How Braniff Went Bust: The Collapse Of The Fastest-Growing Airline In America

Hello, and Welcome In 1982, Braniff International, one of the most profitable and largest airlines in the world,   ran out of money. The world, however, wasn’t really surprised. Why weren’t they you may ask? Well,   Braniff had been showing signs of a struggle for the past few years, and everyone was just waiting for the straw that would break the camel's back. But what happened to cause them to drown in an industry that it once dominated? This is the nosedive of Braniff International. Braniff started out in the year 1926, and over the next five decades,   they became a major carrier in the Southwestern United States. From their main hub in Dallas,   they grew to serve many domestic and international markets with their large fleet of jets. Some iconic aircraft the airline operated in its heydays included the Boeing 747, the 727,   the Douglas DC-8, and even Concorde flights between Dallas and Washington DC   in partnership with British Airways and Air France. Everything was going extremely well for the airline until 1978 when airline deregulation was enacted. 

Since the government no longer controlled the routes and prices airlines could set,   Braniff placed a big, Texas-sized, bet on deregulation and decided to expand rapidly. The number of routes they served increased by 50%   overnight as Braniff built itself a domestic and international empire.   In order to finance their new operations, the airline borrowed heavily. They also moved their headquarters into a new facility in Dallas in 1978, which cost $6 million in rent a year. Braniff expected profits to increase, but, the exact opposite happened. Passenger numbers decreased due to competition from other airlines, mainly American and Delta Airlines, which were also based in Dallas. In addition, Braniff’s costs rapidly increased along with their expansion,   with Braniff’s fuel expense increasing 94% to $400 million. Increased fuel usage combined with rising jet fuel prices was a recipe for disaster,   and Braniff was pushed further and further into debt as the country entered into a recession.   Layoffs preceded in the next few years, with the company laying off a quarter of its workforce. By 1981, Braniff was over $700 million dollars in debt. The industry had too many seats and not enough passengers to fill them. Some Braniff flights were taking off less than half full,   and the quality of service had started to dwindle. Braniff’s board members realized that a change in management was imminent, so the airline brought in staff from the newly successful Southwest Airlines as the last resort to save Braniff. They made another bold move by converting planes to either all economy or all First class layouts.

While it was innovative, passengers who wanted higher quality services switched to American and Delta Airlines, both of who were increasing their services to DFW. Next, Braniff launched giant sales to advertise its Texas Class,   a new economy service, with a simplified fare structure. Other airlines responded by matching Braniff’s sale prices and offering more flights to the same destinations as Braniff. In January 1982, Braniff started recording negative cash flows,   which meant that they were spending more money than they were making.   The company needed cash desperately if they were going to have any chance of survival. Braniff attempted to sell off its Latin American routes to Pan Am,   but the Civil Aeronautics Board denied it, citing that Pan Am would have a monopoly in the area. The routes were eventually sold to Eastern Airlines for $18 million,   but Braniff had already lost more than they received by the time the new deal was made. Not knowing where else to turn, Braniff launched crowdfunding. A donation department was set up at Braniff’s headquarters to try and raise money to keep the airline afloat,   but they still couldn’t get the funds they needed to pay their bills,   despite the generosity of thousands of people in the Dallas area. A few months later, there was a threat of an industry-wide pilot strike that left Braniff with no other options. On May 12th, 1982, Braniff International Airways ceased all operations.   All flights were immediately grounded with thousands of passengers and crew members stranded. The issues of high competition and too few customers that brought down Braniff were similar to what plagued other airlines, but since Braniff had spent millions expanding their network right after deregulation, the airline was in a position that made them extremely likely to fail. Some analysts agree that the actions of management after Braniff’s rapid expansion were virtually pointless, as the airline had already put itself in a position that was unrecoverable. However, this wasn’t the end of Braniff. 

There were two comeback attempts:   one in 1984 and one in 1991. The first attempt used a low-cost business model but failed after 5 years due to high competition. The second attempt was even less successful, with the airline operating only a year before it stopped flying due to issues within upper management. Braniff’s subsidiaries continued to operate after the original airline shut down.   Braniff Education Systems, Braniff International Hotels,   and even their aircraft maintenance services carried on the legacy of the airline. Even Braniff’s parent company, the one that used to run the original airline,   is still operating. They’re now a branding and licensing firm that still owns the airline’s intellectual property and is only one of two defunct airlines to do so, the other being Pan Am. Recently, more companies have been created to protect all the trademarks, copyright,   and intellectual property of Braniff and all the other airlines it acquired during its growth. But Braniff’s influence in the airline industry can also be found today. In 1983,   a year after Braniff shut down, employees from the original airline got together to form Sun   Country Airlines in Minneapolis, which still operates today as a low-cost holiday airline. If we ever want to see the original Braniff flying again, it’ll have to be a decision by the companies that own the branding to either start the airline themselves or sell the usage rights of their branding. But until that time, it’s legally impossible for the airline to start up again. Braniff’s downfall may have been a nasty one, but it just goes to show that when airlines need to make big decisions, they must take industry predictions into account accurately.   Otherwise, they might end up destroying themselves and nose-diving into failure like Braniff.