The Historical Development of Delta Air Lines

Malcolm Fairweather

Department of Geography State University of New York Plattsburgh, New York 12901

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INTRODUCTION

In 1979, the last year for which complete statistics are available, the airlines of the United States carried a record 317 million passengers over 262 billion passenger miles . Al­though gross revenues increased to $27 billions that year, net earnings plummeted from $1,197 millions in 1978 to $409 millions in 1979. Soar­ing fuel costs were the main culprit for the earnings reduction. These in­creased by 89 percent in a single year and accounted for $2.3 billions in increased expenditures.' In spite of a poor financial year, U.S. sched­uled air carriers did provide 84.6 percent of intercity public passenger miles generated in the nation. This was up from 83.8 percent in 1978 and 76.0 percent in 1969.2 Thus, the airlines have become an increas­ingly important medium of public transportation.

During the same year, 1979, Delta Airlines recorded over 40 million en­planements and generated some 26.1 million revenue passenger miles . These figures represented an annual traffic increase of about 9 percent, which was slightly higher than the average for the domestic trunk air­lines as a whole. 3 Such volumes of traffic have made Delta the nation's number two carrier in enplanements and ranked it sixth in terms of the revenue passenger miles generated. It is widely considered to be one of the best managed air carriers in the country and its expansive vitality is witnessed by the record-setting or­der it placed with the Boeing Air Corporation in November 1980 for 60 B-757's, at a cost of $1.6 billion.4

The aim of this paper is to trace the spatial development of Delta Air­lines from a tiny crop dusting ser­vice in Louisiana to one of the world's largest airline companies.

THE 1920's AND 1930's

The origins of Delta Airlines are to be found in the mid-1920's through the blending of two dissim­ilar activities-boll weevil eradica­tion and military aircraft design. Fifty years ago, Collett W. Woolman, a Louisiana entrepreneur, was in­volved in research to develop an in­secticide to stop the crop destruc­tion caused by the boll weevil. He determined that the use of calcium arsenate could be an extremely ef­fective controlling agent, especially if an extensive crop dusting method could be developed. Concurrently in Ogdensburg, New York, the military aircraft manufacturing company of Huff Daland was attempting to broaden its markets by developing commercial models of its aircraft. After a meeting with Woolman in 1923, Huff Daland saw the profit po­tential in the crop dusting business and established the first such ser­vice in 1924. Woolman became the Vice-President in charge of Huff Da­land Dusters, Inc. a year later. In 1928, Woolman and a group of Lou­isiana businessmen purchased the crop dusting operation from its par­ent organization and renamed it Delta Air Service, Inc. Within a year Wool­man added passenger service to the crop dusting operations after pur­chasing the assets of the Flying Fox Service, a small local passenger air carrier. This transaction was a major step forward for Delta at a time when

the air passenger industry was still in its infancy. Furthermore, what made Delta's service so unusual was the fact that the company did not have any government airmail con­tracts which were the financial back­bone of most of the early airlines.

In June, 1929, Delta Air Service initiated passenger transportation with a flight from Dallas, Texas, to Shreveport and Monroe, Louisiana, terminating in Jackson, Mississippi. By September, Birmingham, Ala­bama had been added to this route (Figure 1), and in the following year a link to Atlanta was added. These early passenger routes lost money, however, and had to be supported by the crop dusting operations of the company. To help the cash flow problem, Woolman decided to sub­mit a bid on one of the new airmail contracts that was being let under the McNary-Waters Act of 1930. Un­fortunately Delta lost the bid to the larger and more experienced Amer­ican Aviation Corporation (AVCO), the holding company that later be­came American Airlines. In October, 1930, Delta Air Service sold its pas­senger equipment and service to AVCO. It reorganized later in the year and was rechartered by the state of Louisiana as Delta Air Cor­poration. Once more the company concentrated its flying operations on crop dusting.

At the national level problems were emerging with the airmail de­livery system. In 1933 Postmaster Brown was charged with unfair practices in awarding the 1930 air­mail contracts. As a result of the scandal, President Roosevelt can­celled all government airmail con-

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tracts, and after a brief but tragically unsuccessful period with the Army del ivering airmail , new contracts were announced for bidding under the Air Mail Act of 1934. This time, Delta Air Corporation was the low bidder for Airmail Route 24, a route that offered deliveries to some of the same cities that Delta had ser­viced in 1929. The new route ran from Fort Worth to Dallas and on to Shreveport, then Monroe, Jackson, Meridian, Birmingham, Atlanta, Co­lumbia and terminated in Charles­ton, South Carolina. On the more extensive newer route, Delta proved to be forward looking and within two months had initiated a passen­ger service which carried some 1,464 people by the end of the year.6 For the remainder of the decade the route system did not change (Figure 2). The airline did grow, however, since it increased the number of passengers that it conveyed, and as early as 1935 added the 10 passen­ger Lockheed Electra to its fleet to accommodate this increased de­mand for passenger travel.

During the 1930's, the airline in­dustry began to realize that its fu­ture lay in passenger transportation and not solely in the movement of mail. In addition , the airlines were experiencing a period of sustained growth and were becoming an ac­cepted part of the life of the nation. As a result, the federal government felt that " it must have regulatory power over the airline industry and that it must regulate air commerce in the same way that it regulated in­terstate and foreign commerce.,, 7 To accomplish these goals, the Civil Aeronautics Act was passed in 1938

and under this authority 16 major domestic airlines received perma­nent "Certificates of Conveniences and Necessity" for the routes they operated . Under this so-called " Grandfather Clause," Delta Air Cor­poration was the first airline to re­ceive permanent certification in the nation.

THE 1940's AND 1950's

The first real expansion of the Delta route system came in 1941 with the acquisition of routes from Atlanta to Savannah via Macon, and from Atlanta to Cincinnati via Knox­ville. In addition to the route expan­sion, Delta purchased the 21 seater Douglas DC-3, the workhorse of the pre-jet era. With Atlanta at the hub of an enlarged route system Delta moved its corporate headquarters there from Macon, Georgia in 1941. Throughout the 1940's Delta in­creased the number of passengers on its flights and the company's as­sets grew correspondingly. More­over, the company's route network expanded, first with the award of the Shreveport to New Orleans route in 1943, and soon after with the 1,028 mile link from Chicago to Miami, Florida, the longest single route awarded by the Civil Aeronau­tics Board (CAB) to that time (Figure 3). In order to accommodate the longer hauls and increased enplane­ments, Delta purchased several larger aircraft; namely the DC-4 and the DC-6 with carrying capacities of 48 and 67 passengers respectively.

By the end of the 1940's Delta Air Lines, as the company was now called, had little further successes expanding its own route system into

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the urban markets of the North, al­though some growth did occur in the southeastern region. In 1948 in­novative agreements with Trans World Airways and American Air Lines did enable Delta to accom­plish some unusual forms of route expansion. Aircraft compatibility, notably the use of DC-4's and DC-6's, permitted Delta to initiate inter­change agreements whereby TWA personnel took over Delta planes in Cincinnati for flights to Columbus, Dayton, Toledo and Detroit, while Delta crews flew TWA planes south from Cincinnati to Dallas, Atlanta and Miami. Under similar agree­ments with American Airlines, ser­vice between Fort Worth and the west coast cities of San Francisco and Los Angeles was introduced.s

Thus Delta was able to offer ex­panded service without having to seek new route approvals from the CAB.

The early 1950's was a period of great route expansion for Delta and it set the stage for the airline's move into the jet era a few years later. As mentioned earlier, the company at­tempted unsuccessfully to expand its own route network into the in­dustrial areas of the North to tap the dense, large and affluent markets there. Consequently, Delta under­took merger discussions with the Chicago and Southern Airlines. The heads of the two companies knew each other well, had similar busi­ness philosophies and both recog­nized the advantages of expansion through company mergers. Further­more, the route networks of the two airlines were compatible, being linked at Chicago, Muncie, Shreveport,

Jackson and New Orleans. On May 1, 1953, the CAB approved the merger, thus creating the fifth larg­est airline in the U.S.A. and adding over 5,000 miles of new routes to Delta's system, including service to the Caribbean and Latin America.9

Two years later an additional 1,000 miles of routes were added to the Delta system when the CAB awarded it the Atlantic-Charlotte-Washington­Baltimore-Philadelphia-New York City route. The latter award created a 10,500 mile route network that linked the South, Midwest and Mid-Atlan­tic regions.'o The company now turned its attention to acquiring the newly developed jet aircraft as a means of efficiently servicing its longer haul routes between the larger hubs in its greatly expanded route system.

During the mid-1950's many of the trunk airlines introduced turbo­prop aircraft to their fleets. Delta, however, elected not to go through this intermediate technological stage but waited for the pure jets to ar­rive. This decision of Woolman's was to work to the company's advan­tage, especially in competition with its major rival, Eastern Airlines. Eastern invested heavi Iy in tu rbo­prop Lockheed Electras that unfor­tunately developed structural weak­nesses and were grounded for a time or were permitted only to fly at reduced speeds. These events al­lowed Delta to compete effectively with its rival, while waiting for early delivery of the DC-8's (September 1959) after which the airline was able to capture a sizeable proportion of the market on the medium-long haul routes from Eastern." These

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DELTA AIR 1948

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gains over Eastern Airlines were im­portant to Delta for they came at a time when expenditures for the new jets were great and there was a need to generate as much revenue as possible. "With its new routes to the North and a new jet fleet, Delta by the end of the fifties could no longer be called a southern regional air­line." 12

THE JET ERA

The acquisition of the jet engined aircraft gave Delta the opportunity to increase the speed and efficiency of its operations over long haul routes. Furthermore, the jets has­tened the realization of Woolman's goal of creating a transcontinental airline, when in 1961 Delta was awarded the Southern Transconti­nental route with service to Las Ve­gas, San Francisco, Los Angeles and San Diego.

By 1961 Delta's route network had been extended to over 14,000 miles (Figure 4) . Now the airline offered service throughout much of the southern U.S.A. and linked this re­gion with the Midwest and the Northeast. In addition, the route net­work offered passengers short hauls from small and medium sized com­munities to the major air hubs out of which the long distance trips were generated. The strategy permitted Delta to offset the higher per mile cost of short hauls with the much more profitable longer hauls. This new concept in air passenger ser­vice, the feeder-hub system, was to be a major route development strat­egy in the coming decades.

Throughout the 1960's the num­ber of longer hauls continued to in-

crease, and in 1964, with an inter­change agreement with Pan American Airways, service from At­lanta to London, England was initi­ated. In the space of half a decade Delta had emerged from being a re­gional trunk carrier to one with transcontinental and transatlantic links (Figure 5).

While Delta prospered during the 1960's another airline that was des­tined to play a role in its modern day route system was having severe fiscal problems. During the period 1961-1971 Northeast Airlines had posted only one profitable year, 1966, and executives of the airline feared bankruptcy. Although described as "a chronic money loser,,,13 North­east did have the long distance air routes between the northeastern U.S.A. and Florida that Delta had heretofore been unable to secure. Thus, one of the top money makers in the airline industry merged with a money loser in August, 1972, add­ing some 10,000 miles of new routes to Delta's system.

Soon after the merger with Northeast Airlines, Delta changed its route service policy. Since 1934, the company had dropped very few centers from its route network,14 but in 1973, Delta petitioned the CAB for permission to withdraw service from 18 New England cities. Stated as the principal reason for the request were losses averaging $112 per passen­ger carried on the routes serving these communities. 15 Delta, how­ever, had no plans to leave the re­gion completely. Thus in a detailed ruling, the CAB certified a new re­gional carrier, Air New England, to take over air service to these smaller

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New England centers. Delta, there­fore, was able to expand its opera­tions into the New England region, eliminate the less profitable routes that had been flown by Northeast Airlines and maintain service on the most compatible ones for its jet fleet-the longer haul, larger city linkages.

While New England was being added to the Delta route system, ex­pansion was underway in the Southwest with service being intro­duced to Tulsa, Reno, Denver, San Antonio and Austin. Also, Delta was planning its own links abroad, and in 1978, service was initiated to Lon­don, England from Atlanta, with flights to Frankfurt, West Germany coming a year later. Delta was now a truly transatlantic airline. The mergers and new routes obtained from the CAB, however, made it necessary for Delta to streamline its inventory of aircraft types, espe­cially as the industry was going through a period of reduced profit­ability. To improve its efficiency Delta began to concentrate its equipment inventories on DC-9-32's for small markets and short hauls, Boeing 727-200's for medium sized cities and moderate length hauls, and Lock­heed L-1 011's for linking the major hubs over the longer hauls.16

In 1978, the Airline Deregulation Act was passed by Congress and while many carriers rushed to estab­lish a foothold on new routes, Delta's approach was more guarded. The airline has been "cautiously op­posed" to the concept of deregula­tion, believing that the trunk and re­gional carrie"rs would terminate service to smaller communities and

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thus reduce the profitability of the hub system concept that Delta had developed.17

It is difficult to examine thor­oughly the impact of deregulation upon Delta's route system. The early part of 1979 saw the airline industry faced with a critical fuel shortage that caused air travel cancellations and led Delta's Vice-President for Finance to state in March 1979 that "Right now we could not expand our operations if we wanted to.,,18 As a result, they cut-back 18 flights a day and had a first quarter earn­ings balance that was 61 percent lower than for the same period of 1978.19

As critical fuel shortages dimin­ished, Delta cautiously began to ex­pand its route system again with rel­atively longer hauls (Figure 6). In addition, Delta used provisions of the Deregulation Act to discontinue service to some 13 centers including Caracas and Maracaibo in Vene­zuela, the Bahamas, Presque Isle, Maine and Meridian, Mississippi. Furthermore, Delta pushed forward with its Atlanta-type air hub concept by expanding its terminal facilities in, and connections to, the Dallas/ Fort Worth airport. By establishing long hauls to large urban centers such as Chicago, Miami and Boston, Delta now plans to increase the flow of passengers through the Dallas/ Fort Worth hub to about 500,000 people a month, half the number that presently pass through Atlanta.

CONCLUSION

Today, Delta operates an air car­rier network linking some 86 cities with over 50,000 miles of routes and

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DELTA AIR 1979

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extending beyond the U.S.A. into Canada, the Caribbean, Bermuda, England and West Germany. Thus the company that began life as a crop dusting operation is ranked now as one of the world's major airlines. These developments have been ac­complished by Delta's cautious ap­proach to growth, exemplified most recently by the determination not to rush route expansion immediately following the Deregulation Act of 1978. To prosper, however, the air­line has had to be innovative and introduction of the feeder-hub con­cept in the late 1960's illustrates well the ability of the company to de­velop successfully new route strat­egies. Furthermore, among the Wall Street financial community, Delta enjoys the reputation of being the best managed airline in the nation. Although the fiscal and managerial aspects of the company are beyond the scope of this study, these phe­nomena have produced an airline with an excellent profit record that has facilitated the early introduction of newer, faster and more efficient aircraft in recent years. Thus with $1.6 billion worth of orders placed for Boeing 767's in 1980 alone, Delta is planning for continued growth and aims to be the nation's premier do­mestic air passenger carrier before the end of the 1980'S.20

ACKNOWLEDGMENT

The author wishes to express his gratitude to Catherine M. Allen who

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drafted the final copy of the maps in this study. Cathy is a Geography major and secretary of the Epsilon Omega Chapter of G.T.U. at the State University of New York-Plattsburgh.

FOOTNOTES

1. Air Transport Association. Air Transport 1980: Annual Report of the U.S. Scheduled Airline Industry. Washing­ton. D.C .• 1980. p. 1.

2. Ibid .• p. 5

3. Ibid .• pp. 14 and 15.

4. New York Times. November 12. 1980. pp. D 10 and 11 .

5. W. David Lewis and W. Philip Newton. Delta : The His­tory of an Airline. {Athens. Georg ia: University of Geor­gia Press. 19791. p. 30.

6. Ibid .. p. 5Q.

7. R. M. Kane and A. D. Vose. Air Transportation {Dubuque. Iowa: Kendall Hunt Publishing Co .• 19751. p. 34.

8. Ibid .• pp. 128-9.

9. K. M. Field. ed .• From Travel Air to Tristar {M iami. Flor­ida: Halsey Publish ing Co .• 19791. p. 12.

10. L. Sherman. ed .• Delta Airlines 50th Anniversary {At­lanta. Georg ia: Delta Air Lines. 19791. p. 23.

11 . Lewis and Newton. p. 271 .

12. Field. p. 12.

13. New York Times. October 27. 1971. p. 65.

14. Harold M. Elion. " A Historical Atlas of the Domestic Trunk Airlines of the United States: {unpublished M.A. thesis. San Francisco State College. 19701. p. 95.

15. New York Times. November 12. 1980. p. D 10 and 11.

16. New York Times. November 12. 1980. p. D 11 .

17. Wall Street Journal. September 8. 1980. p. 17.

18. Wall Street Journal. March 6. 1979. p. 20.

19. Wall Street Journal. October 28. 1979. p. 28.

20. Wall Street Journal. September 8. 1980. p. 17.