Do you ever wanna take a break from work and go on a short vacation? Maybe somewhere warm,
like Florida or the Carribean while also saving a few bucks? Don’t worry
this video isn’t an ad for some cheap hotel package, but rather the set up
for what was once one of Chicago’s most iconic budget carriers: Midway Airlines.
Regarded as the first airline to emerge after the industry was deregulated in the 1970s,
Midway Airlines was aimed at providing low cost leisure services to the south side of Chicago.
So, how did a tiny start-up like Midway pop up in one of the most competitive
air travel cities in the country and stick around for over a decade? Well,
it all boils down to the perfect set of circumstances.
In the 1970s, Chicago’s Midway airport, located just 12 miles from downtown Chicago,
didn’t have much activity going on. Airlines had begun transitioning
their Chicago flights to the much larger and further away Chicago O’hare airport
and left Chicago Midway quite underserved in terms of direct destination offerings.
Fortunately for the airport in 1976, 3 investors - Kenneth Carlson,
Irving Tague, and William Owens recognized this unsupplied demand and received an Air Operators
certificate from the Civil Aeronautics Board to base a new airline out of Chicago Midway.
As for the name of this new airline,
it was decided to name it “Midway Airlines” as a nod to the airport it was based out of.
But before the airline could start operations,
the airline industry was deregulated, which gave the opportunity for start up airlines
like Midway Airlines to fly wherever they wanted without much government intervention.
3 years after their founding in October 1979, Midway began their first flights
out of Chicago with service to Cleveland, Kansas City, and Detroit with a fleet of 3
DC-9-10s from TWA. The new service proved to be an instant success, with Midway Airlines adding
more DC-9s and service to New York La Guardia, St Louis, and Arlington a year later in 1980.
During its run, Midway Airlines marketed its Chicago Midway airport
base as a stress-free alternative to the busy Chicago O’hare airport.
Not only did Midway airport have the advantage of being smaller and easier to navigate,
but its location is only 12 miles away from the city, as opposed O’hare, which is 18 miles away.
That might not sound like much of a difference,
but Chicago traffic can sometimes make cutting those extra 6 miles equivalent
to saving 20 minutes off your travel time, especially during rush hour.
Time saving methods like this made the discount
airline not only popular with families, but with many business travelers as well,
all who were extremely loyal to their local southern-chicago airline, and the
high concentration of business travelers onboard Midway led them to offer additional amenities.
Service onboard Midway Airlines somewhat resembled a hybrid of full service and
budget carriers today. While the airline was mainly marketed towards vacation travelers
trying to save a few bucks, 2 by 2 leather seating was also offered in the front of
many aircraft traveling to destinations also frequented by business travelers.
Signature amenities on board flights included hot towels for the entire cabin
and chocolate-wafer mints served after dinner. The wafers became
extremely popular among Midway’s business travelers, and in a less significant way,
had the same effect as the famous biscoff cookies found on many airlines today.
The airline continued to do well throughout the years,
introducing the much larger MD-80 into the fleet in 1983. And a year later in 1984,
Midway purchased the assets of the now defunct Florida Airways.
This added the Boeing 737-200 into Midway’s fleet as well as several
new routes to the caribbean. Service to St. Thomas and St. Croix (croy) via Miami
and Nassau via Fort Lauderdale began in the coming years using the newly acquired 737s.
Midway also found itself under some new leadership during this time. David Hinson,
who had a role in starting the airline back in 1978,
became CEO in 1985 and led the flourishing airline into its most expansive period.
In 1987, Hinson oversaw the establishment of a new regional feeder airline: Midway Connection,
which used Dornier 228 and Embraer 120 turboprops to operate routes to cities within the states of
Wisconsin, Indiana, Michigan, and Illinois. Midway now had 116 flights to over 40 destinations.
Led by Hinson, Midway expanded again in 1989, setting up hub operations in Philadelphia. This
new network expansion was purchased from the struggling Eastern Air Lines for $200 million
along with even more DC-9 aircraft. The new routes from Eastern opened up many routes along the East
coast of the United States, with destinations concentrating in Florida and the North East.
Although Midway was doing very well financially for the time being, the airline would peak around
this time, flying 10.1 billion revenue passenger kilometers, compared to just 0.6 billion in 1981.
However, the next couple of years would bring major challenges for Midway. The airline’s new
presence at Philadelphia had attracted the attention of more than a few pairs of eyes.
USAir, who also had a hub in Philadelphia,
would go head to head with Midway. And after less than a year in Philidelphia,
USAir drove Midway out of their territory through fierce competition, which included capturing
the loyalty of many of the area’s business travelers during the current economic climate.
Of course, competition wasn’t the only reason for Midway’s failure at Philadelphia. Rising
jet fuel prices from the Kuwait invasion of 1990 and debt from buying Eastern’s routes
combined with a USAir turf war put Midway in a bad spot, which led them to sell their
Philadelphia operations to USAir in October of 1990 for $67.5 million.
Although Midway had downsized back to their home in Chicago, the company’s troubles weren’t over.
The 1991 gulf war would cause jet fuel prices to climb even further,
which caused a problem for all airlines. The conflict had also led to a decrease in passengers,
which would prove to be devastating for leisure airlines at the time: especially Midway.
The decrease in passengers combined with an increase in costs caused Midway to file for
Chapter 11 bankruptcy in March 1991, citing rising jet fuel prices and factors from the current
economic recession. The company immediately set up plans to restructure itself and save
the airline. Within a few months, Midway was in talks with Northwest Airlines for a buyout.
Unfortunately for Midway, Northwest pulled out of the negotiations, and Midway ceased
operations the following day on November 13th, 1991, ending the airline’s 12 years of service.
Many passengers were instantly stranded at their current locations. Chicago’s O’hare
airport soon became flooded with hundreds of Midway passengers looking for a way home.
Fortunately for many, other airlines choose
to accommodate Midway passengers and honor some tickets, but many travelers
going to specific destinations still had extreme difficulty getting home.
Employees of the airline that were laid off without warning became furious,
and expressed their disdain for Northwest by boycotting them outside Chicago Midway Airport,
blaming them for destroying their beloved airline.
Northwest claimed they discontinued the takeover plans due to false
revenue information submitted by Midway. Officials from Midway Airlines disagreed,
believing Northwest only wanted a swift takeover of Midway’s valuable gates at Chicago.
After the failed negotiations, Midway Airlines re-filed their bankruptcy for
Chapter 7 liquidation, which sold and retired all assets of the airline by 1992 including many DC-9,
MD-80, and 737 aircraft. At the time, Midway Airlines controlled two-thirds of all Chicago
Midway operations, and with a blink of an eye, it was gone, taking hundreds of jobs with it.
At the time, no airline was safe from the plague of rising fuel costs. Even
Pan Am and Eastern, large airlines with huge influences around the country,
went defunct around the same time for similar, but more complicated reasons.
Southwest and ATA slowly filled the void at Chicago Midway left by Midway Airlines,
leading to the airport’s status as a major Southwest Airlines hub today.
Even though Midway Airlines was gone, it wouldn’t take long for the airline
to make a comeback. In 1993, Jet Express, a commuter airline providing feeder services for
TWA and USAir bought Midway’s trademark and returned Midway’s name to Chicago.
Many employees of the new airline were staff members of the original Midway,
and even Kenneth Carlson, one of the old Midway’s founders,
had a significant role in creating the new Midway Airlines. The new airline
began service from Chicago Midway to New York LaGuardia with 2 Fokker 100s in November 1993.
The number of destinations that the new Midway Airlines served out of Chicago increased gradually
until 1995 when the limited number of gates at Chicago Midway Airport and high competition in
the area led Midway to relocate their hub to North Carolina’s Raleigh-Durham International Airport.
Midway’s move into Raleigh-Durham came at the time when American Airlines was
closing their hub at the airport and refocusing its assets to Miami as they
had just taken over Eastern’s former hub at MIA.
Due to this “passing of the torch” as one might say, Midway formed a partnership with
American Airlines that lasted many years. Instead of the new Midway having its own loyalty program,
customers flying Midway could use American Airlines AAdvantage miles. In addition,
American Airlines also worked as Midway’s Revenue Management behind the scenes.
Although Midway Airlines was no longer based at Chicago Midway,
executives saw no need to change the airline’s name since Raleigh-Durhan,
the airline’s new home, was located quote-on-quote “Midway” between the
Northern and Southern East Coast, where the airline concentrated its services.
After the airline finished its transition into operations at Raleigh-Durham,
Midway decided it would discontinue it’s low cost carrier services and
transition to becoming a full service airline. This was in part
due to the increased concentration of business travelers in the Raleigh area,
as opposed to the airline's old hub at Chicago Midway, which served many leisure travelers.
As part of these plans, the airline ordered 4 brand new A320 aircraft for
services to the Carribean. The airline did very well during its first year at Raleigh,
flying 1.2 million passengers and supporting a workforce of over 1000.
However, it wasn’t long before the new Midway ran into trouble.
The Caribbean services ended up having to be cut from the airline’s route network
due to financial reasons, and the A320s were rescheduled to cross-country destinations,
including Los Angeles and Las Vegas among others.
While some of these new routes did well,
it became apparent that the A320 wouldn’t be a part of Midway’s future, and the last of
the type was removed by 1999. To continue to fuel their expansion plans in the meantime,
Midway raised money from investors and went public on the NASDAQ stock exchange.
This allowed them to purchase additional
aircraft for their operations; this time the CRJ100. But raising money attracted
more than a few eyes. A few unsuccessful takeover attempts came in the next couple of years as well,
including the likes of Don Burr, the founder of the now defunct PeoplExpress.
In March 1999, the airline’s situation again began to worsen. Southwest Airlines and US
Airways announced they would be serving the Raleigh market and brought heavy low cost
competition to the area. To respond to this, Midway ordered 15 737-700s. This was not only
complimented their regional jet fleet, but to also keep its dominance at the airport.
By the end of 1999, revenues were up to $218 million,
but profits had fallen from $15 million the previous year to just $9.8 million.
Although the airline was still making money, their financial position was weakening,
and it wouldn’t take much of a disturbance in the market for the airline to be swept off its feet.
Unfortunately for Midway, they lost many passengers to the new low cost competition,
which drastically decreased much needed revenues. The cash outflow became so great,
that on August 13th 2001, Midway filed for Chapter 11 bankruptcy citing high fuel prices,
a downturn in business travel, and slow growth.
Thousands of employees were immediately laid off, but the airline continued to fly
during its Chapter 11 reorganization, relying on its larger 737 aircraft.
Sadly, they wouldn’t have much time to recover.
Less than a month after Midway filed for bankruptcy, the events of 9/11
put a huge thorn in Midway’s side. And due to the current global situation,
the carrier was forced to immedietly shut down operations on September 12th, 2001.
However, Midway wasn’t done flying yet. The carrier was hanging on by a thread
when the US government injected 12.5 million dollars into the airline to keep it afloat,
and Midway resumed operations a month after they shut down.
They began flying a reduced schedule using 737s and CRJs and continued to do so until July 17th,
2002 when Midway again ceased operations, disposing its 737s and many more employees.
The carrier resumed operations under US Airways express with a handful of CRJs out of Raleigh,
but this venture wouldn’t last long, and the company ceased operations for the
final time on October 30th, 2002 filing for Chapter 7 bankruptcy.
The airline was unable to acquire enough capital to stay afloat during the post 9/11 market,
and the last option was to liquidate its assets and completely dissolve the company.
The new Midway had ultimately succumbed to the same fate as its predecessor. Both airlines fell
into a restructuring bankruptcy influenced by global events, and were both unable to recover.
Both Midway’s also faced similar problems as well, with high debt from aircraft orders and
high fuel costs hindering their ability to turn a profit in their final years.
Competition from USAir (then later US Airways) also coincidentally affected
both airlines. While each each encounter was independent of the other, it’s interesting
to realize how the same airline had a part in both Midway’s historys and subsequent downfall.
In the end both airlines were created to serve specific markets that carried
millions of happy passengers. They had a lasting impact on the airline
industry by introducing flying to thousands of lower income families
and helping to support their home airports in times of low traffic.
Thousands of leisure travelers in the Chicago and Raleigh areas were
introduced to flying for the first time, and convenient business travel in both
cities were partially saved during the entrance of both carriers respectively.
So that’s the story of Midway Airlines. Both carriers got their start by adding supply to a
demand gap, and each succumbed to global factors and heavy competition around a decade later.
Have any of you watching ever flown Midway and would like to share your
experiences? Please feel free to let us know down in the comments below!
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as always, stay safe and have a wonderful day everyone!