Aeronautics: Vanishing Independents

In September 1930 the brothers Charles Townsend & Nicholas Saltus Ludington, Philadelphia socialites, started Ludington Air Lines, a plane-per-hour service between New York, Philadelphia & Washington—”most travelled stretch of territory in the world.”* The Ludingtons put $1,000,000 into the company, kept most of the stock, sold none publicly. They declared themselves prepared to operate at a loss for five years. Last week they sold out to Eastern Air Transport, reputedly for $250,000.

From the outset Ludington Line was watched with keen interest by the entire industry, since operations without mail contracts were supposedly doomed to failure. Ludington set a new low for fares, a new high for economy of operation, based its hope of success on its convenient schedules. It not only borrowed railroad tactics but got the Pennsylvania Railroad to handle its tickets and to admit Ludington buses to the Penn terminal in Manhattan. At the end of the first year Ludington had carried 66,000 passengers, showed a net profit of $8,073. Skeptics wondered if the Ludington books were kept in the manner required of airmail operators by the Post Office Department; Executive Vice President Gene Vidal insisted that a profit of even $28,000 might have been rightfully claimed.

Three months later Ludington began to slip. It was getting stiff competition from the mail-subsidized Eastern Air Transport, which had begun a passenger service over the same route. A reorganization shook out Vice Presidents Vidal and Paul Collins, who had built the line with the Ludingtons’ backing; shook in as president James M. Eaton, formerly of Pan American.

Meanwhile Postmaster General Brown, advocate of airline monopolies, had been urging E. A. T. to buy out Ludington. Negotiations last year got nowhere. Finally, the story goes, the Postmaster General threatened to give Ludington a mail contract unless E. A. T. bought. E. A. T. bought last week, announced it would maintain all Ludington schedules except Washington-Norfolk, which E. A. T. already served. Thus passed, as Cord’s Century Lines passed a year ago, another of the “independents” into the Big Four of U. S. airlines.

North American & G. M. A Ludington motive for selling out was fear that Pennsylvania Railroad might withdraw its support. Reason: Pennsylvania has an interest in Transcontinental Air Transport (air-&-rail) which, by a merger now pending, may become closely connected with E. A. T.

The pending merger is far more momentous than the Ludington-E. A. T. deal. It involves North American Aviation, Inc. (holding company for E. A. T.) and General Aviation Corp., which is 40% owned by General Motors. Together, their total assets are $25,000,000. Their holdings are complex:

General Aviation Corp. has an airplane factory near Baltimore. Also it owns about one-fourth of Western Air Express. Western Air Express and T. A. T. each own 47 1/2% of the big line named Transcontinental & Western Air.

North American controls T. A. T. and owns E. A. T., which operates from New York down the Atlantic seaboard to Miami. Also it owns Berlinger-Joyce Aircraft and is second largest stockholder in Douglas Aircraft Corp., and has large holdings in Curtiss-Wright Corp. In addition it controls various non-flying enterprises such as Sperry Gyroscope and Ford Instrument.

By the pending deal, General Aviation would acquire the aviation interests of North American. Results: an integrated network of lines across the U. S. and down the Atlantic coast; an outlet for G. A.’s airplanes; General Motors as United Aircraft’s rival for the title of largest single factor in the U. S. aviation industry.

*Originally the line was named New York, Philadelphia & Washington Airway Corp. The name was changed not only because it was awkward, but because the line actually touched neither New York, Pennsylvania nor the District of Columbia. Its bases were Newark, Camden and Hoover Airport on the Virginia bank of the Potomac.