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#AncientAirlines: Passengers Loved Kiwi Airlines But Love Couldn’t Pay The Bills

Photo by Torsten Maiwald. Used with permission per notations on Wikipedia.

Kiwi International Airlines typified the saga of starting an airline in the 1990s.

With low fares and high quality, Kiwi International Airlines should have been a stand out success story. But like most airlines of the post-deregulation era, internal conflicts, FAA issues, competition and a few too many customer perks, the airline failed.  The story behind Kiwi is fascination though.  That’s why it’s our #AncientAirliner of the week.

Kiwi was founded in 1992 with Robert Iverson, a former Eastern Airlines pilot, along with several other pilots from various failed, sold, and merged airlines. In the beginning stages of their plan, they referred to themselves as the “Kiwi Acquisition Group,” referencing the Kiwi bird that couldn’t fly. The name stuck and after several investments from the founding pilots and their new employees, they officially became Kiwi Airlines.  Kiwi International Airlines was a Part 121 employee owned and operated airline. The airline was focused on a very low cost experience for the consumer without sacrificing quality. Great meals, decorated aircraft, and low cost airfare were hallmarks of Kiwi service.

Kiwi launched on a high note.

Employee motivation was initially very high due to higher than average pay averaging up to double the pay at other airlines. The pay, combined with very positive labor relations meant that the airline started off on a very positive note. After acquiring two Boeing 727-200 aircraft, the airline proceeded to make their first flight in September of 1992 from Newark International Airport to Chicago’s Midway airport. The airline was committed to customer ease and satisfaction flying various non-stop routes, many of which were departing from smaller, more accessible airports. Throughout the year, they maintained an impressive safety record and made many customers happy.

Quickly began to struggle

Not everything was great at Kiwi though. Despite making money off of half-full passenger loads due to a favorable cost-structure and creating extremely satisfied customers, the airline had a $6 million loss in its first year.  Just 18 months later, the airline had its first major issue on its hands. Thirteen of their acquired aircraft were grounded by the FAA because they had concerns about their pilot documentation procedures. They lost $2 million because of this misstep but quickly fixed the issue.

Even with their challenges, Kiwi continued to grow and customers enjoyed the service. Thanks to their great customer service and strong safety record, the Conde Nast Traveler named Kiwi the best domestic airline in the United States. The airline had acquired 16 leased aircraft and employed over 1,000 individuals by 1995.  They added additional routes and grew rapidly.  That same year, Iverson was removed from his leadership post. He eventually spoke out against Kiwi Airlines just as the airline began experiencing the first real business and operational challenges and suffering major monetary losses. The hits kept coming.  Kiwi owed several million dollars to the IRS.  They also owed money to various airports around the country. The FAA grounded many of their aircraft and determined that a large amount of their pilots were undertrained. Kiwi Airlines maintained that these actions were an over-reaction and continued to push their safety record as evidence. The attention didn’t help their bottom line.  Many employees were laid off and those that remained had to accept a 17% pay cut.

Bankruptcy follows

Additional layoffs continued in 1996. Kiwi’s paper value was only worth an estimated $35 million. In September of that year, Kiwi Airlines officially began chapter 11 bankruptcy proceedings. They suspended most of their operation in October of 1996, except for charter flights. In January of 1997 attempted to startup again by running a limited schedule flying its trunk routes. Unfortunately it didn’t last long. By the end of 1998, they were deep in the red again. They owed several airports over $750,000 total and the United States Department of Transportation began several investigations into the airline for failure to meet federal fitness standards for air carriers and various other issues.

In March of 1999 Kiwi was still hanging on, although barely, despite several changes of those in charge of the company and various attempted bailouts and loans. They were only operating charter flights with four aircraft left in their fleet, flying to six cities with less than 500 individuals employed. In December of 1999, the aircraft finally called it quits and was liquidated.

Kiwi had many things passengers wanted in an airline, but unfortunately the late 1990’s were tough for the entire industry and even a tougher time to start a successful airline. Like many other upstarts, Kiwi failed. Despite the sad finish, Kiwi flew over 8,000,000 passengers with no incidents and left the industry with a surprisingly strong safety record.

Sources Cited

30, March. “Also. . .” Los Angeles Times. Los Angeles Times, 30 Mar. 1999. Web. 29 Nov. 2016. <http://articles.latimes.com/1999/mar/30/business/fi-22376>.

“Kiwi International Airlines Inc.” History of Kiwi International Airlines Inc. – FundingUniverse. N.p., n.d. Web. 29 Nov. 2016. <http://www.fundinguniverse.com/company-histories/kiwi-international-airlines-inc-history/>.

Aviation Consumer Protection Division. N.p., n.d. Web. 29 Nov. 2016. <http://airconsumer.ost.dot.gov/cessations/kiwi.htm>.

Photo by Torsten Maiwald.  Used with permission per notations on Wikipedia.

 

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