Capitol Air was a United States supplemental air carrier regulated by the Civil Aeronautics Board (CAB), 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 (most such carriers did not). 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 (FBO), 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 (what irregular air carriers received from the CAB at the time in lieu of a certificate) 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-46sMiami Line Chosen for AF Airlift, Miami Herald, 3 April 1954 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 (External links has a link to a Volunteer Airlines timetable). Losses exceeded $100,000 (over $1.2 million in 2025 terms).Volunteer Adds To Flights Here Chattanooga (TN) Daily Times, 19 August 1954
Capitol would fly for Logair until 1965. In 1956 and 1957, almost all its revenue was from the military (see Table 1). 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.Three County Airport Firms Employee 500, Wilmington (DE) News-Journal, 2 July 1959
+ Table 1: Capitol Airways financial results, 19521960 195219531954195519561957195819591960Operating revenue: Military charter 685 1,969 3,347 4,957 6,642 5,387 5,016 6,492 Civilian charter 236 229 288 60 55 2,814 4,830 5,571 Scheduled 33 121 20 28 32 668 502 Other 277 8 9 Total972 1,198 2,231 3,764 5,037 6,725 8,233 10,514 12,574 Op profit (loss) 19(1) 36 24 67 27 1 (117) (204) 131 Net profit (loss) 25 9 81 191 (2) (90) (282) 105 Op margin (%) 3.0 1.1 1.8 0.5 0.0 -1.4 -1.9 1.0Operating revenue: % of industry(2)1.4 1.7 4.1 4.9 7.5 13.3 12.6 13.7 15.1Industry(3) rank 22 8 6 6 4 2 3 4 2 (1) Profit before tax (2) Versus other supplemental air carriers
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 (after Trans International Airlines and World Airways) to introduce jets with a convertible (passenger/freight) 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 Jet Sets Non-Stop Record Nashville Tennessean, 12 February 1964
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.
+ Table 2: Capitol Airways(1) financial results, 1961–1970 USD 000196119621963 1964 196519661967196819691970Operating revenue: Military charter 9,817 14,911 12,616 10,002 9,008 18,129 16,473 13,821 15,309 13,874 Civilian charter 2,969 2,539 2,456 5,636 10,126 11,237 13,622 25,794 27,458 25,624 Scheduled 377 1,352 273 1,540 Other 239 106 57 219 117 418 457 1,510 388 148 Total13,401 18,907 15,402 17,397 19,252 29,784 30,553 41,125 43,155 39,646 Op profit (loss) 207 504 216 1,956 1,297 5,750 4,319 4,790 1,519 (330)Net profit (loss) 62 (34) (48) 1,244 1,185 2,296 1,938 3,485 (150) (1,147)Op margin (%) 1.5 2.7 1.4 11.2 6.7 19.3 14.1 11.6 3.5 -0.8Operating revenue: % of industry(2)16.3 17.7 16.7 16.4 13.7 14.2 11.8 12.6 11.9 11.8Industry(2) rank 2 2 2 3 4 4 4 4 5 5 (1) From 1967, Capitol International Airways (2) Versus other supplemental air carriers
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,Capitol Airline Offers Stock Nashville Tennessean, 1 April 1967 completing it in May,Capitol International Airways Offering Tombstone Nashville Tennessean, 10 May 1967 becoming a public company. In July 1969, conglomerate City Investing agreed to buy Capitol, with an offer that expired at year end (buying such carriers was in fashion: The Hillman Company bought American Flyers in 1967, and in 1968, investment bank Stephens bought Purdue Aeronautics, insurance company Transamerica Corporation bought Trans InternationalTransamerica Signs For Airline Purchase Sacramento Bee, 12 March 1968 and INA Corp., also an insurance company, offered to buy World Airways). 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 (today's Smyrna Airport) southeast of Nashville.Capitol to Bring Flight Base to Smyrna, The Tennessean, 8 January 1971
By 1972, charters to Europe were a dominant part (73%) of Capitol's commercial business, similar to the other four (Trans International, Overseas National, World Airways and Saturn Airways) of the so-called Big Five charter carriers. Capitol's civil business now dominated military (see Table 3). 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 (DOT) 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.
+ Table 3: Capitol International Airways financial results, 1971–1978 USD 00019711972197319741975197619771978Operating revenue: Military charter 8,286 10,237 6,947 8,770 4,659 5,571 4,928 Civilian charter 30,716 27,341 33,943 40,246 32,861 45,602 74,389 80,083 Other 133 172 675 2,342 1,627 993 1,704 Total39,135 38,587 44,353 47,867 43,973 51,889 80,945 86,715 Op profit (loss) (1,619) 182 (886) 1,382 131 1,174 (175) (2,995) Net profit (loss) (2,542) 755 (551) 1,624 2,941 299 (1,754) Op margin (%) -4.1 0.5 -2.0 2.9 0.3 2.3 -0.2 -3.5Operating revenue: % of industry(1)10.8 11.7 11.9 11.2 10.2 12.4 15.7 16.4Industry(1) rank 5 5 5 5 5 5 4 3 (1) Versus other supplemental air carriers
Deregulation and demise
As shown in Table 3, Capitol ended the final year of regulated era (1978) as the third largest supplemental by revenue, but its advancement from number five earlier in the 1970s in part reflected Saturn's 1976 merger into Trans International and Overseas National's September 1978 liquidation.
Capitol entered deregulation still reliant on a fleet of DC-8s and suffered the March 1979 death of its founder Jesse Stallings, and the April 1980 death of Mack Rowe, Stallings's long-time lieutenant (at the airline since 1946) and successor as Chairman. Capitol's first scheduled service was in May 1979 from New York to Brussels, at which time the airline intended to remain mostly a charter carrier for the foreseeable future. However, by 1980 it was already mostly a scheduled carrier by revenue (see Table 4), largely long-haul service (see Destinations).