In nine years, the Manassas-based Colgan Airways Corp. commuter service, which started out with a twice-daily flight to Poughkeepsie, N.Y., added routes to North Carolina, New Jersey and Binghamton, N.Y.
In the process, the airline was praised by the Federal Aviation Administration for consistently adhering to safety standards and was featured in Forbes magazine as a model of commuter line success. Today, however, it has cut all of its routes but one it recently had to lay off pilots for the first time in its 12-year history.
The reason: skyrocketing fuel prices and maintenance costs that have tripled in the past nine years, unprofitable routes and the cost of elaborate federal requirements geared to bring the commuter companies in line with the standards of major air carriers.
Although larger commuter lines are riding the crest of a booming new market created by airline deregulation, staggering cost increases are symptomatic of the industry as a whole. Smaller commuter companies, unable to compete for the "low-density" air traffic vacated by the major airlines, are feeling the pinch of hard times.
"It's become a real slap in the face," said Dale Nicholson, of Cumberland Airlines in Cumberland, Md., 100 miles northwest of Washington. "We've had to discontinue routes to Baltimore, Washington, Philadelphia and Pittsburgh. Fuel six years ago was 13 percent of our total operating cost; now it's 40 percent."
Duane H. Ekedahl, president of the Commuter Airline Association of America, predicts that commuter airlines will be serving 15 percent more passengers each year over the next decade. But he says he is concerned about the "overkill" of some new federal regulations.
At the heart of his concern are the sweeping changes in commuter airline operations implemented by the FAA last December.
Few commuter airline officials question the necessity of broad safety standards -- such as the replacement requirements for engine parts that were once used until they couldn't be fixed anymore -- though the standards will cost the industry an estimated $7 million, the Commuter Airline Association says.
But airport facilities served by planes that can carry 20 passengers or more now have to comply with full security requirements against hijacking or bomb threats. This means the airports must use armed security guards, screen passengers, put up fences, and institute luggage searches, Ekedahl said.
"It's utterly absurd," he maintains.
Another airline association spokesman said that the security requirement costs will reach $20 million. "It's a terribly costly and unnecessary regulation," the spokesman said. "There have been exactly five hijackings in the entire commuter history and all of them occurred in the Caribbean."
"For the FAA to consider a costly regulation such as this at a time when two-thirds of the commuter airports across the country do not have instrument landing systems is . . . a very serious distorition of priorties at the FAA," Ekedahl said.
Virginia State Sen. Charles J. Colgan (D-Prince William), president of Colgan Airways, also operates an airport that handles 270 aircraft. It is the leading Cessna airplane sales center in the southeastern region and operates one of Virginia's largest flight schools.
But Colgan admits that it has "become very difficult to make money" with his commuter service. A two-month-old route to Morristown, N.J. was dropped last September, Colgan said, and the Raleigh service was cut last January. Then the senator returned from the General Assembly in March to make a difficult decision.
"The airline had operated the Dulles-to-Poughkeepsie route for 10 years, but the planes were flying empty several times," Colgan said. "We were losing money on it. There was no alternative."
Colgan uses two 12-passenger, two-engine Beechcraft 99 turboprop airplanes and, like many smaller commuters, relies heavily on corporations for business. The Dulles-to-Poughkeepse flights, for example, were dominated by IBM personnel shuttling between their Poughkeepsie headquarters and a Manassas components division.
Larger commuters such as Air Virginia in Lynchburg and Henson Aviation in Salisbury, Md., are picking up routes that have been dropped by larger firms. Under the provisions of the Airline Deregulation Act of 1978, the major carriers are no longer contracturally bound to fly unprofitable routes -- and, in addition, federal subsidies are available for these routes.
Newport News, for instance, a city of 250,000 in southeastern Virginia, was once served by four major airlines. Now only United Airlines remains, offering two flights a day. But Henson has signed a contract beginning this June for 10 flights a day to cities such as Philadelphia, Baltimore and Washington.
"We'll be using 30-passenger Shorts-330 airplanes with a stewardness, and are ordering 50-passenger DeHavilland-7s," Henson said. "We fit the site of the aircraft to the needs of the city."
But deregulation does not always man profitable routes. Air Virginia, the state's largest commuter line, has had 30 percent more passengers in the past three months and was recently chosen by the Civil Aeronautics Board to fly the route to Danville, Va., a town no longer served by Piedmont Airlines.
"It's not an economical route," said Air Virginia's executive vice-president, Dave Peel. "That operation will not support itself." And for that reason, the CAB subsidizes the Danville route: Air Virginia receives an average of $60,000 a month to service it.
Even for the expanding commuter airlines, however, rising costs are alarming. Colgan remembered "complaining that turbo fuel in 1971 cost 39 cents a gallon. Now it is over $1.50 a gallon."
Maintenance costs have also risen sharply. In 1971, the cost of an engine overhaul for a $350,000 Beechcraft 99 was under $15,000. Now, Colgan says, the same overhaul costs "more than $45,000."
Many of the costs have been passed onto consumers, resulting in a doubling of fares in the past nine years, Colgan said.
Colgan, who plans to restore his Poughkeepsie route month and rehire four pilots, said that a one-way ticket to that city now costs $83, compared with $46 in 1973.
Commuter airlines are also being caught in a credit pinch by the major oil companies, which have all but stopped selling to them at wholesale prices, according to the Commuter Airline Association of America.
With a fuel contract, jet fuel could be purchased for less than 50 cents a gallon. Without fuel contracts, commuter firms such as Air Virginia say they are forced to buy fuel on the spot market for as high as $2 a gallon and have had to raise ticket prices every quarter.
Many oil companies, as is the case with Exxon at Colgan Airways Corp., once furnished the airport with trucks and pipe, free of charge, for the purchased fuel.
"Three months ago they informed us that they could no longer afford to leave their equipment on our property and that we would have to buy it or it would be removed," Colgan said.
The two fuel trucks and pipe will cost Colgan an estimated $38,000, he added.
But despite the growing number of costs, most commuters airlines still believe that the 1980s will be the formative years of what is an emerging industry.