Acker’s Gamble: Air Florida 1979-1982

​With deregulation of the airlines in the USA the expectation was that an intrastate airline like Air Florida would be a force in the new post-regulation world and for a while that was true enough. The story of Air Florida is forever intertwined with the fortunes and wheeler dealing of one man, Ed Acker who took it from obscurity to the big leagues and then abandoned it for its greatest rival.

Air Florida Boeing 737-2T4 Adv N53AF Gemini Jets 1:400 Scale Model

With the coming of deregulation C. Edward Acker was able to break his airline, Air Florida, out of the state that it had served since its formation in 1972 by Eli Timoner (who remained Chairman). Acker had transformed the staid and unsuccessful Lockheed Electra equipped Air Florida, he had acquired for only $1.5 million in July 1977, into a sleek and sexy airline. The fleet had been re-equipped with jets, the livery updated to a bright orange and blue and all manner of headline grabbing antics undertaken like onboard cocktails, “Sunshine Sparklers”, and free flight promos, “Sunshine Kisses”, acquired by kissing a “Kiss Miss” employee.

The first Acker colour scheme on the sole 727-76 N91891. Photo by Bob Garrard from his FlickR page

1977 Air Florida file photo of Board Chairman C. Edward Acker

This was just the beginning though and Acker had his sights set on the coming deregulated world. To prepare for this Acker needed to finance growth and this meant new aircraft, new routes, new marketing and a new look, even though the airline was effectively all new already. The Electras were sold and the single leased 727-76 was returned to the lessor in July 1977.

​That left 6 ex-Air Canada Douglas DC-9-15s all acquired in 1977, however the short Nines would themselves not last long into the 1980s. They did enable expansion in Florida with seven new destinations starting on October 1, 1978.

There's little doubt who 737-112 N46AF had served with last. Photo from the collection of Adrian Balch. Used with permission

Air Florida acquired the small commuter airline Air Sunshine in December 1978, mainly to get routes to the Florida Keys, but replacing Sunshine’s DC-3s and Convairs with the DC-9s was not really an option due to runway constraints. The Boeing 737 however could do the route, and everything else the airline needed.

Acker delved into the used plane market and began acquiring leased Boeing 737-100s and 737-200s the first of which, N37AF, arrived in January 1979. These sported a new more modern and sophisticated, but still colourful, livery with green and blue replacing the orange and red. The airline had also ordered 5 new 737-2T4s from Boeing. Additionally, Air Florida organized to lease 737s from Aer Lingus, Air Europe and Transavia during the lean European Winter season and the carrier became well known for its hybrid schemes with quickly applied Air Florida titles.

Another winter season hybrid. This time Air Europe. Peter Duijnmayer [GFDL 1.2 (http://www.gnu.org/licenses/old-licenses/fdl-1.2.html) or GFDL 1.2 (http://www.gnu.org/licenses/old-licenses/fdl-1.2.html)], via Wikimedia Commons

The out of state expansion began on December 14, 1978, with a route to Washington D.C – its first interstate service. Services to the Bahamas had started in November and in January 1979 two points in the US Virgin Islands were added. On April 1, New York was added and by the middle of 1980 expansion had taken Air Florida to Houston, Dallas, Philadelphia and into the Caribbean and Central America. 1979 turned into the airline’s first profitable year ever with revenues jumping by 220% to $60 million, including a $3.4 million profit. Air Florida’s success was built on two things – simple low fares without preconditions and high frequency between important city pairs.

In this April 1979 timetable you can see out of state expansion had begun.

The fleet grew also so that by January 1980 it consisted of 4 DC-9-15s, 4 737-100s and 9 737-200s. All of this expansion came at a price, literally. The airline was in serious debt, partially offset by Acker’s dealings on the foreign exchange market. The debt would be the main killer of the airline in the end but Acker continued, and even accelerated the expansion. Towards the end of 1980 the carrier’s debt had to be refinanced but despite an economy beginning to head in the wrong direction no brake was applied.

On March 28, 1980 charter flights to Europe had been begun with a leased Icelandair DC-10. When Eastern, having been assigned the Miami-London Gatwick route, annoyed the regulators with its insistence on serving Heathrow Air Florida was able to slip in and steal the service away from them. This began accordingly on April 3, 1981 and would be followed by further European capitals. At one point four DC-10-30s were on lease simultaneously to serve these routes.

The 737 fleet also had a shake-up as earlier leased 737-100/200s were replaced by new 737-2T4s and ex-United 737-222s. By the end of 1980 the fleet stood at 6 DC-9s, 2 737-100s and 17 737-200s. In many ways 1981 was the height of Air Florida’s success but also the year that signaled its downfall.

The DC-9s received the new colours too. Here is N73AF in early 1981. Photo by Bob Garrard from his FlickR site

Pan Am had taken over National Airlines in 1980 but the merger had been a disaster. Along with Eastern National had historically been the airline in charge of the Florida bound market down the Eastern seaboard and now Pan Am was forced to decrease services as it struggled to digest its acquisition. This contraction allowed Air Florida to throw half of his fleet onto the former stronghold routes of National and became the second biggest airline to Florida down the Eastern Seaboard (Eastern was still first). 

Left: Note the additional east-coast services on this late 1980 timetable

The airline also announced new orders signing in July 1981 a deal with Boeing for 3 new 757-2T4s (plus 3 options) for a 1983 delivery. The 757s were financed via a complicated double-dipping technique that enabled tax relief through both the US and UK. Further near-term expansion was to be achieved with the acquisition of 5 new 727-227 Advanceds, built for Braniff but never delivered. The first arrived in September 1981. 

Ex-United 737-222 N9048U before she became N67AF in November 1980. Peter Duijnmayer [GFDL 1.2 (http://www.gnu.org/licenses/old-licenses/fdl-1.2.html) or GFDL 1.2 (http://www.gnu.org/licenses/old-licenses/fdl-1.2.html)], via Wikimedia Commons

Air Florida had also for sometime been eyeing up someone to buy as part of a transcontinental strategy. This never really panned out and it missed out on acquiring Air California in May 1981. It was also eyeing up the larger US trunk airline Western and had been given permission to make a formal bid. Other attempts to buy smaller airlines in Texas (Sun Air and Emerald Air) respectively also foundered. In hindsight this all seems crazy, especially as the US economy was entering into a recession and interest rates on debt were spiking. Nonetheless at the time Acker was seen as a genius and Air Florida as a wildly successful airline. 

One of the leased DC-10s. See Part 2 for the full history of the Air Florida transatlantic routes

Perhaps Acker saw the writing on the wall, or perhaps he just wanted the challenge but he stunned the industry in late August. Opening a talk in New York with a group of Wall Street Analysts expecting to hear of Air Florida’s financials instead were amazed when rising to the podium he said he couldn’t discuss the topic. Instead he said:

"I talked to Cunard Lines and told them I was interested in a job as captain of the Titanic. They informed me that I was too late. Not having that challenge available, I decided to try to find one comparable to that. And so I am accepting the chairmanship of a company called Pan American World Airways."

N54AF in November 1980. Peter Duijnmayer [GFDL 1.2 (http://www.gnu.org/licenses/old-licenses/fdl-1.2.html) or GFDL 1.2 (http://www.gnu.org/licenses/old-licenses/fdl-1.2.html)], via Wikimedia Commons

So in hindsight Acker was in effect jumping from the frying pan into the fire, but regardless it was a very personal betrayal of his own airline, even more so since Pan Am was Air Florida’s greatest competitor and now Acker would do his best to bury his former company. Acker started at Pan Am on September 1 and one of his first actions was to repeal all the route closures they had made to Florida and go head-to-head with Air Florida.

The 1981 route network

For a short while things still seemed fine at Air Florida. Whilst the industry as a whole lost $500 million in 1981 it still made a profit of $5.1 million on revenue of $114 million. At the end of 1981 the fleet stood at 3 737-100s, 23 737-200s, 5 727-227s, 4 DC-10s plus a host of commuters operating as Air Florida Commuter airlines. Expansion plans continued apace with new services to Belize and Bermuda (on September 15), Chicago and 4 other Great Lakes cities (November 15) and Boston (December 1).

Unfortunately, Air Florida, now with Eli Timoner back as acting President and Chairman, was entering choppy waters and 1982 would prove to be a disastrous year from which it could never recover. 

Click here for part 2

References
1981. Friedman, T. MAN IN THE NEWS; AT THE CONTROLS OF PAN AM. New York Times
Evanich III, J. Lost schemes: #53 Air Florida 757-2T4 (1981). Airliner Cafe
Davies. R.E.G. Airlines of the Jet Age: A History
The Rise and Fall of Air Florida. Tails through Time