UPS Airlines

1929–1931: First UPS air service

The air cargo business of the United Parcel Service began in 1929. At first, UPS shipped packages as baggage on commercial airline flights on the West Coast of the United States. After Black Tuesday and the beginning of the Great Depression, UPS discontinued the air freight service by late 1931.

1950s–1970s: Packages as luggage

After World War II, UPS (in the process of acquiring common carrier rights for every address in the United States) revisited the idea of shipping packages by air. Starting in 1953, 2-day delivery was offered on coast-to-coast packages; the service was called Blue Label Air. As before, UPS package volume was transported on commercial airline flights. Initially unprofitable, Blue Label Air became popular as its speed created enough demand to maintain a profit.

In 1975, UPS started its first international operations as it expanded into Canada, with an additional expansion into West Germany a year later.

As UPS had become an international company, access to its own cargo aircraft had become a more apparent issue. In 1976, competitor Federal Express (which owned its own fleet of jet aircraft) had turned a profit, showcasing that package delivery companies did not have to exclusively rely on commercial aircraft to transport their volume.

In 1977, the Air Cargo Deregulation Act gave UPS a significant opportunity: the company could now establish its own airline and flying from city to city would require far fewer legislative hurdles as the federal government now encouraged competition between airlines.

1980s: Establishment of UPS Airlines

In 1980, UPS opened its first major hub for sorting packages transported by aircraft, located in Louisville, Kentucky. Located at the westernmost point of the Eastern time zone, Louisville is accessible (by jet aircraft) across the majority of the contiguous United States in less than three hours. In contrast to chief competitor Federal Express (which owned its own aircraft), in the early 1980s, air operations of UPS were undertaken by several contractors, including Evergreen International Airlines, Interstate Airlines, Ryan International Airlines, and Orion Air. Through its contractors, UPS flew its packages using a fleet of commercial aircraft converted to freighters, including Boeing 727-100s, 727-200s, Douglas DC-8s, and Boeing 747-100s.

In 1982, UPS introduced its Next-Day Air service, guaranteeing overnight delivery on certain packages.

To expand its flight network, UPS opened a distribution facility in Anchorage in 1985. Similar to Louisville, Anchorage was chosen for its strategic geographical position, accessible to 90% of the industrialized world in less than 91⁄2 hours flying distance.

In 1986, in an effort to obtain service rights to Japan, UPS entered into a joint venture with DHL, named International Parcel Express (IPX). IPX was rejected for use in Japan, leading UPS to purchase the DHL share of the joint venture in 1987. In August 1987, UPS announced it would take control of its own flying from Evergreen, Interstate, Orion and Ryan. UPS transitioned to its own flying over the course of 1988 in part using a Louisville training facility purchased from Orion. The decision by UPS to insource resulted in substantial dislocation among its contractors. Interstate went bankrupt and later liquidated, and UPS's decision contributed to Ryan becoming moribund for a time. Orion also wound down by the end of 1989.

1990s: Network expansion

At the 1988 founding of UPS Airlines, the company operated a route network serving 41 countries connecting the United States and Canada to Asia and Europe. To expand and modernize its jet fleet, at the end of 1987, UPS purchased dedicated freighter variants of the Boeing 757. In 1995, UPS purchased a second aircraft type from Boeing, the Boeing 767 freighter. The launch customer of both aircraft, UPS Airlines would purchase 75 757s and 32 767s, more than doubling the size of its aircraft fleet.

To update the oldest aircraft in its fleet, the 727-100QF conversion was introduced (QF=Quiet Freighter). In place of a hush kit, the QF conversion changed the aircraft from Pratt & Whitney JT8D to Rolls-Royce Tay turbofans.

In 1991, to gain the ability to fly domestic cargo flights within Europe, UPS entered into a partnership with Danish airline Star Air (part of the Maersk conglomerate), leasing several 727 freighters to the airline (later replaced by 757 freighters).

In the early 1990s, to add capacity to its network, UPS Airlines opened additional hubs, with primary hubs in Rockford, Illinois (Chicago) and Philadelphia; secondary hubs were opened in Dallas/Fort Worth; Columbia, South Carolina; and Ontario, California (Los Angeles).

With most of its aircraft flying primarily on weeknights, the airline was eager to find other ways to produce income from its fleet. In the 1990s, eight 727 freighters were converted (at a cost of $2.5 million each) into 727-100QC (QC=Quick Change) freighters with the ability to be re-converted into passenger aircraft for the purpose of chartered flights.