in 1947 to fly for the Grand Ole Opry. Capitol's Letter of Registration was issued 11 August 1947.
Stallings flew Capitol's first Douglas DC-3, bought for $7,500, to Nashville solo from New York LaGuardia in winter with a busted copilot-side window. Capitol had two Douglas DC-3s by 1948, also the year the airline moved most functions to Berry Field, today's Nashville International Airport. In 1949 just over half its revenues were transport-related.

1950s: decade of growth

As [|Table 1] shows, the 1950s were a decade of substantial growth for Capitol, though it never achieved much more than break-even financial results. By the 1960 it was the second largest supplemental carrier by revenues. In 1951 Capitol started flying military charters. Capitol Air Sales was incorporated in 1953 and took over the FBO activities. In 1954, Capitol Airways successfully bid to fly six Curtiss C-46s for what became Logair, a domestic Air Force cargo virtual airline. That year, the airline flew a total of nine C-46s and four DC-3s. Further, from October 1954 to July 1955, Capitol operated a Tennessee intrastate airline under the name Volunteer Airlines with DC-3s. Losses exceeded $100,000.
Capitol would fly for Logair until 1965. In 1956 and 1957, almost all its revenue was from the military. In 1960, Capitol flew 40 C-46s for Logair, half leased from AAXICO Airlines, a losing bidder that year. In 1958 Capitol flew its first passenger charters to Europe. By 1959 Capitol had five Lockheed Constellations and in February made New Castle Airport at Wilmington, Delaware its main operational base.
195219531954195519561957195819591960
Operating revenue:
Military charter6851,9693,3474,9576,6425,3875,0166,492
Civilian charter23622928860552,8144,8305,571
Scheduled33121202832668502
Other27789
Total9721,1982,2313,7645,0376,7258,23310,51412,574
Op profit 19362467271131
Net profit 25981191105
Op margin 3.01.11.80.50.0-1.4-1.91.0
Operating revenue:
% of industry1.41.74.14.97.513.312.613.715.1
Industry rank2286642342

File:N9718C L1049E Super Constellation Capitol Aws PMI 17SEP67.jpg|thumb|Super Constellation at Mallorca 1967

Turboprops and jets

By July 1962, Capitol was flying five Armstrong Whitworth AW.650 Argosy aircraft for Logair, its first turbine equipment. The Argosies were out of the fleet by year end 1965, consistent with Capitol's exit from domestic military flying. In October 1963 Capitol was the third supplemental air carrier to introduce jets with a convertible Douglas DC-8-54F. In February 1964, Capitol set a commercial aviation world record by flying a DC-8 nonstop from Tokyo, Japan to Wilmington, Delaware in 12 hours and 25 minutes.
Capitol accumulated over a dozen Lockheed L-1049 Super Constellations in the 1960s. Capitol's exit from the type was accelerated by reduced military demand for Vietnam War freight flights in 1967, which fell most heavily on piston aircraft, consistent with US military policy favoring turbine equipment. By December 1967, four L-1049Hs, previously employed for the military, were sitting at Capitol's Delaware base with "no prospects for further use of the fully depreciated aircraft." The L-1049s were out of the fleet by year-end 1968. C-46s remained, because Capitol flew three and then five on wet lease in Europe for Lufthansa 1964–1969. By 1970, Capitol had a pure DC-8 fleet.
USD 0001961196219631964196519661967196819691970
Operating revenue:
Military charter9,81714,91112,61610,0029,00818,12916,47313,82115,30913,874
Civilian charter2,9692,5392,4565,63610,12611,23713,62225,79427,45825,624
Scheduled3771,3522731,540
Other239106572191174184571,510388148
Total13,40118,90715,40217,39719,25229,78430,55341,12543,15539,646
Op profit 2075042161,9561,2975,7504,3194,7901,519
Net profit 621,2441,1852,2961,9383,485
Op margin 1.52.71.411.26.719.314.111.63.5-0.8
Operating revenue:
% of industry16.317.716.716.413.714.211.812.611.911.8
Industry rank2223444455

File:Capitol DC-8-63.jpg|thumb|DC-8-63CF Gatwick 1973
File:Douglas DC-8-63, Capitol International Airways JP6377819.jpg|thumb|DC-8-63CF San Juan 1978

Public company and Atlantic charter carrier

On 17 March 1967, the airline changed its legal name to Capitol International Airways, a name it had used for business purposes since at least 1961. Later the same month, Capitol filed an initial public offering, completing it in May, becoming a public company. In July 1969, conglomerate City Investing agreed to buy Capitol, with an offer that expired at year end. In January 1970, with CAB approval incomplete, City Investing walked away. As [|Table 2] shows, Capitol's 1969 operating margins dropped significantly vs the prior three years. In 1971, Capitol consolidated operations and headquarters to Smyrna, Tennessee, at the recently-closed Sewart Air Force Base southeast of Nashville.
By 1972, charters to Europe were a dominant part of Capitol's commercial business, similar to the other four of the so-called Big Five charter carriers. Capitol's civil business now dominated military. Charters accounted for 32% of all Atlantic passengers at the time. In 1973–1974, the US govt sought to prop up Pan Am, which was losing a lot of money, especially on the Atlantic. The Department of Transportation asked carriers to raise transatlantic fares, including charter rates. Capitol refused, noting it was making money, charter rates were going up of their own accord and Pan Am's issues were of its own making. The DOT identified Capitol as the "recalcitrant carrier" preventing a "voluntary" agreement. In response, the CAB imposed minimum charter rates. Backlash was immediate and the CAB order was suspended by a court injunction. In late 1974, Senator Ted Kennedy held hearings on the issue, the first of a series of such hearings on airline regulation that in retrospect were seen as starting a process that ended in the 1978 Airline Deregulation Act.