Founded in 1946, Airborne Flower Traffic Association was headquartered in California and flew fresh flowers from Hawaii to the U.S. mainland. Undergoing a number of changes over the next 22 years, that company became Airborne Express, an express delivery company and cargo airline. Airborne Express was headquartered in Seattle, Washington, while its hub was located in Wilmington, Ohio.
Airborne Express Inc. was acquired by DHL in 2003. Prior to being acquired, it grew to become the third-largest private express delivery company in the nation, behind Federal Express (FedEx Express) and United Parcel Service (UPS).
From 1946 to 1968, the company was primarily focused on the transportation of fresh flowers. Growth was slow and competition was stiff. Then known as Airborne of California, the company began to change in 1968. Air Cargo Equipment Corporation developed and patented a special narrow container that allowed the space within large jet aircraft to be used more efficiently. In addition, the new containers eliminated the need to modify an airplane’s cargo doors, which saved money for any air-freight company that used them. This special container became known in the industry as the “C” container because of its shape.
Because of C containers, Airborne was able to use passenger aircraft rather than aircraft modified for freight. This allowed the company to purchase commercial passenger aircraft and simply make minor modifications to the passenger doors to allow the narrow cargo containers to be loaded and unloaded easily. In addition, no modifications were required to enlarge an airplane’s cargo doors.
Airborne of California then merged with Pacific Air Freight of Seattle. The new company was named Airborne Freight Corporation (a name it kept until 1980). Following the merger the company’s headquarters was moved to Seattle and its focus became regular freight movements.
Becoming Airborne Express
In 1980 Airborne Freight Corporation acquired Midwest Air Charter, another air freight company. Following the acquisition the company changed its name to Airborne Express. In April 1980, ABX Air was founded under Airborne Express.
Airborne Express became the first airline to buy its own airport – the Clinton County Air Force Base in Wilmington, Ohio. It became the company’s primary freight-sorting hub.
While the surplus air base only cost Airborne $850,000 to purchase, it spent over $100 million to retrofit and develop it for the company’s specific purposes. By June of 1981 Airborne opened its first package sorting facility, which was able to process 50,000 packages nightly. And by 1984 new fuel, maintenance and ground support equipment facilities were opened at the airport. The costs to maintain the airport were Airborne’s responsibility; it is estimated that those costs were over $250 million for maintenance, sorting centers, aircraft hangars, machine shops and flight simulators during the years the airline operated the airport.
Growth from 1988-2001
After buying Sky Courier in 1988, Airborne began offering same-day delivery. The company signed contracts with independent logistics contractors in each city where it operated an office. The vehicles used by the contractors were painted Airborne’s gray, red and black colors and displayed its logo. The drivers employed by the contractors were outfitted with Airborne uniforms. In addition, Airborne Express began to offer a cheaper second-day package service, which was similar to FedEx’s second-day, or “P2” (priority two) parcel service.
Airborne expanded its package sorting facility in October 1990, increasing the number of packages it could handle nightly to 520,000. In May 1991, Airborne announced that it would build a new runway and a third maintenance hangar in Wilmington.
The company introduced its “Flight-Ready” prepaid express letters and “Express Pack” system in 1992. That was followed the next year by the introduction of the Airborne Logistics System (ALS), which provided Airborne with warehousing and distribution services for its key customers.
Airborne opened its Ocean Services Division in 1994. That division and its ALS helped establish “the first new film distribution program for Technicolor labs since 1944.”
Airborne began using the second runway at Wilmington in 1995. In addition, it created the Airborne Alliance Group to handle many of the back office functions for the company.
In 1997, the company announced that it would add Boeing 767 jets to its fleet (which began to be delivered and to go into service in 1998). Also in 1998 the company created its Airborne Brokerage Services division. In addition, Airborne was listed on the Fortune 500 list for the first time.
Airborne signed an alliance with the United States Postal Service in 1999. [email protected] was the name given to the new service. The following year Carl Donaway became the company’s new president.
Also in 2000 Airborne announced a ground service, a first for the company. Ground Delivery Service and 10:30 a.m. Delivery Service were launched in 2001. With the internet becoming more important, Airborne.com launched several services, including the Small Business Center and Airborne eCourier.
As noted earlier, Airborne Express was smaller than UPS and FedEx, its two primary competitors. Because of that, Airborne’s management developed a strategy to concentrate on businesses that regularly shipped large volumes of urgent items. It then tailored its services to the specific needs of those businesses. Focusing on those large-volume companies, Airborne chose to purposely ignore businesses and consumers that were not regular users of express mail and parcel services carriers.
Airborne Express advantages
By focusing on customers that shipped larger volumes of packages, Airborne Express picked up more items per stop than FedEx or UPS. This meant that Airborne’s pick-up and delivery operations were leaner than its competitors. Moreover, by using independent contractors for over 60% of its deliveries, Airborne negotiated low rates while increasing revenue. In addition, Airborne’s aircraft were often over 80% full.
Airborne Express weaknesses
Airborne was unable to significantly cut into the market shares of either UPS or FedEx. While the company did begin offering overnight express delivery, when it began it could only offer a midday delivery guarantee rather than the 10:30 a.m. guarantee offered by its competitors.
When Airborne did begin to offer a 10:30 a.m. guarantee in 2001, its on-time delivery metrics were not as good as UPS and FedEx. Although it delivered 10:30 a.m. items on-time 96% of the time, FedEx and UPS delivered on-time at a rate over 99%. Additionally, Airborne did not have a sophisticated software program like those used by its competitors. The company’s marketing effort was not as effective as its competitors either.
Acquisition by DHL
Airborne Express operated as an independent company for 57 years. That ended on August 14th, 2003, when the company’s shareholders approved its acquisition by DHL, which is owned by Deutsche Post World Net. The $1.05 billion acquisition became effective the next day.
DHL was the dominant package delivery service in Europe and much of the rest of the world. It sought to compete with UPS and FedEx in the United States through its Airborne Express acquisition. DHL retained Airborne’s ground operations, but spun off its air operations as ABX Air, Inc.
However, after several years of going head-to-head with UPS and FedEx, DHL significantly cut its U.S. operations. In 2008, DHL cut the jobs of 5,400 employees. Then, on November 10, 2008, it announced that it was letting another 9,500 employees go when it discontinued “domestic-only” air and ground operations in the United States on January 30, 2009. DHL also announced it was shutting down all U.S. ground hubs and reducing its U.S. stations to 103 from 412. DHL continued to operate its DHL Express between the U.S. and other countries.