Vanguard Airlines was an airline based in Kansas
City, Missouri. For a time, Vanguard also had
significant operations at Chicago Midway
International Airport in Chicago, Illinois,
until late 2000.
It ceased operations on July 29, 2002, after
filing for bankruptcy. The airline flew leased
Boeing 737s and MD-80 aircraft to several
destinations from its main hub in Kansas City at
the time of its demise. Vanguard Airlines
started service in 1994.
Vanguard was originally started as a Low-cost,
low-fare airline, the purpose of which was to
undercut the costs of the major carriers and so
be able to charge lower fares. Super-low regular
advance fares of as little as $29 each way were
the norm. Sale fares of as little as $10 were
not uncommon.
By the time Vanguard started, however, most
major carriers had learned how to deal with such
competition. They simply lowered prices in the
markets where these smaller airlines flew,
making it impossible for the Low-cost airlines
to make money.
In 2000, the airline began a program to change
itself from a Low-cost, low-fare airline to the
more sustainable Low-cost carrier model. This
type of airline had lower costs than the major
carriers, but competed on more than just price.
Service, on-time performance, leg room, frequent
flier programs, and other factors are often used
in this competitive model. No longer were the
cut-rate advance-purchase fares well-below the
major carriers. Only the full-coach fares, which
fewer customers buy, were significantly lower.
The change program worked and the airline saw
significant improvements in operational and
financial performance. The summer of 2001 saw
some of the best growth and performance the
airline had ever achieved; but the September 11,
2001 attacks changed all that. In October, 2001,
the airline cut 20% of its staff. Full-time
hourly workers were cut to as little as 32 hours
per week. The executive suite took a 25%
pay-cut. The airline struggled to compete in a
market that saw schedules cut by a third and
planes flying half-full.
During this period, Vanguard also introduced a
multi-color aircraft livery similar in concept
to Braniff International Airways "Flying Colors"
or Air Canada's "airline within an airline"
concept, ZIP airlines. This paint scheme was
adopted with the introduction of the McDonnell
Douglas MD-80 Series aircraft and involved the
stylistic painting of the new Vanguard livery,
in varied hues upon different aircraft. As in
the case of Braniff's ultimate "Ultra" or
"wet-look", more restrained use of colors were
favored by the design team, which conversely was
to become Vanguard's final livery.
The assumption made and popularized by many economic
analysts was that airlines like Vanguard were forced
into bankruptcy due to the industry downturn following
the September 11 attacks in 2001. This may be an
incorrect assumption for Vanguard and other airlines
despite popular opinion. Shortly after the attacks,
Vanguard received approximately $2–3 million in federal
aid, as did most other airlines.
If
this money had never been distributed, there is a
possibility that Vanguard might have gone bankrupt
before the end of 2001. The cost of moving Vanguard from
the Open Skies reservation system to SABRE during 2001
forced the airline to invest millions that the airline
could little afford. Company meetings between CEO Scott
Dickson and Marketing Director Greg Aretakis and other
staff became more numerous and serious as the year
passed. On at least three occasions, the conclusions
made by the CEO and Marketing Director was that the
transformation of Vanguard from an Open Skies to a SABRE
system had to work, or it would be the end of the
airline.
Daily revenue records showed marked increases in sales
overall, but difficulties in adopting SABRE overshadowed
the successful sales increases. The money that the
government remitted to Vanguard after 9/11 offered the
airline a new lease on life. It would not sustain the
airline forever, but it allowed for a few months of
replanning. Companion fare sales and internet ticket hot
deals helped keep the airline above water for several
months, and the hopes of more funding from the Air
Transportation Stabilization Board kept a positive
outlook among airline staff.
The following summer was bad for most airlines, but
worse for Vanguard. While operational performance
continued to improve to summer 2001 levels, the airline
was still saddled with $80 million in debt. Nervous
about increased bookings, credit card processors
required greater and greater assurances that they would
not lose money if the airline failed. In his book about
the bankruptcy of the airline, Scott Dickson wrote how
these processors required surety bonds of 125% of sales
to continue processing credit cards. As each ticket was
sold, the airline actually lost money. It was
unsustainable and on July 29, 2002 the airline ceased
operations.
When operations ceased, National Airlines and
Frontier Airlines immediately offered to take
Vanguard passengers on a space-available basis.
Controversy broke out with other airlines that
had accepted Air Transportation Stabilization
Board grants immediately following the September
11, 2001 attacks. One requirement of these
grants was to accept passengers from airlines
that ceased operations for a nominal fee. Some
airlines refused and others charged higher fees
than allowed under the law. Eventually, most
passengers reached their destinations.
Not long after the bankruptcy, Robert H.
Brooks, owner of Naturally Fresh, Hooters
restaurants and PACE Aviation, offered to
purchase the airline. His offer was rejected
and the company was eventually liquidated.
Its headquarters became the temporary
offices of the Transportation Security
Administration in Kansas City.
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