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36

Tail Spin

PBA was an airline in disgrace. Peter Van Arsdale had two weeks to save it. He did. Then the next disaster struck.
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Looking through the window of his brother's office, Peter Van Arsdale could see the reporters across the old airport road, milling about in the harsh Florida sun, CBS and ABC, minicams and instant eyes, a whole pack of them, swarming at the scent of disaster. That noon, Saturday, November 10, 1984, Federal Aviation Administration officials had delivered an "emergency order of revocation" to the Naples headquarters of Provincetown-Boston Airline Inc. (PBA), America's largest commuter carrier, and already the reporters were out in force. Peter could hear them outside, shouting their questions through the closed door, baying for blood.

And blood there was. Peter's older brother John, chairman and chief executive officer of the company their father had founded 35 years ago, was disgraced, stripped of his pilot's certificate, and accused by the FAA of "reckless" flying that "endangered the lives" of passengers and crew. Vice-president of operations John Zate, a 24-year PBA veteran and member of the board, was gone too; Zate was accused of certifying a pilot on PBA's DC-3 without giving her a flight test, and of multiple "fraudulent or intentionally false statements" on official flight-test records. The chief pilot, the assistant chief pilot, and the three pilots with management rank had all lost flight status, likewise accused of faking flight test records. The FAA also cited the airline for more than 160 violations of training regulations, including 136 specific cases of flight attendants serving as crew members when their requirements for "recurrent training" had not been met. In addition, the FAA listed no fewer than 6 violations relating to aircraft inspection and maintenance, including "exceeding [the] time limit for required inspection" and "use of unauthorized personnel to perform maintenance."

An emergency order of revocation is the most severe action the agency can take. Four thousand passengers traveling on PBA's more than 600 daily flights were stranded, 103 planes grounded, dozens of cities left partly or wholly without air service. And 1,500 PBA employees were suddenly out of work. Peter's first thought, sitting there in the beleaguered corporate headquarters, was that the airline would go broke. Air Illinois, faced with a similar crisis 11 months earlier, had dissolved. Air Vermont lost its certificate in January 1984, and had lurched along under the protection of the federal bankruptcy courts for months. PBA, Peter knew, paid out $5 million to $6 million each month in bills and debt service. Without a certificate, it was technically no longer even an airline, and thus was already in default on its loans.

Even before the latest disaster, 1984 had been a turbulent year for the Van Arsdales. In July, after more than 30 years of safe flying, PBA had suffered its first crash: A Cessna pilot flying an unscheduled trip from Provincetown, Mass., to Boston undershot his approach, plunging into the harbor and killing his wife, the sole passenger. In September, another Cessna pilot lost power just off the Naples runway and crashed into the nearby woods, killing one passenger. The National Transportation Safety Board (NTSB) would later report that a ground-crew member had accidentally filled the Cessna with the wrong fuel.

Still, neither tragedy -- nor the growing numbers of complaints about schedule delays, rude personnel, and lost luggage -- seemed to slow PBA down. The airline had been on a fast track ever since the brothers took over from their father in 1980, and 1984 was a financial record breaker. By the end of the first three quarters, PBA had recorded $58.4 million in revenues, up 41% from the $41.4 million registered the entire previous year. Profits climbed as well, up to $3.3 million over nine months, 43% more than all of 1983's. "Johno," 40, ran the company like a fiefdom, dazzling both competitors and Wall Street with his aggressive style. In October, he bought Marco Island Airways, another Florida commuter, and added the Bahamas to his swelling list of stations. He had $20 million worth of new planes on order and a $15-million private placement in the works. For the whole year the Van Arsdales were expecting to board close to 1.5 million passengers, a record for a commuter airline. In 1985, John predicted, the figure would approach 2 million.

With November's decertification, however, John's plans lay in ruin. The issue became survival.

Peter and the board, or what was left of it, met that afternoon in John's old office, behind closed doors, to consider their grim alternatives. File for Chapter 11? That would protect them from their creditors, but it could mean turning control over to a court-appointed trustee and trying to run the airline COD. Appeal? That would take 60 to 90 days. "Besides," Peter asked, "what the hell is there to appeal?" Sell? Liquidate? John had wanted to play the political card, hoping that such influential regular passengers as Sen. Edward M. Kennedy or Massachusetts Congressman Gerry Studds could sway the federal government. But Peter thought that was unrealistic: "No politician is going to oppose safety in the air."

Instead, the board agreed, there was only one course for survival: Win a new certificate, and with it the right to fly again. Before competitors took their market share. Before the money ran out. They would have to replace their discredited executives, submit a new management team to the FAA, then rebuild the airline from scratch, winning agency approval for each step. All their manuals would have to be rewritten, each plane reinspected, each crew member retrained and retested. By the book.

It might have been better, Peter reflected, if he had been the one forced out. The airline had been John's life, a 24-hour-a-day, seven-day-a-week obsession; he would have reveled in the challenge. Peter had had other plans. He had just gotten married again, and had bought a new boat, Slick, a 42-foot racer. So far he had only been able to sail it once.

"There were times, during that meeting, when I wondered if I hadn't gotten the short end of the stick," Peter remembered. "I've always sort of worked in John's shadow. I was temperamentally suited for it. There are times you reflect how nice it would be to get home in daylight hours and see the kids, and I knew I wouldn't be able to do that for a while."

In the office, the joke had always been that PBA stood for "Peter's Brother's Airline." Now Peter's brother was gone.

There was no mistaking John Van Arsdale if you worked for PBA. He would show up at a station, crips in his black and white pilot's uniform, rattling off questions and barking commands, every inch a former Marine. It was as a working pilot -- the Flying CEO -- that he built PBA into a commuter giant, and it was as a working pilot that he brought it down. "The key to good management is to set an example that starts at the top," John preached. "At PBA everybody gets their hands dirty."

PBA had been an unusual commuter long before the two brothers bought it from "Old Man Van," however. Its strategic core was a mixed fleet, a variety of plane sizes; PBA guaranteed passengers a seat, then rolled out the right size plane to match capacity to demand and keep load factors high. Operating in two resort markets, Massachusetts in the summer and Florida in the winter, PBA shuttled most of its assets -- planes and staff alike -- back and forth seasonally. With his Florida markets protected by the Florida Public Service Commission, the Van Arsdales' airline had never seen a year without a profit.

The deregulation of the airline industry in 1978 changed the rules of the game, and the airline had to adapt. It was two years before John could convince his father to step aside, but once at the helm he changed course with a vengeance. His mixed fleet became a competitive weapon, allowing him to schedule frequent service, slash his prices, and still show an operating profit thanks to his high load factors. A master strategist quick to react to the market, John loaded on debt, took the company public, and pushed for growth. Since 1979, PBA moved from 6 markets to 36, from 300,000 passengers a year to nearly 1.5 million. Revenues increased at a compound annual growth rate of 46%, profits at 17%. He added 66 new planes, including the company's first turboprop, the 19-passenger, Brazilian-made Bandeirante. Starting with a staff of 230, he built his payroll to 500 in two years and 1,500 in four.

On paper, the rise of John Van Arsdale ended with a single flight. On November 29, 1983, according to the FAA, he had been flying a Martin 404 from Hyannis, Mass., to Naples when he lost all the hydraulic fluid just after takeoff. Rather than landing the plane at once, as required by the FAA, he had flown on to Jacksonville, Fla., where PBA has a maintenance base. In Jacksonville, he moved the passengers onto a Nihon YS-11, and flew down to Naples. Since he had never won an FAA rating on a YS-11, he was flying illegally. Then, when the trip was completed, he had forged another pilot's signature on the flight log.

"Blame it on fatigue," John said; the brothers agreed at the time that it was dumb. "But I didn't worry too much about it," Peter said. "I didn't think he'd get caught."

It was, said one PBA executive, a characteristic act. "Johno was a typical entrepreneur. And what does an entrepreneur do to build a company? He takes risks."

In fact, John had a long history with the FAA. The sign over his office door read, "The Lord Giveth, and the Government Taketh Away," and he was outspoken in his criticism of the agency's restrictions on his plans. But well before that November flight, PBA's fast growth had brought major stress. Policies and practices that had worked with 230 employees were outmoded with 1,500. A manager who had been able to oversee the work at 6 stations could never keep up with 36.

"There was always a crunch; never enough people or enough time," one manager remembered. "So we shortcut proper procedures."

"John tried to run everything himself," another said. "He was a workaholic. But he got so immersed in the details that he couldn't set policy. The only policy was to get the job done at any cost."

That policy, one former pilot charged, led to widespread violations of safety rules. Dominic Carlo Giammette, who was fired in December 1982, testified to the FAA about bacteria that had grown in the fuel tank of the Bandeirante; PBA, he said, refused to put in an anti-icing, antibacterial additive, contrary to both the manufacturer's requirements and the FAA's rules. Giammette charged that his colleagues were allowed to fly more hours than the FAA's maximum and that they were instructed to log times that were in compliance with FAA regulations, that baggage handlers overloaded cargo areas, and that station managers listed adults as children to get loaded planes under federal weight restrictions.

Giammette had had a brief but stormy career with the Van Arsdales. Hired early in 1980, he was fired three years later in a dispute over his refusal to land a plane in heavy fog. PBA management labeled him a hothead and later tried to deny him unemployment compensation, charging that he was fired for "violation of company rules," but the Florida labor board ruled that his dismissal had nothing to do with his performance as a pilot. Giammette had gone once to the FAA in 1983 with no result. Then, in September 1984, after the Florida crash, he went to the FAA again.

The FAA had already inspected PBA twice that year. In February, it investigated 183 charges based on allegations forwarded by the president of the Aviation Safety Institute, but turned up only "five minor items." In February, when Secretary of Transportation Elizabeth Dole ordered scrutiny of the nation's entire commuter fleet, PBA was inspected again, and again found clean. This time, though, Giammette not only brought charges to the FAA, he delivered copies of the company's falsified records as well.

In November, when the FAA set up a motor home outside the PBA office to begin its third investigation of the year, John went into his crisis mode, seeking to minimize the possible damage with equal measures of conciliation, stridency, and bluster. On November 7, when he announced his record third-quarter revenues, he also announced the resignation of his vice-president of operations. PBA, he said, was "cooperating fully" with an FAA investigation into "alleged deficiencies." But in correspondence with the agency, he took a harsher line, accusing its officials of "a witch-hunt," conducted "to make the company an example of the power that the FAA is capable of exerting." He told employees that Giammette was on a "vendetta."

Saturday morning, before he saw the actual revocation order, John escalated his attack on "this massive abuse of federal power." He sent a telex to other stations urging the staff to protest directly to Washington. His pilots were quick to the barricades. John had hired most of them, and they liked his style. "It's time we stood up -- this isn't the Soviet Union," one shouted to the raucous crowd meeting in the Naples airport lounge. "If it takes marching on Ronald Reagan, let's do it."

"Why the hell should Johno have to give up this company?" another asked. "Without Johno, it's nothing."

But once the agency letter came, John had no choice; with his license revoked, he would probably never again be allowed to work in a position of responsibility in the industry. By the time he met a reporter from an ABC affiliate for a last interview, John had finally given up. He looked neat, freshly shaven and in a clean shirt. But his red eyes were rimmed with exhaustion and he couldn't help rambling on camera, fighting the quaver in his voice.

"The FAA is determined to put PBA out of business. They've blown everything out of proportion," he told the reporter.

"Do you have any hope of getting the company started up again?"

"No."

"Could Peter start it up again?"

"No," John said. "It's six months to a year before you can get your certificate back. By then you have no passengers and no image. You've lost all of your ticket-counter space. You've had all of your airplanes repossessed. You don't have any qualified employees."

It was, on advice of counsel, his final interview. By the end of its meeting that Saturday, the board had voted to accept John's resignation as chairman and CEO of the airline he had built in his own image.

Ever the hands-on entrepreneur, John Van Arsdale wrote the press release himself.

Like his brother, Peter had been part of his father's airline since he was a boy: first as a station hand; then as a pilot; then, after a sabbatical of sorts, as a company executive. But while John had joined the Marines for his two years away from PBA, Peter had gone to California. Like John, Peter came to work in a pilot's black and whites, and he was deferred to as a Van Arsdale. But he had never had to act the boss. "Coop," he had been called, for Gary Cooper. A tousled blond with a tan, he had never been much of a talker. "Yup," he'd say. Or "nope."

Privately, Peter had been relieved when the ax had finally fallen; the seven days leading up to the decertification had been the worst week of his life. He hadn't even known the airline was being investigated until the Sunday before, when he had checked in at the office after his first overnight on the new yacht and had seen the FAA motor home parked outside. As the week progressed he took over for the disgraced head of operations, found the faked records for himself, and wondered if the agency would discover John's illegal flight. Then, finally, he watched while his brother went down in televised agony.

Like John, Peter was convinced that PBA was safe. Except for John's flight, Peter insisted, all the FAA had were the training flights, now corrected, and some "irrelevant" infractions. "We had unsafe paper, but we didn't have unsafe planes or unsafe people," he complained. "Unsafe . . . give me a break."

It just seemed so unfair to him; he thought PBA had started to turn a corner. He and his brother had wrestled for hours over the strains of growth, figuring out how to build a management structure that would keep PBA sound. Finally, John had agreed there would have to be some changes. They had hired one consulting group to streamline their maintenance procedures and another to develop their training -- although neither one, admittedly, had been able to make much headway yet. "Everybody says, you guys are on a fast growth track, and yes, we are, but we've been on it for five years," Peter said. "Less was slipping through the cracks when we got shut down than in any time in the past five years."

The Monday after the FAA's revocation order, the news was grim. PBA stock, at 7 3/4 before the crisis, fell to 4 afterward; analysts pronounced themselves "shocked" and "perplexed" by PBA's collapse. Peter's competitors were already announcing plans to invade his markets. The president of Southern Express Airways Inc. told the Naples Daily News that PBA would never come back. He planned to expand his fleet, he said, if that is what it would take to serve the state.

Peter believed the news would get better. The stock would come back; his competitors would overreach; the media would move on to the next disaster. But it all depended on how fast he could get flying. The sooner he was in the air, the more absurd the agency's action would look, the easier it would be to convince his employees that PBA still deserved their loyalty, and the faster Wall Street would forget its doubts. Most important, the sooner he was serving the public again, the faster his passengers would forget the crisis within what one Boston television station that Sunday called "the most unsafe airline in America."

"It's full speed ahead, and we'll just see what it takes to get recertified," Peter told his staff. "I don't see that much changing."

John had left him with real strengths. PBA had always kept vendor accounts current, and had just paid the month's bills. All the loans were secured to 180%, so the banks would be patient. And cash wasn't the crisis Peter had feared; by shutting him down the FAA had shut down most of his expenses as well. It would take only $50,000 a week to keep going while getting recertified, he estimated, and he had nearly $3 million in cash and receivables.

The board was a help, too. The brothers had picked its members carefully when they had taken the company public one year before; most were family friends, with strong ties to the communities PBA served. Edwin J. Putzell Jr., 72, was not only former general counsel for Monsanto Co., he was also chairman of the City of Naples Airport Authority. On John's resignation he agreed to serve as temporary chairman of the PBA board. Sixty-two year old Mike Fenello, a friend of board member C. Bill Gregg, was lured out of his second retirement to oversee operations. A no-nonsense former Navy flier, Fenello had served both as vice-president of operations and safety at Eastern Air Lines Inc. and as an FAA deputy administrator. He knew safety regulations, and he knew how strictly the agency could read them. Board member Philip L. Thomas, a New York City public relations expert and a former vice-president of Esmark Inc., helped Peter with the airline's all-important media strategy. PBA officers would no longer be available to the press, Thomas suggested; henceforth all statements would come by release, signed by the chairman, so no one would be misquoted or have statements taken out of context.

The mixed fleet, traditionally the source of PBA's strength, was a mixed blessing as Peter tried to get back in the air. Each plane type had to win certification separately, so the process would take five times as long. Still, PBA could bootstrap its way back, bringing the line up in stages, one plane type at a time. In most of its markets, PBA had a 90% share before the shutdown. With just his small planes in the air, Peter would be running a much lower cost operation; he could make money with only 25% of the market.

The FAA was cooperative. On Tuesday, three days after the shutdown, the agency agreed to let Peter serve as CEO, since he hadn't been personally involved in the violations. And it accepted his stage-by-stage start-up plan. That same day, the agency sent down the first of dozens of staffers; tables were set up in the auxiliary offices; and a group started assembling the manuals, creating new directives page by detailed page. Maintenance inspections began. The pilots were sequestered at a resort in the Everglades, half an hour away, and ordered to stand by for ground school.

On Wednesday, the day after the FAA gave PBA the green light, chairman Putzell issued his release, announcing "high hopes" to have the airline flying "by next month," a couple of weeks away. Peter, however, had an earlier deadline in mind. He sent a telex to his staff announcing that first flight would come the following Tuesday, just 10 days after the shutdown. They would be open for reservations by the weekend and flying before Thanksgiving.

For the next few days Peter worked day and night, fueled by hot coffee and diet Coke. He was everywhere, helping write manuals or soothing a tearful secretary; late at night he worked the phones, listening patiently to irate former customers, arranging a rebate for one golden-ager left stranded by the shutdown. He would have worked straight through if he could have.

But it would not be enough. Sunday night, Peter discovered they would miss his self-imposed deadline. He had assumed he could use sections from his old manuals for the start-up, but the FAA was insisting that everything be done anew. That meant a two- or three-day delay.

He sat in his office, frustration and fatigue simmering out together. "Damn. It cost us money, and it cost us credibility." John would have howled loud and long. Should Peter have tried to push the agency harder? His staff would think so. "And I can't even say anything to the press, because the FAA is so sensitive."

It took the chairman of the board to snap him out of his funk. There would have to be some changes, the board agreed. No more public predictions. And no more looking back. Right or wrong, just or unjust, the FAA was his boss, "and you don't get in a pissing contest with your boss."

"And get some rest," the chairman added. "You're no good to anyone if you're exhausted."

It was the best advice Peter had gotten all week. The next morning, Monday, the bags under his eyes were gone and his smile was back. The chairman's advice had struck a chord: Peter resolved that his second week as CEO would be different. He and John had been talking about making changes for years; now Peter could act on them. The shutdown had made PBA a small business again, and in place of 1,500 employees and million-dollar revenue flows he was working with a skeleton crew and $50,000 a week. The company had hired consultants; now was the time to give them their head. The organization chart was 10 years out of date; now was the time to revise it. It wasn't his job, he realized, to add to the clutter of coffee cups around the manuals, or to try to keep an eye on every fire. That had been one of John's mistakes.

"The only thing I can't do is panic. You get so damn busy running around you can't find time to sit and think. John and I had problems deciding my role; it had never been clearly defined. Now I've got to sit down and decide what I should be doing."

Peter's next crisis -- the resignation that morning of Fred Valentine, vice-president of maintenance, a member of the board, and a nine-year PBA veteran -- convinced him that he was on the right track.

Val was typical of the old PBA. He knew maintenance as well as anyone, better than most, but he was as autocratic as John and as much a hands-on manager. He couldn't delegate and wouldn't change. Since the autumn he had been fighting a new tracking system the consultants had proposed, a system that promised to increase productivity by 50% and save the company $1 million annually.

Now that PBA was shut down, Peter had told him, he would have a perfect opportunity to put the new system in place. But Val had refused, even after his new CEO insisted the issue was not open to debate.

Peter merely shrugged when a secretary delivered his old friend Val's resignation two hours later. "Frankly, it was something I would have had to deal with down the road anyway," he mused. "If something wasn't Val's idea, it wasn't a good one. I've got lots of talent in maintenance, and it's always been stifled."

He knew how it would look to the outside -- one more PBA executive gone, and a challenge to the credibility of his maintenance department, which had been largely untarnished by the investigation. So he simply issued no release. He made his promotion that afternoon but kept the news inside the company. Then Peter spent the rest of the afternoon loading his papers into grocery bags and carrying them to his brother's old office.

"The chairman of the board convinced me to change offices," he explained sheepishly. "The captain of the ship used to be here. I have to move so it's clear we've still got a captain."

John's Siberian tiger poster came off the wall, replaced by pictures of spinnakers billowing in the wind. Framed snapshots of Peter's two children and second wife replaced the aircraft portraits John had kept on the credenza.

Actually, he liked his old office better. Before, he had looked out the front, at the road. Now he looked out the back, at a pile of dirt. Not that he had much time to stare out the window.

By Wednesday afternoon, Peter felt nothing but optimism. Someone had delivered a cake with "PBA Forever" to the office; "Good Luck PBA" flowers sat at the deserted Naples ticket counter. The crisis had brought everyone together: the operations secretary who worked 20 hours, glued to her word processor, took a 6-hour nap, then came back for another 20; the Miami baggage handler who had come in on his own time and repainted all the carts so the Van Arsdale airline would look spiffy when Peter got it back in the air.

More and more, however, Peter was thinking beyond simply getting back in the air. If he could put the new systems and controls in place now, while PBA was small, and keep them in place as he brought each stage up, the payoff would come in dollars; reducing expenses by 3? per available seat mile, he estimated, could bring $12 million to the bottom line. He would never have a better chance. All of the old managers who would have fought the changes were gone, disgraced or resigned. Most of the men who met in his office for his first managers' meeting that Wednesday afternoon were new to their positions.

The mood at the meeting was ebullient. All systems were go, and the manuals would be finished any hour. The pilots were standing by to start testing. Mike Fenello reported that the FAA is "completely at our disposal."

PBA would be flying by Sunday, four days away.

Peter had given a lot of thought to running a managers' meeting, even before he became CEO. He had always thought John was too critical, too much like their father. His meetings were hour after hour of finger pointing, with no agenda and no objective. So Peter sat quietly, drumming his fingers on his desk as his managers had their say one by one. Having the CEO's ear was a new experience for most of them, and they took it -- at length. What should have been a half-hour meeting stretched on to two hours, because every decision was deferred to Peter. We need 200 copies of the manuals -- what printer should we use? The pilots would be testing at the airport -- what motel should they stay in?

In time, Peter hoped, he would be able to avoid so much detail. But for now his managers needed all the support they could get. "I've got a lot of guys in there who are really trying to watch the dollars, and I've got guys in there who have never had to make decisions." He knew how they felt.

"This is the rough part now," he assured them. "But I have to warn you. You guys are going to be filling out a lot of forms. Our guys are going to get the message: Fill in all the boxes. I want to come out of this squeaky clean. And I want to stay squeaky clean."

He carried much the same message when he went out to give his talk to the pilots at Thanksgiving dinner.

The pilots had taken decertification hard, and they had been under the gun ever since. Rather than marching on Washington, they had been put through flight training, shipped off to some developer's folly in the Everglades, away from their families, for day after day of classes. Testing had started Thanksgiving morning, two hours of flying maneuvers with the FAA inspector watching every move. Most of the PBA executives, with their wives, had driven down to the resort in the Everglades in a show of support.

Peter got to his feet slowly when he finished his pumpkin pie, pushing back his chair and buttoning his unfamiliar sport coat. Public speaking had always been John's job; standing in front of an audience still made Peter's palms wet.

It began as a low-key pep talk. "Think of decertification as a learning experience," he told them. Better training and planning would make everyone's life easier, he promised, and "PBA will be even more awesome than it was before."

Then he tried to explain about the sport coat. The black and whites had always been a symbol of the flying Van Arsdale boys; last Thanksgiving Peter himself had flown five round-trips between New York and Hyannis. But he had decided the uniform had to go. It gave him too much exposure to the regulations: If John hadn't been flying he would still have been CEO. "So I'm probably going to be 15 minutes later to work, trying to figure out what to wear," he joked. "But I'm not going to be any different inside."

Finally, he began to warm up. "I don't worry too much about those guys," he said of his competitors. "They don't have the balance sheet to go out and get new planes. And rather than keeping things smooth, they're just getting greedy. They're on a self-destruct program."

He scanned the room for effect. Southern Express's planned expansion into PBA's turf was foundering, but the bluster of their president had stung many of the pilots, and the room had fallen silent.

"There are a lot of guys out there licking their chops . . . and I can't wait to take it to 'em!"

Privately, Peter thought his competitors would take it to themselves. Southern Express had been overbooking heavily, leaving reserved passengers stranded all over Florida. But Peter was trying to act a new part. He had always been laid back; now he had to show them he could be aggressive, no longer the kid brother but the boss, willing to go toe-to-toe in the competitive battle. "Take it to 'em," was more John's style -- although when Peter thought about it he liked the way it sounded.

John himself came to the office only once that week.

Time had stopped for John with decertification. He looked tan and relaxed, but the threat of a legal battle dragged on, and his 63-year-old mother worried about what he would do with himself. His plans were vague. Write a book? Move to France? Run for office? In the meantime, he had a house filled with long-deferred projects to keep him occupied, and lunches with his son at McDonald's. He had come by the office to pick up a few personal effects, and to see if he could borrow his brother's boat.

"Sure," Peter agreed. "I could only use it between midnight and six in the morning anyway."

Then he stood with John in his new office, looking at seat fabric for the new planes until his brother was ready to go.

"Anything I can do to help?" John asked.

"Nope," Peter said.

To Peter Van Arsdale, standing by himself on the tarmac that early Sunday morning, it was the sweetest sound in the world. The first PBA Cessna was taking off, with four paying passengers aboard.

He had done it, against the predictions. And he had done it fast. Just two weeks after the shutdown he had won a new certificate, "the most inspected airline in America," according to the FAA. Across the state, and up north as well, PBA was flying again, but Peter's way -- tighter, leaner, and in better control than ever before.

He hadn't expected to see the press at 6 a.m. Journalists, he thought, slept late; to accommodate them Peter had scheduled a "first flights" media event that afternoon. But five reporters had come anyway, more than one for each passenger. For a change, Peter was glad to see them. For two weeks, the pictures on the news had all been grim, grounded airplanes and a deserted airport. But now the story was upbeat, and he wanted it told. Certainly his staff looked slick: uniforms pressed, smiles in place. Each one wore a button, "PBA . . . We're Flying!" And there were cards on the check-in counters with the same message. The baggage handler walked out to each passenger's car, thanked each person for flying and took each bag from curbside; then he weighed each item, down to the pocketbooks, so passengers would know that PBA was squeaky clean.

That afternoon, the turnout stunned even Peter. It seemed half of Naples was there, kissing his cheek or shaking his hand: the regular passengers and friends of the family, chamber of commerce types and his laid-off staff, along with a horde of reporters, feeding at the buffet and standing in line for a glass of New York State champagne. It was more like a party than a press conference, with Peter both the host and the honored guest. Bemused but beaming, he wandered through the crowd, accepting the congratulations.

The coverage was better than he had expected, too. There were pictures of Peter handing the passengers carnations as they got on board, then of the new CEO as he cut a bouquet of balloons and watched them sail off into the blue sky, symbolizing the takeoff of the new PBA. His consultant had written a speech for him to give so he could avoid having to answer reporters' questions, but he knew it sounded wooden, so when the speech was over he decided to ad-lib, just to be himself and tell his story. He had won them over, he could tell; the press was charmed.

For the next three days, Peter was on the go, visiting all of PBA's operating stations, to spread the word: management-by-flying-around, his consultant called it. "There's no letting up now," Peter told his staff. "We're just getting started." So far, PBA had brought up only the Cessnas; it would still have to win FAA approval for four more plane types. Besides, only 60% of the routes were open, and more than 1,000 people were still out of work.

But Peter had complete confidence in the future. He thought that a 25% to 35% growth in revenues in 1985 was still a realistic target, much as John had planned, but with stronger earnings if his new systems and new managers could perform. He planned to open his first new station, in Fort Pierce, Fla., within the month, then move PBA into the Bahamas after the first of the year. The new planes were still on order, and he had even put the private placement back in the works.

PBA was flying again, better than ever, and he knew he couldn't have done it without the shutdown.

"The FAA gave us a great opportunity. Our pace has been quickened by three years. We were aware of what we had to do. But you can't just snap your fingers and get it done. That's what the FAA did -- they snapped their fingers.

"My initial reaction was, boy, have we gotten screwed. But I realized now we brought this down on ourselves. I know that I can't be innocent. I'm like Ronald Reagan with the Marines in Beirut -- I should have known what was going on.

"You know what I've decided through this whole thing?" Peter asked. "Working is better than not working. I've had to make more decisions in the past week than I've had to make in my career. And I think I'm doing fine. If I can get through this, I can get through anything."

It looked, for the next three weeks, as if PBA would have clear skies. When its second plane type, the 19-passenger Bandeirante, went up on schedule it was able to return to full service. In two weeks PBA was carrying 2,400 passengers a day, and even Peter was astonished. "That means I'm the third or fourth largest commuter in the country," he said, "already."

There was no time to go sailing, yet, but he allowed himself a few days off. As a regular $10,000 contributor to the Republican National Committee, "a Republican Eagle," he and his wife, Karen, were invited to the White House for a State Dinner -- "and how many times in my life am I going to be invited to the White House?" Peter had never seen anything like it: the elegance, the Marine Band, a glittering guest list that included Joan Collins and Dino De Laurentiis. Karen sat next to the President himself. It was a night Peter would never forget. And it was a symbol of the triumph he had fought so hard to win.

Two days later, Peter was at his desk, planning schedules, when he got the phone call.At 6:15 p.m. PBA flight 1039, a Bandeirante making its fourth commuter trip of the day between Jacksonville and Tampa, had gone down just after takeoff with 11 passengers and two crew members on board. There were no survivors.

Early details were sketchy. It was a clear night, with visibility for seven miles. The plane had climbed for two minutes off runway 31, rising to about 500 feet, before it suddenly went out of control, plunging into the swampy woods.

Why? One by one, Peter discarded each grim explanation. The plane had been FAA inspected, the pilot had been FAA tested; on paper, everything was clean. Could the plane have been misfueled, like the Cessna that crashed in September? But a Bandit will run on any kind of fuel. Pilot in trouble? But there had been no radio call to the tower, and there was a co-pilot aboard. Could the pilot have lost an engine? But the Bandit is a twin-engine plane, and the pilot had just demonstrated a one-engine takeoff during recertification.

Every airline has written disaster procedures; PBA had gone through theirs twice in the past six months. Assemble a crisis team, make up a list of victims, choose someone to go to the site, call the FAA, the NTSB, and the insurance company. Peter's job was to contact the next of kin. The victims' bodies lay sprawled in the twisted rubble, burned beyond recognition; identification would require dental records. What could he say? "There was an accident. We think your husband was on board. There were no survivors."

Peter had gone through crash procedures before, but he had never had to make those calls himself, all 13 of them, one after the other. Once again he could hear the press outside, see them at the door and through the window, but until he had put together a list of victims there was nothing he could say to them. Once again, the press was shut out; all information would be by written release.

The next day's papers were lurid, and all three networks showed pictures of investigators picking through the smoldering rubble. The stock dropped to 5, and reservations fell by 75%. Peter canceled all his advertising, and pulled the buttons and the counter cards. "I have asked myself over and over what has PBA done to deserve this," he wired his staff. "There is no answer and never will be." Then he started to write a letter to each next of kin. No words had ever come harder.

Friday morning, the NTSB issued preliminary findings. The investigation showed that the horizontal stabilizer had broken off the plane's tail. Metal stress? Metal fatigue? An act of God? Although there was no evidence that either PBA or the FAA were to blame, the questions and criticisms were just beginning. Did the FAA let PBA back in the air too quickly? If the airline was so unsafe a few weeks ago, why let it back in the air at all? Congressman Dan Glickman of Kansas, chairman of the Subcommittee on Transportation, Aviation, and Materials, called for an investigation. Secretary of Transportation Dole's office announced it would begin an investigation into "possible conflicts of interest" on the part of Mike Fenello. "What about that dinner at the White House?" a Washington Post reporter asked Peter. Or those $10,000 contributions to the Republican National Committee?

Once again, the issue for PBA was survival. Peter grounded all his Bandeirantes, days before the FAA ordered all carriers to do so, and took each tail section apart, far more than the FAA required, searching for a clue. But he found nothing.

"If you sat down in one of those think tanks and asked what is absolutely the worst thing that could happen to the airline, this is it," Peter said later. "I feel like the guy who made Tylenol, or the head of Union Carbide.

"The sad thing is, the next time a commuter plane crashes, they'll bring it up again. Ten years from now, PBA will still be the airline that had three fatal crashes in 1984."

For a while, Peter clung stubbornly to his belief that he could bring the airline back. The Bandeirantes were still down, and traffic was falling daily. Cash flow was becoming a critical problem -- and the banks, which had been so eager to lend him money in the past, were now playing hardball. "But what am I supposed to do? Roll over and play dead?" He racked his brains for ways to raise the money to see the airline through. In time, he still hoped, the passengers would return. The media glare would move on. His work would not be in vain: PBA could grow again.

On December 12, a Southern Express plane crashed, injuring two. Every news story mentioned PBA's crash as well.

On December 27, PBA grounded two pilots who had taken off with the gust lock on their DC-3's tail still in place. They would later face disciplinary action by the FAA.

On January 15, Peter was forced to guarantee PBA's payroll with his personal stock holdings. Four days later the banks ordered PBA to close 10 stations.

On January 23, a former PBA employee, his voice disguised and his name not revealed, turned up on a CBS news program alleging widespread drug abuse and alcoholism among the pilots.

On February 1, facing bankruptcy, John and Peter Van Arsdale sold their controlling interest in Provincetown-Boston Airline to Tampa attorney Hugh F. Culverhouse, owner of the Tampa Bay Buccaneers, in exchange for $1 million in loan guarantees.

Peter was ousted as CEO of the airline his family had built. On February 3, he began moving out of the office that had been John's. He had been in it less than three months.

Last updated: Mar 1, 1985




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