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For the New Zealand airline of the same name operating between 1994-1996 on trans-Tasman routes, see Kiwi Travel International Airlines.

KIWI International Air Lines
IATA ICAO Callsign
KP KIA Kiwi
Commenced operationsSeptember 21, 1992
Ceased operationsMarch 24, 1999[1]
HubsNewark International
Secondary hubsHartsfield Atlanta International Chicago Midway International Airport
Fleet size4 (as of March 1999)[2]
Destinations6 (as of March 1999)[2]
HeadquartersHemisphere Center,[3]
Newark, New Jersey
 United States
Key peopleRobert Iverson (President 1992-1995),[4] Jerry Murphy (President 1995-1998), Charles C. Edwards (Owner, 1997-1999)

Kiwi International Air Lines (IATA: KP, ICAO: KIA, call sign: Kiwi Air) was a Part 121 American airline that operated from September 21, 1992[5] to March 24, 1999.[1] It had its headquarters in the Hemisphere Center in Newark, New Jersey[6] adjacent to Newark International Airport.  

KIWI International was founded by a group of Eastern Air Lines pilots[7] in a plan to re-employ former Eastern pilots, managers, and non-contract employees who had lost their jobs when Eastern Air Lines went into bankrupt 1989. The former airline employees originally formed a group and called themselves KIWIs because they were no longer flying, just like the flightless kiwi birds.[8] In its brief history, the airline flew 8,000,000 passengers without an incident.[2]

History

Promotional button for Kiwi International Airlines, circa 1994. Diameter 54mm. Yellow background, with cartoon figure of a Kiwi bird wearing airline captain's hat, tie, wings, and shoulder insignia. Says "FLY WIKI" in red block letters on the top, and "Kaptain Kiwi" in script across the bottom.
Promotional button for Kiwi International Airlines, circa 1994. Diameter 54mm.

Originally, the intent of the KIWI Founders (known as the KIWI Acquisition Group) was to purchase the Pan Am Shuttle (which flew exclusively between New York LaGuardia, Boston Logan, and Washingtion National) out of the Pan Am bankruptcy. When the group presented a Kelso and Company backed $100,000,000 offer to Pan Am, it was rejected in favor of a Delta Air Lines offer for all of Pan Am including its shuttle.[9] With advice from the DOT and the FAA, the KIWI Acquisition Group decided to start a new airline from scratch rather than buy a failing carrier. To do this, the KIWI Acquisition Group raised approximately $2,000,000 from a group of out-of-work Newark-based Eastern Air Lines pilots. The pilots each invested $50,000 apiece with a promise of employment as a Captain in any new airline the KIWI Acquisition Group was able to certify - preferably based out of Newark International Airport. When it came time to name the new airline, the KIWI Acquisition Group decided to keep KIWI in the name of their new air line.

KIWI flew its first revenue flights on September 21, 1992 using two refurbished 727-200s from Lufthansa on routes between Newark and Atlanta, Chicago and Orlando.[10] KIWI offered gourmet meals and expanded legroom of 36 inch pitch in their airplanes.

In his 2005 book “Competition Demystified: A Radically Simplified Approach to Business Strategy”[11] Columbia Professor Bruce Greenwald described Kiwi's initial winning operating strategy as:

  1. Not to get so big as to directly antagonize established carriers. KIWI started with 3 routes from Newark International Airport to 3 different hubs with different incumbents. The amount of traffic KIW planned was unthreatening enough so that it would cost the airline's incumbents more to eliminate KIWI than to let KIWI live. KIWI's east-west Newark-to-Chicago route (NOTE: KIWI flew into Midway Airport and did not challenge United at its O’Hare hub) iincurred minimally into United's and American's business out of O'Hare. KIWI's Newark-to Atlanta route (at Hartsfield) again put minimal pressure on Delta; and, KIWI's North-South routes to Florida from Newark were schedule to cherry pick a small portion of the leisure business from Delta and Continental.  
  2. Avoid challenging the established carriers on price. KIWI pegged its ticket prices to the lowest restricted fare the competition was offering. Where it challenged them was by providing enhanced service.
  3. Avoid poaching pilots, flight attendants, or other personnel from the established carriers. A large part of its reason for being was to put Eastern employees back to work in an industry they loved and in a company they believed in.

This early KIWI niche strategy was to focus the business on a single main hub (Newark – with access to the large NY-NJ metropolitan flying public), a simple route structure, and identifiable target business and leisure markets. Being in the NY-NJ media capitol of the world also gave cash poor KIWI a distinct benefit – tremendous amounts of free national and local TV and radio coverage.

Early on the airline secured a passenger sharing agreement from Richard Branson to feed between KIWI and Virgin flights.[12] Branson helped out by promoting KIWI and called KIWI his favorite U.S. airline. KIWI International Air Lines enjoyed a flawless safety record and near perfect dispatch reliability rate of 99.6% as it expanded.

By 1993, the KIWI BOD decided to place an order for 11 BAC One-Eleven aircraft with five options. The British designed aircraft were to be built in Romania. However, Romaero, KIWI's Romanian partner, failed to find funding to develop the variant aircraft, which would be equipped with modern Rolls Royce Tay engines. As a result, KIWI scrapped the plan but not before Romaero had invested approximately $1 million in KIWI and received 1 seat on the KIWI Board of Directors.[13]

A Boeing 727-200 of Kiwi landing at Newark International Airport (1994)

During this same timeframe, the pilot investors in KIWI in late 1994 fractured along geographic lines (Newark vs Atlanta vs Miami) and in February 1995 the KIWI Board of Directors removed its first Chairman/CEO/President, Robert Iverson.[4] INC. Magazine reported that at this point KIWI under Iverson's leadership had accumulated operating losses of nearly $40 million in less than 2 and a half years of flying.[14] INC Magazine reporter, Anne Murphy, explained that KIWI had a major failing by selecting many of its top management from the ranks of its own pilot investors who had no practical management experience, including Iverson. INC reported: "The CEO (Iverson) himself had never managed so much as a baggage carousel".[15] Ultimately, Iverson expanded his team to an unwieldy 11 vice-presidents (the majority of whom were fellow pilots) all reporting directly to him. As Iverson admitted when interviewed for the INC article Taking the Fall, "We ran the company like a little pilots' union or a flying club, not like a business."[16]

After his removal, the KIWI board was reconstituted and hired professional (non-pilot) management and advisers. Jerry Murphy (formerly of MGM Grand Air and Pan Am) was hired as the President and CEO of KIWI in June 1995 and served in that capacity until November 1998.[17] At the time, former Chairman John Anderson explained: "He (Iverson) never showed himself capable of running this airline profitably.".[15]

In 1996, KIWI had apparently secured a $20 million financing package from Recovery Equity Partners, a CA-based private equity fund through the efforts of Conexus. However, at the time KIWI received the first tranche of the financing package, the ValuJet and TWA accidents in May and July 1996 occurred. Following these unrelated accidents, the FAA increased its surveillance of the airline industry but more specifically of the smaller carriers in the industry like KIWI. Because of alleged maintenance documentation issues, KIWI was asked by the FAA to temporarily ground 25% of its fleet.

KIWI, which was once called "one of the best of the recent start-up lines" by Consumer Reports Travel Letter ultimately filed for bankruptcy on September 30, 1996 and after failing to find additional financing, stopped scheduled service on October 15.[18] After several fits and starts, in July 1997, a Federal bankruptcy judge in Newark agreed to liquidate KIWI in a $16.5 million deal for KIWI's assets with Joe Logan (Aviation Holdings) and Dr. Charles C. Edwards, an orthopedic surgeon and entrepreneur (from Maryland) who had led about 30 business enterprises over his 33-year career. The deal included a Huntington Station, New York investment firm called NJS Acquisitions, which invested $3.5 million for its 20% stake.[7] In its first five months under Edwards hands-on leadership, KIWI ended service from Atlanta to Palm Beach and Orlando, and added service from Newark to Boston and Tampa, from Boston to West Palm Beach, from Chicago to Tampa, from Atlanta to Tampa, and (on a seasonal basis) from Orlando to San Juan, Puerto Rico.[7]

By the end of 1998, KIWI had an operating loss of $19.8 million. By February 19, 1999, KIWI also owed more than $750,000 to the airports it served.[19] Subsequently, on March 23, the U.S. Department of Transportation (USDOT) announced plans to revoke Kiwi's operating certificate for failing to meet federal fitness standards for air carriers.[1][19] According to The New York Times, KIWI was also the subject of two separate USDOT investigations, one about the airline's financial and managerial fitness and another about its safety. At the time, KIWI was on the verge of receiving a $3 million bailout from the reconstituted Pan American Airlines (to address the USDOT concerns about its financial and managerial situation), but the termination of KIWI's operating certificate for safety reasons meant it would be months before the airline could fly again if ever.[2]

As of March 1999, KIWI tried being a charter carrier with four leased jets flying to six cities, with 500 employees and 11 months of paid advance reservations for about 80,000 seats.[2] However, by December 1999, the Federal bankruptcy judge in Newark approved the total liquidation of the airline.[20]

Ed Perkins, editor of TheTravel Letter, noted that other members of the travel press blamed the KIWI bankruptcy on chronic undercapitalization, problems with the FAA, and the "media's indiscriminate innuendos about the safety of all low-fare airlines following the Valujet crash". However, Perkins suggested a fourth problem for KIWI: the "pervasive power of the giant lines' frequent-flyer programs," noting that KIWI had targeted business travelers on some of its routes.[18] Perkins pointed out that KIWI's major competitors would match KIWI's fares (but only around the times of the KIWI flights) but they included frequent-flyer miles - worth about $12–15 per one-way trip which resulted in a loss of customers for KIWI, even though it belatedly established its own Frequent Flyer program.[18]

Destinations

[Hub] Hub
[T] Terminated destination
City Country IATA ICAO Airport Refs
Aguadilla  Puerto Rico BQN TJBQ Rafael Hernández International Airport [Terminated]
Aruba  Netherlands AUA TNCA Queen Beatrix International Airport [Terminated]
Atlanta  United States ATL KATL William B. Hartsfield-Jackson Atlanta International Airport [Terminated]
Bermuda  Bermuda BDA TXKF L.F. Wade International Airport [Terminated]
Boston  United States BOS KBOS General Edward Lawrence Logan International Airport [Terminated]
Chicago  United States MDW KMDW Chicago Midway International Airport [Terminated]
Las Vegas  United States LAS KLAS Las Vegas McCarran International Airport [Terminated]
Miami  United States MIA KMIA Miami International Airport [Terminated]
Newark  United States EWR KEWR Newark Liberty International Airport [Terminated]
Orlando  United States MCO KMCO Orlando International Airport [Terminated]
San Juan  Puerto Rico SJU TJSJ Isla Verde International Airport [Terminated]
St. Maarten  Sint Maarten SXM TNCM Princess Juliana International Airport [Terminated]
Tampa  United States TPA KTPA Tampa International Airport [Terminated]
West Palm Beach  United States PBI KPBI Palm Beach International Airport[Terminated]

According to its spring/summer 1998 route map, the airline also served Niagara Falls, New York via the Niagara Falls International Airport. This same route map depicts nonstop routes flown the Kiwi hub located at Newark Airport to Aguadilla, Puerto Rico, Atlanta, Chicago Midway, Orlando and West Palm Beach.[21]

See also

References

  1. ^ a b c Information for Consumers Regarding the Cessation of Service by Kiwi International Airlines Archived 2006-02-05 at the Wayback Machine from a U.S. Department of Transportation website
  2. ^ a b c d e In Abrupt Reversal, F.A.A. Grounds Kiwi Airlines, a February 7, 1995 article from The New York Times
  3. ^ Kiwi International Air Lines from the U.S. Securities and Exchange Commission website
  4. ^ a b Kiwi International's Founder Leaves the Airline, a February 7, 1995 article from The New York Times
  5. ^ "Flightless Bird: The Rise and Fall of KIWI International Air Lines", 1999, Aviation Week and Space Technology, Condé Nast Traveler
  6. ^ "World Airline Directory." Flight International. March 22–28, 1995. 74.
  7. ^ a b c Surgeon Strives to Resuscitate Kiwi Air Lines, a December 16, 1997 article from The New York Times
  8. ^ "Kiwi Sets Midway Flights". Chicago Tribune. New York Times. August 16, 1992.
  9. ^ "Delta Wins the Bidding to Buy Most of Pan Am : Airlines: Purchaser to get prized Northeast shuttle. Federal bankruptcy court approves $1.39-billion deal". Los Angeles Times. August 13, 1991. Retrieved December 6, 2019.
  10. ^ TRAVEL ADVISORY; New Airline Says Its Fares Will Be Lower, a August 9, 1992 article from The New York Times
  11. ^ Greenwald, Bruce C.; Kahn, Judd (August 18, 2005). Competition Demystified: A Radically Simplified Approach to Business Strategy. Penguin. ISBN 978-1-101-21843-3.
  12. ^ "The Lost Airlines Of New York". Airways Magazine. February 21, 2014. Retrieved December 6, 2019.
  13. ^ Ill fated ambitions a 09/04/1997 article from Flight International via flightglobal.com
  14. ^ Murphy, Anne (September 1, 1995). "Taking the Fall". Inc.com. Retrieved December 18, 2019.
  15. ^ a b Murphy, Anne (September 1, 1995). "Taking the Fall". Inc.com. Retrieved December 24, 2019.
  16. ^ Murphy, Anne (September 1, 1995). "Taking the Fall". Inc.com. Retrieved December 25, 2019.
  17. ^ Press, The Associated (November 25, 1998). "Chief Resigns at Kiwi". The New York Times. ISSN 0362-4331. Retrieved December 10, 2019.
  18. ^ a b c Perkins, Ed (December 1996). "Kiwi's Bankruptcy". Consumer Reports Travel Letter. 12 (12). Yonkers, New York: Consumers Union: 267. ISSN 0887-8439.
  19. ^ a b DOT Proposes to Revoke Kiwi Certificate Archived 2009-06-25 at the Wayback Machine a March 23, 1999 press release from the U.S. Department of Transportation website
  20. ^ Metro Business; Liquidation Marks The End of Kiwi Air
  21. ^ http://departedflights.com, Spring/Summer 1998 Kiwi International Air Lines route map

External links

source: https://en.wikipedia.org/w/index.php?title=Kiwi_International_Air_Lines&oldid=932723724

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