Maersk Air

Maersk Air A/S was a Danish airline which operated between 1969 and 2005. Owned by the A. P. Møller–Mærsk Group, it operated a mix of scheduled and charter passenger and cargo services. Headquartered at Dragør, its main operating bases were Copenhagen Airport, Billund Airport and Esbjerg Airport. The airline run also offshore helicopter operations from 1975 to 1999 and had three airline subsidiaries: Maersk Air UK, Maersk Commuter, and Star Air.

The airline was founded on 21 February 1969 - coinciding with the purchase of Falck Air regional airline scheduled operations - and legally incorporated on 1 January of the following year. Twin turboprops Fokker F27s were bought and scheduled domestic services from Copenhagen to Odense and Stauning started on 1 November 1969. From 1971 to 1995 Maersk participated in Danair consortium, which run all domestic services in Denmark. Maersk Air was heavily involved in the inclusive tours market during the 1970s, firstly operating Boeing 720Bs and later on 737-200s. From 1981 Maersk started international flights, first out of Billund and in the 1990s out of Copenhagen.

Maersk Air gradually invested in new aircraft, including the Fokker 50, Boeing 737 Classic, and later the 737-700. During the 1990s the number of international services increased, often codeshared with foreign airlines. When the Danish airlines were deregulated in 1995, Maersk first sought to compete with Scandinavian Airlines and later they created a "cartel". After being exposed, the airline fell into a decline after 2001, posting large deficits from which it never recovered. The airline was bought by the FL Group and merged to form Sterling Airlines in the fall of 2005.

History

Establishment

thumb|left|A [[Fokker F27 at Pisa Airport in 1972]]

The giant shipping entity A. P. Moller first investment in aviation was in 1937 when it bought a stake in Danish Air Lines, at the time the Danish flag carrier. Its next step took place in 1967, when the group bought a Hawker Siddeley HS 125-3B corporate jet. At that time there were few possibilities for Danish airlines as the charter market was dominated by Spies Rejser and Tjæreborgs Rejser, each of them with their own airline: Conair and Sterling, respectively. Scandinavian Airlines System (SAS) was the flag carrier and had the sole right to run international scheduled services, and freight charters could only be carried out if the entire load had a single shipper and recipient.

The establishment of the airline was approved by the group in 1969. The airline aimed at a charter market with aircraft in the 50-seats range, and perhaps securing the rights to fly regional schedules to small domestic airports. Operations to Odense Airport commenced on 26 December.

The new airline, Maersk Air I/S was officially incorporated on 1 January 1970. The same day it took over the assets in Falck Air along with its air operator's certificate (AOC), concessions and the operational management of the HS-125. Norwegian-American Finn Rassmussen Ryssdal was hired as the airline's first director. He held the position for two years until he was replaced by another Norwegian, Johan Paus, former CEO of Scanair. As part of the build up, Maersk entered the travel agency industry. Originally named Maersk Air Rejsebureau, was later named Maersk Travel.

Initial operations

thumb|left|A [[Fokker F27 in 1976]]

The assignement of domestic routes was a contentious political issue. SAS held the privilege to commence any route they wanted, but lacked regional partner airlines to link the smaller airports. Danish authorities, therefore, asked the three scheduled carriers, SAS, Maersk, and Cimber, to negotiate and reach an agreement. This was reached in November 1971, whereby the joint consortium company Danair was established. Thisted Airport opened in 1971 and Maersk was selected as the operator. The Thisted and Stauning services were transferred to Cimber Air in 1976, although Maersk continued to operate some services.

thumb|right|A [[Boeing 720B in 1980]]

Maersk also aimed at the inclusive tours charter market. To gain better access to the market, in December 1971 Maersk bought two travel agencies, Raffels Rejser and Bangs Rejser. This was followed up by the purchase of Unisol in 1974 and the three were merged to form a new agency under Unisol brand and an estimate of 120,000 annual trips. After having lost 100 million Danish krone (DKK) by 1979, Unison was sold to Tjæreborg in 1980. A collateral cause was Unisol's inability to profile itself in a market dominated by two high-profile, yet diametrical, owners.

Maersk Air was contracted by Maersk Oil to operate to the latter's oil fields in the North Sea. For this purpose, Maersk Air bought two Bell 212 helicopters. The airline stationed these at Esbjerg Airport and they commenced operations on 1 July 1975.

thumb|left|[[Boeing 737|Boeing 737-200 Advanced at Faro Airport in 1985]]

Stabilization with jetliners

Maersk Air took delivery of its first two Boeing 737-200 Advanced in 1976 and by 1981 the airline had 14 in the fleet. Most of them were used for charters, mostly for Danish inclusive tour operators. This was a highly competitive market, where Maersk had to compete with Conair, Sterling and Scanair, amongst others. From 1983 three aircraft were entirely dedicated to this task. Some B737s were leased to other carriers, including Guyana Airways, Malaysia Airlines and Tunisair.

thumb|right|[[de Havilland Canada DHC-7 Dash 7 in 1982]]

The challenges of the 80s

Maersk Air experienced declining profits at during the late 1970s. The revenue of DKK 535 million in 1979 fell to DKK 454 million in 1981, hitting a record loss of DKK 29 million in 1981. The company started having problems with liquidity and in 1981 was not able to pay wages to its employees. In that same year Bjarne Hansen was hired as CEO. The number of bases for charter operations was reduced, cutting personnel costs. The two Beechcrafts were sold, as were nine other of the airline's twenty-four light aircraft. A key part of this plan was not allowing the aircraft to remain idle during the day, thus maximizing revenue. The number of employees were reduced from 720 to 480. By 1985 the revenue had risen to DKK 898 million in 1985, allowing the airline to make a profit of DKK 112 million in 1985.

From 27 September 1982 Danair 38%% subsidiary was reorganized. SAS's routes to Aalborg, Aarhus, and Rønne were transferred to the pooled airline. On its side Maersk increased the number of departures on its services. The goal was to improve profitability. And although the scheme did increase passenger numbers, it failed to improve Maersk Air's financial performance in the domestic market. From 1 January 1983 Stauning was dropped from Maersk and Danair's schedules. From 1988 Maersk Air saw competition on its scheduled service to the Faroes because of the establishment of the local Atlantic Airways.

Domestic and international expansion

Maersk explored the possibilities to fly international routes. The first non-SAS international concession dated back to 1981 and granted to Air Business scheduled flight from Esbjerg via Thistedt to Stavanger Airport, Sola in Norway, using an Embraer EMB-110 Bandeirante. Maersk Air bought the company in 1984 together with the two Short 360s and renamed it Maersk Commuter I.S. in 1988. Soon the concession changed and the tiny airline was allowed to operate from Aalborg instead of Thistedt, a market with better passenger potential. The subsidiary was fully integrated in April 1990.

Changes in European Community rules in 1984 allowed any carrier to operate intra-European routes, provided that two regional airports were connected. Maersk focused on Billund airport, which was centrally located in Jutland and was classified as a regional airport. It was already a popular base for charter flights. London was a favorite destination, but all its four main airports were all categorized as "primary". To exploit the new opportunities, Maersk turned to the neglected London Southend Airport, which was classified as a secondary airport. The airline inaugurated the route on 29 November 1984 with two round trips,

thumb|left|[[Boeing 737 Classic|Boeing 737-300 at Faro Airport in 1986]]

Maersk considered both Århus and Billund as the base for their Jutland operations, and settled for Billund. The next international route to be inaugurated was to Cologne Bonn Airport in Germany in 1988, in cooperation with Lufthansa. It was flown with the Fokker 50, which had just started service with the airline. During the late 1980s Maersk Air favored the expansion of its travel agencies, both domestically and abroad. From 1993 it acquired a fleet of Boeing 727-100s and started flying for United Parcel Service.

Maersk Air also decided to enter the British market. It bought part of the Plimsoll Line, which in turn bought Birmingham Executive Airways (BEA) and Brymon Airways. After a merger as Brymon European Airways and subsequent demerger, Maersk Air UK was founded on the assets of BEA. It operated a series of international and domestic services out of Birmingham Airport, initially with a fleet of three Jetstream 31 and three BAC One-Elevens. Maersk signed a franchise agreement by virtue of which Maersk Air UK would fly with British Airways livery and flight codes, but at their own expense and with their own aircraft and crew. In 1996 the 1-11s were replaced by Boeing 737-500s. Bombardier CRJ200s were introduced two years later.

Maersk also secured a 49% stake in Estonian Air, after having beaten SAS in a privatization tender. Two of Maersk Air's Fokker 50s were leased to Estonian Air, who also took delivery of two 737-500s, replacing the old fleet of Soviet origin., and Stockholm. Billund, perhaps best known for its Lego headquarters, has a potential market of 1.5-2 million people living within a 90-kilometer radius from the airport. The third package allowed flights between any airport in the EU. Maersk Air began services from Billund to Frankfurt in 1993, and a year later it started flights from Copenhagen to Kristiansand. To meet the deregulation, Maersk carried out a major fleet reshape in 1993. The airline sold the Fokker 50s and leased them back. Meanwhile, it procured six Boeing 737-500s, which were delivered in 1996 and put at work on all most important routes. With the demise of Danair, Maersk Air focused on improving its international links. Its primary strategy was to establish routes from Billund to European destinations with codeshare agreements with major European airlines. Gradually the services were upgraded from Fokker 50 to Boeing 737-500s. Danair was dissolved on 1 October 1995, when the domestic airline industry in Denmark was deregulated.

thumb|left|[[Boeing 737 Classic|Boeing 737-400 at Faro Airport in 1992]]

Maersk's success in Jutland was noticed by SAS, which in October 1996 opened its first route out of Billund, to Frankfurt. This was the first time in which the two airlines competed head to head. In response, in the following year Maersk Air launched services out of SAS' stronghold at Copenhagen Airport to Milan, Geneva and Stockholm. Additional routes out of Billund were added in 1997. with Maersk Air being the European launch customer. With its eight daily round trips, Maersk Air only captured 10% of the market on the Copenhagen–Stockholm route, losing money on it. Maersk, therefore, started negotiations with British Airways and KLM to see if they could become part of an airline alliance. They were in close negotiations with what would become Oneworld, but pulled out in the last minute.

thumb|[[Boeing 737 Next Generation|Boeing 737-700 at Stuttgart Airport 2004]]

With the 14 June 1998 opening of the Great Belt Fixed Link, car, coach and rail transport became faster between Jutland and Funen on one side, and Zealand on the other, cutting travel time by an hour.

The same year the government introduced a domestic air tax of DKK 150 on all domestic flights, which further contributed to the fall in domestic leadership. Maersk Air anticipated a significant drop and scaled down services from a 737-500 to a Fokker 50. Yet passenger numbers dropped by 1/3 and the service was terminated on 13 June 1998. Ole Dietz took over as managing director on 1 March 1999.

thumb|left|[[Boeing 737 Classic|Boeing 737-300]]

After the Oneworld negotiations failed, Maersk Air turned to SAS in an attempt to start a cooperation. Negotiations commenced in early 1997, and the deal was announced on 8 October 1998, and took effect 28 March of the following year. Maersk would adopt EuroBonus and codeshare all domestic flights, flights out of Copenhagen and selected Billund services. In addition to the publicly stated clauses, the agreement also contained a series of illegal collusions. Maersk and SAS split up the market between them, so they no longer would fly in competition. This meant that Maersk Air would stop flights from Copenhagen to Stockholm and Geneva. Maersk Air also agreed to — gradually so to not awake suspicion — withdraw from its various codeshare agreements with other airlines than SAS. The case was followed up by the EU Commission and the Danish authorities, which carried out a dawn raid on 15 June 2000. Maersk Air was sentenced to a fine of €17.5 million, while SAS was fined €43.75 million. As a consequence, Dietz resigned as CEO and Hansen, who had been appointed chairman, also withdrew. Flemming Ipsen was hired as a new CEO, while Troels Dilling was hired as chairman.

Decline

thumb|left|A [[Boeing 737 Next Generation|Boeing 737-700 in the last livery]]

Maersk was affected by a series of labor disputes in 1998 and 1999. At the turn of the century Maersk Air fell into financial distress. The airline was hit hard by the 2001 airline recession, making a loss that year of DKK 341 million. Leadership increased in 2002, largely through the increased sale of discounted tickets. Maersk Air therefore turned to divest its non-core activities. Estonian Air was sold to SAS in 2003. In the years following the cartel case, almost the entire executive management of the airline was replaced. A large portion of the new management was without experience in the aviation industry. On 1 November 2003 Ipsen was replaced as CEO by Finn Øelund, who came from the same position in Air Greenland. He devised a new strategy, in which the airline would better utilize its fleet by placing flights closer to each other and flying throughout the day. He also proposed competing head-on with SAS, as he believed that Maersk Air with the new strategy could operate with lower costs than the tri-national consortium airline. Aircraft received a new white and dark blue livery, replacing the old light-blue Maersk colors. The airline adopted the slogan "fly as you like" and focused its route expansion on typical holiday destinations and cheap fares.

Since 2002 Maersk had seen competition in the scheduled market from Sterling Airways, which had reorganized itself as a low-cost carrier targeting the Mediterranean leisure market. In 2005 Fred. Olsen & Co. sold the airline to FL Group. The Maersk Group announced on 30 June 2005 that it would sell Maersk Air to Sterling. The sale price of Maersk Air was never made public and the assets were merged to form Sterling Airlines on 13 September.

Operations

thumb|left|[[Short 360 of Air Business at Copenhagen Airport in 1984]]

Maersk Air I/S was until 1996 organized as a partnership (), which was again owned by two subsidiaries within the Maersk Group. This allowed the company to report less detailed accounts, and hindered competitors from gaining as good a picture of the company's economic situation. Maersk Air I/S was reorganized in 1996. The partnership model was abandoned and instead, the airline became a limited company () directly under the mother company. Star Air on its side became a subsidiary of Maersk Air.

Throughout its existence, Maersk Air operated a corporate jet for the Maersk Group. Five different aircraft were used in series, first consisting of two Hawker Siddeley HS 125, These were all named Jette Maersk and served two purposes. First, they were used for flying executives. Secondly, the aircraft were dispatched to send mechanics and spare parts of serve ships of Maersk Line and other shipping companies within the group. Because this could minimize downtime due to mechanical failure, the latter proved a highly profitable endeavor.

Ground handling

Initially, Maersk and the other major Danish airlines had a common ground handling company, Copenhagen Air Services, at the eponymous airport. In 1994 Maersk Air bought out the other owners of Copenhagen Air Services. Within three years it was making a DKK 46-million profit from a DKK 401-million revenue. In 1998 Maersk merged the company with the ground handling company owned by the Swedish Civil Aviation Administration, creating Novia. It operated ground handling services at the airports in Copenhagen, Stockholm-Arlanda and Gothenburg-Landvetter.

With the deregulation of the handling market from 1999, entranced with lower costs took over a substantial portion of the market. Novia failed to retain its profits and lost DKK 80 million from 1999 to 2001. The CAA sold to Aviapartner in 2001, but the cooperation was poor. Maersk Air eventually let the company be file for bankruptcy.

Subsidiary airlines

thumb|right|[[BAC One-Eleven of Maersk Air UK]]

thumb|right|[[Maersk Air UK

Boeing 737-500 in British Airways ethnic livery at Birmingham Airport]]

thumb|right|[[Boeing 727-100 of Star Air operating for UPS]]

• Danair. SAS held a 51% share of the company, while Maersk had 34% and Cimber Air a 15%. Initially, it was to organize domestic flights and in the long run become a separate operator. Danair bought services from the three airlines, who retained flights to their respective destinations. Then Danair would set prices and sell tickets on the flights and the profits were paid out in relation to the ownership shares. The airlines were paid a fixed price, irrespective of their actual operating costs.

• Maersk Air UK operated in the United Kingdom between 1993 and 2003. It operated under a franchise agreement with British Airways with its base at Birmingham Airport. It employed the BA branding, including aircraft livery, uniforms, in-flight service, and catering, as well as terminal services. It also employed BA's flight codes and reservation system. Flights qualified for miles on BA's frequent-flyer program, Executive Club.

• A 49-percent stake in Estonian Air was owned by Maersk Air between 1996 and 2003. The flag carrier of Estonia was based at Tallinn Airport and flew a limited international network, using a combination of Boeing 737-500s and Fokker 50s. Maersk Travel was merged with DFDS Travel in 1997, to create Maersk DFDS Travel. This proved a difficult process and Maersk pulled out of the new company in 1999.

Maersk also aimed at serving the inclusive tours charter market. To gain better access to the market, Maersk bought two travel agents in December 1971, Raffels Rejser and Bangs Rejser. This was followed up with purchasing Unisol in 1974 and the three were merged to form a new agency under the brand Unisol and 120,000 annual trips. Unisol—Denmark's third-largest inclusive tours travel agency—was placed under the industrial department in Maersk, while the airline reported directly to the executive administration. This caused a lack of coordination between the companies and Maersk never made money from the inclusive tours operations.

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!scope=row | de Havilland Heron

| align=center | 2 || 1969 || 1970 || align=center |

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!scope=row | Hawker Siddeley HS 748

| align=center | 5 || 1970 || 1981 || align=center |

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!scope=row | Bell 212

| align=center | 5 || 1975 || 1993 || align=center |

On 25 January 1975 the F27 OY-APB was carrying out a landing on a wet and icy runway at Vágar Airport. Without having been informed of the conditions, the pilots veered the aircraft off the runway and collided with terrain.

The fatal accident took place on 2 January 1984. A Bell 212 with registration OY-HMC crashed into the North Sea during a flight from Esbjerg Airport to an oil platform. There arose a breach in the steering system and the pilots lost control of the helicopter. This caused the aircraft to start to spin and the pilots to reduce speed to regain control. This caused a loss of height and eventually brought the helicopter to an emergency landing on the water. Both pilots and a passenger were killed in the crash.