View source for Air California

{{Tone|date=August 2025}}{{Short description|US low-cost & one-time intrastate airline (1966–1987)}}
{{For-multi|the defunct Mexican airline|Aero California|the airline of New Caledonia|Air Calédonie}}
{{Infobox airline
| image_size     = 
| airline        = Air California/AirCal
| logo           = AirCal - 1981.svg
| IATA           = OC
| ICAO           = ACL
| callsign       = AIRCAL
| aoc            = 
| hubs           = [[John Wayne Airport|Orange County]]
| focus_cities   = 
| frequent_flyer = [[AAdvantage]]
| lounge         = 
| alliance       = 
| fleet_size     = 
| destinations   = 
| company_slogan = 
| parent         = {{ubl|
  | {{nowrap|[[Westgate-California Corporation|Westgate-California]] {{small|(1970–1981)}}}}
  | {{nowrap|ACI Holdings {{small|(1986–1987)}}}}
  | {{nowrap|[[AMR Corporation]] {{small|(1987)}}}}}}
| num_employees  = 
| alt            = 
| founded        = {{Start date and age|1966|04|12|df=y}}
| commenced      = {{Start date and age|1967|01|16|df=y}}
| ceased         = {{End date and age|1987|07|01|df=y}}<br />{{small|(merged into [[American Airlines]])}}
| bases          = 
| subsidiaries   = 
| headquarters   = [[Newport Beach, California|Newport Beach]], [[California]]
| key_people     = [[C. Arnholt Smith]] <br> [[William Lyon (general)|William Lyon]] <br> [[George Argyros]]
| website        = 
}}
[[File:AirCalifornia-1969-B737-100.jpg|thumb|Air California 737-100 in 1969 at [[John Wayne Airport|Orange County airport]]]]
'''Air California''', later renamed '''AirCal''', was a U.S. airline company headquartered in [[Newport Beach, California]] that started in the 1960s as a California [[intrastate airline]].<ref>{{cite book|title=World Airline Directory|publisher=Flight International|access-date=2009-05-24|date=20 March 1975|url=http://www.flightglobal.com/pdfarchive/view/1975/1975%20-%200529.html|page=465}}</ref><ref>"[http://factfinder.census.gov/servlet/MapItDrawServlet?geo_id=16000US0651182&_bucket_id=50&tree_id=420&context=saff&_lang=en&_sse=on Newport Beach city, California] {{webarchive |url=https://web.archive.org/web/20080319133137/http://factfinder.census.gov/servlet/MapItDrawServlet?geo_id=16000US0651182&_bucket_id=50&tree_id=420&context=saff&_lang=en&_sse=on |date=March 19, 2008 }}." ''[[U.S. Census Bureau]]''. Retrieved on May 25, 2009.</ref><ref>"World Airline Directory." ''Flight International''. March 30, 1985.[http://www.flightglobal.com/pdfarchive/view/1985/1985%20-%200894.html 34]." Retrieved on June 17, 2009.</ref>  The airline's home airport was Orange County Airport, now known as [[John Wayne Airport]].

Air California was the "other" California intrastate carrier, counterpart to better known [[Pacific Southwest Airlines]] (PSA). The two airlines had very different origins. PSA was the product of a highly competitive, lightly-regulated earlier period in California intrastate airline history, while Air California was born into a later, far more regulated California environment. The California regulator explicitly aimed to ensure Air California's success by shielding it from PSA competition, in particular at Orange County Airport, from which PSA was excluded. Air California was further protected by Orange County itself. From 1967 through 1980, Orange County ensured Air California was one of only two mainline airlines to have access to (and the dominant carrier at) Orange County Airport, a lucrative duopoly that allowed Air California to prosper.

Air California/AirCal had a series of unusual owners. From 1970 to 1974, it was under the control of [[C. Arnholt Smith]], a [[San Diego]] powerbroker, later convicted of fraud. From 1974 to 1981, it was controlled by Smith's former holding company [[Westgate-California Corporation]] (WCC), while WCC was in an extended period of bankruptcy run by a court-appointed trustee. From 1981 to 1987, AirCal was controlled by two California real estate developers, who, despite the turbulent nature of the industry at the time, made a success of the airline, before selling it to [[American Airlines]].

Following the federal [[Airline Deregulation Act]] in 1978, Air California expanded beyond its namesake state. The airline was renamed AirCal in 1981 and merged into [[American Airlines]] in 1987.<ref name=vnshlat>{{cite news |url=https://www.latimes.com/archives/la-xpm-1987-07-02-fi-1598-story.html |work=Los Angeles Times |last=Granelli |first=James S. |title=County's one and only lasted 21 years : AirCal vanishes - absorbed by American |date=July 2, 1987 |access-date=March 21, 2021}}</ref> By that time, AirCal flew as far east as [[Chicago O'Hare International Airport|Chicago]] and as far north as [[Seattle International Airport|Seattle]], [[Ted Stevens International Airport|Anchorage]], and [[Vancouver International Airport|Vancouver, BC]]. But less than four years later, American gutted the former AirCal network, leaving little to show for its purchase.

==History==

===Startup===
Air California originated in a December 1965 meeting in [[Corona del Mar]] by William Myers, Alan H. Kenison (later a founder of [[Jet America Airlines]]), Mark T. Gates, Jr., William L. Pereira, Jr. (son of noted architect [[William Pereira]] who designed the [[Theme Building]] at [[Los Angeles International Airport]] (LAX)<ref>[https://ucistories.lib.uci.edu/people/william-l-pereira-jr William L. Pereira, Jr. profile in UCI Stories website of University of California Irvine Library, Accessed April 20, 2024]</ref>) and Lud Renick to discuss air service from [[Orange County, California|Orange County]] to San Francisco, with the idea of Air California as the result. At the time, air service from Orange County Airport was minimal. The population of Orange County in 1967 was about 1.2mm, up from only 216,000 in 1950; Orange County was the fastest growing in the country. Air travel in California was then dominated by [[Pacific Southwest Airlines]] (PSA). Air California was designed to do what PSA would not: serve Orange County. Airport officials had asked all major west coast carriers to serve Orange County Airport and none were interested.<ref name="SNAchrono">[https://files.ocair.com/media/2022-09/JWA%20Chronology_0.pdf ''John Wayne Airport Chronology: 1923-Present'']</ref><ref name="TIME">[https://content.time.com/time/subscriber/article/0,33009,843909,00.html ''Airlines: Competing with the Freeways'', Time Magazine, June 9, 1967]</ref>

At the time, all significant US airlines but one were tightly regulated by the [[Civil Aeronautics Board]] (CAB), an agency of the Federal government. PSA was the exception, its intrastate status made it exempt from CAB oversight. It had used that freedom to grow from nothing in 1949 to a jet carrier in 1965, taking market share away on its California routes from much larger but less efficient carriers regulated by the CAB. Air California was designed to be like PSA but centered on Orange County. Air California was incorporated on 12 April 1966<ref>[https://opencorporates.com/companies/us_ca/0507554 OpenCorporates record for Air California]</ref> and the same month, applied to the [[California Public Utilities Commission]] (CPUC) to be a California [[intrastate airline]] for its first route, from Orange County Airport to [[San Francisco Airport]] at a fare of $14.85. The CPUC approved the application in September, requiring a minimum of five frequencies per day.<ref>{{cite report|title=Decisions of the Public Utilities Commission of the State of California|volume=66|page=230|year=1966|hdl=2027/uc1.b3221772 |url=https://hdl.handle.net/2027/uc1.b3221772}}</ref> In December, Air California had an [[initial public offering]] and the airline launched its first services January 16, 1967, using two [[Lockheed L-188 Electra|Lockheed Electra]] aircraft.<ref>{{cite report|date=1976|title=Appendix to Hearings before the Subcommittee on Administrative Practice and Procedure of the Committee of the Judiciary United States Senate 94th Congress First Session on Oversight of Civil Aeronautics Board Practices and Procedure|volume=3|url=https://books.google.com/books?id=auw1AAAAIAAJ|publisher=US Government Printing Office|location=Washington, DC|pages=2135–2136|access-date=March 3, 2024|ref={{sfnref|Hearings|1976}}}}</ref><ref name="chrono">[https://www.latimes.com/archives/la-xpm-1986-11-18-fi-8280-story.html ''AirCal Chronology'', Los Angeles Times, November 18, 1986]</ref> Total capital raised prior to the first flight was $5.3mm, including $2.5mm from the stock offering.<ref name="TIME" />

In October 1967, Air California took delivery of two more Electras, for a total of four.<ref>[https://www.newspapers.com/image/996858580 ''Air California Chief Promises to Expand'', Santa Ana Register, May 25, 1967]</ref> San Jose and Oakland were added. In 1968, the airline added two DC-9s to the fleet, but by year end both the DC-9s and the Electras had been phased out in favor of six 737-200s. Ontario and Burbank were added.<ref>[https://www.newspapers.com/image/382518566 ''Air Service and Debate Grow at County Airport'', Los Angeles Times, April 8, 1968]</ref><ref>[https://www.newspapers.com/image/996868678 ''Air-Cal now All Jet; Electras Served Well'', Santa Ana Register, Dec 25, 1968]</ref>

In April 1967, Air California was operating 48 nonstop [[Lockheed L-188 Electra]] propjet flights a week from Orange County (SNA) to San Francisco (SFO). It added Orange County (SNA) to San Jose (SJC) and Oakland (OAK) flights around the beginning of 1968.

By May 1968, the airline was operating 92 flights per week from SNA to SFO, primarily using [[Douglas DC-9-10]] twin jets, as well as 50 flights a week from SNA to SJC, with most continuing on to OAK.

By 1976, Air California was operating nonstop intrastate jet service between Orange County and San Francisco, San Jose, Oakland, Sacramento, San Diego and Palm Springs; between San Diego and Oakland and San Jose; between Ontario and Oakland and San Jose; and between Palm Springs and San Francisco, San Jose and Oakland.<ref>http://www.departedflights.com, Jan. 1, 1976, Air California system timetable route map</ref>

===First failed PSA merger and sale===

[[File:AirCal logo.svg|thumb|Original Air California logo, used from 1967 to 1977]]
As the nearby table shows, Air California's initial financial results were poor. In December 1969 it agreed to a merger with PSA, citing its financial results.<ref>[https://archive.org/details/AirCaliforniaMagazine211/ ''Air Cal Board Accepts PSA Acquisition Offer'', Air California Magazine, November 1969]</ref><ref>[https://www.newspapers.com/image/385932356 ''Air California OKs PSA Merger Despite Earlier Denial'']</ref> Air California shareholders approved the deal, but shortly thereafter, in May 1970, PSA withdrew from the deal, citing a "negative view" by the CPUC. Within a week, Air California's CEO had resigned, and a new buyer surfaced, [[Westgate-California Corporation]] (WCC).<ref>[https://www.newspapers.com/image/165693463 ''Air California Now Talking Deal with San Diego Company'', Los Angeles Times, May 28, 1970]</ref> In June 1970, WCC acquired 60% of the carrier, which was approved by the CPUC on the grounds that Air California's future was in doubt.<ref>[https://www.newspapers.com/image/384772626 ''Westgate Takeover of Air California Allowed'', Los Angeles Times, March 3, 1970]</ref> In July 1971, WCC pumped $2.5mm into Air California, buying shares that increased its stake to 81%.<ref>[https://www.newspapers.com/image/384741540 ''Air California Sells Common to Westgate'', Los Angeles Times, July 1, 1971]</ref>

In April 1971, Air California provided flight attendant training to [[Southwest Airlines]] during its startup phase.{{sfn|Hearings|1976|p=2141}}

{{Table alignment}}
{|class="wikitable plain-row-headers defaultright"
|+ Air California Financial Results, 1967 thru 1973{{sfn|Hearings|1976|p=2133}}
! (USD 000) !! 1967 !! 1968 !! 1969 !! 1970 !! 1971 !! 1972 !! 1973
|-
! Operating revenue
|  4,354  ||  8,849  ||  13,686  ||  16,144  ||  19,729  ||  22,905  ||  27,023 
|-
! Operating expense
|  5,295  ||  9,992  ||  15,540  ||  15,950  ||  20,304  ||  21,905  ||  23,956 
|-
! Operating result
|  (941) ||  (1,143) ||  (1,854) ||  194  ||  (575) ||  1,000  ||  3,067 
|-
! Interest
|  (258) ||  (616) ||  (564) ||  (596) ||  (460) ||  (376) ||  (343)
|-
! Pre-tax net
|  (1,199) ||  (1,759) ||  (2,418) ||  (402) ||  (1,035) ||  624  ||  2,724 
|-
! Operating margin
| -21.6% || -12.9% || -13.5% || 1.2% || -2.9% || 4.4% || 11.3%
|-
! Pre-tax margin
| -27.5% || -19.9% || -17.7% || -2.5% || -5.2% || 2.7% || 10.1%
|}

WCC ownership was a mixed blessing. WCC's owner was [[C. Arnholt Smith]], a powerful [[San Diego]] businessman and banker, owner of the [[San Diego Padres]] baseball team, a close associate and funder of President [[Richard Nixon]] and owner of the [[United States National Bank of San Diego]] (USNB), largest bank in that city<ref name="BigFail">[https://www.sandiegouniontribune.com/news/150-years/sd-me-150-years-october-19-htmlstory.html ''From the Archives: October 19, 1973: City’s largest bank fails'', San Diego Union-Tribune, October 19, 2018]</ref> and the 10th largest in California.<ref name="nytempire">[https://www.nytimes.com/1972/05/14/archives/a-san-diego-empire-beset-from-many-sides-ca-smith-eases-reins-a-san.html ''A San Diego Empire'', New York Times, May 14, 1972]</ref> Smith was highly controversial, accused of lining the pockets of his family and friends through self-dealing (including with WCC, USNB and others) of making illegal campaign contributions, and more.<ref>[https://books.google.com/books?id=64LSAAAAMAAJ&q=byron+e.+calame ''Self-Dealing Tycoon: How a Californian Uses Publicly Owned Firms to Aid Private Ventures'', Wall Street Journal, April 16, 1969]</ref><ref name="tampering">[https://books.google.com/books?id=elIEAAAAMBAJ ''Tampering with Justice in San Diego'', Life Magazine, March 24, 1972, pg 30]</ref> WCC made a loss, its first in 11 years, in 1971.<ref>[https://www.newspapers.com/image/385562913 ''$2.6 million Loss at Westgate Doubles Estimate by Smith'', Los Angeles Times, April 4, 1972]</ref>

There was one immediate benefit from WCC ownership: Air California was able to take its seventh 737, delivered to WCC and turned over to Air California in September 1970. The eighth was delivered in May 1971. First-class ("Fiesta") service and Palm Springs made their debut in 1969, San Diego in 1970, though Burbank was suspended. In 1971, Sacramento was added to the network. {{sfn|Hearings|1976|p=2141-2145}}

===Second failed PSA merger, parent company bankruptcy and scandal===

In mid 1972, WCC agreed to sell Air California to PSA.<ref>[https://www.newspapers.com/image/385651746 ''PSA to Acquire Air California Control From C. Arnholt Smith'', Los Angeles Times, July 7, 1972]</ref> WCC told the CPUC that Air California showed no signs of making money and WCC would not further support it.<ref>[https://www.newspapers.com/image/386285363 ''Westgate Refuses to Prop Up Airline Further, PUC Told'', Los Angeles Times, September 29, 1972]</ref> In February 1973 the CPUC agreed, against heavy opposition, including from its own legal staff,<ref>[https://www.newspapers.com/image/382665096 ''PSA, Air California Merger Plan Called Illegal by PUC Staff'', Los Angeles Times, November 21, 1972]</ref> to allow the merger to proceed.<ref>[https://www.newspapers.com/image/385361883/ ''PUC Votes Approval of PSA's Purchase of Air California'', Los Angeles Times, February 24, 1973]</ref> But by then the merger also faced opposition from the US Department of Justice on anti-trust grounds.<ref>[https://www.justice.gov/atr/case/us-v-pacific-southwest-airlines-inc-and-westgate-california-corp ''U.S. v. Pacific Southwest Airlines Inc. and Westgate-California Corp.'', Anti-Trust Division, Department of Justice, December 5, 1972]</ref> For instance, the combination would have had an 81% market share on the Los Angeles Basin to San Francisco Bay market and even higher market shares on individual submarkets.<ref>[https://law.justia.com/cases/federal/district-courts/FSupp/358/1224/1412246/ ''United States v. Pacific Southwest Airlines, 358 F. Supp. 1224 (C.D. Cal. 1973)'']</ref> These market shares show how successful were the California intrastate carriers in driving off the far larger CAB-regulated carriers pre-deregulation.

But then, in May 1973,<ref name="Assails">[https://www.nytimes.com/1973/07/23/archives/smith-assails-secs-bid-on-westgate-receivership-codefendants-named.html ''Smith Assails S.E.C.'s Bid On Westgate Receivership'', New York Times, July 23, 1973]</ref> The [[U.S. Securities and Exchange Commission]] sued to place WCC in receivership on the grounds of serious malfeasance by Smith, plus the outside auditors withdrew their certification of Air California's accounts for 1971 and 1972, and those of WCC for 1971.<ref>[https://www.sec.gov/news/digest/1973/dig051473.pdf SEC News Digest, May 14, 1973]</ref> Trading was halted in Air California and WCC stocks. Unsurprisingly, almost exactly a year after it had been made, the PSA offer for Air California lapsed.<ref>[https://www.newspapers.com/image/381871026 ''PSA and Air California Merger Plan Dropped'', Los Angeles Times, July 6, 1973]</ref> In October, USNB was seized by the FDIC, knocking out the foundation of Smith's empire.<ref name="BigFail" /> In February 1974, WCC filed for Chapter X bankruptcy.<ref>[https://www.nytimes.com/1974/02/27/archives/westgate-former-key-company-of-smith-plans-reorganization.html ''Westgate Former Key Company Of Smith, Plans Reorganization'', New York Times, February 27, 1974]</ref> Chapter X bankruptcy was eliminated in a 1978 bankruptcy reform, but under it, WCC operated under the control of trustees, who managed it in the interests of shareholders.<ref>[https://repository.law.miami.edu/cgi/viewcontent.cgi?article=2583&context=umlr Asa S. Herzog, ''The Chapter X Rules'', 31 U. Miami L. Rev. 227 (1977)]</ref> The bankruptcy dragged on for eight years, with WCC selling pieces of itself along the way, until it was finally liquidated in 1982.<ref name="Final">[https://www.nytimes.com/1982/05/06/business/final-chapter-written-in-saga-of-westgate.html ''Final Chapter Written in Saga of Westgate'', New York Times, May 6, 1982]</ref> Therefore, from 1974 until it was sold in 1981, Air California was in the odd situation of being owned by a bankrupt company run by trustees rather than conventional management.

===Survival: the role of the California regulator===

Prior to 1979 [[Airline Deregulation Act|US airline deregulation]], as a California intrastate carrier, Air California was economically regulated by the CPUC, in contrast to most US airlines of the era, which were economically regulated by CAB. Prior to 1965, the CPUC only had the right to regulate intrastate ticket prices. So long as they followed CPUC tariffs, anyone was free to start an intrastate California airline, to enter and leave specific markets and to choose their own frequencies. But in 1965, the CPUC gained the right to regulate airline certification, market entry/exit and service quality for California intrastate airlines.<ref>{{cite journal |last=La Mond|first=Annette M.|date=Autumn 1976|title=An Evaluation of Intrastate Airline Regulation in California|url=https://www.jstor.org/stable/3003277|journal=The Bell Journal of Economics|volume=7|issue=2|pages=641–657|doi=10.2307/3003277 |jstor=3003277 |access-date=March 2, 2024|url-access=subscription}}</ref> In effect, the CPUC became a kind of mini-CAB for California intrastate airlines.

Air California was unprofitable for the first five years (though it broke even on an operating basis in 1970; see table) and CPUC regulation was critical to its survival. In 1969 the CPUC said "From the beginning we have recognized the need to protect Air California from destructive competition, at least until it becomes a viable operator."<ref>{{cite report|title=Decisions of the Public Utilities Commission of the State of California|volume=70|page=91|year=1969|hdl=2027/uc1.b3274578 |url=https://hdl.handle.net/2027/uc1.b3274578}}</ref> This took four forms: (i) CPUC ensured that other than some minor routes, Air California did not compete with PSA, leaving the carriers with largely non-overlapping route networks. This left Air California free to concentrate its energies on competing with CAB carriers on its routes, which had higher costs. (ii) The CPUC approved higher airfares for Air California than for PSA was authorized on similar routes. (iii) The CPUC stopped the further new entry of intrastate airlines. (iv) in at least one case, the CPUC restrained PSA growth with the explicit goal of helping Air California.{{sfn|La Mond|1976|p=644}} In fact, from 1965 onward, the CPUC certified only one other carrier, [[Holiday Airlines (US Airline)|Holiday Airlines]], which for some reason chose to fly only to [[Lake Tahoe]].<ref>{{cite report|url=https://hdl.handle.net/2027/umn.31951002834663r?urlappend=%3Bseq=692%3Bownerid=13510798903406325-770|hdl=2027/umn.31951002834663r|hdl-access=free|title=Aviation Regulatory Reform: (Part I) Hearings before the Subcommittee on Aviation of the Committee on Public Works and Transportation, House of Representatives, Ninety-Fifth Congress, First Session on H.R. 8813 (Introduced August 13, 1977)|publisher=U.S. Government Printing Office|location=Washington, DC|year=1977|page=670}}</ref>

===Orange County Airport duopoly and financial stability===

[[File:Air California Boeing 737-200 Silagi-3.jpg|thumb|Air California 737-200 in 1980]]
Since its parent company was mired in bankruptcy, it was timely that Air California's fortunes took a turn for the better, becoming solidly profitable from 1973 onward. In this, Air California was helped not only by the CPUC, but also by its duopoly at Orange County Airport. From 1967 until late 1980, the only two carriers at Orange County were Air California and [[Bonanza Air Lines]] (and Bonanza's successors, [[Hughes Airwest|Air West]] in 1968 and [[Hughes Airwest]] in 1970). This was driven by lack of facilities. It's hard to overstate how important this was: in the mid-1970s, Air California relied on Orange County Airport for up to 75% of its passengers.<ref>[https://www.newspapers.com/image/387381947 ''AirCal Gets New Financial Muscle But Faces Stiffer Competition, Too'' Los Angeles Times, May 19, 1981]</ref> In 1979, the FAA determined that this was, unsurprisingly, discriminatory, leading to the airport opening to other airlines.<ref name="SNAchrono"/>

In February 1975, Holiday Airlines collapsed, with Air California and PSA both getting emergency CPUC authorization to back fill for Holiday at [[Lake Tahoe Airport]], which the CPUC required be flown with Electras.<ref>[https://www.newspapers.com/image/251927125 ''Airlines To Serve Tahoe Area'', Petaluma Argus-Courier, February 20, 1975]</ref> Air California acquired three.<ref>{{cite book|title=World Airline Fleets 1979|first=Guenter G.|last=Endres|publisher=Airline Publications and Sales Ltd|isbn=9780905117522|location=Hounslow|page=192|year=1979|url=https://archive.org/details/worldairlineflee0000unse}}</ref>

===Intrastate no more, sale to new owners and AirCal===

[[File:AirCal Boeing 737-200 N466AC Marmet.jpg|thumb|AirCal [[Boeing 737-200]] in 1983<ref name="vintageairliners.com">{{cite web | url=https://vintageairliners.com/air-california/ | title=Air California - Vintage Airliners | date=28 February 2014 }}</ref>]]
In 1977, still in Chapter X bankruptcy, WCC bought out Air California's minority shareholders and made it a wholly owned subsidiary, in furtherance of its intent to reorganize with Air California as its main business.<ref>[https://www.newspapers.com/image/747940313 ''Air Cal Is Westgate Subsidiary'', Desert Sun, Oct 19, 1977]</ref> In 1977-78 Air California added two 737-100 aircraft from [[Aloha Airlines|Aloha]].<ref>[https://www.newspapers.com/image/747942762 ''Air Cal Reveals Aircraft Buys'', Desert Sun, August 24, 1977]</ref> But Air California ended the 1978 flying to Reno, Nevada; it was no longer an intrastate airline.<ref>[https://www.newspapers.com/image/150663276 Air California advertisement in Reno Gazette-Journal, December 18, 1978]</ref> With out-of-state expansion spurring it on, Air California ended 1979 with 11 737s and had 16 at the end of 1980, but by then the Electras were gone.<ref>[https://babel.hathitrust.org/cgi/pt?id=osu.32435030758577 ''FAA Statistical Handbook of Aviation: Calendar Year 1979'', Table 5.5]</ref><ref>[https://babel.hathitrust.org/cgi/pt?id=osu.32435030758569 ''FAA Statistical Handbook of Aviation: Calendar Year 1980'', Table 5.5]</ref>

In October 1980, [[Air Florida]] announced it had purchased interests in the to-be-reorganized WCC from two WCC creditors.<ref>[https://www.newspapers.com/image/387165765 ''Air Florida Moves to Acquire Westgate, Parent of Air California'', Los Angeles Times, October 22, 1980]</ref> This kicked off a bidding war for post-reorganization WCC, which Air Florida ultimately won in November for $47mm.<ref>[https://www.newspapers.com/image/621775075 ''Air Florida buys Air California'', Sacramento Bee, November 15, 1980]</ref> WCC at the time owned only Air California, plus a Puerto Rican tuna cannery, but Air Florida would have to wait until WCC completed its reorganization and in the meantime, the WCC trustee was still in charge, with a mandate to get the best deal for WCC investors. The losing bidder in the WCC auction thus bid for Air California at a price that would give a better return for WCC investors. And when the dust settled on that auction in May 1981, the new group won, with a bid of $61.5mm, $57.5mm of which was financed by [[Wells Fargo]].<ref name="rebound">[https://www.newspapers.com/image/401465409/ ''Successful Builder Pilots AirCal Through Turbulent Times'', Los Angeles Times, February 5, 1984]</ref> This was AirCal Investments, a vehicle for two Orange County real estate developers, [[William Lyon (general)|William Lyon]] and [[George Argyros]]. WCC's trustee didn't bother to hide his satisfaction with the outcome. He preferred local ownership. He had been angered by the surprise bid by Air Florida to buy WCC, had in fact put Argyros and Lyon together in the first place, when each had separately inquired.<ref name="unbroken">[https://www.newspapers.com/image/387381947/ ''AirCal Gets More Financial Muscle but Faces Stiffer Competition, Too'', Los Angeles Times, May 19, 1981]</ref><ref>[https://www.newspapers.com/image/621775075 ''Risk Pays Off For AirCal Owners'', Los Angeles Times, Nov 18, 1986]</ref>

The airline that Lyon and Argyros bought came, as of April 6, 1981, with a new name (AirCal) and a new image. [[Landor Associates]] did the new livery, [[Mary McFadden]] did the new uniforms.<ref>[https://www.newspapers.com/image/461119040 ''AirCal: a new name, a new image'', San Francisco Examiner, March 16, 1981]</ref>
{{Table alignment}}
{|class="wikitable plain-row-headers defaultright"
|+ Air California/AirCal Financial Results, 1979 thru 1986
! (USD mm) !! 1979<ref>[https://airlines.org/wp-content/uploads/2014/08/1980.pdf Air Transport Association 1980 Annual Report]</ref><ref name="FS80">{{cite report|title=Air Carrier Financial Statistics|publisher=Civil Aeronautics Board|date=December 1980|page=35|hdl=2027/msu.31293024880514 |url=https://hdl.handle.net/2027/msu.31293024880514}}</ref> !! 1980<ref>[https://airlines.org/wp-content/uploads/2014/08/1981.pdf Air Transport Association 1981 Annual Report]</ref><ref name="FS80"/> !! 1981<ref>[https://airlines.org/wp-content/uploads/2014/08/1982.pdf Air Transport Association 1982 Annual Report]</ref> !! 1982<ref>[https://airlines.org/wp-content/uploads/2014/08/1983.pdf Air Transport Association 1983 Annual Report]</ref> !! 1983<ref>[https://airlines.org/wp-content/uploads/2014/08/1984.pdf Air Transport Association 1984 Annual Report]</ref> !! 1984<ref>[https://airlines.org/wp-content/uploads/2014/08/1985.pdf Air Transport Association 1985 Annual Report]</ref> !! 1985<ref>[https://airlines.org/wp-content/uploads/2014/08/1986.pdf Air Transport Association 1986 Annual Report]</ref> !! 1986<ref>[https://airlines.org/wp-content/uploads/2014/08/1987.pdf Air Transport Association 1987 Annual Report]</ref>
|-
! Op revenue
| 98.1 || 158.8 || 211.6 || 214.7 || 239.0 || 303.9 || 344.5 || 375.4 
|-
! Op profit (loss)
| 1.3 || 12.2 || 0.3 || (20.7)|| 17.3 || 24.5 || 12.8 || (3.7) 
|-
! Net profit (loss)
| 1.3 || 9.9 || 4.4 || (24.0)|| 3.7 || 11.2 || 9.3 || (1.6)
|-
! Op margin
| 1.3%|| 7.7%|| 0.2%|| -9.6%|| 7.2%|| 8.1%|| 3.7%|| -1.0%
|-
! Net margin
| 1.4%|| 6.2%|| 2.1%|| -11.2%|| 1.6%|| 3.7%|| 2.7%|| -0.4%
|}

===Stripped of John Wayne Airport advantage; financial distress===
{{Rail freight
|float=right
|title=AirCal/Air California Revenue Passenger-Miles/Kilometers, in millions
|1968|218 RPMs
|1970|291 RPMs
|1972|387 RPMs
|1973|747 RPKs
|1975|898 RPKs
|1979|1624 RPKs
|1985|2961 RPKs
|source=''Air Transport World''
}}
After unbroken profitability while WCC was in Chapter X, AirCal under Lyon & Argyros was immediately unprofitable.<ref name="unbroken"/> Headwinds included the debt the two had taken on to buy AirCal, the [[Early 1980s recession in the United States|early 1980s recession]], the extended impact of the August [[Professional Air Traffic Controllers Organization (1968)|air traffic controller’s strike]], which limited airline aircraft utilization and growth and the expanding impact of 1979 airline deregulation, which spread competitors into AirCal markets, and vice versa. For instance, PSA finally broke into John Wayne Airport (SNA), after, as they noted, 15 years of trying.<ref>[https://www.newspapers.com/image/390899948 ''Airlines in High-Stakes Battle for Flights'', Los Angeles Times, August 26, 1982]</ref> AirCal had entered LAX in 1980,<ref>[https://www.newspapers.com/image/387069807 Air California advertisement in Los Angeles Times, July 1, 1980]</ref> its LAX penetration assisted by a late 1980 strike at PSA.<ref>[https://www.newspapers.com/image/387019172 ''Strike Is Over but PSA Woes Put Off Recovery'', Los Angeles Times, January 19, 1982]</ref> AirCal was no longer protected by the CPUC or the SNA duopoly. Further, jet fuel prices increased from 40 cents/gal at the beginning of 1979 to over a dollar in 1981,<ref>[https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMA_EPJK_PWG_NUS_DPG&f=M U.S. Energy Information Administration U.S. Kerosene-Type Jet Fuel Wholesale/Resale Price by Refiners]</ref> related to the [[1979 oil crisis]].<ref>[https://www.newspapers.com/image/401800337 ''AirCal Reports Record Gains in Sales, Income'', Los Angeles Times, January 31, 1984]</ref>

There was another factor: AirCal was squeezed at its SNA base, its historic source of profits. From 1970 to 1985, SNA capped daily average jet departures to 41/day,<ref>[https://www.newspapers.com/image/390436784/ ''History of the Orange County Airport'', Los Angeles Times, January 31, 1985]</ref> with AirCal having 27 during the duopoly period that ended 1980. But the FAA insisted other airlines be accommodated. As other airlines entered, incumbent frequencies were cut to accommodate them. AirCal was the biggest incumbent, so was the biggest victim; AirCal’s average daily SNA frequencies dropped over the course of several years from 27 to 12.5.<ref>[https://www.newspapers.com/image/633667080/ ''Employees of AirCal Take Case to Court'', Los Angeles Times, July 28, 1983]</ref><ref>[https://www.newspapers.com/image/401737635/ ''PSA Charges Favoritism, Seeks Writ to Block AirCal'', Los Angeles Times, March 22, 1986]</ref> Many airlines wanted a piece of SNA and were even willing to buy MD-80s (then the quietest narrowbody available) to do so. For instance, [[Frontier Airlines (1950-1986)|Frontier]]’s decision to get MD-80s was SNA-driven.<ref>[https://www.newspapers.com/image/387499882 ''Frontier to Add DC-9 Super 80s to Keep Place at Wayne Airport'', Los Angeles Times, March 7, 1981]</ref>

AirCal came close to failure, but was saved by a combination of cost savings, with substantial layoffs, a 10% wage reduction for those who remained, a realignment of its route network, concentrating on increasing frequency on important routes like LAX to San Francisco.<ref>[https://www.newspapers.com/image/401456204 ''Entrepreneurs Lot Not So Hot, Symposium Told'', Los Angeles Times, October 30, 1985]</ref> Lyon took over the CEO position himself. During this period, the historic Hughes Airwest network was being eliminated, as Hughes successor Republic withdrew from the west coast. Western Airlines intrastate service was also shrinking. AirCal was also substantially recapitalized, with the combination of an initial public offering with Lyon and Argyros converting their from the airline into equity. This relieved the airline of a substantial debt load.<ref name="rebound"/><ref>[https://www.newspapers.com/image/633610376/ ''AirCal Seeks Approval for 1st Public Offering'', June 24, 1983]</ref>

===Final years===
[[File:BAE 146-200 N141AC Aircal ORC 16.10.86 edited-2.jpg|thumb|right|AirCal BAe 146–200 at [[John Wayne Airport|Orange County airport]] in 1986]]
AirCal’s fleet remained 737-200s (and two 737-100s), along with seven MD-80s, until it ordered a dozen [[Boeing 737 Classic|Boeing 737-300]]s in 1984, with Boeing agreeing to take back the MD-80s in trade. The 737-300s were even quieter than the MD-80s, and obviously compatible with the 737-100/200s.<ref>[https://www.newspapers.com/image/390436784/ ''AirCal Says Service Now Key to Growth''. Los Angeles Times, November 15, 1984]</ref> The last of the MD-80s were gone by early 1986.<ref>[https://www.newspapers.com/image/402003019/ ''Flight Awards Favor AirCal, PSA Charges'', Los Angeles Times, February 27, 1986]</ref> SNA noise limits basically forced AirCal into buying [[British Aerospace 146|BAe-146]]s; new 1985 flight limits had a looser limit for aircraft below a certain noise level, and the BAe-146 qualified. That would have given PSA a substantial advantage unless AirCal also got the aircraft, so it ordered six.<ref>[https://www.newspapers.com/image/402078876 ''AirCal Orders British Jets to Counter PSA'', Los Angeles Times, Jan 10, 1986]</ref>

In the fourth quarter of 1985 the string of profits was upset due to the entry of Continental West into California.<ref>[https://www.newspapers.com/image/402146114 ''AirCal’s Net Jumps 9% Despite 4th-Quarter Loss'', Los Angeles Times, February 20, 1986]</ref> Continental West was a short-lived [[Texas Air]] subsidiary created to take delivery of aircraft due to limits placed on Continental by its bankruptcy judge.<ref>[https://www.newspapers.com/image/638596773 ''New airline planned by Texas Air Corp.'', Fort Worth Star-Telegram, March 21, 1985]</ref> Additional capacity cratered west coast fares once again, leading to 1986 being once again unprofitable. In June 1986, AirCal created a holding company for the airline, ACI Holdings.<ref>[https://www.newspapers.com/image/402403622 ''AirCal Shareholders OK Holding Company'', Los Angeles Times, June 20, 1986]</ref>

In November 1986, AirCal accepted a purchase offer from American Airlines for $225mm, $90mm of which would be split by Lyon and Argyros. American was in the midst of a hub expansion program, then building new (now defunct) hubs in [[Raleigh–Durham International Airport|Raleigh]], [[Nashville International Airport|Nashville]] and [[Luis Muñoz Marín International Airport|San Juan]]. Building a west coast presence from scratch at the same time was considered a bridge too far for American, so it bought rather than built. Another factor was that [[Frank Lorenzo]]'s Texas Air was also interested and American was eager to block it.<ref>{{Cite book |last=Petzinger |first=Thomas Jr. |title=Hard Landing |date=1995 |publisher=Times Books |isbn=0812921860 |pages=324–325 |location=New York}}</ref> AirCal had achieved a 1985 market share on the LA Basin to SF Bay corridor market of just under 33%, second to PSA which had just less than 49%. AirCal had expanded up the coast to Canada and Alaska and as far east as Chicago with a fleet of 39 aircraft.<ref>[https://www.newspapers.com/image/404589298/ ''American to Purchase AirCal for $225 Million'', Los Angeles Times, November 18, 1986]</ref> American’s purchase closed May 1, 1987 and AirCal was merged out of existence on July 1.<ref>[https://www.newspapers.com/image/403005635 ''United Airlines to Begin County Operations Sept 9'', Los Angeles Times, May 21, 1987]</ref><ref>[https://www.newspapers.com/image/404733526 ''AirCal Fades Into Orange County History'', Los Angeles Times, July 2, 1987]</ref> AirCal's long-time rival, PSA, was likewise swallowed by [[US Airways|USAir]] in 1986.<ref>{{Cite web |date=2022-05-29 |title=The PSA era ended 35 years ago |url=https://www.sandiegouniontribune.com/news/local-history/story/2022-05-29/from-the-archives-the-psa-era-ended-35-years-ago/ |access-date=2025-11-14 |website=San Diego Union-Tribune |language=en-US}}</ref>

==Legacy==

[[File:N917NN Boeing 737-823 American Airlines (Air Cal Heritage) MIA 17.1.23 (52850551661).jpg|thumb|An [[American Airlines]] [[Boeing 737-800]] with AirCal heritage livery]]

AirCal left almost no trace.

The successors of PSA and AirCal, USAir and American, raised prices, reflecting their higher costs. In early 1990, the last-minute roundtrip fare from Los Angeles to Sacramento was $456, over $1000 in 2024 dollars. State legislators were increasingly irate, finally proposing a raft of bills to punish the carriers, even suggesting a state-owned airline.<ref>[https://www.newspapers.com/image/176646554/ ''6-Bill Package Seeks to Lower State Air Fares'', Los Angeles Times, February 28, 1990]</ref> They didn't notice that the market had already taken care of the problem. [[United Airlines]] had already announced an increase in frequency on Los Angeles to San Francisco from 16 to 27 per day.<ref>[https://www.newspapers.com/image/175494368 ''United Plans Sharp Boost in Number of L.A.-S.F. Flights'', Los Angeles Times, January 23, 1990]</ref> More to the point, Southwest Airlines had announced it was entering Burbank with 10 a day service to Oakland at a last-minute fare of $59 one way, $29 in advance.<ref>[https://www.newspapers.com/image/779376167 ''Southwest expanding Oakland flights'', Oakland Tribune, February 1, 1990]</ref>

The resulting Los Angeles Basin to San Francisco Bay fare war was brutal, made worse when Iraq invaded Kuwait thereby spiking oil prices, collapsing demand for international travel and tipping the US into the [[Gulf War]]. In January 1991, in announcements only two weeks apart, American and then US Air gutted the former AirCal and PSA systems, throwing in the towel less than five years after offering to buy the former intrastate airlines.<ref>[https://www.newspapers.com/image/176379160/ ''US Air to Cut Most California Flights'', Los Angeles Times, January 26, 1991]</ref>

Despite this, in the case of PSA its indirect legacy is substantial because it was the inspiration for Southwest Airlines, and thus PSA is generally viewed as the original [[low-cost carrier]]. Air California/AirCal can't make the same claim. In fact, there's a good case to be made that Air California only survived to be sold to Lyon & Argyros ''because'' of regulation. Air California was a product of the post-1965 CPUC and the Orange County duopoly, and thus not a good argument for deregulation.

That makes AirCal's success under Lyon and Argyros even more anomalous. The chance that two Orange County real estate barons, airline industry outsiders, could buy an apparently healthy airline, have it immediately fall on hard times, but quickly turn it around and make a success of it during one of the most turbulent eras in US airline history would seem rather slim. But that's what happened. And then they had the good sense to sell the airline at a healthy profit (since it appears that the vast majority of their purchase money was funded by a loan from Wells Fargo) and apparently never again dabble in airlines. They might have had the single greatest return on investment of any airline owners in the 1980s, and yet this part of US airline history is little known.

In 2015, [[American Airlines]] added to its heritage livery series a AirCal [[Boeing 737-800]].<ref>{{Cite news|url= https://www.usatoday.com/story/travel/flights/todayinthesky/2015/12/01/american-completes-heritage-plane-rollout-twa-aircal-paint-jobs/76604236/ |title= American completes 'Heritage' plane rollout with TWA, AirCal paint jobs |work=USA TODAY|access-date=2024-07-28|language=en}}</ref>

==Incidents and accidents==
On Tuesday, February 17, 1981, an AirCal Boeing 737-200 crashed while attempting to land at John Wayne Airport.<ref name=alclnds>{{cite news |url=https://news.google.com/newspapers?id=WuMzAAAAIBAJ&sjid=ajIHAAAAIBAJ&pg=5199%2C5313918 |work=Lodi News-Sentinel |location=California |agency=UPI |title=Airliner crash-lands; 34 hurt |date=February 18, 1981 |page=1}}</ref><ref name=susp>{{cite news |url=https://news.google.com/newspapers?id=KhBWAAAAIBAJ&sjid=S-IDAAAAIBAJ&pg=6725%2C4832438 |work=Eugene Register-Guard |location=Oregon |agency=Associated Press |title=Mix-up in runway instructions suspected in California crash |date=February 18, 1981 |page=5A}}</ref> AirCal Flight 336 was a scheduled flight from San Jose International Airport to John Wayne International Airport. Around 48 minutes into the flight, the crew received clearance for a visual approach to land on runway 19R. As Flight 336 was approaching, at high speed and with the engines pulled back to flight idle, another AirCal flight, Flight 931, received clearance to take off from runway 19R. The controller recognized the potential danger of a collision between the two aircraft and ordered Flight 931 to abort takeoff and instructed Flight 336 to go around. Flight 931 immediately aborted its takeoff, however, Flight 336 initially failed to comply and did not go around in time to achieve positive climb and instead touched down on the runway with the landing gear in the process of being retracted. The aircraft left the runway surface around {{convert|900|ft|round=5}} past the runway threshold, skidded another {{convert|1170|ft}} before finally coming to rest {{convert|115|ft}} to the right of the centerline.<ref name=ntsbsr>{{cite web |url=https://libraryonline.erau.edu/online-full-text/ntsb/aircraft-accident-reports/AAR81-12.pdf |archive-url=https://web.archive.org/web/20240103093459/http://libraryonline.erau.edu/online-full-text/ntsb/aircraft-accident-reports/AAR81-12.pdf |archive-date=3 January 2024 |title=Aircraft Accident Report. Air California Flight 336. Boeing 737-293, N468AC. John Wayne Orange County Airport. Santa Ana, California. February 17, 1981. NTSB-AAR-81-12 |access-date=18 July 2025 |date=19 August 1981 |publisher=[[NTSB]] |url-status=live }}</ref> All passengers and crew members survived the crash. The Boeing 737-293 aircraft, registered N468AC, was damaged beyond repair and consequently written off.<ref>{{cite web |title=AirCal Flight 336 |url=https://aviation-safety.net/database/record.php?id=19810217-2 |website=Aviation Safety Network (ASN) |publisher=Aviation Safety Network |access-date=4 August 2019}}</ref>

On June 5, 1986, an AirCal 737 flying from Los Angeles to Portland came within 100 feet of a private plane before the AirCal pilot banked to avoid a collision. No crew or passengers were injured during the incident.<ref>{{cite news |title=Jetliner Reports Near Miss |url=https://www.nytimes.com/1986/06/07/us/jetliner-reports-near-miss.html |work=The New York Times |issue=46798 |volume=135|date=7 June 1986 |archive-url=https://web.archive.org/web/20220814195910/https://www.nytimes.com/1986/06/07/us/jetliner-reports-near-miss.html |archive-date=14 August 2022}}</ref>

==Destinations==

===Destinations in May 1987===

AirCal's May 1, 1987, system timetable listed the following destinations shortly before it was merged into American Airlines:<ref name="vintageairliners.com"/>
{{col div}}
* [[Anchorage, AK]] (ANC)
* [[Burbank, CA]] – now [[Bob Hope Airport]] (BUR)
* [[Chicago, IL]] – [[O'Hare Airport]] (ORD)
* [[Long Beach, CA]] (LGB)
* [[Los Angeles]] ([[LAX]])
* [[Oakland, CA]] (OAK)
* [[Ontario, California|Ontario, CA]] (ONT)
* [[Orange County, CA]] – now [[John Wayne Airport]] (SNA)
* [[Portland, OR]] (PDX)
* [[Reno, NV]] (RNO)
* [[Sacramento, CA]] (SMF)
* [[San Diego, CA]] (SAN) 
* [[San Francisco, CA]] ([[SFO]])
* [[San Jose, CA]] (SJC)
* [[Seattle, WA]] (SEA)
* [[South Lake Tahoe, CA]] (TVL)
* [[Vancouver, B.C., Canada]] (YVR) – ''only international destination served by the airline''
{{col div end}}

===Previously served destinations===

Air California/AirCal previously served these destinations during its existence:

{{col div}}
* [[Fresno, CA]] (FAT)
* [[Las Vegas, NV]] (LAS)
* [[Monterey, CA]] (MRY)
* [[Palm Springs, CA]] (PSP)
* [[Phoenix, AZ]] (PHX)
{{col div end}}

==Fleet==
===Final fleet===
As of July 1, 1987, at the time of the merger, AirCal's fleet consisted of the following aircraft:{{Citation needed|date=January 2025}}

{| class="wikitable" style="margin:0.5em auto; text-align:center"
|+ Air California fleet
|-
!Aircraft
!In<br>service
!Notes
|-
|[[British Aerospace 146|BAe 146-200]]
|6
|All were transferred to [[American Airlines]] and later retired in 1990.
|-
|[[Boeing 737-100]]
|2
|All were transferred to [[American Airlines]] and later retired in 1988.
|-
|[[Boeing 737-200]]
|21
|All were transferred to [[American Airlines]] and later retired in 1991.
|-
|[[Boeing 737-300]]
|8
|All were transferred to [[American Airlines]] and later retired in 1992.
|-
!Total
!37
!colspan=3|
|-
|}

===Retired fleet===
Air California/AirCal previously operated the following aircraft:

{| class="wikitable" style="margin:0.5em auto; text-align:center"
|+ Air California retired fleet
|-
!Aircraft
!Total
!Introduced
!Retired
!Notes
|-
|[[Lockheed L-188 Electra]]
|7
|1967
|1980
|
|-
|[[McDonnell Douglas DC-9-14]]
|2
|1968
|1969
|Leased from [[McDonnell Douglas]].
|-
|[[McDonnell Douglas MD-81]]
|2
|rowspan=2|1981
|rowspan=2|1986
|
|-
|[[McDonnell Douglas MD-82]]
|6
|
|-
|}

===Retro Livery===
American Airlines N917NN was painted with AirCal livery in 2015

== See also ==
* [[List of defunct airlines of the United States]]

==References==
{{Reflist}}

== External links ==
{{Commons category}}
* [http://www.departedwings.com/The%20Airlines/Aircal/OC.htm Air California and AirCal History]
*{{cite web|title=AirCal Commercials playlist|publisher=Aviation Commercials|url=https://www.youtube.com/playlist?list=PL3QwopPRHOLXdnJ989EnK3YeRNeCkXcn9 |website=youtube.com |language=en |format=video |date=January 23, 2022}}

{{Portal bar|United States|Los Angeles|Companies|Aviation}}
{{American Airlines}}
{{U.S. airlines of the regulated era (1938–1978)|state=collapsed}}
{{Airlines of the United States|state=collapsed}}
{{Authority control}}

[[Category:Defunct regional airlines of the United States]]
[[Category:Defunct companies based in Greater Los Angeles]]
[[Category:Companies based in Newport Beach, California]]
[[Category:Airlines established in 1966]]
[[Category:Airlines disestablished in 1987]]
[[Category:1966 establishments in California]]
[[Category:1987 disestablishments in California]]
[[Category:1987 mergers and acquisitions]]
[[Category:Airlines based in California]]