The tendency is to think that if Colgan Air is a "mom and pop" airline run by the family, it can't be very big. Yes, it did start out as "mom and pop" operation flying one airplane for one customer on one route. But today it operates 23 aircraft to 31 destinations ranging from Ohio to Maine. That's not bad for a family-run business.

In 1971 Colgan Airways was begun out of Manassas, Va., by Charles (Chuck) Colgan under a three-year contract to fly IBM [NYSE: IBM] employees between the IBM facility in Manassas to its plant in Poughkeepsie, N.Y., stopping off at Washington Dulles International Airport to pick up people along the way. It started with a single Beech 99 and a guarantee from IBM that it wouldn't lose money on the deal. "That's a very good way to start an airline," Colgan said. Frequency was three times a day, every day except Saturday.

During the run of the IBM contract, Colgan added two more Beech 99s to the fleet as well as routes from Manassas to Binghamton, N.Y., and Dulles-Raleigh/Durham, N.C. When the contract expired, "We continued without a contract because it was so successful," he said.

In 1975 Chuck Colgan was elected to the Virginia Senate from Prince William County and has served as a senator in the Virginia legislature for the past 28 years. The Senate only sits for 45 days in odd number years and 60 days in even number years. "So it doesn't take as much time as you would think. But there are still constituency problems almost continuously, so it's a very busy job," he said.

In 1980, Colgan was able to get its first essential air service (EAS) contract, providing service into Hot Springs, Va. By 1986, the airline had a fleet of two Beech 1900Cs, three Shorts 330s and four Beech 99s, and had grown to 160 employees.

Also in 1986, Presidential Airways started flying out of Dulles as one of the many new "upstart airlines" created following deregulation of the U.S. airline industry in 1978. It started service flying the newly introduced British Aerospace BAe 146 four-engine jetliner. It was also looking for a turboprop operator that it could buy and turn into a feeder airline.

"I made a big mistake and sold [Colgan Airways] to them," Colgan said. "But we stayed in aircraft sales at Manassas airport."

Four years later Presidential was bankrupt and one of its leased Beech 1900s was available. "So we got a certificate, went and bought the [Beech 1900] and went back into business on Dec. 1, 1991, as Colgan Air," he said.

Once again Colgan started his one-aircraft airline service flying for IBM, this time assisted by his son, Michael, serving as executive vice president. Michael Colgan was named president in 1995.

The airline was able to secure the EAS route to Hot Springs again with a one-year subsidy. "When the subsidy stopped, we continued flying the route. Then we got into Bar Harbor, Rockland and Augusta, Maine. Then it grew from there." That was followed by another EAS route from Bluefield and Beckley, W.Va, to Charlotte, N.C., he explained.

On July 1, 1997 Colgan signed a code-share agreement with Continental [NYSE:CAL] to fly as a Continental Express carrier. However, Continental would not allow Colgan Air to fly into its Newark, N.J., or Cleveland hubs. "We had a very good relationship with Continental, but did not have a chance to grow with them," said Michael Colgan.

"US Airways [OTC BB:USALA] could provide more growth opportunities, so we signed with US Airways as one of their express carriers in 1999," he said. Colgan now flies exclusively as a US Airways Express carrier.

Colgan Air is owned by the Colgan family. Initially, Chuck Colgan and his wife, Agnes, owned 60 percent, and Michael and Julie Colgan owned 40 percent. When Agnes Colgan passed away, her 30 percent was given to the children and put in a trust. Chuck Colgan said that he eventually plans to turn over an additional 10 percent to Michael, giving him a total of 50 percent of the airline.

Three of Michael's siblings also work for the airline, along with eight grandchildren. One grandchild, Mike Colgan Jr. serves as manager of system controls. Others include Mary Colgan Finnigan, vice president of administration; Dorothy Colgan-Chaplin, director of customer care; and Chuck Colgan, Jr. manager of personnel development. Robert Colgan, brother of Chuck Colgan, Sr., serves as marketing manager.

Today Colgan Air's routes extend as far north as Presque Island, Maine, west to Columbus, Ohio, and south deep into Virginia, serving 31 destinations in 11 states. It serves the Cape Cod region out of LaGuardia and Boston Logan, with a 15-man maintenance base at Hyannis, Mass. "We operate year round to the Cape to protect our slots at LaGuardia," the senior Colgan said. "We lose money during the wintertime from November through April, but it picks up very strong in May and through the summer." The airline serves Hyannis and Nantucket year round, but only has summer season operations to Martha's Vineyard. The year round service is out of LaGuardia, with summer service to the Cape out of Boston.

Other key hub airports besides Dulles, LaGuardia and Boston Logan include Albany, N.Y., and Pittsburgh. Colgan also has a maintenance facility in Albany. "When American (NYSE: AMR) shut down its Albany maintenance base, they laid off quite a few people. So we went up and hired 22 mechanics and opened the Albany facility," Colgan said. Those mechanics handle overnight-type maintenance for aircraft based in New England. The Albany base also does "C" checks for the Saab 340s. Colgan said that they are now doing all their own heavy maintenance as a cost cutting effort. "We used to farm all that out before," he said.

The airline has a lot of overnight points for the aircraft, so crew bases are scattered across the system to prevent crews from having to overnight in hotels. "We even have a crew base in Bar Harbor [Maine]," Colgan said. "We have a lot of pilots who are from Bar Harbor. They want to live there, so they don't leave. That helps us in that we don't get the turnover and we have good quality people who are with us a long time."

Pilot training is done through FlightSafety International, using its simulators at LaGuardia and in San Antonio, Texas and St. Louis, Mo.

For the future, Colgan plans to expand with turboprop aircraft and is currently "having discussions with US Airways and Saab on what that would mean," Colgan said.

However, "the last few years have been hard on the industry. We need to build our strength back up before we dive into too much."

Michael said that the airline's 1900C models will be replaced by newer 1900D models. Two new "D" models are ready for delivery, leaving four "C" models to replace. Those four "will be replaced either with 1900Ds or with Saabs," he said. "We want to expand with more Saab 340s and 1900s. We believe there will always be a spot for turboprop operators, and we want to be the ones to grow. We think we have great growth opportunity with US Airways, but we have to take it as it comes."

He also noted that the use of regional jets is something that has been discussed for the long-term future. "But nothing's been decided on that."

Colgan Air

10677 Aviation Lane
Manassas, VA20110
(703) 368-8880
http://www.colganair.com

• Chairman - Charles Colgan
• President - Michael Colgan
• VP- Finance - Patti Barth-Carlo
• VP-Maintenance - David Fitzpatrick
• VP-Administration - Mary Colgan Finnigan
• VP-Operations - Donnie Nunn

Fleet: 16 Beech 1900s, 7 Saab 340Bs

2002 Statistics:

• RPMs (000) - 95,383
• ASMs (000) - 221,491
• Pass. Carried - 449,485