Trump Shuttle

Trump Shuttle, Inc., doing business as Trump Airlines [http://www.cta-otc.gc.ca/rulings-decisions/orders/1992/A/1992-A-212_e.html] , was an airline owned by Donald Trump from 1989 to 1992. The landing rights and some of the physical assets necessary to operate the shuttle flights were originally part of Eastern Air Lines and known as the Eastern Air Shuttle. It operated hourly flights of Boeing 727 aircraft from LaGuardia Airport in New York City to Logan International Airport in Boston, Massachusetts and Ronald Reagan Washington National Airport in Washington, D.C., then known as Washington National Airport at the time Trump Shuttle operated.

History

As the financial outlook for Eastern Air Lines became more pessimistic in the late 1980s, the carrier began to sell its routes and aircraft. It organized its profitable Northeastern air shuttle operation into a separate company headed by Bruce Nobles with the intent of selling it to raise cash. On October 5, 1988, amidst a prolonged threatened mechanics strike action, real estate mogul Donald Trump arranged to purchase the shuttle. In June, 1989 the deal was completed, financed through a $380 million loan from a syndicate of 22 banks. The new airline began service as Trump Shuttle on June 23. Its IATA designator code was 'TB'.

Trump pushed to make the new shuttle a luxury service and a marketing vehicle for the Trump name. Its aircraft were newly painted in white livery and the interiors redecorated with such features as maple wood veneer, chrome seat belt latches, and gold colored lavatory fixtures. The airline also was a leader in the adoption of advanced technologies; it introduced some of the first passenger self-service check-in kiosks in coordination with Kinetics at its LaGuardia base and partnered with LapStop, a startup firm which rented laptop computers to passengers.

Trump's previous experience with airlines was operating a scheduled helicopter service to Atlantic City, New Jersey. Trump was to expand this service to include helicopters from Manhattan to LaGuardia Airport and to offer scheduled helicopter service between New York and the Hamptons.

Almost from its inception, the company encountered financial problems. The Shuttle's core passengers chose it for its convenience, not its costly luxury features, and during the prolonged labor strike at Eastern Shuttle many defected to the competing Pan Am Shuttle or to Amtrak's Metroliner service. In late 1989 the U.S. Northeast entered an economic recession which depressed demand, while the August 1990 Iraqi invasion of Kuwait caused jet fuel prices to double.

Trump Shuttle never turned a profit. The high debt load incurred in the company's formation unnerved Trump's creditors as his other high profile, highly leveraged interests failed. In September 1990 the loans were defaulted and ownership of the airline passed to its creditor banks, led by Citicorp. With airline share prices depressed by the recession and anticipation of the Gulf War, they were unable to sell the operation at a desired price despite lengthy negotiations first with Northwest Airlines, then American Airlines and US Air Group.

The banks finally negotiated a complex marketing arrangement in which US Air Group would assume 40% ownership and agree to manage the operation for ten years, including fares, financial record keeping, advertising, promotions, aircraft maintenance, and labor relations. The same agreement gave USAir an option to purchase the entire shuttle operation on or after October 10, 1996 with an exclusive right to do so until April 10, 1997. 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.

US Airways subsequently announced the purchase of the remainder of Shuttle, Inc. on November 19, 1997, and the service has since operated under the name US Airways Shuttle. Shuttle, Inc. remained as a subsidiary of US Airways Group until July 1, 2000, when it was merged into US Airways.

The demise of the shuttle almost meant a demise of Trump's scheduled helicopter service to Atlantic City and the Hamptons. However, he was to continue to operate a private service for highrollers. Trump's involvement in airlines was evoked frequently in the television show "The Apprentice".