Wikipedia

United States Overseas Airlines

United States Overseas Airlines (USOA) was a supplemental air carrier founded and controlled by Dr. Ralph Cox Jr, a dentist turned aviator, based at Cape May County Airport in Wildwood, New Jersey, where it had a substantial operation.[1] It was one of the larger and more capable of the supplemental airlines, also known as irregular air carriers, during a period where such airlines were not simply charter carriers but could also provide a limited amount of scheduled service. USOA's operations included scheduled flights that spanned the Pacific. However, in the early 1960s USOA fell into significant financial distress leading to its 1964 shuttering by the Civil Aeronautics Board, the defunct federal agency that, at the time, controlled almost all commercial air transportation in the United States.

United States Overseas Airlines
FoundedMarch 1946
Commenced operationsNovember 1946
Ceased operations24 September 1964 (1964-09-24)
Operating basesCape May County Airport
Oakland
Fleet size14 (see below)
DestinationsSee below
HeadquartersWildwood, New Jersey
United States
Key peopleDr Ralph Cox, Jr.
Employees500
DC-7 at Burbank March 1964 in USOA's last year of operation

Cox pursued USOA-related litigation for at least 14 years after the collapse of the carrier, almost as much time as the airline existed.

History

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Foundation and ascent

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The airline originally did business as Ocean Air Tradeways (OAT), a dba for the aviation activities of Ralph Cox, starting in March 1946.[2] Cox received a dentist degree prior to World War II but became a Navy aviator during the war, after which he worked at American Overseas Airlines. Then based in Ronkonkoma, Long Island, OAT received its letter of registration (what such airlines had at the time in lieu of a certificate) from the CAB in 1947, at which time it had a single DC-4.[3] Aviation pioneer Charles F. Blair Jr helped Cox with collecting the war surplus aircraft from mostly-empty Bradley Field in Spring 1946, its conversion to civilian configuration and first commercial flight from New York City to Dhahran, Saudi Arabia on behalf of Aramco (including transporting Egyptian leader Mahmoud El Nokrashy Pasha to Cairo, Egypt)[4] in November 1946.[5]

USOA was incorporated in Delaware on 28 January 1949,[6] but it was only in December 1950 that the letter of registration was transferred from OAT to USOA, making it an airline.[7] By 1953, USOA had five DC-4 aircraft.[8] USOA or its predecessor, OAT, participated in the Berlin Airlift, provided air transport in support of the Korean War, flew refugees from the Hungarian Revolution of 1956, what was then Belgian Congo, for the Military Air Transport Service and the Navy's domestic Quicktrans system.[9] From the early 1950s until it started to collapse in the early 1960s, USOA was always one of the largest irregular/supplemental air carriers by revenue (see table below). In 1957, USOA was viewed as a perfectly acceptable choice but came second in the CAB case in which Trans Caribbean Airways (a smaller supplemental, but one with a better record of profitability and deeper presence in the Puerto Rico market) won a certificate to fly from New York to Puerto Rico and the Caribbean.[10] Unfortunately for USOA, Trans Caribbean's certification turned out to be the only time the CAB ever elevated a supplemental to that status.[11] In 1960, employment exceeded 500.[5] As shown in the below table, peak revenue was 11.8 million dollars in 1959, equivalent to over $125 million in 2024 terms.

Hudson Bay and child abduction

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In 1955, a USOA DC-4 on lease to another operator supporting construction of the Distant Early Warning Line (a Cold War radar net designed to detect Soviet bombers) in Canada's far north ran out of fuel and landed on frozen Hudson Bay. USOA collected the insurance, bought the salvage rights and rescued the aircraft. It dumped hay and sawdust around the aircraft to delay the ice melting beneath it and fastened pontoons underneath to float the aircraft once the ice did melt. USOA successfully towed the aircraft across 30 miles (48 km) of open water to Churchill, Manitoba, hauled it out, took the wings off and shipped it by rail. This gambit got wide play, featuring twice in Life magazine.[12][13][14][15] Including the cost of repairing the aircraft, however, USOA lost money.[16]

The mid-1950s also saw Dr Cox's marital issues intersect with USOA. In 1953, he abducted his child from his estranged wife in New York City. The child was found living in USOA's hangar at Cape May.[17] Further, due to refusing to pay alimony, a judge awarded his wife control of the airline, which lasted six weeks until Cox could appeal.[18] Over the next few years, Cox crossed state lines with the child twice more, moving her to Pennsylvania, and later to Mississippi, trying to find a judge to award him custody.[19] USOA featured not only in press coverage but as a participant; for instance, the wife's divorce attorney attached a DC-4.[20]

United States Overseas Airlines Financial Results, 1952 thru 1963
1952[21] 1953[22] 1954[23] 1955[24] 1956[25] 1957[26] 1958[27] 1959[28] 1960[28] 1961[29] 1962[29] 1963[29]
USD 000:
Operating revenue 4,348 2,974 3,529 5,629 4,707 5,194 9,007 11,812 11,644 9,691 5,694 4,746
Profit (loss) before tax 717 (12) (425) 112 (508) 324 (401) (1,427) 151
% of operating revenue:
Military charter 73.9 81.3 72.4 77.7 58.2 61.8 39.4 55.2 59.3 11.6 4.6
Civilian charter 8.6 8.7 9.0 15.2 20.2 8.9 17.9 4.7 1.4 4.1 6.2
Scheduled 17.8 11.0 4.1 2.8 17.1 28.1 41.4 38.5 39.3 84.3 89.2
Other -0.3 -1.0 14.6 4.3 4.5 1.1 1.3 1.6 (1) (1) (1)
Operating revenue:
% of industry(2) 6.1 4.2 6.5 7.3 7.0 10.3 13.8 15.4 14.0
Industry(2) rank 3 5 3 4 4 3 2 2 3
(1) Included in scheduled (2) All supplemental air carriers

Collapse

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Relative to other supplementals, USOA was big, and had many capabilities (e.g. long-range aircraft that regularly flew across oceans; the airline also had its own airframe and engine maintenance facilities, not only in New Jersey[1] but in Oakland[30]), but it did not produce regular profits. USOA's financial record of the 1950s, even ignoring the large 1959 loss, was, on average, below breakeven. The January 1960 collapse of Transocean Air Lines, at one time the undisputed leader among the supplementals, did not help USOA, though it did pick up Transocean's western Pacific service that hopped from Honolulu to Wake Island to Guam to Okinawa, a low-cost alternative for American military and dependents in those parts.[31] In 1962 the CAB noted with concern USOA's serious financial issues when certificating it on an interim basis as required by new legislation,[32] and two of the five board members wrong a strong dissent about certificating USOA at all, based in part on poor finances.[33] Other supplementals, such as AAXICO Airlines, produced regular profits, so USOA's issues were not a reflection of an industry-wide issue.[34]

The situation became critical when in March 1962 USOA failed an inspection that eliminated its ability to carry military charters.[30] This was in the wake of the 1961 Imperial Airlines Flight 201/8 crash that killed 74 soldiers, the accident report of which was damning of that supplemental carrier's competency,[35] causing the military to inspect its airline contractors. Military charters accounted for 59% of 1961 USOA business (see table), so that was a substantial blow. USOA quickly corrected the issues and passed another inspection later in the year, but yearly contracts had already been awarded, and then USOA failed again in 1963.[36] Ironically, in its entire history USOA never had a single fatality,[36] which set it apart from other supplementals, which, in general, had an accident rate far higher than the scheduled carriers.[37]

The second issue was that 39% of USOA's revenue in 1961 was from scheduled service. Such scheduled service was legally limited to 10 flights (each way) per week between any city pair. As the table above shows, that business became almost the entire of USOA's revenue in 1962 and 1963, the airline being unable to generate a significant civilian charter business. USOA tried pushing the envelope on this business to the point it was issued a cease-and-desist order by the CAB.[38] Yet by the terms of the same 1962 legislation referenced above, supplementals (including USOA) were to lose access to that business in July 1964.[39] The CAB did, in fact, give USOA some flexibility on this score after repeated entreaties and in recognition of its financial distress, allowing it to fly five flights per week on certain routes in 1963, while noting that the window for this business was closing.[40] By 1964, USOA had resorted to raiding funds nominally held in trust for taxes and was failing to meet payroll or refund tickets as required. On 24 September 1964, the CAB suspended USOA's certificate for 30 days effective midnight on 25 September. An examiner recommended making it permanent after a hearing in mid-October. The airline was kept grounded while Cox appealed, and the full board ruled December 7 to revoke its certificate.[41] The CAB noted that, just before it was shut down, USOA was achieving only a quarter of its civilian revenue projections and only one half of its military revenue projections. The CAB said USOA was "irredeemably financially unfit", its situation one of "almost complete financial collapse", its future in charter operations "verges on the hopeless."[42]

Legacy

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Litigation

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Dr Ralph Cox Jr. litigated the end of USOA to at least 1978 in well over a dozen major actions. His focus was asset-based lender Walter E. Heller and Company. Heller lent USOA $1.7 million in 1962, secured by USOA and related entities (all owned by Cox and his family) including a personal guarantee from Cox. USOA defaulted on the loan almost immediately, but Heller held off on foreclosing until 1965. Thereafter Cox was relentless in legal actions designed to frustrate Heller from recovery and sued Heller for hundreds of millions, alleging a grand conspiracy. Heller finally won a 1974 injunction preventing further litigation by Cox or any related party. The judge said in part, about Cox and his Heller-related legal actions:[43]

I find, without reservation or equivocation, that Cox instituted each and every one of them in bad faith. He has added an unusual talent for lying to his contempt for the judicial process. His imagination in exploiting the courts as a means of harassing, intimidating and impeding Heller in the collection of its money is truly spectacular.

Despite the injunction, Cox funded further litigation (albeit without his overt participant as a plaintiff), which a California appeals court rejected in 1978.[44]

In 1977, there were a dozen derelict USOA aircraft at Cape May County Airport being cut up for scrap.[45]

Deregulation

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In January 1979, following passage of the 1978 Airline Deregulation Act, the CAB awarded supplemental airlines World Airways and Capitol Air scheduled authority on the New York City/Washington DC to Los Angeles/San Francisco markets. Ralph Cox dba United States Overseas Airlines applied in the same proceeding, which the CAB denied on the basis that USOA made no attempt to show it was fit: no operating plan, no finance plan, nothing. However, the Board encouraged Cox (and several other supplemental veterans) to show they had the wherewithall to operate an airline.[46] To which Cox, et al, said, among other things, that Capitol and World should be denied because they were CIA fronts. The Board said it looked at everything that had been submitted, even material previously excluded by the administrative law judge as irrelevant, and found "no substantial evidence to support the petitioners' strong-worded accusations."[47]

Fleet

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As of its interim certification in 1962, USOA had 14 aircraft:[48]

  • 8 DC-4
  • 6 DC-6

The company acquired DC-7s by 1964, as shown in the picture above and in a 1964 timetable.[49]

Destinations

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From a 1961 USOA timetable:[50]

References

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  1. ^ a b Wildwood - Homebase Of A World Air Service, Sunday Press of Atlantic City, 21 October 1962
  2. ^ New Lockheed $4 Million Order, North Hollywood (CA) Valley Times, 12 December 1955
  3. ^ "Nonscheduled Lines Renew Protests". Aviation Week. 47 (6): 52. 11 August 1947. ISSN 0005-2175.
  4. ^ Blair, Charles F. Jr (1969). Red Ball in the Sky. New York: Random House. pp. 54–61. ISBN 9780091039103.
  5. ^ a b Supplemental Air Carrier Certificates: Hearings Before a Subcommittee of the Committee on Interstate and Foreign Commerce, House of Representatives, Eighty-sixth Congress, Second session, On H.R. 7593, A Bill to Amend Sections 101 and 401 (e) of the Federal Aviation Act of 1958 so as to Authorize the Civil Aeronautics Board to Include in Certificates of Public Convenience and Necessity Limitations on the Type and Extent of Service Authorized, and for Other Purposes, May 23 and 24, 1960 (Report). U.S. Government Printing Office. 1960. p. 94. hdl:2027/mdp.39015020443662.
  6. ^ "State of Delaware business entity search results for ID 428220". icis.corp.delaware.gov/eCorp/. State of Delaware, Department of State, Division of Corporations. Retrieved 29 August 2024.
  7. ^ PR Case 1957, p. 144.
  8. ^ The Large Irregular Air Carrier Industry in 1953 (Report). Washington, DC: Air Transport Association of America. 15 December 1954. p. B-61. hdl:2027/uc1.c100995252.
  9. ^ Interim 1962, p. 434–435.
  10. ^ "Service to Puerto Rico Case". Civil Aeronautics Board Reports. 26. Washington, DC: U.S. Government Printing Office: 144–147, 153. October 1957 – June 1958. hdl:2027/uc1.b2938517.
  11. ^ Burkhardt, Robert (1974). CAB--The Civil Aeronautics Board. Dulles Intl Airport, Virginia: The Green Hills Publishing Company. p. 116. LCCN 74082194.
  12. ^ Like Eliza, He's Got A Chance, National Post (Toronto), 2 July 1955
  13. ^ "The Sawdust Airdrop on Hudson Bay". Life Magazine. 38 (26): 61–62. 27 June 1955.
  14. ^ "The Perilous Docking of an Icebound DC-4". Life Magazine. 39 (3): 34–35. 18 July 1955.
  15. ^ Plane Brought From Arctic Crash Site, Press of Atlantic City, 1 November 1955
  16. ^ "Airline Loses Money in Salvaging DC-4". Aviation Daily. 113: 340. 1957.
  17. ^ Mother Mauled In Fight For Baby, Wilmington (DE) Morning News, 29 January 1953
  18. ^ Didn't Like Him, But Loved His Airline, New York Daily News, 31 March 1953
  19. ^ Cox v. Cox, 234 Miss. 885 (Miss. 1959).
  20. ^ Plane Ownership In Lawyers' Fees Suit, Press of Atlantic City, 6 October 1956
  21. ^ Quarterly Report of Air Carrier Operating Factors (Report). Civil Aeronautics Board. March 1954. p. 63. hdl:2027/mdp.39015026081284.
  22. ^ Quarterly Report of Air Carrier Operating Factors (Report). Civil Aeronautics Board. March 1955. p. 74. hdl:2027/mdp.39015026081284.
  23. ^ Quarterly Report of Air Carrier Financial Statistics (Report). Civil Aeronautics Board. March 1956. p. 55. hdl:2027/mdp.39015026081276.
  24. ^ Quarterly Report of Air Carrier Financial Statistics (Report). Civil Aeronautics Board. March 1957. p. 59. hdl:2027/mdp.39015026081276.
  25. ^ Quarterly Report of Air Carrier Financial Statistics (Report). Civil Aeronautics Board. March 1958. p. 81. hdl:2027/mdp.39015026081490.
  26. ^ Quarterly Report of Air Carrier Financial Statistics (Report). Civil Aeronautics Board. March 1959. p. 79. hdl:2027/mdp.39015026081490.
  27. ^ Quarterly Report of Air Carrier Financial Statistics (Report). Civil Aeronautics Board. March 1960. p. 81. hdl:2027/mdp.39015026081482.
  28. ^ a b Quarterly Report of Air Carrier Financial Statistics (Report). Civil Aeronautics Board. March 1961. p. 88. hdl:2027/mdp.39015026081482.
  29. ^ a b c "Supplemental Air Service Proceeding". Civil Aeronautics Board Reports. 45. Washington, DC: U.S. General Printing Office: 398–399. July–November 1966. hdl:2027/osu.32437011658214.
  30. ^ a b Airline Here Hit by U.S. Edict Oakland Tribune, 29 March 1962
  31. ^ Prop-Jets To Chase Nose Cones, Honolulu Star-Advertiser, 1 May 1960
  32. ^ "United States Overseas Airlines, Inc., Interim Certificate". Civil Aeronautics Board Reports. 37. Washington, DC: U.S. Government Printing Office: 424–451. October 1962 – February 1963. hdl:2027/osu.32437011658610.
  33. ^ Interim, 1962 & 445–446.
  34. ^ Proceeding 1966, p. 383–384.
  35. ^ Accident Investigation Report: Imperial Airlines, Inc., Lockheed Constellation L-049, N 2737A, Byrd Field, Richmond, Virginia, November 8, 1961 (Report). Civil Aeronautics Board. 6 February 1962. Retrieved 27 August 2024.
  36. ^ a b Proceeding 1966, p. 398.
  37. ^ "Aviation: Off the Schedule". Time. 21 September 1962.
  38. ^ "United States Overseas Airlines, Inc., Enforcement Proceeding". Civil Aeronautics Board Reports. 34. Washington, DC: U.S. Government Printing Office: 597–616. June–December 1961. hdl:2027/osu.32437011657521.
  39. ^ Low-Cost Airline Shuts Local Office, Oakland Tribune, 29 July 1964
  40. ^ "United States Overseas Airlines, Inc., Individual Service". Civil Aeronautics Board Reports. 39. Washington, DC: U.S. Government Printing Office: 738–743. September 1963 – February 1964. hdl:2027/osu.32437011658511.
  41. ^ "United States Overseas Airlines, Inc., Interim Certificate Proceeding". Civil Aeronautics Board Reports. 41. Washington, DC: U.S. Government Printing Office: 461–473. August 1964 – January 1965. hdl:2027/osu.32437011658412.
  42. ^ Revocation 1964, p. 467.
  43. ^ Walter E. Heller & Co. v. Cox, 379 F. Supp. 299 (S.D.N.Y. 1974).
  44. ^ Smith v. Walter E. Heller Co., 82 Cal.App.3d 259 (Cal. Ct. App. 1978).
  45. ^ Old Airline Lands in the Scrap Heap, Press of Atlantic City, 19 June 1977
  46. ^ "Transcontinental Low-Fare Route Proceeding". Civil Aeronautics Board Reports. 80. Washington, DC: U.S. General Printing Office: 31–33, 71–74. January–March 1979. hdl:2027/osu.32437011657398.
  47. ^ "Transcontinental Low-Fare Route Proceeding, Applications for Nonstop Authority and Exemption Authority". Civil Aeronautics Board Reports. 80. Washington, DC: U.S. General Printing Office: 316–323. January–March 1979. hdl:2027/osu.32437011657398.
  48. ^ Interim 1962, p. 434.
  49. ^ "System Timetable". timetableimages.com. United States Overseas Airlines. 1964. Retrieved 30 August 2024.
  50. ^ "Schedule and Fares". timetableimages.com. United States Overseas Airlines. 12 June 1961. Retrieved 29 August 2024.
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