Vanguard Airlines: An Unauthorized History

Daniel Fitzgerald, 2007

Editors Note:  This is the first in a series of Kansas
Heritage articles.  For my first effort, I chose a subject
close to home and not too far in the distant past. 
Future articles will continue to have a Kansas/ Kansas
City focus.  The author was Operations Manager of
Vanguard Airlines and employed with the company from
1997 to the company's bankruptcy in 2002.  The opinions
expressed are that of the author.


First of all, I am not a disgruntled employee.  That is a
quick answer applied to anyone that speaks out when
their company goes bankrupt or sold out.  In fact, I
know this is part of life.  Most people will drift through
multiple careers before retirement. 

Some companies attract bad karma like flies to wallpaper.
I can think of Enron as a recent example.  Somewhere
out there, I have no doubt that lots of angry former
employees are all competing for web space to tell their
stories of gloom and doom.

I like my life.  I live in paradise.  It is sunny and warm most
of the time.  I like my current job.  The company treats me
fine.  I have no regrets regarding how my life ended up in
the years after Vanguard Airlines.

However, once in awhile, especially after the fifth anniversary
of 9/11 came and went, that I reminiscence.  I feel like setting
the record straight.  I think back and remember the bad with
the good. 

Recently I ran across the only history of Vanguard Airlines on
the web.  It appears in Wikipedia.  In fact, I was surprised at
how detailed it was, and yet, it wasn't.  It was this brief
article that took me back nearly five years. 

Vanguard Airlines existed from 1994 to 2002.  It was
one of those start-up ambitious airlines that every-
one chose when they were broke and needed to fly some-
where.  It was one of those airlines that people loved to
hate when they were two hours late to their scheduled
destination, but $200 wealthier because they didn't choose
Delta, Continental, or American.   It was one of those
airlines that disappeared as quick as it came to life, and is
now part of the annals of American passenger flight that
people just as soon forget, a ghost airline with a history
that is quickly disappearing as well.

Vanguard Airlines began as a discount airline organized by
a group of relative unknowns from New Jersey.  This was their
second effort at an airline.  The first was a short-lived venture
called People's Express that came and went faster than 
Vanguard.  Vanguard's official airline code reflects the New
Jersey origins, "NJ." 

I was not around for the first three years.  Most of that inform-
ation I heard second-hand.  Vanguard's headquarters was always
Kansas City.  Kansas City received this distinction for a couple
of reasons.  For one, it was centrally located, and the "wheel and
spoke" airline business plan suited it well.  All flights would come
in and go out of Kansas City.  Second, Kansas City was the
recent graveyard of other aspiring airlines, namely Braniff and
Eastern Airlines.  Lots of raw talent with previous airline experience
was there for the taking.  Oddly enough, there were few takers.

Vanguard's first CEO was Rocky Spane, a former vice-admiral with
a distinguished military career.  How and why Spane was chosen
CEO, however, remains a mystery.  He had no commercial airline
experience before Vanguard.  Spane's name would be synonymous
with Vanguard for years.  Despite his apparent lack of experience,
time and time again he would help Vanguard rise from near bank-
ruptcy and reinvent itself. 

Vanguard became the proving ground for a lot of young, inexper-
ienced talent.  Myself included.  I joined Vanguard in 1997 as a
sales agent.  From there, I became a member of the Road Warrior
business sales department, a supervisor, an operations manager,
and finally the guy that planned airline routes, cancelled flights,
and assisted with new connections.  The experience the company
gave me was invaluable. 

The first couple of years, Vanguard tried a variety of destin-
ations, some of them successful, some not so successful. The
first cities were Kansas City, Denver, and Salt Lake City. 
Denver turned out to be a long-time cash cow for Vanguard,
much to Frontier's disgust.  Salt Lake City was not so success-
ful and a strange choice.  That destination lasted only a few
months.  And then there was Milwaukee.  Milwaukee seemed to
be a low-cost alternative to get Vanguard near Chicago.  That
destination lasted mere days.  Phoenix, another destination
choice, came and went almost as fast, like, well, a Phoenix.

In July 1996, a Valu-Jet aircraft crashed into the Everglades,
killing everyone onboard.  There was no relationship be-
tween Vanguard and Valu-Jet, except that they both began
with the letter "V."  Nonetheless, Vanguard would have to
defend and live down the "non-relationship" for years. In
reality, Vanguard had one of the best safety records in the
business.  No crashes, no near crashes.  No reason to re-
late Vanguard to Valu-Jet.

From the beginning, if a destination did not work out within
months, there was not much loyalty.  Vanguard would leave
at the drop of a hat, and they didn't care who was left in
the lurch.  The best example of this was Cincinnati.  Vanguard
attempted to drum up business in Cincinnati as early as 1996.
They were unable to compete against Comair and Delta.  In
1998, they tried again to make Cincinnati a permanent fixture.
Again, the same thing happened.  Vanguard was unable to com-
pete, and gave Cincinnati residents less than a week to find
alternative airline options.  Some ticket-holders lost a lot of
money, because at first, no other airline honored Vanguard's
tickets.  Some ticketholders had to drive to the next closest 
Vanguard destination, Pittsburgh, rather than lose money on
swapping tickets. 

Vanguard first attracted leisure travelers.  Many of the destin-
ations reflected this.  There was Orlando, Tampa, San Fran-
cisco, Los Angeles, Miami and Las Vegas. 

Unfortunately, competition was brisk and bitter, and Van-
guard usually suffered. Then there was the weird, Des Moines
and Wichita. Tickets were as low as $29 roundtrip.  The dest-
inations were short-lived. Vanguard also offered free round
trips for delays as if they were water.  A two hour delay
would often be rewarding to the passenger.  They would get
a free round-trip voucher to use later.  One passenger I
researched bought one roundtrip and flew six more times
for free.  Not exactly an easy way for a company to make
money.
  
This business plan lasted until June 1997.  It was a hard pill
to swallow, but Spane and other officers decided that the
leisure traveler concept wasn't working.  This was the first 
cross-roads for Vanguard as the company nearly went
bankrupt.  But instead, Spane transformed the company into
a low-cost business carrier.  This business plan would work,
if only for awhile.

The Transformation 

Vanguard focussed on business destinations for the rest of
the decade.  They kept Denver, and added Minneapolis,
Chicago-Midway, Pittsburgh, Dallas, and Atlanta.  Some of
these choices, with fares as low as $19 roundtrip, worked
to attract travelers but didn't add much to the company
coffers.

Chicago-Midway became a secondary hub for Vanguard for
awhile.  Here planes flew to Pittsburgh and Minneapolis.

Minneapolis was where Vanguard was much-loved.  The
city was forced to pay high fares because Northwest Air-
lines had a hub there.  Vanguard's flights were usually
full, much to Northwest's disgust.  In September 1998,
the unexpected happened.  Northwest went on strike,
leaving thousands of travelers high and dry.  Vanguard
immediately responded by increasing fares by as much as
200% in response to the demand.  The plan worked.  The
airline briefly boomed and Vanguard posted its first profit-
able quarter ever.  There was, however, a downside to the
strike.  Once the strike was over, a sizable number of folks
resented Vanguard's increase in fares, and they never re-
turned.  

The last quarter of 1998, and perhaps the first quarter of
1999, were the only profitable quarters the airline ever wit-
nessed.  The profits were not sizable, but they were a moral
victory nonetheless.  Spane was right on target.  If there was
a downside, it was the fact that Vanguard had only 15 air-
craft, and no spares.  All the aircraft were being used all the
time.  Routine maintenance meant that a flight would have to
be cancelled.  There was no plane to take its place. 

Most of Vanguard's fleet were 737's and 727's in the 200 and
300 series.  These aircraft mirrored that of Southwest Airlines,
only a smaller fleet and older.  The size of the fleet was a
bad problem that Vanguard never successfully beat.  There were
not enough planes to plan extensive multiple day flights to
the same city, or to even expand successfully. 

Vanguard's competition was another serious factor.  Northwest
Airlines hated Vanguard's presence in Minneapolis.  For years,
they hired a man who did nothing but sit at the Vanguard gate
counting passengers coming and going. 

Vanguard's presence in Dallas was also a bone of contention,
this time for American Airlines.  Vanguard sued American Air-
lines beginning in 1999 for a series of complaints that boiled
down to unfair competition.  The lawsuit dragged on for years,
wasting manpower and accomplishing nothing.  Why this waste
of energy was allowed to happen is puzzling. 

Vanguard was at another serious cross-roads in mid-1999. 
Things seemed to be working.  Load factors were up, people
were buying tickets.  The master plan that Spane gambled on
was working.  But pride and bad luck got in the way.

The first sign of trouble was the Road Warrior program.  This
small department catered exclusively to companies that wished
to purchase blocks of tickets for their traveling employees at a
discount.  The discount was as much as 50% off regular business
fares.  Among the companies that took advantage was Sprint. 

Sprint was a sizable portion of the Road Warrior program, and
they were happy with Vanguard.  When their contract came up for
renewal, the marketing department, feeling immense pride from
two successful quarters, was not quick to offer them a good re-
newal rate.  In fact, feeling invincible, they blew them off. 
Sprint just as quickly told Vanguard goodbye.  A large chunk of
business went with them.  The next bad omen was Mother's Day,
1999.  The FAA suddenly, without warning, grounded all 737's
to inspect them for wiring defects.  Vanguard's entire fleet was
grounded, as was much of Southwest's.  Mothers all over the
country were marooned on Mother's Day.  People never forgot,
and they blamed Vanguard, not the FAA. 

During the summer of 1999, things went downhill fast.  Two planes
were grounded after birds flew through the engines and grounded
them.  Flights were cancelled right and left.  Promises were made
and broken regarding when the planes would be back in commission.
Few efforts were made to lease or acquire new aircraft. 

The success that Spane brought to Vanguard quickly vanished.
Nothing he could do could bring it back.  Losses mounted month
after month.  By early 2000, the writing was on the wall.  Spane
decided to retire, leaving Vanguard without a CEO.  The next move
was a strange one. 

Vanguard's next CEO was one of Frontier Airline's favorite sons,
Jeff Potter.  Why he joined Vanguard as CEO remains a bizarre
mystery.  He had built up a sterling reputation with Frontier.  His
future with Frontier seemed bright.  Suddenly, he jumps ship and
accepts a CEO position with a fiercely competitive airline named
Vanguard.  Also joining the staff was a new marketing vice-pres-
ident named Greg Aretakis.  Aretakis left Shuttle America, a
failing East coast airline, to try his luck with Vanguard.  Potter
and Aretakis were old friends.  Their connection went back years.

Potter's stay with Vanguard was barely a year, if that.  His goal
was to turn the fledgling airline around.  The focus shifted from
business travelers to a unique combination of leisure and busin-
ess destinations.  Among the new additions were Buffalo,
LaGuardia (New York City), Las Vegas, Myrtle Beach, Austin,
Colorado Springs, Seattle, San Francisco and Los Angeles for
a second time.  Vanguard went from coast to coast.  Another goal
was to transform Vanguard from an Open Skies reservation system
to a powerful Sabre reservation system, and to develop a website
for reservations.  Drastic measures to turn the airline around.

Potter never moved to Kansas City.  He never brought his family
there.  His family stayed in Denver, home of Frontier Airlines.  One
day, suddenly, Potter chose to leave Kansas City, and to leave
Vanguard, to become CEO of Frontier Airlines.  Rumors circulated.
Was Vanguard being built up as a merger, and then it was decided
that Vanguard was too far gone to be a merger with Frontier? Who
knows.  Potter left a parting gesture for Vanguard.  One of
Vanguard's newest destinations was Reno/Lake Tahoe.  The airline
was in the middle of several marketing deals with hotels and
casinos in Reno and Tahoe when Potter left.  Less than a month
after Potter's departure, the hotel and casino deals dried up, and
they choose a sweeter deal with Frontier.  Coincidence?  I will let
the reader judge.

The final CEO was Scott Dickson, formerly of Grupo-Taca Airlines. 
Dickson was looking to return to the states from Central America. 
Vanguard seemed a logical choice.  Aretakis played a more domin-
ant role in the everyday affairs of the airline.  Joining the group
was Dave Rescino as CFO.  Rescino had recently served as CFO
of a defunct airline called Aspen Air.  He had overseen the entire
bankruptcy process.  Was Rescino part of the new Vanguard team
because of his experience with the bankruptcy process of Aspen Air? 
Again, who knows.  They positioned themselves in 2001 to play
out Vanguard's hand:  bankruptcy or success.

Most of 2001 was a transitionary year, and Vanguard could not
afford any more transitions.  Pure cold cash, that is what the
airline needed.  The company invested what was perhaps two mil-
lion dollars in transforming the reservation system from Open Skies
to Sabre.  Six weeks of training were set aside to bring everyone up
to speed with the new system.  The training, however, was sporadic
and faulty.  Too many folks did not get enough training and were
thrown out to make reservations only half prepared.  Sabre had two
versions, a hard code-related version and what was supposedly an
easier version.  Neither version was defined as easy, and folks got
muddled down day after day with a system that didn't seem to work.
Revenue reports were shoddy and inconclusive, so arguments even
ensued over how much revenue the company was actually
making each day.  Everyone had their theories and they were
too bullheaded to admit someone else might have the right answer. 
The goal of the reservation exchange was to draw more travel
agents in Vanguard's direction.  It did accomplish that, but the
real wave of the future was internet, and attention was less
focussed there.  The revenue did not pick up, aircraft did not
arrive on schedule for new flight plans, things were going
downhill fast.  There was uncertainly as to whether Vanguard
would survive 2001.  Fortunately, the company had Rescino,
ready to use his experience at liquidation and bankruptcy to
pick up the pieces.

September 11, 2001, was a wake-up call for everyone, not just
the airline industry.  We all remember where we were.  We all
remember the scenes played over and over.  Vanguard was a
small airline.  Resilience was our middle name.  Two weeks
after 9/11, 25% of the company workforce was laid off, fired,
whatever you wish to call it.  It was mostly a gesture.  I don't
think research had anything to do with it.  The company
survived on personality, not cold hard facts.   Within the next
month, the company also received nearly three million in funds
(more or less) from the federal governement to help stabilize the
airline industry.  The Air Stabilization Board was activated and
promised more grant money for distressed airlines. 

There is a chance that had the three million not come along,
the airline would have naturally declared bankruptcy before the
end of the year. As it was, the federal money postponed the
inevitable and injected new economic life into the airline.  My
theory, as controversial as it may be, is that Vanguard had no
reason to state that they were a victim of 9/11.  9/11, as
strange as it may seem, saved the airline.  The money came in,
but the staff that were laid off were not immediately re-hired.
The goal for the next year was to grab $100 million in grant
money from the brand new Air Transportation Stabilization Board.
That was the ticket for success.  Big money to start over and
fulfill the unfulfilled dreams. 

The rest of 2001, the management team wrote grant request
after grant request to the Air Stabilization Board.  Each grant
request was rejected. First they would ask for 150 million, then
100 million, and so on and so on. The bad news would then drift
in:  sorry, rejection.  Sales slowly went up. People slowly returned
to fly.  Perhaps they chose us because we were far removed from
the terrorist radar screen due to our size.  We slowly leased some
more aircraft.  We repainted aircraft.  We put on a new face.
We tried companion fare sales, Tuesday sales, special hot deals on
the internet, package deals with our friends, the travel agents.
Amazingly, some of it worked.  Sales and load factors dramatically
increased and even returned to pre-9/11 levels in some areas. 

In January 2002, Vanguard called back most of the folks that were
laid off, and had a big job fair on top of that.  While other airlines
continued their cuts, Vanguard kept expanding.  There was no real
reason for it, but it happened.  It set up a false sense of security. 
Revenue continued to increase, but the revenue was not generated
from travel agents.  The web-site was the big star that blew every-
one away.  People were turning to the website more often for their
airline tickets.  Vanguard took advantage of it by continuing to offer
great internet fares. 

Vanguard's debt load approached 80 million.  Nervous about
increased bookings, credit card processors required greater and
greater assurances that they would not lose money if the airline
failed. According to Scott Dickson's book, processors required
surety bonds of 125% of sales to continue processing credit cards.
As each ticket sold, the airline lost money.  There was no end in
sight.  

June and July 2002 were banner sale months.  By early July, the
airline was making a million in sales a day.  It was an unbelievable
comeback from the year before.  The goals and plans that Dickson,
Aretakis, and Rescino had set in motion two years ago were starting
to materialize. But the Air Transportation Stabilization Board was
not a friend.  No matter the amount of money requested, the
rejections mounted like tickets on the highway.

Vanguard's last day of business was July 29, 2002.  I remember it
well. The day started out much like any other day.  No idea that this
was the last day of work.  At 4 o' clock that afternoon, we had a
marketing meeting with all the members of the marketing team to plan
sale strategies for the fall.  Still, no reason to think anything was
wrong. Aretakis was to join us, but he suddenly ran into CEO Dick-
son's office, along with Rescino and a couple of other vice-
presidents.  The door closed behind them. They stayed in there
for about 40 minutes. Aretakis exited the meeting, composed and
smiling.  He joined us for the marketing meeting and even recom-
mended some marketing strategies for September and October. 
He didn't even flinch, didn't even show a poker face. 

Two hours later, Vanguard closed for good.  It was probably just a
phone call to all the stations that did it.  No one even bothered to
call the Vanguard Reservation Center.  Customer service represent-
atives had to find out from customers about the closure of the airline.
Someone forgot until nearly forty-five minutes after the Kansas City
station desk had closed and local television stations had reported the
news.  I received a phone call at around 11:30 that night to not
bother reporting to work the next day.  I was busy moving to a new
house that night, so I had no idea of the news that was happening.

Vanguard never resurrected itself.  There were hopes and dreams,
but little else.  Robert Brooks of Hooters played with the idea of
buying up Vanguard and calling it Hooters Airlines.  This kept hopes
alive for a couple of months, but apparently he was not interested in
saddling the debt.  Hooters Airlines does exist now, thanks to the
purchase of Pace Air.  Rescino took over the scene and guided the
skeleton of the airline through bankruptcy court.  He was so masterful
at it, you would almost think he had played through the scenario time
after time before it actually happened.  Most employees did receive
the money they were owed.  It took a couple of years, but true to
form, all's well that ends well.

The key players mostly landed on their feet.  Greg Aretakis went to
work as marketing director for Frontier Airlines, under, you guessed
it, Jeff Potter, CEO.  A handful of employees found work with local
stations, such as Southwest and Midwest Express.  Speaking of
Midwest Express, Aretakis, and Scott Dickson, now guide that airline.
No wonder I hear very little about it anymore.  Another bankruptcy
on the horizon maybe? Rescino, once the bankruptcy business was
over, went to work for an unrelated company, having retired from
the airline business. 

As for me, I left Kansas City in 2003 to fulfill my dream of living in
sunny Florida (well, usually sunny).  All is well that ends well. 
Occasionally I hear from good Vanguard friends.  Rumors still fly
of a resurrected Vanguard, but four years is four years.  If it
happens, great.  I wish them the best.