California Central Airlines

California Central Airlines

IATA ICAO Callsign - - -
Founded	1947
Commenced operations	1949
Ceased operations	1955
Fleet size	7 (1953)
Headquarters	Burbank Airport, California
Key people	Charles C. Sherman, Edna K. Sherman

California Central Airlines Martin 2-0-2

California Central Airlines (CCA) was a post-war American scheduled price-focused intrastate airline based at Burbank, California, the most prominent airline associated with Charles C. Sherman. CCA slightly preceded, and during its existence was bigger than, its contemporary and competitor, Pacific Southwest Airlines (PSA). The core route of both airlines was from Los Angeles to the San Francisco Bay Area.

After the collapse of the original CCA, its owners created another airline, California Coastal Airlines, which did business as California Central Airlines. This second California Central lasted until 1957.

History

Startup

In 1946, husband and wife team Charles C. Sherman and Edna K. Sherman founded Airline Transport Carriers (ATC) as an irregular air carrier, which is term by which the Civil Aeronautics Board (CAB) referred to charter carriers at the time. ^[1] The CAB was the US government agency that tightly regulated the US airline industry until 1979.

In 1947, the Shermans established California Central Airlines, a separate company, to offer intrastate air travel within California, initially on the Burbank airport (then known as Lockheed Air Terminal) to San Francisco Airport route, with the first flight on January 2, 1949 and equipment provided by ATC. ^{[2] [1]} CCA was the first of eight California intrastate carriers that started operations within a 13 month period, of which only PSA and CCA continued in operation for more than a year. ^[3] As intrastate carriers, none of these new entrants was subject to regulation by the CAB. The intrastates initially charged $9.95 or $9.99 from Los Angeles to the Bay Area, less than half of the CAB-standard fare. By comparison, the Southern Pacific Railroad cost $7.50 and took 10 hours. ^[4]

CCA started with four Douglas DC-3s and by January 1951, CCA/ATC had eight DC-3s and two DC-4s, one of which was contracted to the government supporting the Korean War. ^[5] The airline upgraded to five Martin 2-0-2s (billed as "Martinliners") in 1951, sourced from Northwest Airlines. ^[6] The 2-0-2s had tricycle landing gear and were significantly faster than DC-3s.

CCA ultimately extended the Burbank-San Francisco route to San Diego in the south and Sacramento in the north. ^[7] It added Oakland and smaller points in California such as Salinas, ^[8] Inyokern and Muroc ^[6] (today's Edwards Air Force Base).

CCA was credited with having changed the transportation market between Los Angeles and San Francisco. In 1953, the US Senate Committee on Small Business noted that CCA had helped shift 65% of transport between the two cities to air, and asked the CAB to foster the same thing on the east coast. ^[9]

California Central Airlines Financials, FY1950 thru 1954 ^[10]

(1) Includes activities of ATC, but CCA revenues were 99.5% of the whole for this period, when CCA/ATC were in bankruptcy

	YE Mar 31				9Mo Ending	Jan 28, 1954 to
USD 000	1950	1951	1952	1953	Dec 31, 1953	Dec 31, 1954(1)
Op revenue	848.6	1,175.5	1,652.8	2,113.5	1,279.4	1,734.9
Op profit (loss)	(30.4)	61.0	16.7	(9.6)	(161.7)	(25.1)
Net profit (loss)	(19.6)	44.1	14.4	(7.6)	(125.8)	(38.6)
Op margin	-3.6%	5.2%	1.0%	-0.5%	-12.6%	-1.4%
Net margin	-2.3%	3.8%	0.9%	-0.4%	-9.8%	-2.2%

Sidelines, distractions and competition

In 1952, ATC started a route to Hawaii under the name California Hawaiian Airlines (CHA) using a Lockheed Constellation, using a similar livery to CCA, which the company described as "the plane with the candy-striped tail". ^[11]

CCA and its owners had a high public profile, constantly in the news. CCA flight attendants regularly featured in fashion shows for department stores. The Shermans were the subject of media profiles. The company regularly billed itself as California's Pioneer Low Cost Scheduled Airline. ^[12]

Unfortunately, CCA was also in the news for less positive reasons. It tangled with regulators:

• It angered the California Public Utilities Commission (CPUC) by jumping the gun on a fare increase, arguing that the CPUC had no right to regulate its fares, something that the California Supreme Court ruled was not true, leading to a very high ($138,000) fine (over $1.5mm in 2024 dollars) in 1954. ^[13]
• The existence of ATC gave the CAB a continuing interest in CCA: the Shermans were admonished by the CAB because ATC and CCA were tightly coordinated, something that required CAB permission since both were aviation enterprises. That permission was ultimately granted, but not without angering the enforcement bureau of the CAB. ^[14]

In June 1953, CCA suffered a wildcat strike when 70 mechanics working for ATC (but contracted to work on CCA aircraft) walked off the job, which interrupted service and generated damaging headlines. ^[15] The strike lasted 37 days, affecting a peak period for CCA. ^[16]

There was indication that competition from PSA was beginning to tell. In 1953 PSA charged lower fares ($11.70) with its DC-3 service than did CCA with its faster Martin 2-0-2s ($13.50) on the Los Angeles to Bay Area route. PSA, of course, touted its lower fare ^[17] and CCA, annoyed it was undercut, tried to get the CPUC to order PSA to charge the same fare, which the CPUC refused to do. ^[18] In August 1953, CCA re-instituted "Thriftliner" DC-3 service, matching PSA's fares, alongside continued Martin 2-0-2 service at $13.50. ^[19]

In November 1953, CCA filed a securities registration seeking to sell debt and equity, where it was revealed the company had a significant working capital shortfall. ^[20]

Bankruptcy

On January 27, 1954, CCA and ATC jointly filed for Chapter XI bankruptcy ^[1] (pre-1978 US bankruptcy laws differed from those prevalent today - Chapter XI had some similarities to today's Chapter 11 but was not the same. ^[21] ). A condition of being able to reorganize under Chapter XI was that the companies show more assets than liabilities. CCA/ATC said it had assets three and a half times greater than its liabilities, but tied up in equipment. ^[22]

CCA/ATC operated for a year under Chapter XI protection, but failed to reorganize. In January 25, the company was declared bankrupt and a trustee was appointed to sell the assets. PSA-owner Kenny Friedkin was among the initial bidders, ^[23] but the winner, on February 14, was a group composed of Southwest Airways (unrelated to today's Southwest Airlines) and Allegheny Airlines with a bid of $800,000 (about $9mm in 2024 dollars). They ordered CCA/ATC to cease operations immediately and operations ceased at midnight. ^{[24] [25]} This was challenged in court, but ultimately upheld. ^{[1] [26] [27]}

California Central Airlines and Pacific Southwest Airlines annual passengers, 1949-1954

Passengers	1949	1950	1951	1952	1953	1954
California Central Airlines	73,487 [5]	93,045 [5]	145,101 [28]	190,187 [29]	148,091 [30]	162,012 [30]
Pacific Southwest Airlines [31]	15,011	45,390	75,995	92,484	115,028	102,124

Post-liquidation

After the assets of the original CCA/ATC were sold, ATC was discharged from bankruptcy and the Shermans resumed business. ^[32] They bought the rights to use the California Central Airlines name which flew as a dba of California Coastal Airlines, a new company the Shermans established just prior to the auction of the original CCA. ^{[33] [34] [35]} This version lasted until August 1957, ^[3] its disappearance preceded by CPUC action against the airline for failing to refund over 200 customers, resulting in difficult headlines. ^{[36] [34]}

California Hawaiian Airlines, again a dba of Airline Transport Carriers ^[37] continued through 1962. It flew for the military and passenger charters. But in early 1962 the military excluded it from further contracts ^[38] and later in the year the FAA pulled its operating certificate. ^[39] In 1963, CHA appealed the decision, without success. ^[40]

Legacy

CCA is little known today, but in the early 1950s its impact was noted nationally which helped start a conversation about the efficacy of airline regulation that ended 25 years later in US airline deregulation. it also helped pave the way for the greater success of PSA.

At the same time, it's easy to see the weaknesses in CCA:

• Almost immediately spread itself across smaller markets
• CCA/ATC combination engaged in other, completely unrelated endeavors, such as California Hawaiian Airlines
• Multiple aircraft types
• Attempting to do too much, too fast

In that respect, CCA also provided an early example of how not to build a low-cost carrier.

Fleet

The ATC/CCA/CHA fleet in 1953: ^[41]

• 5 Martin 2-0-2
• 1 Lockheed Constellation
• 1 Douglas DC-3

Incidents

On 28 January 1948 an ATC Douglas DC-3 (NC36480) crashed at Los Gatos with the loss of all 32 people aboard. ^[42]

See also

• List of defunct airlines of the United States

References

1. In re Airlines Transport Carriers, 129 F. Supp. 679 (S.D. Cal. 1955), February 28, 1955
2. Airline Reports Boom in Business, Oakland Tribune, January 12, 1950
3. Aviation Regulatory Reform: (Part I) Hearings before the Subcommittee on Aviation of the Committee on Public Works and Transportation, House of Representatives, Ninety-Fifth Congress, First Session on H.R. 8813 (Introduced August 13, 1977) (Report). Washington, DC: U.S. Government Printing Office. 1977. p. 671.
4. Air Coach Lines Boom Business With Cheap Rates, Santa Barbara News-Press, December 7, 1949
5. Flying Fare, Los Angeles Evening Citizen News, January 5, 1951
6. item in Skyways, Los Angeles Times, August 26, 1951
7. Airline to Inaugurate Bay Area, San Diego Run, Los Angeles Evening Citizen News, June 16, 1949
8. Air Trips Set, The Californian (Salinas), December 19, 1949
9. Aircoach Stand Still Unchanged, Baltimore Evening Sun, September 23, 1953
10. Jordan, William A. (1970). Airline Regulation in America: Effects and Imperfections. Baltimore: Johns Hopkins Press. pp. 330–331. ISBN   0801810620.
11. CHA/Skymaster Reservation advertisement, Honolulu Advertiser, July 2, 1952
12. California Central Airlines legal notice, Los Angeles Times, February 6, 1955
13. State PUC Can Discipline Airline, Valley Times, April 3, 1954
14. Economic Decisions of the Civil Aeronautics Board: January 1952 - June 1952 (Report). Vol. 15. Washington, DC: U.S. Government Printing Office. 1956. p. 876.
15. Mediator seeks to end airline row, Los Angeles Daily News, June 26, 1953
16. Jordan 1970, p. 183.
17. PSA advertisement in San Francisco Examiner, June 23, 1953
18. Decisions of the Public Utilities Commission of the State of California (Report). Vol. 52. 1953. p. 509. hdl:2027/uc1.b3221758.
19. Econoscope, Los Angeles Mirror, August 28, 1953
20. Airline Files Candid Prospectus With SEC, Los Angeles Times, Nov 13, 1953
21. Harner, Michelle M., "Final Report of the ABI Commission to Study the Reform of Chapter 11" (2014). Book Gallery. Book 97
22. Airline Files Plan to Pay Off Creditors, Fresno Bee, February 20, 1954
23. Finn Twins Try to Buy Airlines at Auction Sale, Los Angeles Times, February 2, 1955
24. Airlines Sell for $800,000, San Francisco Examiner, February 15, 1955
25. Econoscope, Los Angeles Mirror, February 24, 1955
26. "California Central Airlines". ATDB-aero. Retrieved 11 December 2020.
27. California Central Airlines - CCA
28. Airline Reports New Traffic Record, Oakland Tribune, Jan 3, 1952
29. Intra-State Airline Sets Traffic Record, Oakland Tribune, January 21, 1953
30. L.A.-to-Oakland Air Service Gains, Valley Times, January 10, 1955
31. The PSA History Page: Chronological history of PSA, by year
32. "Large Irregular Carrier Investigation". Economic and Safety Enforcement Cases of the Civil Aeronautics Board. 28. Civil Aeronautics Board: 320–323. December 1958 – February 1959. hdl:2027/uc1.b2938519.
33. Incorporation information for California Coastal Airlines
34. State Orders Airline To Give Refunds, Los Angeles Times, May 2, 1957
35. Jordan 1970, p. 20.
36. Airline Accused of Refund Refusal, Santa Barbara News-Press, January 28, 1957
37. Certificates Urged For 3 Airlines Pomona Progress-Bulletin, May 25, 1961
38. 4 Non-Skeds Lose GI Flights, Pittsburgh Press, January 6, 1962
39. FAA Revokes Licenses of 7 Airlines, Oakland Tribune, October 25, 1962
40. Item under Airlines: TWA plans to start three-class service on Jan. 1, December 5, 1963
41. "The World's Airlines". Flight . 6 March 1953. p. 310. Retrieved 6 December 2013.
42. "Airline Transport Carriers". Aviation Safety Network. Retrieved 11 December 2020.