In the days following Pearl Harbor and given the wartime situation, the US Civil Aeronautics Board (CAB) suspended all awards for new air services. However, the CAB soon realized that air services would need to expand to support the growing production effort for the war.
On 11 July 1944 the CAB issued a judgement that created a new category of airline – it was called a feeder or local service airline. Its objective was to funnel passengers and goods from smaller communities to larger cities for connections to the large established trunk airlines of the day – the ‘Big Four’ of United, Eastern, American, and TWA.
One of the early pioneers to take advantage of the CAB’s decision was an aerial photographer and inventor, from Ithaca, New York, named C.S. Robinson. His work with aerial photography before the war led him to develop a metal spring-like shock mount for his cameras that was superior to the rubber mounts of the day which tended to became hard at high altitude.
Robinson’s factory to support the war effort was in Teterboro, New Jersey and he commuted between Teterboro and Ithaca in his Fairchild 24. Finding a constant stream of people who wanted to hitch a ride with him, he decided to start his own airline to connect upstate New York to the New York/New Jersey area.
On 6 April 1945 Robinson Airlines began airline services from Ithaca and New York City using three Fairchild 24s. With traffic growing, Robinson expanded to larger aircraft and hired pilots as fast as he could to meet demand. One of his new hires was a former Navy patrol pilot and lawyer named Robert Peach. He was a decorated Navy pilot in the Pacific with two Distinguished Flying Crosses and at the time he joined Robinson Airlines, he was finishing law school at Cornell and wanted to get back into flying part-time.
With the rapid growth of demand out of Ithaca, Robinson’s laid-back management style wasn’t conducive to a growing airline; in the immediate years after the end of the Second World War, the finances suffered. However, Edwin Link, the developer of the Link Simulator (vital to training pilots) with a factory in Binghamton, New York, was willing to invest in Robinson if there was a change of leadership to assure a return on his investment.
Link provided the seed money to allow Robinson to upgrade to Douglas DC-3s and by 1952 Robert Peach had risen through the ranks to gain the attention of outside investors. He ended up buying Robinson Airlines outright which assured Link’s continued investment. One of his first acts as head of the airline was to hold a contest to rename it, and that’s how it became Mohawk Airlines.
Link’s investments weren’t enough for Mohawk as Peach pushed for an increase in the usual subsidy the CAB gave to local service airlines. It was a role that raised Peach’s prominence in the airline community as he advocated for more support for the smaller airlines. In those days, the CAB had a subsidy given to airlines for routes they flew and Peach pushed for the CAB to treat local service airlines like Mohawk on the same basis as the large established trunk airlines.
At the time the Eisenhower Administration wasn’t too keen on the idea of increasing subsidies to local service carriers, but Peach and the other local service carrier heads had two important allies – one was Donald Nyrop, the head of the CAB at the time (who later became the head of Northwest Airlines) and the other was Texas Democratic Representative Lloyd Bentsen.
When the CAB opened up for applications for local service carriers in 1945, certification was provisional. Bentsen’s proposed legislation would make certification of the local service carriers permanent, placing them on better footing with the established trunk carriers and opening the door to increased subsidies from the CAB. President Eisenhower signed the bill after it was unanimously passed by both houses of Congress in 1955.
At the beginning of 1962 Mohawk, under Peach’s leadership, grew tremendously. This culminated in Peach winning the fight and on 25 June 1965, the Mohawk BAC One-Eleven (christened ‘Ohio’) flew its first revenue service. In addition, Fairchild-Hiller FH-227 turboprops were also put into service to replace the piston twins. Mohawk reached its zenith in 1967 with route awards from the CAB to Detroit, Cleveland and Boston.
The floor fell out from underneath Robert Peach and Mohawk Airlines in 1968. On 23 June that year, the BAC One-Eleven ‘Discover America’ crashed on a flight from Elmira, New York to Washington, DC. The cause was a valve failure in the APU that resulted in an inflight fire that compromised the tail structure.
Two weeks later, a new air traffic controllers union called Professional Air Traffic Controllers Organization (PATCO), started in New York City, staged a slowdown to protest about inadequate staffing and excessive overtime. Working to the letter of the rules, air traffic backed up around numerous chokepoints that led into the New York City area. From July to August, the PATCO action proved disastrous to many airlines, but more so to Mohawk given its route structure. Peach even tendered a bill to the FAA for costs incurred during the PATCO slowdown as a protest.
In the following year, a general downturn in the economy hit Mohawk’s passenger numbers. By 1970, the nation was in recession and every airline was losing money and this further added to Mohawk’s woes. To save costs, many local service carriers were handing off services to smaller cities to commuter airlines with the CAB subsidy ‘flowing through’ from the local service carrier to the commuter airline. Mohawk’s rival, Allegheny Airlines, was already doing this with their ‘Allegheny Commuter’ brand. The CAB permitted this as long as the local service airline would step back in should the commuter airline cease services to any of the communities.
At Mohawk, the pilots saw the outsourcing to commuter airlines as a threat to their jobs (some things in the airline industry never change and this is still a contentious issue today). One minute before midnight on 12 November 1970, the pilots went on strike after the failure of negotiations, and Mohawk was essentially shut down.
The debts that Mohawk incurred upgrading to the BAC One-Eleven and FH-227 aircraft were piling up against declining traffic. The pilot’s strike was a nail in Mohawk’s coffin as the management turned to a small New York City aviation consulting firm to assist with a turnaround. This small firm was Jet Capital, founded in August 1966 by two Harvard business school graduates, Frank Lorenzo and Bob Carney.
With a small office in the prestigious Pan Am building in Manhattan, Lorenzo and Carney had a stock offering in January 1970 that netted them $1.5 million in ‘seed money’. They had earlier provided financial consulting to Detroit-based cargo airline Zantop (which got their name out in the industry).
Lorenzo met with Robert Peach on numerous occasions and Jet Capital offered Mohawk a restructuring plan that essentially resulted in Lorenzo controlling Mohawk Airlines. At the time, Lorenzo was only 30 years old and his plan to take over Mohawk was too much for Robert Peach and the board to swallow.
With the airlines’ fortunes waning quickly, Peach instead allowed his long-time rival Allegheny Airlines to purchase Mohawk. By this time the slow slide of Mohawk meant that Peach had less control over the company than was the case in 1967. On 20 April 1970, he had lunch with Frank Lorenzo thanking him for his services and offer, but explained that the board had decided to sell to Allegheny. After lunch, Robert Peach went home to prepare for a speech he was to give that night, but instead shot himself in the head; the loss of Mohawk too much to bear. Robert Peach wasn’t the only airline boss to kill himself after dealing with Lorenzo.
The sale of Mohawk to Allegheny left Jet Capital with the seed money from its stock offering burning a hole in their pockets. Lorenzo came tantalizingly close to getting control of an airline, something he had long wanted since he was a teenager. In 1971, Mohawk wasn’t the only airline in need of a financial turnaround. Texas International was based in Houston and it wasn’t long before, during that same year, they engaged Frank Lorenzo’s services. But that is a story for another day.