Midway Airlines (1976–1991): Difference between revisions

===Representative Fary and Lamar Muse===▼

In June 1976, [[Lamar Muse]], founding president of [[Southwest Airlines]], testified to Congress. Representative [[John G. Fary]], in whose district was Midway Airport, asked if Muse had any ideas how to revive the airport, then “virtually a ghost town”. Muse said, in part, “…you could do exactly the same thing at Midway that Southwest has done at Love Field in Dallas…”<ref>{{cite report|title=Civil Aeronautics Board Reports|volume=78|year=1978|page=514|url=https://hdl.handle.net/2027/ien.35559002074619}}</ref> Muse said he incautiously aired this idea in the offices of consultants Simat, Helliesen & Eichner (SH&E), where partner John Eichner was a friend and frequent business partner of Muse. Two other SH&E consultants took the idea to former [[Hughes Airwest]] executive Irving Tague and incorporated Midway Airlines (October 13, 1976)<ref>[https://opencorporates.com/companies/us_de/829940 Opencorporates record of Midway Airlines incorporation]</ref> to be first in line with the CAB. And founder Kenneth Carlson was in fact an SH&E vice president immediately prior to starting Midway Airlines.<ref name="Carlson">{{cite report|title=Economic Cases of the Civil Aeronautics Board |volume=87, part I|date=October 1980 – January 1981|page=682|url=https://hdl.handle.net/2027/osu.32437000534244}}</ref> In response, Muse created a subsidiary, Midway (Southwest) Airway Co., which also applied to the CAB. Muse’s idea was to connect Midway Airport to 15 cities about 200-500 miles from Chicago, whereas Midway Airlines took a smaller list of six cities to the CAB.<ref>{{cite book |last=Muse |first=Lamar |author-link=Lamar Muse |date=2002 |title=Southwest Passage |publisher=Eakin Press |pages=166-193|isbn=1571687394}}</ref>▼

Midway Airport was a flashpoint for critics of airline regulation because the slow and bureaucratic CAB failed to resuscitate the airport, a priority for the City of Chicago and the Illinois [[Parliamentary delegation#In the United States|congressional delegation]]. Muse said in July 1977 Congressional deregulation hearings (when total airline service at Midway was two Delta flights/day) that, based on its experience in Texas, Southwest would, within a year, pump 5 million passengers per year through Midway with 92 737 departures/weekday (79 per day on weekends).<ref>{{cite report|title=Aviation Regulatory Reform: 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)|publisher=U.S. Government Printing Office|location=Washington, DC|pages=493-496|year=1977|url=https://hdl.handle.net/2027/umn.31951002834663r}}</ref>▼

But Southwest’s board of directors was not supportive and the plan was a bone of contention in Muse’s feud with Southwest founder [[Rollin King]], which ultimately led to Muse's resignation from Southwest in March 1978.{{sfn|Muse|2002|p=193}} This helped clear the way for Midway Airlines. History later vindicated Muse's view of Midway airport as a Southwest opportunity (as of March 5, 2024, Southwest scheduled up to 249 departures per day at Midway).<ref name="WNMDW">[https://swamedia.com/media_storage/city_fact_sheets/MDW.pdf Southwest Airlines City Facts for Chicago (Midway), accessed April 2, 2024]</ref> Midway Airport did not reach the 5 million annual passengers/year level until 1987.<ref>{{cite report|title=FAA Statistical Handbook of Aviation|year=1987|publisher=Federal Aviation Administration|page=84|url=https://hdl.handle.net/2027/mdp.39015018250038}}</ref>▼

Midway Airlines, from concept to reality, reflected the progress of US airline deregulation, for which the inflection point was the high-profile 1975 [[United States Senate|Senate]] hearings on the CAB by [[Ted Kennedy]]. Ex-ante, new scheduled carrier certification was unthinkable, it hadn’t happened in decades. Ex-post, there was a sense of possibility, which is why, in 1976, the idea of Midway Airlines was plausible.<ref>{{cite report|last1=Bailey|first1=Elizabeth E.|last3=Kaplan|first3=Daniel P.|last2=Graham|first2=David R.|title=Deregulating the Airlines: An Economic Analysis|publisher=Civil Aeronautics Board |date=May 1983 |pages=26-29|url=https://hdl.handle.net/2027/ien.35556021337282|ref={{sfnref|BG&K|1983}}}}</ref> But CAB bureaucracy still moved slowly. However, in 1977, President [[Jimmy Carter]] appointed deregulator [[Alfred E. Kahn|Alfred Kahn]] to run the CAB, handing control to reformers, thereby completely changing the nature and tempo of its decisions{{sfn|BG&K|1983|p=29-34}}. The Carter administration (and Congress) was in favor of opening up Midway Airport to low-cost air travel.<ref>{{cite journal|journal=Economic Cases of the Civil Aeronautics Board|volume=78|title=Chicago-Midway Low-Fare Route Proceeding|date=August-September 1978|publisher=Civil Aeronautics Board|page=485|url=https://hdl.handle.net/2027/osu.32437011657497|ref={{sfnref|Proceeding|1978}}}}</ref><ref>[https://www.newspapers.com/image/386495676 ''Cut-rate Midway flights OKd by U.S.'' Chicago Tribune, December 3, 1977]</ref> The CAB announced in August 1977 that it would decide the Midway airport proceeding by August 1978, incredibly fast for the CAB.{{sfn|Proceeding|1978|p=481}}▼

The August 1978 CAB ruling (against a backdrop of the [[Airline Deregulation Act]] going through Congress) was good news/bad news for Midway. Good news: it got the routes it wanted. Bad news: so did everyone else. Midway believed it deserved (as the self-proclaimed innovator) all six Midway routes to itself, at least for a time, to become established. But the CAB noted that Southwest might be the innovator (see prior section) and projections showed it to be the most efficient applicant, but the CAB wouldn't play favorites. Midway, Southwest and [[Regional airline#Early growth|local service airline]] [[North Central Airlines|North Central]] each got all six routes and Northwest and Delta got the select Midway routes they asked for. In addition, Midway and the Southwest Midway subsidiary were both given economic certification as well. The CAB was on a roll: it had already opened an even broader Midway airport proceeding for another 24 routes.{{sfn|Proceeding|1978|p=454-592}} There was substantial doubt Midway Airlines would get funding given what looked like an avalanche of future service at the airport.<ref>[https://www.newspapers.com/image/386662496 ''Midway Airlines can’t get backing'', Chicago Tribune, December 17, 1978]</ref>▼

But, notwithstanding early interest, few airlines made any subsequent moves toward Midway Airport, because deregulation put all networks up for grabs; there were more pressing concerns.<ref>[https://www.newspapers.com/image/385469790 ''Midway budget flights in spring'', Chicago Tribune, November 13, 1978]</ref> While Southwest continued to participate in Midway CAB cases, it took no practical steps towards service. Lamar Muse was long-gone, and Southwest would not enter Midway until 1985.<ref name="WNMDW"/> Even with the way relatively clear, Midway Airlines found it hard to raise money, Chicago investors were generally uninterested.<ref>[https://www.newspapers.com/image/386818628/ ''Lot of groundwork preceded first flight of new airline'', Chicago Tribune, October 31, 1979]</ref> On August 2, 1979, it announced it had raised $5.7mm from 16 private investors, only one of which was Chicago-based, allowing the airline to head towards a November 1, 1979 launch.<ref>[https://www.newspapers.com/image/386926625/ ''New airline to offer low-cost rates from Midway to 3 cities'', Chicago Tribune, August 3, 1979]</ref> In September, the CAB gave 15 airlines (including, of all airlines, [[Wien Air Alaska]]) the right to fly those other 24 routes from Midway. One was [[FedEx Express|Federal Express]], having obtained [[Boeing 737#737-200|Boeing 737-200QC]] aircraft with which it wanted to fly packages at night and passengers during the day.<ref>{{cite journal|journal=Economic Cases of the Civil Aeronautics Board|volume=83, Part 1|title=Chicago-Midway Expanded Service|date=September-October 1979|publisher=Civil Aeronautics Board|pages=272-412 |url=https://hdl.handle.net/2027/ien.35559002074676}}</ref> This was Fedex’s “Project Torso”, wherein founder [[Frederick W. Smith|Fred Smith]] briefly toyed with the idea of passenger service.<ref>{{cite book|first=Roger J.|last=Frock|title=Changing How the World Does Business|date=2006|location=San Francisco|publisher=Berrett-Koehler |pages=181-182|isbn=1576754138|url= https://www.bkconnection.com/books/title/changing-how-the-world-does-business}}</ref> At the time, Fedex had a highly profitable monopoly on overnight delivery growing at 40% per year.<ref>[https://www.newspapers.com/image/772214000 ''Federal Express Seeking Expansion Area'' Memphis Commercial Appeal, September 10, 1978]</ref> Passenger service was a distraction. But ultimately, none of the 15, other than Midway, did anything with this broad new authority.▼

[[File:Southwest 737-200 N702ML.jpg|thumb|Boeing 737-200 in Midway/ Southwest Airlines hybrid livery.]]▼

The airline was dissolved in 1992. A group of investors bought the Midway Airlines name and started a [[Midway Airlines (1993–2003)|new airline]] using the name in 1993. That airline went bankrupt in 2003.<ref name="wp81501"/>▼