Deregulation gave this airline a lift

John C. Van Arsdale Jr. heads a company that has really taken advantage of airline deregulation.

In a period when the airline industry has been reeling from a series of changes, Provincetown-Boston Airline has emerged as one of the fastest growing, large regional airlines in the United States. Passenger volume has increased more than 50 percent in each of the past two years.

Mr. Van Arsdale, chairman and chief executive officer of PBA, and his brother Peter, the company president, own the airline. Together they have guided the growth of the company, which until recently was tiny in the industry.

PBA is the oldest commuter airline operating in the US. In 1949 John C. Van Arsdale Sr. started the passenger service between the tip of Cape Cod and Boston. It adopted a practice known as demand scheduling, which means the airline guarantees a seat on all scheduled flights.

To work out the scheduling requires a flexible fleet of planes to match aircraft size with passenger demand. In 1949 the senior Van Arsdale started with three planes which could carry two to four people. Today the 55-plane fleet (largest of any regional airline) includes five types of planes that carry from nine to 58 passengers.

In 1960 Mr. Van Arsdale started flying routes in Florida to offset the lean winters of a Northern tourist resort. The first Florida routes were based in Naples, on the state's west coast. PBA followed its tourist-oriented markets for the next 19 years with no major changes.

But the passage of the Airlines Deregulation Act in 1978 offered new opportunities in the industry. New and old markets were up for grabs where federal approval had been required in the past. The act also ate into the federal subsidies that had been accepted by many of airlines.

The changes brought differing philosophies to a head within PBA. John C. Van Arsdale Sr. had built his company by finding markets that needed airline service. He had never gone looking for competitive battles. Sons John Jr. and Peter felt there were markets that needed better service outside the PBA system, service they felt they could offer with deregulation in effect.

For example, they felt that Air New England, a company serving Cape Cod and the islands of Nantucket and Martha's Vineyard, was in trouble. It was seeking greater subsidies at a time the government was trying to reduce them. The brothers decided PBA should expand into the Hyannis, Cape Cod market against Air New England.

With all the talk of buying new planes and expanding markets, John Sr. decided it was time to retire and become a company ''cheerleader,'' as he called it. He sold the company to his sons.

When Air New England cut down its Hyannis service in the summer of 1979 and then folded, PBA continued to expand its Northern and Southern systems, going against established airlines in some markets and charting new service in others.

John Van Arsdale Jr. says PBA has beat industry problems by emphasizing service.

Clean airplanes; clean, neat terminal facilities; friendly personnel in the planes and in the terminals, and what he calls ''tough scheduling'' keep bringing in customers, he says.

''I can tell you all the schedules of the competition in our markets,'' he says, reciting a few of them for emphasis, and stating that only with a good knowledge of the other companies can you spot ways to give your customers the best service. ''I've lived this business since I was 12,'' says the 37-year-old CEO, ''and I understand it. I keep up with everything that's going on.''

Most of all, the PBA emphasizes customer service. Company policies are geared toward reliability, safety, and comfort.

New Bedford, Mass., is a good example of how customer responsiveness pays off. When Air New England announced late in 1980 that it would stop serving that city, PBA was among four airlines to apply to pick up the service. The PBA proposal promised to wipe out the federal subsidy within two years. It won the award and in the first three months of operation boarded more than three times as many passengers as were handled in the corresponding period the previous year.

The company president, 33-year-old Peter Van Arsdale, said no new markets are planned in the near future, and the effect of the air controllers' strike has been to leave still fewer landing slots than desirable in the company's present system. According to Peter, it's just as well for the company to level off for a year or so to get some debt paid off. Acquisition of new aircraft and building new terminal and maintenance facilities have taken a lot of borrowed capital.

John Van Arsdale Jr. likes the new way better and he likes the new competitive spirit his airline is showing. His voice is serious but not cold when he says, ''I'd hate to be on the other side.''