Airline Executives and Federal Regulation: Case Studies in American Enterprise from the Airmail Era to the Dawn of the Jet Age

Published by EH.Net (October 2000)

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W. David Lewis. Airline Executives and Federal Regulation: Case Studies in American Enterprise from the Airmail Era to the Dawn of the Jet Age. Historical Perspectives on Business Enterprise, Mansel G. Blackford and K. Austin Kerr, Editors. Columbus: Ohio State University Press, 2000. xi + 379 pp. Photos, notes, and index. $60.00 (cloth) ISBN 0-8142-0833-9.

Reviewed for H-List and EH.Net by Scott E. Tarry, , Aviation Institute and Department of Public Administration, University of Nebraska at Omaha.

W. David Lewis and his colleagues have produced a collection of studies that will be useful to both the historian interested in the evolution of America’s air transport system and the contemporary student of air transport who is looking for a better understanding of the industry’s contemporary challenges and opportunities. The studies, which focus on individual airline executives, are well written and informative. The biographical accounts in themselves would be interesting to students of aviation history, but the way in which Lewis and the other contributors weave the biographies together with an exploration of the regulatory and political processes that shaped the American air transport industry in its formative years makes this book attractive to a much broader audience. The book is worth reading because it shows how the individual characteristics and personal choices of these airline executives shaped in no small way their ability to work within the regulatory framework governed by the Civil Aeronautics Board (CAB).

In his introduction to the volume, Lewis gives a nice overview of the political, social, and economic environment that confronted America’s early airline executives. This information is especially important to the reader who understands today’s air transport industry, but may not fully appreciate the rather tenuous beginnings of air travel in this country. Lewis provides some indication of what might be found in each of the subsequent case analyses and also provides at least a general framework for thinking about relationship between government and firm.

The studies cover an impressive range of airlines and individuals. From Eddie Rickenbacker, who rose from a working class background to become an American hero and eventually the head of Eastern Airlines, to Robert Peach, who used his entrepreneurial spirit and legal training to build, against considerable odds, Mohawk Airlines into a serious regional carrier. In both cases, the authors, Lewis and William M. Leary, respectively, show how Eastern and Mohawk benefited from their leaders forceful leadership and willingness to take risks. Both authors also explain how the politics of the regulatory process and Rickenbacker’s unwillingness to play the political game and Peach’s predicament as the head of a small carrier eventually forced both men from the airline business.

The accounts of Continental’s Robert Six, Northwest’s Donald Nyrop, and American’s C.R. Smith are well written explorations of three success stories in the American airline industry. Despite different styles, political connections, and attitudes towards government, each of these men were able to make sense of the context within which their airlines operated. While not always successful in their bids for more routes and other concessions from the CAB, these men were more willing and able than many of their competitors to work within the confines of the regulatory system. Roger Bilstein provides a compelling overview of Smith’s rise to prominence, not only at American Airlines, but also in the industry itself. Donna Corbett’s study of Nyrop traces a successful personal journey from regulatory bureaucrat to airline manager and industry leader. She points to Nyrop’s political and regulatory experience in explaining his longevity and success at the head of Northwest Airlines. Michael Gorn’s analysis of the rise of Robert Six highlight’s the importance of making the most of one’s good fortune.

The cases are not exclusively personal and managerial success stories. In fact, three cases trace the tragic demise of airline executives who enjoyed considerable, but fleeting success. William Leary’s analysis of Robert Peach details the rise of Mohawk Airlines and its eventual demise and acquisition by Allegheny Airlines, which arguably precipitated Peach’s taking of his own life in 1971, shortly after the merger. William Trimble’s study of George R. Hann, the head of Pittsburgh Aviation Industries Corporation and Pennsylvania Airlines, and who was forced from the industry after participating in the so-called “spoils conference” in 1930, illustrates the fate of some of the industry’s early leaders. These leaders participated in the U.S. Postmaster General’s scheme to stabilize the industry by allowing if not promoting collusion among established carriers. While the airlines continued in the industry by simply changing their names and ending their affiliations with aircraft manufacturers, individual company leaders like Hann were excluded from participating in the growth and development of the industry they helped to found. Finally, Roger Launius’s study of Orvis M. Nelson provides an entertaining look at an entrepreneur who managed to succeed by working on the fringes of the regulatory system. Nelson’s development and operation of a successful “nonscheduled” airline operation challenged the authority of the CAB and the interests of entrenched carriers who operated with the blessing and support of the government. One is left to wonder whether Nelson’s Transocean Air Lines represented a healthy challenge to the industry’s entrenched interests or a dangerous, destabilizing force as his critics charged.

The book is a good collection of case studies and is highly recommended for those who study the industry’s history. It is also a worthwhile read for those dealing with air transport in its current evolutionary stage. Many of the same issues continue to confront the industry and policy makers who monitor the airline industry. Providing efficient and effective air transport services for small and rural communities continues to befuddle policy makers. Insuring that large established carriers do not have an unfair advantage over new entrants continues to raise questions about competition. Labor problems, customer service issues, establishing the right fleet mix, and maximizing profits while insuring safety have been constant themes throughout the industry’s history.

It is worth noting another theme and one that will be understood by those who have any connection to the airline industry beyond simply taking the occasional flight. That theme, and it is evident in each chapter of this book, is that aviation is, for better or worse, different from other industries. It is more than public transportation, it is more than an incubator for technological innovation, it is more than an economic development tool used to link communities to the global economy, it is more than a source of noise, and it is more than part of the nation’s national security. As Robert Six once said “I’ve never known an industry that can get into people’s blood the way aviation does” (p. 171). Aviation is as much about the people who work in it as it is about the airports and airplanes. Even today when airlines are characterized as being driven by faceless “beancounters” and executives with little or no personal love for flying, the airline industry continues to boast more than its fair share of characters who are seemingly larger than life. Herb Kelleher of Southwest Airlines, Gordon Bethune of Continental, and Richard Branson of Virgin Atlantic remind us of the impact individual airline executives can have on the success of their own firms and air transport more generally. Lewis and his fellow contributors provide an illuminating glimpse into some of the most intriguing characters in the historical development of America’s airline industry and remind us that individual leadership is still worth examining if we want to see where air transport is heading in the coming years.

Scott Tarry is Associate Professor of Aviation and Public Administration in the Aviation Institute at the University of Nebraska at Omaha. His research interests include air transport administration and policy. He has served as a faculty research fellow at NASA’s Langley Research Center. His current projects include an examination of rural air transport issues and the impact a small aircraft transportation system might have on small and isolated communities.

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