Airborne Express

Airborne Freight of California

John D. McPherson and partners incorporated San Francisco-based Airborne Flower Traffic (AFC) in California 23 April 1947.^[3][4] AFC was one of the first five air freight forwarders issued letters of registration in 1948 by the Civil Aeronautics Board (CAB),^[5] the now-defunct Federal agency that, at the time, tightly regulated almost all US commercial air transport. As an indirect air carrier, Airborne Flower Traffic fell under the purview of the CAB. AFC changed its name to Airborne Flower and Freight Traffic in 1948 and to Airborne Freight Corporation in 1965,^[6] the same year it went public.^[7] AFC was the clear number two air freight forwarder (after Emery Air Freight) by tons shipped in the early 1950s.^[8] In 1958 it was number two by revenue in the industry after Emery Air Freight.^[9] At the time of its merger with Pacific Air Freight, AFC remained number two, but was in financial trouble,^[10] in part due to a poorly-programmed computer installation.^[11]

Pacific Air Freight

Philip Gruger started Pacific Air Freight (PAF) 1949;^[12] it received its CAB authorization as an air freight forwarder in 1950. Holt W. Webster, a former Northwest Airlines freight employee, joined Gruger in 1951, making it a two-person operation.^[13] Its original business was arranging air transport of produce and contractor equipment to Alaska.^[14] For many years, PAF was a more modest operation than AFC. For instance, in 1956, PAF revenues were $400K versus AFC's $2.1 million.^[15] PAF grew quickly after Webster became president in 1962. In 1965, Airborne's forwarding revenue was $16.3 million (number 2 in the industry), PAF was number 7 at $6.4 million (number 1 was Emery Air Freight at $49.7 million).^[16] By 1967, PAF had $23.1 million in revenue vs $25 million for Airborne.^[17]

AFC was PAF's main competitor; the Justice Department objected to the 1968 merger on anti-trust grounds, but the CAB approved it on the basis that AFC seemed likely to collapse without the merger. The two companies merged into a new Delaware-incoporated entity, Airborne Freight Corporation (ABF).^[10] Holt W. Webster would remain CEO until 1984, seeing the organization through its transition into an integrated package express company.^[13] John D. McPherson became a director of the new company and the largest shareholder until close to the end of his life in 1987.^[18]

Transition to package express company

ABF remained the number two air freight forwarder through 1977 US air cargo deregulation. In that year, Emery had $340 million in revenue while in second place was ABF with $150 million.^[19] In October 1976, ABF started chartering aircraft from Midwest Air Charter (MAC), a small Ohio-based freight airline best known, to that point, for flying checks for the United States Federal Reserve Bank.^[20]

In the 1970s, passenger airlines started withdrawing freighter aircraft from their fleets, leaving air freight forwarders without the overnight cargo flights that they needed. ABF was thus driven to chartering capacity from MAC. The need for ABF's own freight flights only increased with the advent of Federal Express and 1977 US air cargo deregulation and ABF came to increasingly rely on MAC.^[21] In September 1978, MAC bought the airport at Wilmington, Ohio to use as its hub.^[22] In December 1978 ABF bought 9.5% of MAC.^[23] In 1979, ABF bought its own aircraft for MAC to fly.^[24] By year end 1979, MAC had 54 aircraft and was flying to 76 airports and accounted for over half of ABF's shipments.^[20] Finally in 1980 ABF bought out MAC entirely.^[25] ABF renamed MAC to "Airborne Express."^[26]

Airborne Express

The 1980s saw both the development and rationalization of the US package express business as Federal Express (today's FedEx), expanded and competitors, including ABF, responded to it. In the early 1980s, other than the United States Postal Service (USPS), significant US domestic package express companies included Federal Express, Emery Worldwide, Purolator and ABF. In 1982 United Parcel Service (UPS), which had a ground package delivery business and had traditionally offered a second-day air delivery service, entered the overnight delivery service. By 1986, Purolator and Emery were losing money on small package express.^[27] Emery bought Purolator in 1987 to reinforce its overnight market share, but the merger was unsuccessful^[28] and by 1989 Emery withdrew from small package delivery.^[29] ABF ended the 1980s as a third-player survivor after much larger FedEx and UPS.^[30]

In 1985, ABF adopted "Airborne Express" as its trade name. In 1989, ABF renamed its airline to ABX Air to reduce the chance of confusion between the carrier and its parent. By 1990, the package express business (outside of USPS) consolidated to Federal Express, UPS and ABF. In December 2000, the company restructured, with Airborne, Inc. becoming a holding company, the former ABF now called Airborne Express, Inc. and ABX Air becoming a holding company subsidiary.^[31] In 2003, DHL agreed to buy Airborne for $1.05 billion (over $1.8 billion in 2026 terms), part of a strategy by which DHL would attempt to become a third large domestic US package express company. At the time, respective domestic overnight package delivery shares of Airborne, FedEx and UPS were estimated to be 19%, 46% and 33%.^[32] The transaction closed 15 August, as part of which ABX Air was spun out to shareholders due to DHL's foreign ownership.^[33]