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AccessAir – Des Moines, Illinois discount passenger service

Published on July 18, 2012,

Year Founded 1998. AccessAir is established at Moline, Illinois, in the fall of 1998 to offer scheduled discount passenger service to New York (LGA) from the heart of the Midwest. Roger Ferguson is president/CEO and he and a group of 230 employees, from an operational headquarters at Des Moines, Iowa, acquire a pair of Boeing 737-230As (first flown by Deutsche Lufthansa, A.G.) and begin the process of winning regulatory approvals from the FAA and DOT.

Financial support is provided by business interests in Illinois and Iowa. An attempt to gain support from companies in Colorado Springs, who lost heavily as a result of the transfer and demise of locally based Western Pacific Airlines (Westpac), fails.

On January 29, 1999, the company issues a press release detailing the new entrant’s schedule and price structure for the beginning of service, including introductory fares. The company website announces plans to shortly add service to Colorado Springs and Sioux City. Northwest Airlines indicates that it will match the new prices.

AccessAir now reaches an agreement with United Airlines and Trans World Airlines (TWA) under which the startup can exchange passengers and tickets with those carriers if it overbooks.

With FAA support, the certification process is completed on February 1. Following a ceremony, the inaugural service departs Des Moines, Iowa, on February 3 and flies to Moline, where another ribbon-cutting ceremony is held. At 6 p.m., the flight continues on to New York.

The first return service from the “Big Apple” to Moline and Des Moines occurs next day. Also on February 4, daily roundtrip flights commence from Des Moines to Los Angeles (LAX). Introductory $99 one-way fares remain in place until March 4.

Claiming that it has removed its introductory fare, AccessAir complains to the DOT that Northwest has not increased prices and is maintaining them below competitive levels. It is, they suggest, engaged in predatory pricing. Also on March 5, Delta Air Lines and Trans World Airlines (TWA) begin to offer $198 roundtrip fares on the Des Moines to Los Angeles route, matching AccessAir and Northwest.

Northwest responds on March 16, claiming that AccessAir has never discontinued the introductory fare and that it is still available. Northwest is, therefore, only maintaining a level playing field and has not set its fares below competitive level.

AccessAir again petitions the government for relief, seeking “fairness in the marketplace.” It joins with several other small start-ups in holding a high-profile press conference in Washington, D.C., on March 26 concerning the competition issue. Coordinated by Edward Faberman, executive director of the Air Carrier Association of America, the trade group asks DOT and Congress to end the monopoly of terminal gates and other airport facilities by large airlines.

On April 14, AccessAir widens its complaint against the majors, asking the DOT, as well as the attorney general of Iowa, to investigate the alleged predatory behavior of TWA, Delta, and Northwest Airlines.

President/CEO Ferguson announces at the end of the month that his concern has leased two more B-737-200As from Pegasus Aviation and that they will arrive in Des Moines within a month or in early June at the latest. On May 5, it is announced that the company will begin stopping at Colorado Springs within 30 days.

On June 1, the carrier operates its first flight to Colorado Springs, from New York, stopping in Des Moines first. The new Colorado service continues on to Los Angeles.

Although flights continue during the remainder of the year, the new entrant runs into severe economic difficulty. When other carriers lower prices to compete, those initially flying on AccessAir desert in droves to the older airlines. As a result, the company is forced to cancel flights and suspend routes, angering many of those loyalists who remain. A change of leadership from president Ferguson to Rich Musal and a $1 million loan from Polk County cannot stem a pending disaster.

On November 29, the airline shuts down and enters Chapter XI bankruptcy; its leaders vow to fly again within 30 days to avoid the risk of losing government certification. Some income is earned when a B-737200A is chartered to fly the Carolina Hurricanes to their National Hockey League games.

On December 11, Milwaukee-based Midwest Express Airlines offers to take over and expand the carrier’s New York route; three days later, San Francisco–based Pegasus Aviation goes to court asking for repossession of its two B-737-200As.

Arrangements are completed on December 18 for a $1 million loan from the State of Iowa; Des Moines–based Ruan, Inc., one of the original airline investors, guarantees the arrangement. Indicating that Ruan would have too much control over the carrier, the U.S. bankruptcy judge rejects the loan plan on December 21; two days later, after the proposal is changed to satisfy his objections, the judge approves.

Enplanements for the year total 14,000. Estimated losses total $30 million, with debts to unsecured creditors reaching $11 million to 13 million.

Presidential candidate George W. Bush and the U.S. Marshalls Service charter the AccessAir jets during the first week of January 2000; the former needs a plane to ferry media and the latter to haul prisoners. The income provided barely covers the $500,000-a-month Pegasus leases and does not, even when added to the state loan, provide sufficient income to allow a resumption of passenger service.

On January 22, company officials, having completed plans for roundtrips to Chicago (MDW) and a service agreement with Midwest Express Airlines, seek another $6.5 million, in unguaranteed loans, AccessAir 7 from the state. The chairman of the Iowa House Appropriations Committee quashes the idea five days later.

On February 3, airline leaders approach Polk County, the City of Des Moines, and the Iowa Dept. of Economic Development asking them to back the $6.5 million request; otherwise, they warn, these investors could lose what they have already shared. Gov. Tom Visack indicates on February 5 that his administration will not buck the House and grant AccessAir a loan. The same day, Pegasus Aviation gains return of its Boeings.

Claiming that the Pegasus lease fee is far above market average, the airline voluntarily returns the two chartered Boeings on February 7.

Midwest Express Airlines, via Sen. Tom Harkin, comes forward on February 18 and offers to start flying to New York on June 1 if AccessAir is no longer viable. A federal attorney, on February 26, files a motion asking the bankruptcy court to order the airline’s liquidation. On March 3, the FAA yanks the carrier’s Des Moines–New York route authority and, by mutual agreement, president Musal resigns.

After a month in limbo, John Ruan 3rd, CEO of Ruan, Inc. who personally does not want to see AccessAir fold and higher local air fares return, steps forward on April 11 and, through his corporation, pumps $900,000 into the moribund concern. Meanwhile, the business leader and his associates work on a new plan to present to the bankruptcy court. It is envisioned that the hometown airline, with Ruan as chairman, will become something of a “virtual airline,” employing outside concerns to perform many operations. A management company will be hired to provide direction.

On May 20, the corporation agrees to provide the $13 million the airline now says it needs to resume flying and, on May 24, the carrier receives court permission to borrow another $500,000.

The government attorney withdraws his February 26 motion on June 2, clearing the way for AccessAir’s revival. Still, on June 12, Midwest Express Airlines begins Des Moines-to-New York flights anyway. Unable to find a management concern willing to come in without first acquiring the airline’s federal operating permit, the leadership portion of the “virtual” idea is shelved on June 22 and two employees are named as top management. Company training director and former Iowa Air National Guard 132nd Fighter Wing CO Donald Armington is appointed chief administrative officer while ops director Steve Wilson becomes COO.

On August 12, a revised operating plan is presented to the U.S. bankruptcy court under which the Ruan companies will own 85% of AccessAir. Although the $20 million in investments made by such Des Moines area companies as MidAmerican Energy, Pioneer, Farm Bureau Life Insurance, the Principal Financial Group, AmerUs Group, and Ruan are gone, the plan calls for large creditors, including suppliers and some government agencies, to be repaid about 8 to 15 cents for each dollar of debt.

Six days later, chairman Ruan informs the Des Moines Register that regular passenger service to Chicago (MDW) should be resumed by the “new” AccessAir in mid-September. If all goes well, flights to Phoenix and Los Angeles will be offered in October, with Cedar Rapids coming on line in November. A community “kickoff,” a public relations rollout, is held for local businessmen, politicians and the media on August 24.

During late summer and early fall, a contract is entered into with American Trans Air under which the Indianapolis-based major will provide ticketing and other services and reliable links to other cities, such as New York, Indianapolis, and Philadelphia, from its Chicago (MDW) hub. During the same time, the staff is rebuilt to 100.

On October 18, chairman Ruan announces that AccessAir will resume scheduled daily roundtrips to Chicago (MDW) on November 15. Offering introductory $79 one way and $158 roundtrip fares, Ruan asks the community for its support. Two days later, the Des Moines Register, which has provided excellent ongoing coverage of the carrier’s travails, issues a ringing editorial endorsement: “Worth a second chance!”

Unhappily, the rebirth failed and AccessAir shut downed on February 27, 2001.

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