Deregulation Blamed for Demise of Commuter Airline

Associated Press

A two-seat Cessna 140 was all John Van Arsdale Sr. needed to christen Provincetown-Boston Airlines on Nov. 30, 1949. Thirty-five years later, a plane crash that killed 13 people was what it took to put the airline under.

The nation’s first regional commuter carrier grew into its largest in the early 1980s after Van Arsdale turned control over to his expansion-minded sons.

Then came back-to-back fatal accidents in 1984. The federal government shut down the airline because of safety and training violations. Two weeks after it was flying again, 13 people died in the crash in Florida. Bankruptcy and takeover followed close behind.


On paper, PBA officially dies today. In reality, it happened four years ago.

“What’s happening now is like watching a patient catching cancer,” said John C. Van Arsdale Jr., who had to resign as PBA’s chairman after the Federal Aviation Administration stripped his pilot’s license in disastrous 1984. “When the patient dies, it’s merciful.”

Some industry analysts say the demise of the 39-year-old airline that boasted the nation’s oldest continuously operating plane, DC-3 N136PB, is a classic example of how deregulation has crippled small commuter airlines in the 1980s.

The bitter Van Arsdale sons say the FAA overreacted to minor problems, a charge federal officials deny. The father says his sons too brashly expanded what was a cozy and profitable regional service.

PBA formally ceases to be an airline when its parent, Bar Harbor Airways of Bangor, Me., retires its federal operating certificate. PBA’s planes are being sold and service on some routes around Massachusetts will be reduced or canceled, Bar Harbor sales director Steven Mason said.

Gradual Growth

“You might lay the whole thing at the door of deregulation,” said Jon Hurdle, associate editor of Travel Weekly, who has written about PBA. “Van Arsdale Jr. was worried about the competitive effects of deregulation, so he expanded arguably more than he should have.”

The growth of PBA, known for reliability and demand scheduling that had planes take off as needed, was as gradual as its demise was sudden.


In the late 1950s, Van Arsdale worked out an innovative deal with Naples Airlines in Florida under which the two commuter carriers borrowed each other’s services in the off-season; Naples sent its planes and crews north in the summer, while PBA’s operations migrated south in winter.

Over the years, Van Arsdale, who flew young John F. Kennedy around Cape Cod during three congressional campaigns, conservatively expanded service. From 1949-79, the only PBA flights in Massachusetts remained the Provincetown-Boston run. Naples-Miami was added in 1960, Naples-Tampa in 1968 and Punta Gorda-Tampa in 1977.

Then Van Arsdale retired in 1980, turning the company over to his sons, Peter and John Jr., who bought more planes, acquired another small airline and altogether bulked up operations. Flights were added around New England and the South.

“I had reservations,” the elder Van Arsdale, 68, said. “I felt they were moving a little too fast. On the other hand, everything seemed to be going well. They called me the prophet of doom and gloom.”

By 1983, PBA was the largest regional commuter in the United States. The airline that carried 220,000 passengers in 1979 saw its load grow six times to 1.3 million in the first nine months of 1984, a period in which PBA reported profit of $3.3 million on revenue of $58.4 million.

By the end of 1984, PBA had 1,600 employees, 500 daily flights and 104 planes, from a nine-seat Cessna 402 to a 58-passenger Nihon YS-11.


“In order to survive in a deregulated environment we had to grow,” John Jr., 43, said. “Had we not grown profitably I would be more willing to accept the criticism. But we were considerably profitable.”

Reacting to the 1978 federal deregulation of the airline industry, which allowed airlines to set their own destinations, schedules and fares, many small carriers expanded to reduce the impact of losing one market. While others folded, PBA was a success story.

Four-Month Investigation

“They were the envy of some carriers for some time because they made money,” said George James, president of Airlines Economics Inc., a Washington-based aviation consultant.

But in June, 1984, a PBA flight slammed into the water near Logan International Airport in Boston, killing one. In September, a passenger died when a plane exploded in the air after a member of the ground crew in Naples pumped in the wrong kind of fuel.

Then after a four-month investigation revealed pilot training, safety and maintenance violations, the FAA in early November revoked PBA’s operating license. PBA waived an appeal and was back in the air two weeks later.

For all intents and purposes, the end came on Dec. 6, 1984, when Flight 839 from Jacksonville to Tampa, a Brazilian-made Embraer Bandeirante twin-engine turbo-prop, crashed into the woods after takeoff, killing all 13 aboard.


After the accident, public confidence in the airline collapsed. Passenger traffic dropped 50% in two days, bankers tightened the reins on more than $30 million in credit, the stock plummeted.

PBA filed for bankruptcy in March, 1985, shortly after drastic cuts in staff and service. A year later, now-defunct People Express bought the failing airline for $30 million. Through a series of takeovers, PBA wound up as a wholly owned subsidiary of Bar Harbor, a speck on the ledger of giant Texas Air Corp.

The Van Arsdales say they were victims of the FAA’s desire to get tough on airlines after deregulation, which spurred fare wars and unchecked growth among carriers seeking to capitalize on increasing traffic. The family claims PBA never had a fair hearing.

But FAA spokesman Jack Barker said: “We didn’t overreact at all. We reacted properly and in the interest of aviation safety. They had documented that pilots had received training flight checks when in fact they had not.”

Alfred Kahn, a Cornell University economics professor who headed the now-defunct Civil Aeronautics Board when it deregulated the industry, disagrees that deregulation is to blame for PBA’s collapse.

“Deregulation gave people an opportunity to make money, as some of them have, and gave other people a chance to make mistakes,” he said. “What apparently drove (PBA) out of business was making mistakes in terms of overexpansion, excessive acquisition of debt and not flying safely.”


Ironically, John Jr. was working for Bar Harbor when it obtained PBA in 1986. He has since regained his pilot’s license and sells small aircraft in Naples. Peter, 40, stayed on as PBA president until 1987 and now runs a Naples travel agency. John Sr., who sadly watched the demise of his commuter carrier, divides the year between Cape Cod and Naples.