Motley News

Trump’s formal launch in the air business occurred in March 1988 when he acquired three Sikorsky S-61 helicopters that belonged to Resorts International Airlines (RIA) used to shuttle high rollers to the Resorts Casino Hotel in Atlantic City, New Jersey. It launched with a typical pledge from Trump, to create “the best transportation system of any kind in the entire world.”

Nothing really controversial here. Some bankruptcies from other airlines owners, buy-outs, negotiations, etc. Trump added Boeing 727s to his fleet. The shuttle was originally to be a “no-frills” operation for business travelers, but you know Donald. He wanted to turn it into a luxury airlines.

“We took old 727s and spent a huge amount of money stripping them down to the frame and refurbishing them with chrome seat belts, maple bulkheads and faux marble bathrooms [real marble would have weighed the aircraft down],” Bruce Nobles, a former Pan Am executive and president of Trump Shuttle from October 1988 until June 1990, told The Globe and Mail in a 2011 interview. “It was a problem: we spent too much money on the airplanes.” (Link)

The new Trump Shuttle operation launched on June 8, 1989, and by the end of August had returned to a strong market share of 40-50%. Trump pushed to make the new shuttle a luxury service and a marketing vehicle for the Trump name. Both Trump and Pan Am spent millions on advertising campaigns around this time in an attempt to maintain strong competitive positions.

AUGUST 1989 INCIDENT

In August 1989, a Trump Shuttle flight arriving in Boston incurred a nose gear failure upon landing due to maintenance errors by Eastern personnel prior to the acquisition.

FINANCIAL DIFFICULTIES

The company was never profitable. Passenger traffic on the shuttle began to decline in November 1989. In late 1989, the Northeastern United States entered an economic recession which depressed demand, while the August 1990 Iraqi invasion of Kuwait caused jet fuel prices to double. While costs of running the airline rose, many of the corporate customers using the shuttle were cutting travel budgets. Trump’s casino business was simultaneously encountering serious difficulties, and Trump was forced to cede control over several business holdings to his bankers in June 1990 in order to avoid personal bankruptcy. The airline ran out of cash and defaulted on its debt in September 1990.

Trump Shuttle conducted some charter operations around this time to monetize the shuttle’s spare aircraft. In June 1990, the airline carried Nelson Mandela on his eight-city tour of the United States. During the Gulf War of 1990–91, the airline received a government contract to ferry U.S. military personnel between the key domestic bases of Dover AFB, Charleston AFB, Travis AFB, McChord AFB, and Kelly AFB.

THE SALE

Trump had personally guaranteed $135 million of the shuttle’s debt. Following the default, Citibank made arrangements for Northwest Airlines to take control of the shuttle in exchange for relieving Trump’s personal liability on its debt, and all sides were reportedly close to an agreement by April 1991. Northwest announced that its acquisition of the Trump Shuttle was cancelled in August, reportedly due to the Trump Shuttle’s unions demanding parity with Northwest employees and Trump refusing to discount the price to reflect this.

I wonder if this is at least part of the reason Trump does not like unions.

On April 7, 1992, Trump Shuttle ceased to exist when it was merged into a new corporation, Shuttle, Inc., which began operating as the USAir Shuttle on April 12, 1992. Trump claims to have made a “couple of bucks,” but it’s more likely there was a loss of $128 million.

---

CLOSING OPINION

Operating and owning an airlines is a difficult business. Expect to go through losses before, hopefully, eventually making a profit. Donald Trump just did not have the wherewithal nor the commitment to make it work. Get rich quick schemes were more Trump’s style. Perhaps Donald thought he could make money fast with the shuttle since the original deal did show some promise. He simply bit off more than he could chew with the shuttle airlines and changing to a luxury airlines was a bad decision. At least Donald bailed before he got too deep in debt.

For more details, see Wikipedia’s “Trump Shuttle.” https://en.wikipedia.org/wiki/Trump_Shuttle