Supplemental air carriers, until 1955 known as irregular air carriers, and until 1946 as nonscheduled air carriers or nonskeds, were a type of United States airline from 1944 to 1978, regulated by the Civil Aeronautics Board (CAB), a now-defunct federal agency that then tightly controlled almost all US commercial air transport. From 1964 onward, these airlines were just charter carriers, but until 1964 they had limited but flexible ability to offer scheduled service, making them hybrids. In some ways they were the opposite of what the law then said an airline should be. Airlines then required CAB certification, but over 150 nonskeds exploited a loophole to simply start operating. The CAB determined where certificated carriers flew and what they charged. For the most part, irregular carriers flew where they wanted and charged what they wanted. CAB-certificated passenger carriers almost never died (the CAB preferentially awarded desirable routes to weak scheduled passenger carriers and if they got in serious trouble the CAB let them merge with a stronger carrier) but over 90% of supplementals did.
The legacy of supplemental air carriers includes coach class (all US air travel was first class before the nonskeds) and a share of the credit for inspiring 1979 US airline deregulation. Such carriers made little impact on the US airline system after deregulation and no former supplemental carrier survives, the last being World Airways which ceased operation in 2014. All original US scheduled cargo airlines (such as Flying Tiger Lines) also started as irregular airlines. The term "supplemental" was replaced with "charter" in the Airline Deregulation Act of 1978, but survives in the regulations of the Federal Aviation Administration (FAA) (US airlines are dual certificated, with economic certification by the Department of Transportation (as successor to the CAB) and operational certification by the FAA).
The market share of supplementals was small (see Graph 1), but the carriers attracted much attention during the regulated era ending 1978: They offered low fares and competition in a system of high fares and little competition, providing a small amount of relative freedom in an otherwise tightly regulated regime. US scheduled carriers constantly railed against the supplementals as a threat (although once regulations were relaxed the scheduled carriers quickly overcame the supplementals). IATA (International Air Transport Association), then an international airline cartel, spent the 1960s/1970s fighting supplementals on the North Atlantic. Supplementals operated on the edge of legality: Up through the 1950s, some flew scheduled service well beyond what regulations permitted, some in open defiance of the CAB, earning an outlaw reputation. Charters captured over 30% of the transatlantic market in the 1970s. Regulations made it hard to access charters. Some consumers lied to qualify for low fare charters. When CAB enforcement agents detected this, they prosecuted the supplementals. Prominent personalities were connected to supplementals. For example: World Airways's owner Ed Daly flew in supplies and flew out orphans during the fall of South Vietnam. Future billionaire/Las Vegas titan Kirk Kerkorian made his first fortune selling Trans International Airlines. Spies owned one: in 1973 the CIA was exposed as owning supplemental Southern Air Transport.
History Context
The Civil Aeronautics Act of 1938 instituted tight federal control over almost all US commercial air transport, initially by the Civil Aeronautics Authority, but that power passed to the Civil Aeronautics Board (CAB) in 1940. Airlines were required to be certificated by the CAB, but those flying scheduled service prior to the 1938 Act were grandfathered and the CAB certificated 19 domestic scheduled passenger airlines this way in 1939–1941. The 16 still flying after World War II were the domestic trunk carriers, and in many ways the CAB regulated the US airline industry in their interests. In the period 1943–1950, the CAB certificated another set of domestic scheduled airlines, the local service carriers (initially called feeder carriers), to fly routes to small cities. Competition was suppressed; the CAB determined ticket prices and what routes scheduled airlines flew.
Post-World War II demand overwhelmed the trunk carriers and the CAB, which was "lethargic" and "stunted" by the war. For instance, there was a month-long waiting list for air travel from Washington, DC to Dallas. In 1946, Fortune magazine had a 12-page article about industry's struggle to handle massive post-war demand.
The nonscheduled loophole In theory, after World War II, the trunk carriers and (as they were certificated) the feeders were the only airlines providing US domestic scheduled service. But under a pre-war CAB exemption, nonscheduled carriers did not need a certificate, an allowance made so companies like fixed base operators (FBOs) could offer small aircraft charters without CAB approval. In August 1944, the CAB launched an investigation of the post-war role of nonskeds. But as war ended, easy availability of war-surplus aircraft and war-trained pilots resulted in a flourishing of operators using the nonscheduled loophole. Some had transport-class aircraft like DC-3s, and some flew scheduled service. The study concluded May 1946 with the CAB coining the term "irregular" for such operators (versus "regular" service seen as typical of scheduled flights) and required them to register (essentially to gather data) and subjected them to the parts of the 1938 Act that forbade unfair and deceptive practices. The CAB also made an example of two nonskeds, finding they illegally engaged in scheduled service.
The CAB issued a total of 162 "letters of registration" for "large" irregular carriers (those with transport-type equipment), as distinct from FBO-type operators for which the exemption was intended, finally freezing approvals in August 1948. As of June 1948 (the date of its 1948 annual report) the CAB had issued 142 such letters, but only 109 of the carriers were active. The CAB issued another dozen letters to non-certificated pure cargo carriers. By contrast, there were 42 certificated scheduled service carriers in operation. The 142 registered irregular carriers had a total of 356 Douglas DC-3, DC-4 and Curtiss C-46 aircraft between them, compared to over 1000 transport aircraft in domestic service and international service by scheduled operators, whose fleets also included some more modern types, e.g. Lockheed Constellations, Martin 2-0-2s, DC-6s and Convair 240s. The CAB banned irregular carriers from international service without specific permission. The irregulars clustered in big markets like Puerto Rico (flying migrants to the mainland with fares as low as $45 southbound, $85 northbound vs certificated carrier fares of $133), transcontinental (Los Angeles to New York as low as $88 one way vs scheduled carrier $143) and flying people and freight to Alaska.
Coach
Irregular carriers could charge low fares because of high-density seating and no-frills service. Seats were four-abreast in DC-3s and five-abreast in DC-4s (one more than normal) with reduced seat pitch, e.g. from 40 inches to 33. This became known as coach class. With interior reconfiguration, a DC-4 could carry as many as 80 people, up from 50–55. It was generally conceded that irregular carriers invented coach class and the resulting demand expansion. The CAB had to push certificated carriers to offer coach, sensitive to the fact that only the wealthy could afford first class. Coach RPMs only exceeded first class (see Graph 2) in 1960, but even then the CAB was still having to push scheduled carriers to expand coach class.
1949–1955: from death sentence to supplemental
From 1949 to 1955, the CAB swung between suppression and accommodation of irregular air carriers. In 1949, it eliminated the original blanket exemption that enabled irregular air carriers and required each to apply for an individual exemption. 95 did so, but 46 others fell by the wayside. This was seen as a “death penalty” and by 1951, most of the surviving irregulars were either subject to an enforcement action or preliminary disapproval of their individual application. The CAB also shut down specific offenders, like Standard Air Lines in 1949, Viking Air Lines in 1950 and others for scheduled service and other violations. By 1958, the CAB had shut down 18 irregulars or supplementals this way. But the irregulars had their supporters, like the Justice Department. 1949 US Senate hearings credited irregulars with, among other things: Allowing those that could previously not afford it to fly Playing a key role in the Berlin airlift, in contrast to the subsidized scheduled carriers Low air freight costs allowing Alaskans to eat fresh fruits and vegetables. Alaska's governor was big fan.
The CAB had trouble with irregularity: defining something in terms of a negative resulted in an "elusive and shifting concept." The CAB tried several times to nail it down. Even if individual carriers remained irregular (whatever that was), it was noted that a ticket agent representing many irregular carriers might cobble together effectively scheduled service on big routes. If the agent was independent, it was unclear the CAB could prevent this.
The Korean War showed once again that the irregulars could be useful; they carried over 50% of the military charter airlift. A 1949 appeals court ruling required the CAB give an irregular carrier a hearing before shutting it down, increasing the difficulty of possibly revoking dozens of carriers. In 1951, the Senate again weighed in, lambasting the CAB for oppressing the irregulars while subsidizing "high-cost luxury air service for a small part of the population." So the CAB rolled irregular carrier issues into an investigation, kicking the problem into the future, while, as discussed below, still pursuing specific offenders. When the investigation finished four years in the future (December 1955) the CAB was conciliatory. It acknowledged the contributions of the irregulars for things like coach class, Berlin and Korea. It renamed these carriers "supplemental" because it was now their role to provide supplemental capacity through unlimited domestic charters and the ability to fly up to 10 scheduled flights per month per city pair, effectively swapping "irregular" for "infrequent." It extended these rights to 49 supplementals through a new blanket exemption.
1950s combines
A combine was a group of irregular carriers flying under the brand of a group-controlled ticket sales agency, often with common services (e.g. maintenance or accounting) provided by other group entities. The biggest combine was North American Airlines Group (1949–1957), where ultimately five irregular carriers flew under the "North American Airlines" name using a common pool of crews and aircraft. In the case of North American, the carriers were ostensibly independently owned and operated but in practice tightly controlled. Using multiple carriers allowed each to fly "irregularly", while together offering scheduled service. North American was effectively a rogue scheduled airline, highly profitable for its partners, who had the money to delay shutdown until 1957 through public relations, lobbying and litigation all the way to the US Supreme Court.
The CAB pursued three other combines: What the CAB called the Peninsular Group, which flew in the name (and sometimes livery) of, successively, Safeway, South East Airlines, and Atlantic Aircoach. The two main group carriers were Peninsular Air Transport and Aero Finance. It was a family firm: two brothers and a cousin owned/controlled the airlines, sisters owned the agencies, a nephew helped run them, etc. The CAB shut them in 1957.