Air South Airlines was founded in 1993 and was in fact the fourth airline within the USA alone to have used that name, not itself a happy omen. Its homebase was in Columbia, South Carolina and its call sign would become 'Khaki Blue'. The airline's model was to operate low cost high frequency services, often from secondary airports that had lost their jet operations. Initial capital came from founders Donald Baker and Rod Marlin, local citizens as well as the state of South Carolina itself. It had the backing of South Carolina Governor Carroll A. Campbell, Jr. and Columbia mayor Bob Coble. To secure $12 million (of its initial $17 million startup capital) of low interest state loans it hired hundreds of staff directly from Columbia.
It began operations with its first 737-200 on August 23, 1994 and the fleet rapidly expanded to 9 aircraft mostly leased from Polaris Aircraft Leasing and Guiness Peat Aviation. These included four Irish registered 737-2P6 Advanced aircraft that had originally served with Gulf Air. Two of the others were ex-Western Airlines 737-247s dating from 1968.
The airline seemed to catch flak from the local press who were critical of investment from the State and this served to undermine the carrier somewhat. It also seems that there was trouble within the carrier if a 1997 lawsuit is to be taken at face value. Patrick O'Shea the airline's first CEO resigned in February 1995 and claimed that two board members, Clifton Haley and William Hambrecht, initiated a "seditious campaign" to force him off the company's board. He along with Baker and Marlin alleged that Haley and Hambrecht "executed a campaign to dominate the affairs of Air South for their personal benefit, to the detriment of other shareholders and particularly to the detriment of plaintiffs,". They also suggested that the profits Air South showed were false.
This certainly suggests a turf war on the Air South board. Indeed Hambrecht's investment banking firm Hambrecht & Quist, did acquire a controlling interest in 1996 and invested $25 million in the airline. A new management team was brought in and cut the airline's flights by a third. They also altered Air south's focus abandoning its low cost, high frequency approach and instead suicidally targeting high cost, low frequency routes in competition with the majors. The seat mile costs skyrocketed from 8.5-13 cents by 1997. Services were launched to Chicago Midway and New York JFK but were not only impacted by competition but also by winter weather delays. Additionally the fallout of the Valujet crash led to a variety of FAA restrictions and bad press being imposed on smaller airlines.
1995. Air South Reports Third Consecutive Montly Profit.
Norwood, T.W. Deregulation Knockouts: Round Two
1997, August. Air South founders sue two board members. The Augusta Chronicle
1997, September. Low-cost Air South files for Chapter 11 bankruptcy protection. Flight Global
Airline Deregulation: Barriers to Entry Continue to Limit Competition. DIANE Publishing
I'm Richard Stretton: a fan of classic airliners and airlines who enjoys exploring their history through my collection of die-cast airliners. If you enjoy the site please donate whatever you can to help keep it running: