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Midway Airlines (1976–1991)
Midway Airlines (1976–1991)
Midway Airlines (1976–1991)
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Midway Airlines was an airline in the United States based in Chicago, Illinois. It was incorporated on October 13, 1976, by Kenneth T. Carlson, Irving T. Tague and William B. Owens, filing with the Civil Aeronautics Board (CAB) for an airline operating certificate. Although it received its operating certificate from the CAB prior to the passage of the Airline Deregulation Act in 1978, it was viewed as the first post-deregulation start-up. The airline commenced operations on November 1, 1979.[1]

Key Information

The airline was notable for breathing new life into Chicago Midway Airport, which was almost deserted when Midway started operations. The carrier was also notable for pursuing at least three distinct business models during its existence, starting as a discount carrier, then transitioning to an all business-class airline before evolving into a more conventional hub carrier.

Midway was never highly or consistently profitable, but unlike many bigger and/or more prominent airlines (e.g. Braniff, People Express, Western Airlines and Piedmont Airlines) which disappeared through bankruptcy or mergers, it survived the 1980s. Unfortunately, the carrier collapsed soon after attempting to grow substantially by purchasing the Philadelphia hub of bankrupt Eastern Air Lines, filing Chapter 11 bankruptcy in March 1991. A deal was struck to sell the company to Northwest Airlines, which backed out at the last minute, leading to Midway's ultimate shutdown in November 1991.

A group of investors, including Carlson, bought the airline's name (for $20,000) and started another Midway Airlines, which flew from 1993 to 2003.[2][3]

History

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DC-9-15 in the original livery

June 1976: Representative Fary and Lamar Muse

[edit]

In June 1976, Lamar Muse, founding president of Southwest Airlines, testified to Congress. Representative John G. Fary, whose district contained Midway Airport, asked if Muse had any ideas how to revive the airport, then “virtually a ghost town”. Muse said, in part, “…you could do exactly the same thing at Midway that Southwest has done at Love Field in Dallas…”[4] Muse said he discussed this idea in the offices of airline consultants Simat, Helliesen & Eichner (SH&E), where partner John Eichner was a friend of Muse. Two other SH&E consultants took the idea to former Hughes Airwest executive Irving Tague and incorporated Midway Airlines (October 13, 1976)[5] to be first in line with the CAB with this idea. Founder Kenneth Carlson was in fact an SH&E vice president immediately prior to starting Midway Airlines.[6] In response, Muse created a subsidiary, Midway (Southwest) Airway Co., which also applied to the CAB. Muse wanted to connect Midway Airport to 15 cities about 200–500 miles from Chicago, while Midway Airlines took a smaller list of six cities to the CAB.[7]

Midway Airport was a flashpoint for critics of airline regulation because the CAB-regulated industry failed to resuscitate the airport, a priority for the City of Chicago and the Illinois congressional delegation. Muse said in July 1977 Congressional airline deregulation hearings (when total airline service at Midway was two Delta flights/day) that, based on its experience in Texas, Southwest would, within a year, carry five million passengers per year through Midway with 92 737 departures/weekday (79 per day on weekends).[8] But Southwest's board of directors was not supportive and Midway became a focus of Muse's feud with Southwest founder Rollin King, which led to Muse's resignation from Southwest in March 1978.[9] This helped clear the way for Midway Airlines. Muse accurately predicted Midway's future importance to Southwest: as of March 5, 2024, Southwest scheduled up to 249 departures per day at Midway.[10] Midway Airport reached Muse's predicted five million annual passengers/year in 1987.[11]

1976 – November 1979: extended gestation

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Midway Airlines' progress from concept to reality reflected the progress of US airline deregulation, for which the inflection point was the high-profile 1975 Senate hearings on the CAB by Senator Ted Kennedy. Prior to these, certification of significant new airline was unthinkable, it hadn't happened in decades. After the hearings, there was a sense of possibility, which is why, in 1976, the idea of Midway Airlines was plausible.[12] In 1977, President Jimmy Carter appointed economist Alfred Kahn to run the CAB with a mandate for reform, changing the nature and tempo of CAB decisions.[13][14] The Carter administration and Congress were in favor of opening up Midway Airport to low-cost air travel.[15][16] The CAB announced in August 1977 that it would decide the Midway airport proceeding by August 1978, incredibly fast by prior CAB standards.[17]

The August 1978 CAB ruling (against a backdrop of the Airline Deregulation Act going through Congress) was good news/bad news for Midway Airlines; it got what it wanted but so did everyone. Midway argued to the CAB that it deserved (as the self-proclaimed innovator) Midway Airport to itself, at least for a time, to become established. But the CAB noted Southwest might be the innovator (see prior section) and projections showed Southwest to be the low-cost applicant. Nonetheless, Midway, Southwest and local service airline North Central each got all six routes and Northwest and Delta got the select Midway routes they asked for. In addition, Midway and the Southwest Midway subsidiary were both given economic certification as well. Further, the CAB opened another proceeding for another 24 Midway Airport routes.[18] Given what looked like substantial future service at Midway Airport, there were serious doubt Midway Airlines would attract sufficient investment.[19]

However, only Midway Airlines made subsequent moves toward Midway Airport, because as of January 1979, deregulation opened up the entire United States to airline competition.[20] While Southwest continued to participate in Midway CAB cases, it took no practical steps towards service: Southwest would not enter Midway until 1985.[10] Even with the way relatively clear, Midway Airlines found it hard to raise money, Chicago investors were generally uninterested.[21] On August 2, 1979, Midway announced it had raised $5.7mm from 16 private investors, allowing the airline to head towards a November 1, 1979 launch.[22] In September 1979, the CAB gave 15 airlines the right to fly those other 24 routes from Midway. One was Federal Express, having obtained Boeing 737-200QC aircraft with which it wanted to fly packages at night and passengers during the day.[23] This was FedEx's “Project Torso”, in which FedEx founder Fred Smith briefly considered the idea of passenger service.[24] At the time, FedEx had a highly profitable monopoly on overnight delivery growing at 40% per year.[25] Ultimately, none of the 15, other than Midway, used this broad new authority.

Midway Airlines Financial Results, 1980 thru 1990
(USD mm) 1980[26] 1981[27] 1982[28] 1983[29] 1984[30] 1985[31] 1986[32] 1987[33] 1988[34] 1989[35] 1990[36]
Op revenue 25.0 73.9 94.7 103.3 148.0 193.4 261.4 340.7 388.0 463.0 614.8
Op profit (loss) 8.8 4.5 (12.3) (13.0) 0.9 11.1 25.0 13.5 (13.5) (84.5)
Net profit (loss) (5.0) 7.6 0.3 (15.0) (22.0) (3.6) 9.0 19.8 6.5 (21.7) (139.2)
Op margin 11.9% 4.7% −11.9% −8.7% 0.4% 4.2% 7.3% 3.5% −2.9% −13.7%
Net margin −20.2% 10.2% 0.4% −14.5% −14.8% −1.9% 3.5% 5.8% 1.7% −4.7% −22.6%

November 1979 – July 1982: original no-frills business model

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Midway started on November 1, 1979, on three routes: Detroit, Cleveland and Kansas City. Midway's original business model remained inspired by Southwest, but instead of Southwest's 118-seat 737s, Midway started with three 83-seat DC-9-10s.[37] Midway's fares were below those of conventional competitors at O’Hare, and no onboard catering was offered. In 1980, it expanded to five DC-9-10s.[38] The airline ran unconventional offers such as penny sales, offering the return trip at a penny with the outbound at the usual fare to fill up off-peak days.[39] At times this caused chaos as customers rushed to the airport to buy such tickets.[40] Still, the strategy worked; Midway was solidly profitable in 1981 (see nearby table), in only its second full year of operation. The 1981 operating margin was the highest full-year operating margin Midway would ever attain.

Early Midway was marked by significant management turnover. Some founders (like Carlson)[6] were gone by 1980 and in early 1982, Irving Tague took a leave of absence for “personal reasons,” with David Hinson becoming acting chair.[41] Gordon Linkon, formerly of Frontier Airlines, was made President in 1980,[42] embracing the low-cost ethic. Midway went public in December 1980, 850,000 shares at $13.50.[43] But the board was dissatisfied by the airline's discount image and some of those promotions. Chicago was particularly badly affected by the extended disruption caused by the August 1981 air traffic controllers strike. United Airlines grounded 50 aircraft, and Midway found itself unable to fully employ eight DC-9-30s it acquired from Ansett Australia.[44] A new Boston route failed in the face of severe competition.[45] Consequently, results for the first quarter of 1982 were poor, as with the rest of the industry. In a long-planned move, directors fired Linkon in July 1982,[46] shortly after Midway achieved a profitable second quarter, one in which most of the industry made a loss.[47]

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Metrolink DC-9-31 New York LaGuardia October 1984

New Midway Chair/CEO Arthur Bass was part of the founding management, and a former president, of Federal Express.[46][47] Bass hired Neal Meehan, founding CEO of New York Air, as president.[48] They aimed to make Midway Airport the favored airport of the Chicago business traveler, similar to New York LaGuardia or Dallas Love Field.[49] At that time, Midway Airport had no jetways and suffered from a lack of maintenance on the part of the city.[50][51] Bass and Meehan instituted Midway Metrolink branded all-business class service, with four-abreast seating, a “business center” at Midway airport, jetways and other amenities.[52] Florida service, which Linkon initiated, was dropped.

Midway Express 737-200 at Miami, October 1984

The Metrolink operation proved to be a failure. 1983 and 1984 financial results were poor, with losses greatly exceeding the cumulative profits of 1981 and 1982. In 1984, reacting to a proposal from Air Florida executives, Midway acquired the remains of that bankrupt carrier in stages. The two primary motivations for the acquisition were winter demand to offset the seasonality of the Metrolink system, and Air Florida's slots at airports like LaGuardia and Washington National.[53] The deal nominally cost Midway $53 million, most of that ($35 million) for three Air Florida 737-200 aircraft.[54][55] In fact, Midway never paid for the airplanes, passing them to a lessor to purchase and leasing them back.[56] Midway provided working capital to get the remains of Air Florida back in the air in October 1984, which flew under contract to Midway (with Midway marketing and selling tickets) as Midway Express until August 1985, when the Air Florida purchase closed and Midway Express shifted to full Midway Airlines branding.[56]

Florida service was much more successful. In Midway's 1985 annual report, the airline said Midway Express made a profit of $1.4mm for Midway pre-merger.[57] Money-losing Metrolink service made even less sense alongside profitable all-economy class Florida service. 1984 results also included a $1.5mm writeoff for an expensive abortive attempt to establish a helicopter service between Midway, O’Hare and Meigs Field, to be called Chicago Airlink.[58] In January 1985, Bass resigned, followed by Meehan in February, with David Hinson, a Midway founder and founding board member, taking over.[59][60] The airline announced cutbacks and layoffs (Midway Express was unaffected)[61] and discontinued Metrolink.[62] In May, Hinson warded off an attempted proxy fight by other (departed) founders, including Carlson, wanting to return the airline to its original business model.[63] At the time of Bass's departure, Hinson defended Metrolink, but one of Midway's responses against dissident shareholders was to note that the Bass team was gone.[64]

Mid-1985 – June 1989: profitability as a conventional airline

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Midway Airlines Boeing 737-200

Hinson wanted Midway to be “more like other airlines,”[63] and Midway became a conventional hub airline, the differentiator being Midway Airport. The DC-9s were converted to two-class seating[65] and Midway built out its network to both business and leisure destinations (cities like Las Vegas and Phoenix[66][67]) from coast to coast. Midway also acquired McDonnell Douglas MD-87s (a smaller, high-performance version of the MD-80) to allow the airline to reach to the west coast, at the time a non-trivial feat from Midway Airport's short runways. Midway acquired its own regional airline subsidiary, Midway Commuter, to fly from Midway to smaller cities around Chicago. 75% of Midway Commuter passengers connected to mainline flights at Midway airport.[68] Midway had its own maintenance facility in Miami (an Air Florida legacy) [69] and built a simulator facility.[70] The strategy produced profits, but margins never challenged those achieved in 1981. However, during this period much larger airlines like Eastern, Pan Am, America West Airlines, Continental, People Express, etc., all saw heavy losses, and other high-profile names like Pacific Southwest Airlines and Western Airlines merged out of existence. Midway stood out just by surviving.[71]

On a June 1988 weekday, Midway scheduled 116 nonstop flights into Midway Airport from 25 cities, along with 75 Midway Connection nonstops from 17 others. The airline flew Chicago Midway (MDW) – Miami (MIA) – Saint Croix (STX) – St. Thomas (STT) round trip as well as Chicago Midway (MDW) – Fort Lauderdale (FLL) – Nassau (NAS) round trip; aside from those, all Chicago flights were nonstop to and from Midway Airport. Midway Airlines′ peak year was 1989, when it flew 10.1 billion revenue passenger-kilometers, compared to 0.6 billion in 1981.[72]

June 1989 – November 1991: untimely overextension leads to demise

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In March 1989 Eastern Air Lines faced a debilitating strike, tipping it into Chapter 11 bankruptcy.[73] As part of Eastern's attempts to raise cash, it sold its Philadelphia gates (and other assets, such as routes to Toronto and Montreal) and 16 DC-9 aircraft to Midway for $210 million in June of that year.[74][75][76] Further investment included hiring, refurbishing the aircraft and the former Eastern space in Philadelphia, and heavy marketing to introduce east coast residents to Midway. Hinson's rationale was that Midway was reaching the limits of growth in Chicago, and this was its best opportunity to develop a second hub; operations began on November 15, 1989.[77][78] The Philadelphia hub was intended to help drive Midway annual revenue to $2 billion within two years.[79] Also in 1989, Midway ordered 29 McDonnell Douglas MD-82s for a nominal $900 million,[80] as well as 33 Dornier 328 turboprops for Midway Connection for a nominal $244 million.[81] It also reintroduced first class on all routes.[82]

Philadelphia had dominant incumbent hub operator, the much larger USAir;[76] at the end of 1989, Midway had 61 aircraft vs 441 for USAir.[35] Fuel prices were up significantly in early 1990 over 1989, while Florida fares dropped significantly.[83] The US entered a recession in July 1990. Iraq invaded Kuwait on August 2, pitching the US into the Gulf War, inducing an oil price shock and an immediate decline in air travel.[84] On October 19, 1990, less than a year after starting the hub, Midway announced it was leaving Philadelphia. A silver lining was that USAir paid Midway $68 million for the former Eastern gates and Canadian routes.[85][86] Midway's 1990 losses vastly exceeded the sum total of every profitable year Midway ever had, but in fact the previous record loss in 1989 was also due to the Philadelphia operation: Midway had made a small profit in the first three quarters of 1989 before incurring a substantial fourth-quarter loss.[87][88]

Midway filed for Chapter 11 in March 1991, Hinson describing it as a “minor setback”. In October the bankruptcy court approved a $175 million takeover offer by Northwest Airlines, including assuming remaining aircraft and employees. The court rejected a smaller, $110 million bid by Southwest, which did not offer to take aircraft or employees. Midway lost $36 million since filing Chapter 11, against projected income of $6.5 million, and was down to $4 million in cash.[89] Northwest ran newspaper ads saying customers could book Midway with confidence, but a month after agreeing to the deal, it pulled out, accusing Midway of showing inaccurate revenue figures for 1990 and ostensibly claiming concern about environmental liability at Midway Airport. Northwest had huge debts of its own, having been taken private in a leveraged buyout in 1989.[90] Some believed Northwest saw the Midway deal as risking a simultaneous deal to get funding from the state of Minnesota.[91] Regardless of the reason, Midway ceased flying November 13, 1991.[92]

Legacy

[edit]
As the hybrid livery attests, Southwest picked up some ex-Midway aircraft

Having let Midway collapse, Northwest faced significant political anger in Chicago. In contrast, Southwest achieved local goodwill by restoring some service and hiring a number of former Midway employees.[93] Midway Airlines had long proved there was a market at Midway Airport; Southwest wanted to add more Midway service but was constrained by a need to address other opportunities. In the early 1990s, USAir and American Airlines cut back most of their California networks, inherited from Pacific Southwest Airlines and AirCal respectively, and Southwest grew its planned 1991 fleet expansion plan from 11 to 18 aircraft in response (to a total of 124). 1991 also marked the bankruptcy of America West Airlines and its subsequent reduction in capacity in Phoenix, where Southwest and America West were fierce rivals, opening up yet more opportunity.[94] Nonetheless, that moment marked the beginning of Southwest's dominance at Midway Airport. As of March 2024, Southwest's Midway market share was over 85%.[95]

In 1987, David Hinson said that the key to Midway's survival was staying small and keeping out of the way of the big carriers. About the airline business he said, “if you are careful and prudent, you can survive and do relatively well.”[71] As the Philadelphia strategy turned sour, David Hinson repeatedly defended Midway as being the victim of circumstance.[85][83][96] The circumstances facing the US airline business in the early 1990s were indeed poor, as reflected in deep industry losses during this period.[97] The 1989 decision to bulk up Midway and attack the much larger USAir directly contradicted Hinson's earlier remarks, and largely contributed to the airline's demise.

After Midway Airlines, David Hinson went on to work for McDonnell Douglas and served as the head of the Federal Aviation Administration under President Bill Clinton.[98]

Gordon Linkon, the president who achieved Midway's highest annual operating margin in 1981, went on to found Florida Express.[99]

A group of investors bought the Midway Airlines name and started a new airline using the name in 1993. The new Midway Airlines went bankrupt and ceased operations in 2003.[3]

Destinations

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Canada

Caribbean

United States

Fleet

[edit]
Midway Airlines historical fleet
Aircraft Total Introduced Retired Remark
Boeing 737-200 14 1985 1991 [citation needed]
McDonnell Douglas DC-9-14 1 1979 1991 [citation needed]
McDonnell Douglas DC-9-15 8 1979 1991 [citation needed]
McDonnell Douglas DC-9-31 38 1981 1991 [citation needed]
McDonnell Douglas DC-9-32 17 1984 1991 [citation needed]
McDonnell Douglas MD-81 2 1983 1985 N10028, N10029[citation needed]
McDonnell Douglas MD-82 4 1990 1991 N809ML, N810ML, N811ML, N812ML[citation needed]
McDonnell Douglas MD-83 3 1990 1991 N905ML, N906ML, N907ML[citation needed]
McDonnell Douglas MD-87 8 1989 1991 [citation needed]
McDonnell Douglas MD-88 2 1990 1991 N903ML, N904ML[citation needed]

Midway Commuter

[edit]

In 1987 Midway Airlines purchased commuter air carrier Fischer Brothers Aviation based in Galion, Ohio, and moved the entire operation to Springfield, Illinois. Fischer Brothers Aviation had previously operated Allegheny Commuter service for Allegheny Airlines and successor USAir and then began operating Northwest Airlink service on behalf of Northwest Airlines. The initial move consisted of the Fischer Brothers management team (including Vice President of Operations Armando Cardenas, Chief Pilot Mark Zweidinger, Vice President of Customer Service Mark Fisher, Director of Maintenance Craig Anderson and Personnel Manager Cynthia Baldwin) and was led by Midway Airlines executive Richard Pfennig. Offers of employment were extended to the pilots and maintenance team that wanted to relocate. Gordon Jones, Vice President of Maintenance and Jerry Turpstra, Chief Inspector joined the management group in June 1987. Mr. Pfennig took control of the operation and was able to quickly get the company through certification flights. In May 1987 the commuter started scheduled passenger flights. The initial operation consisted of 21 employees, the original seven Dornier 228 turboprop aircraft and eventually ended with 125 employees, 28 Dornier aircraft and 13 Embraer EMB-120 Brasilia turboprop aircraft. Midway Connection operated to cities in the Midwest states, including Wisconsin (Milwaukee, Madison, Green Bay, Oshkosh), Michigan (Traverse City, Grand Rapids, Muskegeon, Lansing, Kalamazoo), Indiana (South Bend, Ft. Wayne, Indianapolis, West Lafayette), Illinois (Bloomington, Champaign, Moline-Quad Cities, Peoria and their home base Springfield, Illinois), and Ohio (Toledo). This Midway Connection service was a wholly owned subsidiary of Midway Airlines, and although it was an independent operation, it was completely operated as a "feeder" for the "mainline" operation via a code sharing agreement. Dispatch and Maintenance for the airline was conducted in Springfield, Illinois, while reservations were supported through Midway Airlines in Chicago utilizing the SABRE reservations system.

Iowa Airways

[edit]

Iowa Airways also operated Midway Connection code share service and in 1989 was flying nonstop between Midway Airport and Benton Harbor, Flint, and Kalamazoo in Michigan, Dubuque in Iowa and Elkhart in Indiana with Embraer EMB-110 Bandeirante turboprops.[100]

Accidents and incidents

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Midway Airlines had no aircraft accidents, However, a plane that was once owned by Midway Airlines would later crash in 2005 as Bellview Airlines Flight 210

Midway Connection had only 3 minor incidents and 2 large bird strike incidents. During initial FAA flight proving runs, a cabin door on the Dornier 228 aircraft opened in flight and struck the tail of the aircraft. The aircraft sustained minor damage and returned to Springfield, Illinois. The door was found in a field later that month.

During a passenger flight, a repair of the previous tail damage came loose inflight and departed the aircraft. The damage was found during inspection by the first officer for the next flight. During engine start up procedures, a parking brake was left engaged on a Dornier 228 aircraft. The FAA determined that braking pressure had bled out from one of the main landing gear brakes. The over-riding parking brake valve prohibited the pilot from being able to actuate the pilot brakes causing the aircraft to yaw and strike one of the other nearby parked aircraft.

Midway Connection had two bird strike incidents involving geese. The first incident involved a goose striking the inner wing between the engine and the fuselage. During the incident the bird was also struck by the propeller and a portion of the carcass was thrown through the passenger window striking a passenger. The second involved a goose striking one of the landing gear sponsons causing substantial damage to the fairing and structure.

Frequent flyer program

[edit]

Midway operated a frequent flyer program called FlyersFirst. Upon cessation of service, the program ended and mileage credits were not transferred to any other program.[101]

See also

[edit]

References

[edit]
[edit]
Revisions and contributorsEdit on WikipediaRead on Wikipedia

Midway Airlines (1976–1991)

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Midway Airlines, Inc. was a Chicago-based founded in 1976 by Irving T. Tague, which commenced scheduled passenger operations on October 31, 1979, using twinjets from its hub at . Modeled on ' point-to-point model with no-frills service, it targeted short-haul routes in the Midwest and Eastern U.S., rapidly expanding post-deregulation to serve up to 17 destinations by 1985 with a fleet of 26 aircraft and over 2,000 employees. By the late 1980s, the airline operated more than 70 planes to 50 airports, employed 6,000 people, and generated annual revenues exceeding $400 million, contributing to the revival of the underutilized Midway Airport as Chicago's secondary hub. The carrier's growth included adding 737-200s to its predominantly DC-9 fleet, which peaked at dozens of variants including DC-9-15s, -31s, and -32s, enabling high-frequency service on routes like to New York and . However, aggressive expansion, including the 1990 acquisition of Eastern Airlines' hub, coincided with rising fuel costs from the War and mounting losses, leading to Chapter 11 bankruptcy filing in March 1991. A proposed sale to collapsed amid disputes over Midway's financial disclosures, resulting in the airline's abrupt shutdown on November 13, 1991, and liquidation, stranding thousands of passengers and employees. This failure highlighted risks of rapid scaling in a competitive post-deregulation environment without sufficient financial buffers.

Historical Development

Founding and Pre-Launch Challenges (1976–1979)

Irving T. Tague, a former executive at , founded Midway Airlines on October 13, 1976, with the aim of launching a low-fare, no-frills carrier operating from Chicago's underutilized . The venture was inspired by ' model of high-frequency short-haul flights, targeting routes underserved by major carriers concentrated at . Investor Kenneth T. Carlson provided early backing, but the founding team faced immediate barriers in a heavily regulated industry where the (CAB) controlled market entry. Midway filed with the CAB for an operating certificate shortly after incorporation, proposing service to a limited set of six Midwestern cities including , , and Kansas City. Despite the regulatory environment's bias toward incumbents—which historically limited new entrants through stringent route and fare approvals—the CAB granted the certificate in 1976, prior to the of 1978. This approval was rare, as pre-deregulation CAB policies imposed fiscal and operational hurdles designed to protect established trunk carriers, often delaying or denying startups. Midway's focus on short-haul routes from a secondary helped navigate these constraints, but the process extended preparation timelines. Pre-launch efforts from 1977 to 1979 were hampered by financing shortages and logistical preparations. The founders invested over $1 million personally, prompting Tague to postpone initial flights multiple times due to inability to cover bills without external capital. Securing a starter fleet of three McDonnell Douglas DC-9-15 jets required leasing arrangements amid high costs and limited access for newcomers, while building ground operations and training crews added delays. These challenges reflected the capital-intensive nature of aviation startups in a pre-deregulation era, where restricted competition stifled funding opportunities and forced reliance on limited personal and local investor resources. By October 1979, with about 200 employees, Midway commenced operations on , marking the end of a protracted buildup.

Launch and No-Frills Operations (1979–1982)

Midway Airlines initiated scheduled passenger service on October 31, 1979, operating from its primary hub at Chicago's with an initial fleet of three aircraft—comprising one Series 14 and two Series 15 models—previously used by . The airline employed approximately 200 staff members at launch and focused on short-haul routes to midwestern cities, providing five weekday roundtrip flights each to and , alongside four roundtrips to Kansas City, with reduced weekend schedules. This timing capitalized on the 1978 , positioning Midway as one of the earliest entrants in a liberalized market that enabled competitive low-fare operations from underutilized secondary airports like Midway. The carrier's business model emphasized no-frills service to achieve cost efficiencies and attract price-sensitive travelers, featuring low unrestricted fares without complimentary meals, beverages, checked baggage, or assigned seating. Operations relied on high utilization and streamlined procedures at the less congested Midway Airport, which facilitated quicker turnarounds compared to Chicago O'Hare, the dominant hub for legacy carriers. By mid-1980, the fleet had expanded to five DC-9s, with added service to and Washington National Airport, reflecting steady demand growth in the deregulated environment. Through , Midway maintained its core no-frills approach while scaling operations, growing its fleet to 16 aircraft—including nine DC-9-15s and seven DC-9-30s—and introducing routes to , Columbus, Minneapolis/St. Paul, Tampa, /Fort Worth, Lincoln, Orlando, and Topeka. In , the airline carried 1,098,337 passengers at a load factor of 54.4 percent, achieving of $346,000 with 907 employees, underscoring initial viability amid rising competition from other low-cost entrants. This period established Midway's reputation for reliable, affordable regional connectivity, though load factors indicated room for improved .

Strategic Expansions and Service Diversification (1982–1985)

In 1982, Midway Airlines pursued route expansions from its Chicago Midway hub, adding nonstop service to Dallas/Fort Worth, Lincoln, Orlando, and Topeka, while initiating flights to Boston via Cleveland. These developments increased the carrier's network to 15 cities by year's end, supported by a fleet of 16 McDonnell Douglas DC-9 aircraft focused on medium-haul operations. The expansions targeted both business centers in the Midwest and leisure destinations in the South, leveraging post-deregulation opportunities for low-fare competition. By mid-1983, under Chairman and CEO Arthur C. Bass, Midway introduced the Metrolink brand for high-frequency short-haul services to regional business markets, enhancing connectivity within the Midwest and Northeast. This diversification shifted some emphasis from purely no-frills leisure routes toward denser schedules for time-sensitive passengers, though the core low-cost model persisted. A pivotal strategic move occurred in September 1984 when Midway agreed to acquire the assets of the bankrupt for $53 million, finalizing the purchase in August 1985. The deal incorporated three 737-200 aircraft into Midway's fleet, marking the introduction of jet types beyond DC-9s and enabling operations under the new Midway Express sub-brand starting 1984. Midway selectively retained efficient routes from Air Florida's network, discarding many leisure-oriented ones, to bolster its southern U.S. presence and experiment with differentiated service tiers. In October 1985, Midway launched three daily nonstop flights to New Orleans and resumed service with three weekday frequencies via , further diversifying its offerings. By fall, the airline consolidated Metrolink and Midway Express operations under the unified Midway Airlines banner, streamlining branding amid fleet modernization with the new 737s. These initiatives reflected a calculated push for scale and market penetration, though they increased operational complexity in a competitive low-cost environment.

Shift to Full-Service Model and Peak Profitability (1985–1989)

In response to competitive pressures and to capture a larger share of business travel, Midway Airlines initiated a strategic shift away from its no-frills origins toward enhanced service quality starting around 1985, focusing on high-quality single-class operations tailored to business passengers. This evolution included improvements in onboard amenities and operational reliability, though the carrier retained its emphasis on low fares relative to legacy competitors. The change was driven by recognition that the pure discount model limited appeal to frequent corporate flyers, prompting investments in customer experience without immediately introducing tiered cabins. Financial performance peaked during this period, marking Midway's most profitable years amid industry deregulation. In 1985, the airline achieved a modest operating profit of $52,000, a stark turnaround from the $12.2 million operating loss in 1984, reflecting initial gains from route optimizations and cost controls. Operating income climbed to $10.9 million in 1986, fueled by expanded services and fleet efficiencies. The zenith came in with $23.8 million in operating income, supported by revenue growth from new markets and higher load factors, before moderating to approximately $6.8 million in 1988 amid accelerating expansion costs. Operational expansions underpinned this profitability surge, with Midway adding five new 737s in 1986 and ordering eight McDonnell Douglas MD-87s shortly thereafter to support route growth. By the late , the carrier operated over 70 aircraft, served about 50 destinations, and employed around 6,000 people, driving annual revenues beyond $400 million—reaching $412 million in 1988. These developments, including a refresh following , enhanced hub efficiency at Chicago's Midway Airport and diversified traffic from leisure to business segments, though they sowed seeds for later overextension.

Aggressive Growth and Path to Insolvency (1989–1991)

In 1989, Midway Airlines pursued aggressive expansion by acquiring the Philadelphia operations of the bankrupt for $206 million, aiming to establish a second hub at and add eight new destinations. This move included purchasing gates, slots, and customer lists, with operations commencing in November 1989, but it strained resources amid competition from the dominant incumbent USAir, which operated 441 to Midway's 61 at year-end. The airline also committed to a $900 million order for 37 McDonnell Douglas MD-80 jets to support growth, building on a fleet that had reached 45 aircraft by mid-1989 while serving 31 cities. Financial performance deteriorated rapidly due to these initiatives. Fourth-quarter 1989 revenues rose to $128 million from $105.6 million year-over-year, but the airline posted losses tied to Philadelphia startup costs, including one-time charges. By first-quarter 1990, revenues increased 34% to $157.1 million, yet an operating loss of $26.1 million emerged, contrasting prior profitability and reflecting high expansion expenses. The Philadelphia venture failed to generate sufficient traffic against entrenched rivals, exacerbating issues as the airline's model shifted from efficient hub operations to costlier full-service competition. External shocks compounded internal overextension. The 1991 Persian Gulf War halved business traffic and doubled fuel prices, eroding margins already pressured by debt from acquisitions and fleet investments. Midway filed for Chapter 11 bankruptcy protection in March 1991 amid mounting losses that surpassed cumulative prior profits. Efforts to restructure via a sale to collapsed on November 13, 1991, after Northwest cited inaccurate passenger and revenue data provided by Midway, leading to immediate cessation of operations, liquidation of assets, and 1,900 job losses. This outcome stemmed causally from overleveraged growth into unprofitable markets without adequate competitive barriers, rather than isolated events.

Business Model and Operational Strategy

Low-Cost Carrier Foundations Inspired by Deregulation

Midway Airlines established its foundations in response to the of 1978, which dismantled federal oversight of airline routes and fares, enabling new entrants to compete aggressively on price. Founded on August 6, 1976, by Irving T. Tague, the airline secured its certificate prior to deregulation but launched operations on November 1, 1979, leveraging the Act's removal of entry barriers to offer discounted, no-frills service from Chicago's underutilized Midway Airport. This model drew inspiration from ' success at secondary airports, emphasizing point-to-point routes to Midwest destinations such as , , and Kansas City, thereby avoiding the congestion and higher costs at dominated by incumbents. The carrier's initial strategy prioritized cost efficiencies through the acquisition of five used McDonnell Douglas DC-9-15 aircraft, each configured for 86 single-class seats, to support high-frequency flights with minimal amenities beyond complimentary snacks and beverages. By basing operations at Midway, Midway Airlines benefited from lower landing fees and gate costs compared to O'Hare, while targeting price-sensitive leisure and business travelers underserved by legacy carriers' higher fares. This no-frills approach—eschewing meals, assigned seating initially, and extensive ground services—enabled fares significantly below competitors, fostering rapid early growth from 56,000 passengers in 1979 to one million by 1982 with fewer than 200 employees and three aircraft. Deregulation's causal impact facilitated Midway's viability by spurring market innovation, as reduced regulatory hurdles allowed nimble operators to exploit niches like short-haul, high-density routes with quick turnarounds and labor efficiencies. However, the model's reliance on sustained low operational costs proved foundational yet precarious, as evidenced by the airline's initial net loss of approximately $1.4 million in 1979 amid startup challenges, underscoring the competitive pressures unleashed. These elements positioned Midway as the first major post- start-up, revitalizing Midway Airport and demonstrating the potential for independent low-fare carriers in a liberalized industry.

Hub Operations at Chicago Midway Airport

Midway Airlines designated Chicago's Midway International Airport as its primary hub upon commencing operations on October 31, 1979, capitalizing on the facility's location just 11 miles from downtown and its diminished traffic after major carriers relocated to the larger in the postwar era. This underutilization allowed for lower operational costs, reduced congestion, and streamlined ground handling, which supported the carrier's emphasis on high aircraft utilization and point-to-point short-haul flights initially linking Midway to destinations such as , , and Kansas City using three leased McDonnell Douglas DC-9-15 jets. By focusing on the smaller airport, Midway Airlines achieved dominance over local traffic, accounting for approximately 65% of the 7.2 million passengers processed at Midway in 1988. The hub's efficiencies stemmed from Midway Airport's compact layout and lighter demand, enabling rapid gate turnarounds and frequent departures without the delays common at O'Hare; this model facilitated daily aircraft cycles exceeding those of competitors, with the fleet expanding from three DC-9s in 1979 to 42 jets—including DC-9 variants, 737-200s, and later MD-80 series—by 1988. Operations grew to encompass up to 116 daily departures from the hub by September 1991 (excluding commuter feeders), serving over 60 cities and peaking at 5.75 million annual passengers in 1987, driven by acquisitions like Air Florida's assets in 1984 that bolstered route density. To enhance connectivity, Midway introduced feeder services via its Midway Connection subsidiary in 1987, utilizing 19-seat turboprops to link 18 regional cities within 250 miles, thereby funneling traffic into the mainline jet hub. Under chairman David Hinson from 1985, hub strategies refined scheduling for optimal on-time performance—reaching 98.3% completion rates by 1990—and incorporated innovations like the Midway Metrolink branding for business routes in 1983, alongside gradual additions of first-class seating in 1989 to attract higher-yield traffic without sacrificing core low-cost principles. These measures, combined with the airport's proximity advantages for quick city access, sustained employee growth from 200 at launch to over 4,000 in the area by the late 1980s, though aggressive expansion strained resources leading to the carrier's 1991 .

Innovations in Efficiency and Customer Service

Midway Airlines emphasized operational efficiency by exploiting the underutilized Midway Airport, which enabled quicker gate turnarounds and reduced delays relative to the congested O'Hare hub, supporting high-frequency point-to-point flights to Midwest and Eastern cities. The carrier minimized aircraft downtime via rigorous maintenance protocols and scheduling optimizations, yielding about $10 million in annual revenue per plane through elevated utilization rates. In 1990, amid financial pressures, Midway implemented targeted cost controls, including vendor contract renegotiations for hotels and engine overhauls, overtime reductions, and fuel efficiencies like lowered cruise speeds, increased simulator training, and computerized , which cut costs per available seat mile to 8.28 cents from higher prior levels. To bolster on-time reliability—a core efficiency metric—Midway launched Operation Bulldog and the Take Charge program in 1990, achieving 90% on-time departures and 83% arrivals in April of that year, with schedule completion reaching 98.3% shortly thereafter. Fleet evolution supported these gains; the addition of EMB-120 Brasilia turboprops in 1990 for commuter routes provided faster, more capacious service than predecessors, enhancing overall network throughput while maintaining low operating expenses. On the customer service front, Midway transitioned from its initial no-frills model post-1979 deregulation to differentiated offerings, starting with Midway Metrolink in June 1983, which featured extra-wide seating and premium meals on high-demand routes like Chicago-New York LaGuardia to attract business travelers. By November 1989, the airline introduced an eight-seat First Class cabin with fares $20–$40 above coach, complimentary upgrades, and lounge access, marking a shift toward full-service amenities while preserving competitive pricing. The FlyersFirst frequent flyer program, enhanced in 1990 with Platinum and Gold tiers offering priority boarding and free upgrades, grew to 650,000 members, adding 4,000–5,000 weekly, as a loyalty tool amid rising competition. These initiatives, coupled with Midway's proximity to downtown Chicago (15–20 minutes by car), positioned the carrier as reliable for time-sensitive passengers, though execution varied with expansion demands.

Financial Analysis

Revenue Growth and Profit Cycles

Midway Airlines experienced initial operating losses following its launch in 1979, recording a net loss of $1.4 million that year amid startup costs and limited scale with three DC-9 aircraft serving four destinations. Losses widened to $4.9 million in 1980 as passenger volumes grew modestly to 464,521, reflecting challenges in establishing post-deregulation. By 1981, the carrier achieved its first net profit of $7.6 million, supported by improved load factors reaching 59.1% and passenger traffic nearly doubling to 885,739, signaling early momentum from efficient no-frills operations at Chicago's Midway Airport. Profitability proved cyclical through the mid-1980s, with a slim $0.3 million in 1982 giving way to losses during expansion phases, including $15 million in 1983 and $22 million in 1984, as the airline added routes and acquired assets like routes, straining costs against revenue growth. A $3.6 million loss persisted into 1985 despite passenger increases to 1.7 million, but recovery followed with $9 million in 1986 on $261.4 million in operating revenues and 2.7 million passengers. Peak profitability materialized in 1987 at $18.8 million , driven by route diversification and load factors near 57%, though 1988 saw a dip to $6.5 million amid competitive pressures. Revenue growth accelerated in the late , reaching $412 million in 1988 and climbing 20% to $493.5 million in 1989, fueled by fleet expansion to over 40 and service to more than 30 cities, with quarterly revenues like $117.3 million in Q1 1989 (up 31% year-over-year). However, aggressive growth reversed profits, yielding a $20.7 million net loss in 1989 despite 5.2 million passengers, as capacity outpaced demand and costs rose. The cycle culminated in by 1990-1991, with Q1 1990 net losses of $22.9 million on $157.2 million revenues and escalating quarterly deficits, including an $86 million loss in Q4 1990 amid fuel price spikes from the and overexpansion. Revenue passenger miles surged 38.9% to 4.9 billion for full-year 1990, yet grew only 16.3% to 712.3 million, highlighting yield dilution and operational strain that led to Chapter 11 filing in March 1991 and cessation of operations.
YearNet Income/Loss (millions USD)Key Notes
1979-$1.4Startup phase
1980-$4.9Modest passenger growth
1981+$7.6First profit
1982+$0.3Marginal gains
1983-$15.0Expansion losses
1984-$22.0Asset acquisitions
1985-$3.6Recovery begins
1986+$9.0 $261.4M
1987+$18.8Peak profit
1988+$6.5 ~$412M
1989-$20.7 $493.5M; overexpansion

Cost Management and Key Expenditures

Midway Airlines maintained cost discipline in its early years by adopting a no-frills operational model post-deregulation, which included point-to-point routing from Chicago's Midway Airport, single-class seating, and the elimination of complimentary meals and assigned seats to minimize overhead. Aircraft utilization was maximized through quick turnarounds averaging under 30 minutes, enabling higher daily block hours compared to legacy carriers. The airline leased pre-owned jets, primarily from , avoiding the capital outlay of new purchases and associated depreciation burdens. Labor expenditures were controlled via a non-unionized , allowing wages below those of established airlines amid the post-1978 environment where startups evaded legacy contract rigidities. By 1985, as Midway transitioned toward full-service offerings like onboard meals to attract business travelers, personnel costs rose, contributing to a shift from operating losses of $12.2 million in 1984 to marginal profitability, though still pressured by expansion. Fuel represented a volatile key expenditure, comprising a significant portion of variable costs; the 1990-1991 surge in prices, doubling from pre-crisis levels, eroded margins and precipitated Chapter 11 filing in March 1991. Aircraft leasing and maintenance further strained finances, with the fleet growing to include 737s by the late 1980s, but without ownership to hedge against downturns. Aggressive infrastructure investments, such as the $200 million hub launched in , amplified fixed costs without proportional revenue gains, exacerbating insolvency amid load factors dipping below 60%.

Factors Contributing to Financial Trajectory

Midway Airlines' financial trajectory was initially buoyed by its post-deregulation low-cost model, which emphasized point-to-point routes from Chicago's Midway Airport with minimal frills, enabling profitability in the mid-1980s through high load factors and efficient operations. However, aggressive expansion from 1989 onward, including the $200 million acquisition of Eastern Airlines' hub and associated gates and routes, significantly increased fixed costs and debt levels without commensurate revenue gains, deviating from the carrier's core strengths in short-haul, high-density markets. This overextension strained liquidity, as the Philadelphia operations failed to achieve expected traffic volumes amid intensifying competition from established carriers like . External shocks exacerbated these internal vulnerabilities. The Persian Gulf War, beginning in January 1991, caused prices to double and passenger demand to plummet due to economic uncertainty and travel fears, contributing to industry-wide losses exceeding $2 billion in the first two months of the year alone. Midway, already reporting net losses—such as $1.369 million in its inaugural 1979 fiscal year—faced acute cash flow pressures, prompting a Chapter 11 filing on March 26, 1991, with liabilities around $250 million against assets of $200 million. A concurrent U.S. further eroded yields, as business and leisure travel contracted amid high and reduced corporate spending, undermining Midway's reliance on price-sensitive Midwestern markets. The carrier's attempts to mitigate distress through a proposed sale to collapsed in November 1991 after Northwest discovered overstated passenger counts and revenue projections—allegedly inflating annual revenues by $35 million—leading to immediate cessation of operations on November 13, 1991, and under Chapter 7. These factors collectively illustrate how Midway's shift from disciplined cost control to hub diversification, compounded by macroeconomic and geopolitical pressures, precipitated despite earlier adaptations to deregulation's opportunities.

Fleet Details

Initial and Evolving Aircraft Inventory


Midway Airlines initiated passenger service on October 31, 1979, operating from Chicago's Midway Airport with an initial fleet comprising three McDonnell Douglas DC-9 jet aircraft sourced from Trans World Airlines: one DC-9-14 and two DC-9-15 models. These short- to medium-range narrowbody jets, each configured for approximately 100 passengers, supported the airline's early focus on high-frequency shuttle services to Midwestern and Eastern U.S. destinations. By mid-1980, the fleet had grown to five DC-9s, reaching eight by year-end through additional acquisitions of DC-9-15 variants. Expansion continued into 1981, with the fleet totaling 13 aircraft, including the introduction of the larger DC-9-30 series for extended routes. In 1982, Midway operated 16 DC-9s, consisting of nine DC-9-15s and seven DC-9-30s. The following year, 1983, saw further diversification with the addition of two McDonnell Douglas MD-81 aircraft in September, bringing the total to 19 jets: nine DC-9-15s, eight DC-9-30s, and the initial MD-80s. In 1984, Midway acquired assets from the defunct , incorporating four 737-200s into its inventory, which expanded the fleet to 26 aircraft: nine DC-9-15s, eleven DC-9-30s, two MD-80s, and the new 737s. By 1985, the operator had 27 jets, including seven 737-200s alongside refined DC-9 variants (nine DC-9-15s, eight DC-9-31s, three DC-9-32s). The 737 fleet grew to nine by 1986 within a 29-aircraft mainline operation dominated by 20 DC-9s. Through 1987 and 1988, aggressive growth added more DC-9-30s and 737-200s, reaching 39 jets in 1987 (nine DC-9-15s, eighteen DC-9-30s, twelve 737-200s) and 42 in 1988 (nine DC-9-15s, twenty DC-9-30s, thirteen 737-200s). The late 1980s marked a shift toward modernizing with McDonnell Douglas MD-80 family ; the first MD-87 entered service in March 1989, followed by MD-88 introductions in February 1990. Overall, Midway's historic fleet encompassed nine DC-9-10 series, 55 DC-9-30 series, fourteen 737-200s, and nineteen MD-80 variants (including MD-81 through MD-88 models), totaling 97 by cessation in November 1991. This evolution reflected the airline's strategy to scale capacity with efficient, second-hand narrowbodies suited to its no-frills, high-density model.

Acquisition Strategies and Utilization

Midway Airlines initiated its fleet with three used aircraft—comprising one DC-9-14 and two DC-9-15 models—acquired from , entering service on , 1979. The airline pursued an opportunistic strategy of purchasing second-hand jets to minimize upfront capital costs, expanding to five DC-9s by mid-1980 and eight by year-end, followed by the addition of DC-9-30 variants starting in December 1981. This approach leveraged post-deregulation market opportunities, focusing on reliable, short-haul aircraft suited for high-frequency routes from Chicago's Midway Airport. By 1983–1984, Midway shifted toward diversifying its inventory through distressed asset purchases, acquiring two used DC-9-81 (MD-81) aircraft in September 1983 and four 737-200s from the bankrupt in September 1984, often via arrangements where lessors purchased the assets and leased them back to Midway. These acquisitions enabled rapid fleet growth to 26 by late 1984, emphasizing fuel-efficient models for expanding and routes, including destinations. In a similar vein, the airline secured 16 DC-9s from Eastern Airlines in June 1989 for over $200 million, integrating them to bolster hub operations at and . Later strategies incorporated outright orders for newer technology, with five new 737s entering service in 1986 and eight new MD-87s added starting March 1989, alongside a $900 million commitment for 37 MD-80 series jets in 1989 to phase out older, less efficient DC-9-15s and 737-200s. Leasing played a prominent role, as evidenced by long-term agreements for 17 DC-9-30s in July 1991 and earlier back-to-lessor structures for acquired assets, allowing Midway to scale without full ownership burdens. Utilization emphasized high daily flight hours through quick turnarounds and point-to-point scheduling, increasing aircraft productivity on dense regional networks; by November 1991, a fleet of 62 jets supported 196 daily departures to 41 cities, though economic downturns later strained this efficiency.

Route Network

Primary Destinations and Market Focus

Midway Airlines initiated operations on October 31, 1979, with nonstop service from its Chicago Midway Airport hub to three primary Midwest destinations: , , and Kansas City, utilizing aircraft. These routes targeted business travelers in regional markets underserved by larger carriers at , emphasizing frequent, affordable flights to capitalize on Midway's proximity to Chicago and lower operational costs. The airline's early market focus centered on short-haul, point-to-point business traffic in the Midwest, with expansions in 1980 adding , Washington National, and New York LaGuardia to connect Chicago with key East Coast financial and government centers. By 1982, further growth included Minneapolis/St. Paul, Columbus, Tampa, and Dallas/Fort Worth, broadening the network to 10-15 core cities while maintaining high-frequency schedules—such as multiple daily roundtrips—to support time-sensitive commuters. This strategy positioned Midway as a low-cost alternative to incumbents, offering no-frills service with discounted fares on secondary aircraft, appealing to price-conscious corporate passengers without the amenities of full-service rivals. In response to post-deregulation opportunities, Midway diversified into leisure markets starting in 1984 with the launch of Midway Express, focusing on Florida destinations like Tampa, Orlando, , Fort Lauderdale, West Palm Beach, and Fort Myers, alongside Caribbean routes to St. Croix, St. Thomas, and later Nassau. These seasonal and vacation-oriented services linked Midwestern origins to sunbelt leisure spots, utilizing 737s for higher-capacity loads during peak winter travel. By the late 1980s, primary destinations encompassed over 20 cities, including (added 1986), , , and Phoenix, but the core emphasis remained on high-yield Midwest business corridors and leisure traffic, which accounted for a significant portion of passenger volume amid network growth to 60 cities by 1990.

Expansion Patterns and Competitive Positioning

Midway Airlines initiated operations on October 31, 1979, with nonstop service from its Chicago Midway Airport base to , , and Kansas City using three DC-9 aircraft, targeting underserved regional markets in the post-deregulation environment. By July 1980, the carrier added and Washington National, followed by New York LaGuardia in October, extending its footprint eastward while maintaining a focus on short- to medium-haul routes with frequencies of multiple daily flights to high-demand business cities. This initial phase emphasized rapid network buildup, reaching 30 new routes and 15 additional cities by December 1978 timetables, though actual launches aligned with 1979-1980 operations. Expansion accelerated in the early , incorporating leisure-oriented southern destinations amid fleet growth to 19 aircraft by 1984. Key additions included , Columbus, /St. Paul, and Tampa in February 1982; Dallas/Fort Worth, Orlando, and others by June; and, following the 1984 acquisition of assets, routes to , St. Croix, St. Thomas, West Palm Beach, and expanded Florida service. By 1985-1987, the network incorporated , Fort Lauderdale, New Orleans, Fort Myers, , , , , Phoenix, and Des Moines, reflecting a shift toward national scope with over 60 cities served by 1990 and peak daily departures exceeding 127 from Chicago. The 1989 establishment of a hub, acquired from Eastern Airlines, added transcontinental reach to and further East Coast connectivity, though this overextension amid pricing pressures contributed to financial strain. Competitively, Midway positioned itself against incumbents like United and by basing exclusively at the less congested Midway Airport, enabling quicker turnarounds, lower operating costs, and fares 20-30% below O'Hare hub competitors while avoiding direct slot constraints at the majors' primary stronghold. It differentiated through upscale no-frills service—featuring leather seats, complimentary meals, and high on-time reliability via the Midway Metrolink shuttle concept—to capture business traffic on premium routes, contrasting the hub-and-spoke inefficiencies of larger carriers. Asset acquisitions from distressed rivals like and Eastern bolstered route access without organic overbuild, yet aggressive growth into saturated markets, such as against American's expansions, exposed vulnerabilities to fare wars and fuel cost spikes by the late 1980s. By 1988, as the dominant operator at Midway with 116 daily flights, it had revitalized the secondary airport but struggled to sustain yields against majors' scale advantages.

Subsidiaries and Affiliates

Midway Commuter Operations

In May 1987, Midway Airlines acquired the capital stock of Brothers Aviation Inc., a commuter carrier headquartered in , reorganizing its operations as the wholly owned subsidiary Midway Commuter Airlines based at Chicago's Midway Airport. The acquisition, valued at $2.5 million, aimed to establish a dedicated feeder network serving smaller regional airports in the Midwest, channeling passengers to Midway Airlines' mainline hub flights and addressing gaps in short-haul connectivity post-deregulation. Operations commenced on June 15, 1987, under the IATA code GP and ICAO code GCS, focusing on high-frequency, low-capacity routes to bolster Midway's overall load factors at its secondary airport base. Midway Commuter primarily utilized aircraft suited for short runways and regional demand, including the Dornier 228-202, to operate from Midway to destinations such as those in , , and surrounding states, emphasizing seamless connections where approximately three-quarters of passengers transferred to larger Midway jets. By 1988, the subsidiary contributed to network expansion by adding routes to underserved markets, including leisure-oriented points, though specific city additions were integrated with parent airline growth. Labor agreements, such as a tentative four-year pilot reached in September 1990, supported operational continuity amid Midway's broader financial pressures. The subsidiary suspended flights on June 1, 1991, preceding Midway Airlines' full cessation in November, as part of cost-cutting measures during the parent's escalating losses and Chapter 11 restructuring attempts. This reflected the challenges of sustaining commuter feeders in a competitive post-deregulation environment, where regional services proved vulnerable to fuel costs and fluctuating demand.

Iowa Airways Integration

Iowa Airways, a regional carrier based in Dubuque, , was established in October 1985 to provide short-haul service primarily within the Midwest. In early 1986, it entered into a code-share agreement with Midway Airlines, becoming the inaugural operator under the Midway Connection branding, which functioned as a feeder network to channel passengers into Midway's Midway International Airport hub. This partnership was formalized and publicly introduced via Midway's timetable effective , 1986, marking the start of coordinated operations without Midway assuming ownership or direct control of Iowa Airways' assets. Under the agreement, Airways initially operated four daily round-trip flights between Midway and Dubuque using EMB-110 Bandeirante twin-turboprop aircraft, each configured for 16 passengers, enabling efficient service to smaller markets underserved by Midway's jet fleet. By 1987, the network expanded to include routes such as Waterloo to Dubuque to Midway, as well as Midway to Elkhart and Benton Harbor, often in coordination with other commuters like Fischer Brothers Aviation to avoid route overlap and maximize hub connectivity. These services utilized Iowa Airways' IATA JT and focused on high-frequency, low-capacity operations to support Midway's strategy of capturing regional traffic for onward jet connections to major destinations. The integration via code-share enhanced Midway's competitive positioning in the post-deregulation era by extending its effective route network to secondary and nearby markets without the capital outlay for additional aircraft or crew training on turboprops, though Iowa Airways maintained independent operations and continued flying until 1994, outlasting Midway's 1991 cessation. This model exemplified early commuter-mainline partnerships, prioritizing seamless ticketing and baggage handling over full merger, but it also exposed Midway to dependency risks if regional partners underperformed.

Safety Record

Operational Incidents and Responses

Midway Airlines encountered several non-fatal operational incidents during its tenure, including near midair collisions, mechanical anomalies, and turbulence events, none of which resulted in passenger or crew fatalities. These incidents were predominantly addressed through (FAA) investigations, (NTSB) reviews where applicable, and adherence to standard protocols such as enhanced maintenance checks and pilot reporting. The airline's , Midway Connection, operating aircraft, also recorded minor near-miss events in . On December 14, 1989, Midway Airlines McDonnell Douglas DC-9-31 (N8969E) experienced a serious incident near , involving unspecified operational challenges during flight, prompting an FAA examination of aircraft systems and crew procedures. Similarly, on May 29, 1991, a DC-9-32 (N933ML) encountered severe at 10,000 feet while in en route, leading to an NTSB determination of inadequate forecasting and recommendations for improved pre-flight briefings. The airline responded by reinforcing crew training on recognition and avoidance, aligning with NTSB guidelines to mitigate such risks in regional operations. Near midair collisions highlighted air traffic control vulnerabilities around Chicago's Midway Airport. On April 29, 1987, a Midway DC-9 descending for landing passed dangerously close to a small 15 miles south of the airport, with FAA analysis attributing the event to visibility limitations and issuing advisories for heightened vigilance in terminal . Another incident on October 4, 1991, involved Midway Flight 307, a DC-9, where an FAA (TCAS) alerted pilots to a potential conflict 11 miles southwest of Midway, averting impact through evasive maneuvers; the agency confirmed the system's efficacy and emphasized its role in preventing escalation. Midway's operational response included post-incident debriefs and compliance with FAA-mandated procedure reviews. Mechanical and ground incidents were addressed via prompt maintenance interventions. On August 23, 1987, a Midway DC-9 bound for experienced malfunction shortly after departure from Midway, necessitating a safe return and subsequent gear inspection per NTSB protocols. Ground operations saw a mishap on , 1987, when Midway Flight 341, preparing for departure to , resulted in two minor injuries during taxi from the gate, handled through immediate medical response and an internal safety audit. These events underscored Midway's reliance on regulatory oversight and proactive maintenance to sustain operational continuity without broader safety lapses.

Overall Safety Metrics in Context

Midway Airlines maintained a safety record free of fatal accidents or onboard fatalities during its operational period from 1976 to 1991, as documented in comprehensive aviation incident databases. This absence of catastrophic events occurred amid the airline's growth from a regional carrier focused on Chicago's Midway Airport to a national low-cost operator serving over 20 destinations with a fleet exceeding 40 by the late . Non-fatal incidents, such as a 1989 near-collision involving a Midway Connection and a 1991 main gear wheel separation on a DC-9-51 during takeoff, were investigated by the (NTSB) and attributed to factors like pilot lookout or mechanical issues without resulting in serious injuries or hull losses. In the broader context of U.S. post-deregulation , Midway's performance aligned with the era's improving trends for scheduled jet carriers under FAA Part 121 , where fatal accident rates declined from approximately 0.04 per million departures in the to near zero in select years like , when Air Transport Association member airlines reported no passenger or crew fatalities across over 5 million departures. Smaller or commuter operators, often using propeller , faced higher risks, with 62 accidents and 63 fatalities in 1979 alone, yielding crash rates per 100,000 departures that exceeded those of larger jet fleets by factors of 3 to 5. Midway's jet-focused operations, emphasizing DC-9 and MD-80 series known for structural reliability, contributed to this cleaner profile, though rapid expansion strained maintenance and training resources without compromising core metrics. Overall, Midway's zero-fatality record positioned it favorably against peers like early low-cost entrants, reflecting disciplined adherence to federal regulations amid competitive pressures, though isolated incidents highlighted vulnerabilities in high-density operations at secondary airports. This outcome predated the airline's bankruptcy, which stemmed from financial overextension rather than safety lapses.

Legacy and Broader Impact

Role in Post-Deregulation Aviation Landscape

Midway Airlines exemplified the influx of new entrants enabled by the , which phased out federal oversight of routes and fares by the , fostering a competitive environment for startups. The carrier launched scheduled operations on October 31, 1979, with two McDonnell Douglas DC-9-15 aircraft serving routes from Chicago's to cities including , , and New York LaGuardia. By targeting a secondary airport with lower gate fees and less congestion than —dominated by and —Midway achieved quicker turnarounds and operational efficiencies, carrying 54,210 passengers in its partial first year despite a net loss of $1.37 million. The airline's no-frills model, utilizing secondhand jets for short-haul point-to-point flights at fares 30-50% below competitors, pressured incumbents to lower prices and contributed to broader post- fare reductions averaging 20-30% nationally in the early . Midway's focus on the Midwest hub at Midway Airport revived a facility that had seen commercial traffic plummet to under 100,000 passengers annually pre-1979, boosting enplanements to over 1 million by 1982 and demonstrating the viability of decongesting primary hubs through secondary airport development. This approach predated and paralleled ' expansion, highlighting how deregulation incentivized niche strategies that enhanced regional connectivity and consumer choice without relying on expansive hub-and-spoke networks. However, Midway's role also illustrated deregulation's risks, as aggressive expansion—growing to 70 aircraft, 50 destinations, and $400 million in annual revenue by the late —exposed it to fuel price volatility, labor costs, and intensified rivalry from low-cost peers like Southwest. The carrier filed for Chapter 11 bankruptcy on July 8, 1991, ceasing operations on November 13, 1991, after failing to secure a merger with amid economic downturns, underscoring how open entry could lead to overcapacity and serial failures among startups, even as it spurred overall industry efficiency gains.

Contributions to Secondary Airport Viability

Midway Airlines played a pivotal role in establishing the economic viability of secondary airports by selecting Chicago's Midway International Airport as its exclusive hub, thereby reviving an underutilized facility overshadowed by the dominant O'Hare International Airport. Established in 1976 with the specific aim of resuscitating Midway, which had declined into near abandonment after major carriers relocated to the larger, more modern O'Hare in the 1960s, the airline launched scheduled operations on October 31, 1979, leveraging the post-deregulation environment created by the Airline Deregulation Act of 1978. This move capitalized on Midway's advantages, including its closer proximity to downtown Chicago (about 11 miles versus O'Hare's 18 miles), reduced congestion, shorter taxi times, and lower landing fees, enabling Midway Airlines to offer point-to-point routes with fares up to 30-40% below competitors at O'Hare while maintaining high load factors through efficient operations with a fleet of McDonnell Douglas DC-9 aircraft. The carrier's focus on Midway drove measurable traffic growth, transforming the airport from a "virtual ghost town" with minimal service into a bustling secondary hub. By the late , Midway Airlines handled the majority of the airport's enplanements, representing 72% of total traffic at the time of its 1991 bankruptcy, which equated to several million passengers annually and demonstrated that secondary airports could sustain viable commercial operations without relying on hub-and-spoke networks dominated by legacy carriers. This resurgence was evidenced by increased daily flights and passenger volumes, as the airline expanded to over 30 destinations, primarily serving markets with frequent short-haul service that avoided O'Hare's delays and higher costs. Beyond Chicago, Midway Airlines' model contributed to a broader recognition of secondary airports' potential in the deregulated U.S. market, influencing subsequent low-cost carriers to prioritize similar facilities for cost efficiencies and competitive positioning. Although the airline's eventual overexpansion led to its demise, its decade-long success validated the strategy of basing operations at underused airports to capture price-sensitive demand, paving the way for entrants like to further develop Midway into a major low-cost hub and inspiring analogous efforts at secondary airports elsewhere, such as Baltimore-Washington International or Oakland International.

Lessons on Expansion Risks in Competitive Markets

Midway Airlines' rapid expansion in the post-deregulation era exemplified the perils of scaling operations in highly competitive markets without adequate financial safeguards. Beginning with modest operations in using a handful of serving regional routes from Chicago's Midway Airport, the carrier grew aggressively by the late 1980s, acquiring additional jets and establishing a secondary hub in through the purchase of Eastern Airlines' assets in for approximately $213 million. This growth strategy relied heavily on debt financing for and route acquisitions, increasing leverage and fixed costs at a time when load factors and yields remained volatile. By 1990, Midway operated over 20 and served more than 30 destinations, but cumulative losses exceeded $100 million, underscoring how unchecked capacity additions can erode profitability margins in an industry prone to price wars and overcapacity. A core lesson from Midway's trajectory is the heightened vulnerability to exogenous shocks when expansion outpaces cash reserves and operational efficiencies. The 1990-1991 recession, coupled with a sharp spike in prices during the —rising over 50% in early 1991—exacerbated Midway's debt service obligations, leading to a Chapter 11 filing on March 27, 1991. Despite initial successes in low-cost, point-to-point service, the airline's shift toward competing for traffic on longer routes exposed it to revenue declines from economic downturns, where demand elasticity proved higher than anticipated. This illustrates a causal dynamic in deregulated markets: while entry barriers fell after the 1978 , sustained viability demands resilience against cyclical factors, as rapid scaling amplifies the impact of fuel volatility or macroeconomic contractions on leveraged balance sheets. Furthermore, Midway's experience highlights the risks of underestimating incumbents' competitive responses and scale advantages. Attempts to capture high-yield markets, such as direct challenges to major carriers on routes like Chicago-Philadelphia, invited retaliation through fare matching and capacity dumps, diluting Midway's cost edges derived from secondary airport usage and workforce productivity. By 1991, entrants like intensified pressure at Midway Airport itself, leveraging superior execution and financial depth to undercut pricing, which eroded the smaller carrier's . Empirical patterns from the era show that post-deregulation startups succeeding long-term, such as , prioritized in underserved niches over acquisitive leaps, avoiding the debt traps that ensnared Midway and contributing to its cessation of operations on November 13, 1991. In essence, competitive markets reward disciplined expansion attuned to core competencies rather than mimicking network giants, as overreach often precipitates amid inevitable industry turbulence.

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  74. https://www.aviationplanning.com/wp-content/uploads/2021/10/History-of-Post-DeReg-StartUps.pdf
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