July 16, 2007
Comair Turns 30 Airline’s Early Days Humble
By Greg Paeth
Early in April of 1977 -- no one seems to remember the exact date -- David Mueller was in the cockpit when Comair's first flight took off for Evansville, Ind., a one-hour trip that would have covered about 200 miles on the ground.
A little more than 30 years after that first flight, Comair has 6,575 employees, a fleet of 133 regional jets, more than 760 daily flights and a future that may be as cloudy as the company's early history, which is packed away in about 20 cardboard boxes in Florida.
On Saturday, two-and-a-half months after Comair and its parent Delta Air Lines emerged from bankruptcy, Comair will stage a 30th anniversary celebration for its employees and their families.
Those first days of Comair were a long way from the what the company would eventually become: the largest regional airline in the nation, eventually acquired by one of the country's largest carriers, Delta.
"I threw the bags, wrote the tickets, took the reservations, flew the airplanes," recalls David Mueller of the early days.
"I remember the first day we hit 50 passengers. That was a big milestone -- 50 in one day," Mueller said of a company that now operates nothing smaller than a 50-seat regional jet.
Pilot Tim Mullane, an employee since January 1978, recalls a recipe box on the ticket counter that doubled as Comair's low-tech reservation system. A customer would call in on one of the company's two phone lines and the name would be jotted on a file card that would then be slipped back into the box behind the appropriate date and destination.
At the time he was hired by David Mueller during a chance meeting at the Detroit airport, Mullane said he was impressed with Comair's equipment -- the twin-engine Piper Navajo that he considered an upgrade from the Britten-Norman Islanders he had been flying in northern Michigan for Chippewa Commuter Airlines, which folded after about six months in operation.
The combination of Ray Mueller's money and Davie Mueller's energy, ambition and accurate assessment of the future of the airline industry propelled Comair off the ground, Ray Mueller said. At the time, he was content running R.A. Mueller in Blue Ash, a company that sells pumps, gauges and other equipment used in moving fluids from one point to another.
"I was 54 then. I'm 85 now, and it came at a point in my life when most other business people are thinking about what are they going to do when they retire," said Ray Mueller, who now lives with Norma, his wife of 63 years, in a waterfront condo in Naples, Fla.
After graduating with a business degree from the University of Cincinnati in 1975, David Mueller, who had been flying since he was 17, said he was convinced that there was a need for air service to cities within a few hundred miles of Cincinnati.
His theory was based, in part, on a debate in Washington about decades-old legislation that dictated how airlines were required to provide service to airports, especially in smaller towns where a lower volume of passengers made it difficult for the carriers to show a profit.
The industry changed dramatically with deregulation in 1978, which ended some subsidies for smaller airports and allowed carriers to abandon unprofitable routes. The legislation also opened up opportunities for commuter airlines like Comair.
Comair was off and growing -- rapidly.
Officials expect a crowd of more than 2,000 at the Comair headquarters in Erlanger on Saturday, and they're concerned about having enough room and enough activities for employees' children.
"It's a good problem to have -- let's put it that way," said CEO Don Bornhorst. "We've dealt with lots of challenges in the last few years."
"Challenges" is an understatement.
In addition to a bankruptcy linked to the near-meltdown of the U.S. commercial aviation industry following the 2001 terrorist attacks, Comair had been engaged in a long, bitter battle with its unionized pilots and flight attendants, who had been asked to make contract concessions as the company restructured during bankruptcy.
There was the 89-day strike in 2001, after which Comair pilots received the best pay and benefits package in the regional airline industry. But the contract proved to be too rich and Comair struggled with high labor costs compared to the rest of the industry.
Pilots this year approved a four-year contract that requires pay and benefits concessions. But the spokesman for the pilots made it clear that he wasn't going to deliver ants to the picnic.
"It's definitely a major milestone that's worth celebrating and we look forward to the next 30 years and a bright future," said Paul Denke, spokesman for the Comair unit of the Air Line Pilots Association.
The company lost planes, flights and employees during the bankruptcy as Delta, despite its parent-company relationship with Comair, cut costs by hiring other regional carriers to handle routes that had been flown by Comair.
Today, Comair ranks second to Atlantic Southeast Airlines as a "Delta Connection" carrier that moves passengers to and from Delta hubs.
On a typical day, ASA handles about 940 flights for Delta on 160 aircraft; Comair's comparable numbers: 760/132, a spokesman for Delta said.
The company faced a monumental challenge last Aug. 27, when a Comair flight crashed on takeoff at Lexington Blue Grass Airport, killing 49 of the 50 people on board.
Comair's first tragic accident occurred in October 1979, when commuter airlines were still a relatively new commodity, nearly leveled the company when seven passengers and the pilot were killed, Ray Mueller said.
"That was the worst time of all and it was very, very difficult to maintain the company past that time because a lot of people quit flying with us and the financial resources weren't available to us," Ray Mueller said. "It was probably the worst experience I've ever had in my life. It was extremely, extremely difficult -- the market just disappeared for us because of the lack of interest in flying with us."
Saturday's 30th anniversary celebration -- pushed back because Delta/Comair were still in bankruptcy court in April -- can be seen as part of a companywide effort to regain some of the momentum that the company enjoyed in the 1980s and '90s, when the airline was growing explosively, rewarding shareholders handsomely and leading the industry with innovations in the air and on the ground.
"We took a lot of risks when it comes to new equipment (and building) the first regional jet terminal in the world," said David Mueller, recalling the debate in the industry about turbo props versus jets when Comair was introducing the Bombardier Canadair regional jet.
Mueller said the debate baffled him.
"I thought to myself, you've got to be kidding me -- If you lined 100 people against the wall and asked would you rather ride a prop plane or a jet, what are you going to pick? Well, at least 99 out of 100 are going to say a jet," Mueller said.
"Everybody was playing catch up after that once we started taking delivery of the jets (from the manufacturer). We went anywhere when we wanted to and just dominated the market," Mueller said. "The playing field is a little different today."
Bornhorst, hired by David Mueller in 1991, recalls Comair's apprehension about making a huge investment in jets.
"I remember at the time we were scared to death about taking the chance because there had been a lot of stories of regional carriers going after regional airplanes -- Fokker and British Aerospace airplanes -- and it killed the airlines," said Bornhorst, recalling the high costs of aircraft that weren't rugged enough to be flown day-after-day, hour-after-hour by commuter airlines.
Today, the playing field is quite different.
Virtually every regional carrier is flying jets, creating such an oversupply of the 50-seat airplanes that Bombardier has ceased production.
Now bigger is better as the gap narrows between the capacity of the regional jets and mainline carriers like Delta.
Bornhorst said he believes Comair's introduction of the 74-seat CRJ-900 that has a first-class cabin will provide the next service breakthrough for the company and its passengers. But in this case, the first-class cabin won't be a Comair exclusive when the first of 14 new aircraft is delivered in September.
Besides its bread-and-butter passenger service, Comair also has put a new emphasis on handling passengers and planes for other airlines at airports all over the country. The on-the-ground service has expanded to a point where Comair has employees in 10 cities where it doesn't have any flights.
The business brings in revenues of about $50 million a year and has been growing at a little less than 10 percent a year, Bornhorst said.
Comair also received certification from the FAA last October to begin providing mechanical service to other airlines on a contract basis. Revenues from that business are still small, in the neighborhood of $2 million to $3 million a year, Bornhorst said.
One major uncertainty still hovering over Comair is its ongoing relationship with its parent, Delta, and its continued relationship as a "Delta Connection" carrier. Bornhorst describes that uncertainty as a "stress point" for some employees although he insists that employees and passengers have no reason to be alarmed.
"It's not the ownership that's important. With Delta, it's the relationship and partnership that we have with them and the relationship and the partnership we have with them would persevere through any kind of structural change," Bornhorst said.
"The fact of the matter is we are a big, big partner for Delta Air Lines and that's not going to change if Delta were to sell us - - Having said that, Delta always wants to keep its options open because that's a prudent thing for it to do, especially during a reorganization -- For them to say that there are some things they absolutely won't do, especially when they can generate some cash flow, would be blasphemy in a restructuring process."
"If the announcement were made today that Delta was selling Comair, it would not impact a single employee, their schedule or what they do. They would still go about their own job the same way they always do," Bornhorst said.
Delta spokesman Kent Landers agreed with Bornhorst that the Delta- Comair relationship would continue even if Delta sells its subsidiary. He stressed that Comair is an important Delta partner.
Airline analyst Ray Neidl with Calyon Securities in New York said he's convinced that Delta will unload Comair: "If they can get labor peace and the right cost structure, they've got a bright future. If they can't, their future is very questionable," said Neidl. "I think it's highly likely people who have access to the numbers (potential buyers) are probably looking at the company right now."
Text of fax box follows:
A list of 'firsts'
Among the "firsts" that Comair has on its resume are:
Becoming the first airline in the United States to fly the Saab 340 turboprop -- a 30-passenger plane -- in 1984.
Becoming the first regional carrier to fly jets -- the 50-seat Canadair regional jet -- in 1993.
Opening the largest terminal ever built for a regional carrier in 1994 at Cincinnati/Northern Kentucky International Airport.
Text of fax box follows:
April 1977: Commuter air service launched.
July 1981: Stock issued and trading begins on the Nasdaq exchange.
September 1984: Comair becomes a "Delta Connection" carrier.
May 1986: Delta buys 20 percent of Comair.
September 1994: The 53-gate Concourse C, the largest terminal ever designed for a regional airline, opens at the Cincinnati airport.
January 1997: Twenty-nine people aboard an Embraer EMB-120 are killed when the plane crashes in Detroit.
January 2000: Delta acquires all of the Comair stock that it didn't own already in a $1.8 billion buyout.
March-June 2001: Airline is crippled by an 89-day strike by pilots.
September 2005: Delta/Comair file for bankruptcy.
August 2006: 49 people die when a Comair flight crashes in Lexington, Ky.
April 2007: Delta and Comair emerge from bankruptcy.
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