North American Airlines Group or North American Group, doing business as North American Airlines was a "combine", a group of US irregular air carriers and related companies under common control that acted as an early scheduled low-cost carrier in the period 1949–1957. It can be seen as a form of virtual airline.
North American was, at the time, highly controversial. It was a rogue airline, lucrative for the four partners who controlled it, bigger and more profitable than some of the smaller trunk carriers of the day yet operating in open circumvention of the law. In 1955, the Civil Aeronautics Board (CAB), the now-defunct Federal agency that, at the time, tightly regulated almost all US commercial air transport, revoked the group's right to operate. The group stayed in operation for almost another two years by challenging this in court, shutting down in 1957 after the US Supreme Court refused to hear a final appeal. A year earlier, in 1956, the group lost a trademark dispute with aircraft manufacturer North American Aviation, so for the last year of its existence was known as Trans American.
Name The group was a constellation of related businesses tied together by common ownership and contract. Many of these entities had similar names, sometimes even identical names. As an example, while the group marketed itself as "North American Airlines", that was also the name of one of the operating airlines controlled (but not owned) by the group. In 1956 Congressional testimony, its lawyer and accountants referred it both as "North American Airlines Group" and "North American Group". In its order to shut down the group, the CAB referred to it as the "so-called 'North American Combine' ".
History Context
In 1938 the United States legislated a system of tight airline regulation overseen by the CAB. Under this system, the domestic scheduled airlines were, for the main routes, the trunk carriers (certificated just prior to World War II) and for routes to smaller cities, the local service carriers (originally known as feeder carriers) certificated after World War II. But after World War II, another set of carriers sprang up, leveraging war-surplus aircraft and war-trained pilots, exploiting a loophole that allowed for "nonscheduled carriers." Originally numbering over 100, these airlines became known as irregular air carriers and later as supplemental air carriers. The CAB struggled to control these carriers, which remained uncertificated (the CAB issued them a "letter of registration" in lieu of a certificate). During the time North American operated, CAB regulation limited irregular carriers in their ability to offer scheduled service. Initially, scheduled flights were required to be offered on an "irregular" basis (hence the name). After 1955, the CAB simply restricted such carriers from offering more than 10 flights/month on any city pair. Irregular carriers were otherwise limited to offering charter flights.
Standard, Viking and Oxnard
Stanley D. Weiss and James Fischgrund were partners in Long Beach-based Standard Air Lines, Inc. (incorporated in California on 10 June 1946, which operated as Fireball Air Express pre-incorporation). Jack B. Lewin and Ross R. Hart were partners in Burbank-based Aero-Van Express Corporation (incorporated in California on 18 February 1946). Separately, Harry Ljung incorporated Viking Air Transport, based at Glendale, California, on 23 January 1946.Air Shipping Company Opens Glendale Hdqrs., North Hollywood (CA) Valley Times, 1 April 1946 But Ljung stepped down in early May, replaced by Hart.North Hollywood, Burbank Pilots Manned Airliner, Los Angeles Evening Citizen News, 16 May 1946 In 1947, Viking Air Transport became the non-operating parent company of Aero-Van Express. Aero-Van did business as Viking Air Lines and in 1948 changed its name to that. Weiss was a former Air Transport Command pilot who flew the Hump, Fischgrund was a lawyer who served as a US Navy officer on a destroyer escort, Hart was a former Douglas Aircraft Company employee and Lewin served in the Army Air Forces Technical Training Command.
Standard and Viking were two of the first irregular airlines to be shut down by the CAB for operating scheduled flights. Along with Charles C. Sherman's Airline Transport Carriers (ATC; Charles Sherman was Weiss's original partner in Standard before he established ATC) the three carriers petitioned the CAB in July 1948 for approval to offer scheduled service. In fact they were already offering scheduled service; in 1948, they were three of the top four irregular airlines offering cheap transcontinental flights. In October the CAB refused the petition. By then, Standard and Viking were working with each other, sharing joint ticket agencies, for instance.Viking-Standard Airlines advertisement in Chicago Tribune, 25 July 1948 The CAB shut down Standard on 20 June (effective 20 July), 1949 and Viking on 5 June (effective 5 July) 1950 for holding themselves out to the public as scheduled airlines in willful and knowing violation of the regulations. For each company this meant revocation of the letter of registration that the CAB issued to irregular air carriers in lieu of a certificate. Standard suffered a fatal crash only a week before its final date (see Accidents). Under new owners, Viking continued to operate until 1956 as a contract carrier, otherwise known as a Part 45 carrier (no longer a common carrier, unable to offer service to the public, the carrier escaped CAB regulation).
By the time the CAB revoked Viking, Hart was operating Oxnard Sky Freight. In 1950, among 55 irregular carriers operating that year, Oxnard was the largest by revenue passenger miles (RPMs: one revenue-paying passenger flown one mile), accounted for over 1/6 of the irregular carrier RPMs. Together with Viking before it was shut down, the two accounted for over 20% of all 1950 irregular industry RPMs. Oxnard Sky Freight was doing business as North American Airlines; the CAB described Oxnard Sky Freight as the "genesis" of North American. However, the CAB was already onto Oxnard and shut it for willful and knowing violations as of March 6, 1951, giving it only a week's notice versus 30 days in the case of Standard and Viking. By then, it appears the four partners were already onto the "classic" version of North American.
North American combine
Fischgrund said in Congressional testimony the group started in 1949, though his partner Weiss said 1950; as mentioned above, Oxnard sold tickets under the North American name in 1950. Sometime after that, the partners switched to the more famous/infamous configuration as follows. Weiss, Fischgrund, Hart and Lewin had identical ownership of everything, other than the airlines. As discussed below, by design the partners did not own the airlines, nor have official management roles, but they tightly controlled them nonetheless. A sales and marketing organization, North American Airlines Aircoach System (originally "North American Airlines Agency") sold tickets, taking a 45% cut, though 15–30 points of the 45 went to a travel agency if North American did not sell it directly (CAB-certificated carriers paid only 5% to travel agents). In 1956 there were 26 sales offices. A separate partnership, Republic Aircoach System, handled back office (e.g. accounting). Twentieth Century Aircraft and California Aircraft owned aircraft and leased them to whichever airline needed them (see nearby chart). In 1957, shortly before it ceased business, the group had 750 employees.
Flying occurred under the authority of four (and after 1953, five) irregular airlines. The carriers were:
Trans National Airlines, Inc. Twentieth Century Air Lines, Inc. (aka North American Airlines) Trans American Airways, Inc. Hemisphere Air Transport Unit Export Company, Inc. (1953 onward)
From March 1952, Twentieth Century Air Lines was renamed North American Airlines, but the CAB fought that for reasons described in the Name change section below. In its 1955 revocation order, for instance, the CAB consistently referred to the specific airline, North American Airlines, as "Twentieth Century Air Lines (North American Airlines)". After the group lost its trademark case in 1956, the name seems to have reverted to Twentieth Century Airlines (rather than Air Lines).
Unit Export was purchased (through a straw buyer) in May 1953. Since the airline only operated in the third and fourth quarters, all 1953 Unit Export statistics can be attributed to North American.
Only one carrier, Twentieth Century, had a payroll; it provided employees and anything else the other four needed, e.g. fuel. The other four carriers otherwise had little substance. Partner-owned organizations provided aircraft to whichever airline was operating the flights that day. The passenger experience was "North American Airlines": tickets said North American, as did airport facilities, the aircraft, passenger announcements, etc. The partners heavily marketed the name. Its 1955 marketing budget was estimated as over $1 million, with $500,000 devoted to "saturation" radio coverage in 10 markets. The typical radio spot was described in an advertising magazine as "loud, fast and high pressure." There were also neon signs and TV show sponsorships. Three main sets of books were kept: the ticket agency, the back office entity and Twentieth Century Air Lines. At the end of the year, entries were adjusted to produce a 2% or zero percent profit for each of the carriers.
California Air Charter The CAB identified yet another irregular airline, California Air Charter (CAC), as a group affiliate. The carrier was controlled by a former Oxnard Sky Freight manager who was also a former Viking shareholder, and CAC had commercial agreements with North American, including operating a shuttle between Burbank and Oakland on North American's behalf.
California Air Charter was established as Kesterson, Inc., in 1946 in Knoxville, Tennessee.Kesterson, Inc. advertisement in the Knoxville Journal, 21 April 1946 The name changed when the airline was sold in 1950. The CAB shut the carrier in a 1959 case for too-frequent scheduled service and other violations. Its authority was withdrawn in early 1960.
Letter of the law The group structure was an attempt to obey at least some part of the letter of the law while frustrating its purpose, including: Running scheduled service with irregular air carriers. Irregular carriers could fly individually-ticked passengers only if service on any one route was "irregular" (relaxed in 1955 to simply be infrequent). By farming out crews and aircraft to each of its five carriers, North American held itself out as providing regularly scheduled service while each individual carrier stayed irregular. Of course, there were specific CAB regulations against just this thing, which was known as "pooling." By design, the carriers were easily replaceable, being little more than pieces of paper. Trans American Airways had "no office, no telephone, no employees, no stationery of its own and no salaries [...] paid to any of its officers." Twentieth Century Air Lines was acquired for $8,000. In 1954, the partners offered to settle with the CAB by shutting down the carriers. The CAB rejected the offer in part because it knew the carriers could be easily replaced, therefore very little would be solved by shutting down the specific carriers.