Remember That One Time Donald Trump Owned an Airline?
Trump has had his hand in many business ventures: real estate, hotels, casinos, golf courses, beauty pageants, reality TV and pro football among others. However, 26 years ago he added airline owner to his vast resume when the Trump Shuttle took to the air. The northeast shuttle service, which was formerly operated by Eastern Airlines before being sold off to Trump, started out with the grandiose flair that Trump is known for though it would ultimately only last for three years.
The Eastern Airlines Air Shuttle began life in 1961, connecting New York LaGuardia, Boston and Washington National with hourly flights. The unique aspect of the service was that no reservations were needed; every passenger was guaranteed a seat on each individual flight, even if an extra plane had to be brought out to fly just one extra passenger. Eastern created a dedicated subfleet for the shuttle consisting of DC-7 and Constellation propliners that had been recently replaced in mainline service by jets along with crews that only worked Shuttle flights. The service was an immediate success and within a few years had evolved from being operated by Eastern’s older props to 727s, DC-9s and later for a short period widebody A-300s.
Eastern’s labor troubles and bloated cost structure began to put a real strain on the airline’s finances in the mid-‘80’s. Sensing an opportunity, Pan Am started up a competing hourly shuttle service that became an immediate success. When Texas Air Corporation bought Eastern in 1989 the labor situation had become untenable. CEO Frank Lorenzo refused to negotiate with the labor unions leading to a strike that effectively shut the airline down. With the airline hemorrhaging cash, Lorenzo began selling off assets including the prized Shuttle operation. Donald Trump placed a winning bid for the Shuttle, its aircraft and landing slots at LaGuardia and National for $380 million dollars that was financed through no less than 22 banks. The newly branded Trump Shuttle took the skies on June 7, 1989.
Trump immediately put his signature over-the-top style into the airline in an effort to win back customers who had left for Pan Am and Amtrak. The 727s inherited from Eastern were repainted in a sharp new livery. The interiors were refurbished to include maple wood veneer, chrome seat belts, and gold lavatory fixtures. The airline introduced a number of innovative amenities, including self check-in (the first airline to offer this) and partnering with a company called LapStop that rented laptop computers to passengers. Trump aimed to introduce high luxury to flights that were usually under an hour in length.
Timing is everything in business, and unfortunately for Trump he entered the airline game at the wrong time. The US entered an economic recession in the late-‘80’s leading many corporations to cut back on business travel. In addition, tensions in the Middle East leading up to the first Gulf war caused oil prices to spike. This 1-2 punch was devastating for the airline industry and led to the demise of a number of airlines including Eastern and Pan Am. Given these circumstances, the Trump Shuttle lost money, and with Trump continuing to accumulate debt in his other ventures it was becoming increasingly difficult to pay back the loans taken to purchase the airline.
In an effort to drum up business, Trump guaranteed that all Shuttle flights would arrive within 15 minutes of their scheduled arrival time or passengers would be compensated. This was a foolish proposition for sure, as the northeast corridor airports were –and still are- very congested with delays being commonplace. The guarantee didn’t last long, and soon after the Trump Shuttle began to reduce its schedule in the face of mounting losses. In September of 1990 Trump defaulted on his loan and control of the airline went back to the banks led by Citibank. Unlike most other airlines that failed during this time period, the Shuttle was still a valuable asset given its business-oriented customer base and access to slot-controlled airports in New York and Washington.
Citibank put the airline up for sale, and after some lengthy negotiations with Northwest and American, settled on a deal with USAir Group. The company would take 40% ownership of the airline for 10 years, while managing the airline’s operations under the USAir Shuttle brand. The same deal gave USAir the option of buying the entire operation outright after five years, which they did in 1997. In April 1992 the Trump Shuttle was no more.
Despite the failed venture, Trump’s name can still be found on an airliner today: his own private 757. Given his presidential aspirations, some have dubbed the aircraft “Hair Force One.”
Gabe Andino is an Associate Editor for NYCAviation.com, aviation enthusiast and airport management professional residing in New Jersey. Follow him on Twitter