Great Lakes Airlines : The Rise & Fall
Great Lakes Airlines : The Rise & Fall “We were just about to take off, probably going I don’t know 100 miles per hour and the door just flew off. There was a loud bang and the door flew off and the noise and the wind and everything. It was scary. It was scary. If there would have been a person sitting on the plane with a baby on their lap, I don’t know what would have happened.” This was Boutique Airlines’ passenger Tom Yon’s memory of a recent mishap.
The regional airline, Boutique Airlines became an up and comer in the aviation industry over the last decade. Their new Pilateus had the impression of private travel and many cite them as the final knife in the heart of former regional powerhouse Great Lakes Airlines.
What happened to Great Lakes Airlines?
At their peak they flew nearly a million passengers annually to over 50 cities around the United States. 50+ planes and 500 pilots Great Lakes dominated the mid and small regional air market in the United States and was the largest Essential Air Service provider in the United States.
The airline was founded by the husband and wife aviation team of Gayle and Doug Voss.
Originally flying 3 Beech 99’s out of Spencer, Iowa and named for the Great Lakes of Iowa, not the bigger ones by Michigan and Chicago. The three principal lakes being Big Spirit Lake, West Okoboji Lake, and East Okoboji Lake.
Eventually Ivan Simpson joined the team and at the time was named Spirit Lake Airways in the late 1970s.
Still based in Spencer, Iowa at the time. Great Lakes would have a series of big highs and lows in the 90s that would take the company to new heights.
When Great Lakes got ahold of a United Express Code Sharing Relationship, they were able to transform themselves in 1992.
In 1995 Great Lakes soared to further heights by signing code sharing deals with Midway Airlines and Southwest.
Great Lakes went to the public markets and found themselves with a $200m+ market value. Ivan Simpson cashed out and Doug Voss was left fully in charge.
This was one of Great Lakes’ best periods. Great Lakes enjoyed revenue coming in from Midway, United, Southwest and Great Lakes branded flights and consistent profitability.
Then things started to go downhill
On November 19, 1996, United Express Flight 5925 operated by Great Lakes Airlines from Chicago and Burlington, a Beechcraft 1900 collided with a King Air during landing at Quincy, Illinois Regional Airport. The aircraft collided at the intersection of the two runways.
On approach, the Great Lakes pilots had inquired as to what the King Air would do. Would it hold short of the runway, or depart before their arrival?
After receiving no response, the United Express crew called again, and the received reply from the King Air was that they were holding short.
However, due to the ground proximity warning system sounding in the 1900s cockpit, only part of the transmission was received by the 1900.
All 12 onboard the Great Lakes flight were killed.
The pilots of the King Air were blamed for failing to effectively monitor both the common frequency and to scan for traffic.
Then adding to their woes, in 1997 Great Lakes lost both Midway and Southwest pulling their code sharing agreements. Then Doug and Gayle divorced and things started to look grim for Doug and Great Lakes.
But, then on June 1, 1998 the airline struck gold and greatly expanded its Denver hub by adding the United Express routes formerly operated by Mesa Airlines.
Now the airline needed more staff and planes to handle the added responsibilities.
The city of Cheyenne had offered a sweet deal for Great Lakes to move their operations from Spencer, Iowa. Denver seemed like the obvious option, considering the Mesa deal.
But, Cheyenne was only an hour and a half drive away. And with a much friendlier tax climate than Colorado, why not?
So the company grew and by December 31, 2000, the fleet consisted of 40 Beechcraft Model 1900D 19-passenger aircraft and eight Embraer Brasilia Model 120 30-passenger aircraft.
Furthermore, Great Lakes served 57 destinations in 14 states located in the Upper Midwest and West Mountain region, with connections to United at Chicago O’Hare, Denver, and Minneapolis/St. Paul.
Then 9/11 came
.
With the added wait times at airports due to the newly established TSA, many commuters chose to drive over fly.
This represented the beginning of the end for Great Lakes Airlines.
In 2002 United Airlines dropped Great Lakes as a United Express partner and this was a huge blow to the airline. Though they still maintained an indirect codeshare agreement with the airline and were able to establish a new agreement with Frontier Airlines.
Great Lakes embraced the Frontier Airlines theme of painting their wings. Great Lakes chose to try and help out their cities with painted advertisements for awesome ski towns such as Telluride, Colorado.
For a while in the early 2000’s it looked like Great Lakes could make it. Then came a near bankruptcy with a debt issue. Great Lakes was sitting on massive debt from all of its acquired planes and the creditors wanted to close the loan due to the Airlines’ losses following 9/11. But in the end a favorable deal was negotiated which essentially allowed Great Lakes to wipe off a ton of debt.
Then with new contracts in Las Vegas and Minneapolis routes things were looking up.
But there was a death blow on the horizon, one that Great Lakes would not recover from.
In 2009 a United Express / Colgan Air flight crashed outside of Buffalo, New York killing everyone on board. Suddenly small regional operators and their pilots were under the microscope.
Moreover, this was in the backyard of powerful Democratic Senator Chuck Schumer, so a bill had to pass. And in 2013 a bill was passed requiring pilots to have 1500 hours.
This was a near death blow to Great Lakes, knocking out over half of their pilots over a short time. All of a sudden in 18 months Great Lakes went from having 50 cities to barely being able to service 20.
In addition, now Great Lakes was forced to pull out 10 of its seats in its Beechcraft 1900D.
Since the new legislation required two pilots for 10 or more seats. And Great Lakes didn’t have anywhere near enough pilots to run their current routes with 2 vs 1 pilot with 1500 hours.
Great Lakes was paying $17 an hour to their starting pilot
s.
How were they going to attract pilots with that much experience to make so little flying propellers vs jet engines. Pilots like anyone else want to rise in their career and knowledge of jets is essential for landing a job with a tier 1 airline.
But switching from propellers to jets wasn’t in Doug Voss’ comfort zone according to former Great Lakes officials.
The price of oil started crashing in 2014 and 2015 which gave Great Lakes a little breathing room. But the writing was on the wall.
Voss believed that the airline could pull through. They would find a way to start recruiting pilots or he would receive a waiver to fly without 2 pilots and get back to 19 seats.
But he had no plane to attract the pilots. And meanwhile customer service was falling like a rock. On top of an on-time rate that was infuriating communities.
Cape Air operates older planes than Great Lakes. But, Cape Air keeps a great on-time percentage by investing a lot in maintenance. Great Lakes had to lower their maintenance spend which meant it would take longer to fix planes.
Great Lakes never had a safety infraction or a complaint about the airworthiness of its planes. But, when you have fewer support staff, things take longer. That mixed with fewer pilots equals an abysmal reliability.
By 2015 the stock had crashed to 25 cents per share and the end seemed near.
Private equity firms were circling like vultures offering to buy out Great Lakes’ planes and engines. But, Voss suffered from a “true believerism” that there would be a rabbit he could pull out of his hat to save the airline.
Great Lakes bid for a contract to fly from Moab, Utah and despite winning the bid, never even flew a single flight due to a lack of available pilots. Great Lakes couldn’t afford to pay pilots what they wanted and operate their routes. There was no business future left. Could Great Lakes have morphed into a WheelsUp? That wasn’t something Doug Voss could consider. Voss believed that the magic rabbit would appear somehow.
However, it did not come to pass and the last Great Lakes Airlines flight departed on Monday evening, March 26th, 2018.