In a bid to curtail the growing influence of the German-owned Colombian air carrier SCADTA,
in Central America, Air Corps officers Henry "Hap" Arnold, Carl Spaatz, and John
Jouett came together to establish Pan American Airways, as a shell company on March 14, 1927.
Pan Am began as a scheduled airmail and passenger service. Its first scheduled
flight was a mail delivery contract flying between Key West, Florida, and Havana, Cuba.
In less than a year, Juan Trippe took over the leadership of the new airline. With Juan Trippe
at the helm of affairs, Pan Am purchased a number of defunct airlines in Central and South America
and negotiated with postal officials to win most of the government’s airmail contracts.
Being one of the first unofficial flag carriers of the United States,
it was favored by the government to win most of the mailing contracts available at the time.
At first, Pan Am only used the Consolidated Commodore and Sikorsky S-38 flying boats
because of the lack of sufficient concrete runways and poor airport infrastructure.
By 1931, the S-38 flying boats were replaced by the Sikorsky S-40 which were much larger
and accommodates more passengers than the S-38. These new flying boats were nicknamed ‘Clippers’.
Between 1931 and 1946, Pan Am has purchased a total of 28 Clippers to serve the Latin
America routes from the International Pan American Airport. During this period, Pan Am began to serve
Europe after reaching an agreement with Britain and France to conduct flights from Norfolk,
Virginia via Bermuda and Azores using the new Sikorsky S42’s. Their pilots dressed in the
captain’s outfits since they took off from sea – a fashion trend still adopted by airlines of today.
Trippe launched a transpacific destination to serve Hong Kong and Auckland. After negotiating
traffic rights to land at Pearl Harbor, Midway Island, Wake Island, Guam, and Subic Bay,
the airline began to ship aeronautical equipment into these locations using a 15,000-ton merchant
ship called North Haven. The plan was that the Clippers would stop at these islands in the course
of their flight, hence provisions needed to be made for them. On the 6th of August, 1937, Juan
Trippe accepted the In January 1942, the pacific clipper completed the first circumnavigation of
the globe by a commercial airliner. As though that wasn’t enough feat, a year later in January 1943,
Franklin D. Roosevelt flew in the Dixie Clipper, thereby becoming the first US president to fly
in the clipper. During World War II, most clippers were diverted to military service,
and a new Pan Am division was set up to take care of the military-supply route across the Atlantic
from Brazil to West Africa. Post-war and modernization.
When the war ended, Pan Am faced fierce competition from various airlines such as
American Export Airlines across the Atlantic, Trans World Airways (TWA), Braniff, and United
Airways to Hawaii, and North-west Orient to the east, in addition to five more airlines
through the Mexico route. This competition was birthed by the new post-war policy to promote
competition between major US carriers on key domestic and international scheduled routes.
In response to this, Pan Am ended the use of flying boats in 1946.
In the same year, TWA was planning to introduce a faster, pressurized Lockheed-Constellations,
a propeller-driven airliner that enabled the planes to fly above regular bad weather. This
impending move by TWA inspired Pan Am to order its own fleet at $750,000 apiece. In fact,
Pan Am would go on to beat TWA to the launch after embarking on its transatlantic constellation
flights on 14th January 1946, three weeks before TWA would start using its new constellation fleet.
In June 1947, Pan Am started the first scheduled round-the-world airline flight. It was planned
in such a way that the weekly DC-4 plane would leave San Francisco at 22:00 Thursday as Flight 1,
stopping at Honolulu, Midway, Wake, Guam, Manila, Bangkok, and arriving Calcutta on Monday at 12:45,
where it will meet Flight 2, a constellation that had left New York at 23:30 Friday.
The DC-4 returns to San Francisco as Flight 2;
the constellation would leave Calcutta at 13:30 Tuesday, stop at Karachi, Istanbul, London,
Shannon, Gander, and arrive at LaGuardia on Thursday at 14:55.
All Pan Am round-the-world flights were required to make at least one plane change
until the introduction of the Boeing 707 in 1960. In January 1950, Pan American Airways Corporation
officially became Pan American World Airways, Inc. By September of that year, they completed
the purchase of American Overseas Airlines from American Airlines in a deal worth $17.45millon.
This followed with the imminent order for 45 Douglas DC-6 planes – an upgrade on the
Lockheed Constellation. In 1957 they started Douglas DC7 flights from the West Coast of the
United States to London and Paris. However, with the introduction of a faster Bristol Britannia
turboprop by BOAC in December 1957, Pan Am’s competitive advantage on that route ended.
Pan Am was among the first airline to contemplate buying a jet engine-powered
aircraft when De Havilland Comet released the first jet planes in 1952.
However, they opted to wait until Boeing released their first jetliner in 1958.
This decision would prove to be right as the Comet struggled to perform at optimum.
Some structural failure led to three Comets being lost in the first year of its launch.
It wasn’t until 1958 that a better version of the Comet was developed with the release
of the Comet 4. Before this time, Pan Am had already ordered 20 aircraft of the Boeing 707
with the addition of 25 Douglas DC-8. These orders amounted to a $269 million outlay
to become the launch customer of Boeing jet planes and kickstart the jet age. Other airlines would
follow through with their acquisitions of jet planes. With 11 passengers onboard, Pan Am flew
the first scheduled jet flight from New York to Paris. On October 26, 1958, with the Boeing 707.
Having seen the growing demand for international flights at the time and with a teaming customer
base, they ventured into contemplating options for larger aircraft that could hold more passengers.
As a result, Pan Am again became the launch customer for the Boeing 747, placing an order for
25 in 1966. Trippe had asked his friend Bill Allen to produce an airplane much larger than the 707.
This purchase would cost them $525 million. It wasn’t until 1970 when the first wide-bodied
airliner, the Boeing 747 took off from the JFK international airport to London’s Heathrow.
This would mark the birth of widebody aircraft. It was during this period that Pan Am experienced
its peak years. At this time, Juan Trippe had stepped down as president but was still attending
meetings of board directors. In 1970 alone, they flew 11 million passengers across 86 countries,
covering 20 billion miles in six continents. The range of modern fleet they possessed at this time
enabled them to fly a larger number of passengers at a longer distance and with fewer stops than
their rivals. The company grew geometrically, accruing cash reserves to the tune of $1 billion.
The hunger for more success led the company to acquire even more advanced aircraft at the time.
For instance, they purchased the Boeing 747 SPs which could fly nonstop from New York to Tokyo.
The company also acquired the Intercontinental hotel chain at this time.
Aside from their huge jet acquisitions, another factor that set Pan Am on their
way to international dominance was their flight crew. It comprised of experienced, multilingual,
and usually college graduates who were put through extensive training. The cabin staff
would usually be trained for 8 weeks before they are allowed to fly.
The pilots would usually start off as mechanics, working through the entire maintenance process
and earning their certificates on the way. For those who care about in-flight service, Pan
Am delivered the sort of service and cuisine that hasn’t been equaled till this day. Everything was
so perfect that nobody anticipated the airline would crumble but it eventually did crumble.
After the oil crisis which saw the price of oil increase by 400%, Pan Am was dealt a huge blow.
By the mid-1970s, they had accrued a total of $364 million in losses
and its debts almost totaled $1 billion. This was as a result of the massive acquisitions made
in the hope that air travel would continue to increase, which eventually did not happen.
The economy slumped at the time and fewer people traveled. There were instances where a
400-passenger capacity widebody aircraft would fly only 50 people while running at almost the same
overhead costs. Soon, the company was threatened with bankruptcy and needed some savings.
William Seawell was president at the time and took some measures to salvage the company.
These radical measures included reducing the network by 25%, slashing the workforce by
30% and cutting wages, rescheduling debt, and reducing the size of the fleet. These helped
Pan Am avert financial collapse and by 1977, the company started recording profits again.
The company was dealt another blow the following year after the deregulation of air travel in 1978.
More US domestic airlines began competing with Pan Am internationally, thereby stripping them of the
monopoly they once enjoyed. While these airlines served both domestic international passengers,
Pan Am only served international passengers. Pan Am began to seek to acquire domestic routes.
They had in fact been applying for domestic routes since the 1950s and 1960s but were declined
as other airlines convinced the US congress that Pan Am would monopolize US air routes.
In a desperate attempt to have a share of the domestic front, Pan Am purchased
National Airlines for $437 million which further strained the company financially.
The acquisition did little to alleviate the company. The airlines had incompatible fleets
and diverse corporate cultures – mechanics working on different planes with diverse
structural orientations. The integration was poorly handled by the leadership of Pan Am.
Although revenue increased 62% from 1979-1980, and also fuel cost rose by 157% due to the merger.
Consequently, Seawell began selling the company’s assets. The first asset to be sold was the
airline’s 50% interest in Falcon jet Corporation in August 1980. In November, the iconic Pan Am
building in Manhattan was sold to the Metropolitan Life Insurance Company for $400 million.
In September of the next year, Pan Am sold its Intercontinental hotel chain.
Seawell was replaced by Edward Acker before the deal was completed. The combined value of the deal
amounted to $500 million. The company continued its assets disposal program. Acker would go on
to sell Pan Am’s entire Pacific division, which consisted of 25% of its entire route system and
their major hub at Tokyo Narita International Airport to United Airlines for $750 million.
Pan Am was trying to have a breather when it was hit with another major setback
on December 21, 1988. A terrorist attack on the Pan Am flight 103 above Lockerbie, Scotland, saw
the plane blow up mid-air resulting in 270 deaths and costing the company $300 million in lawsuits
filed by families of the deceased. The outbreak of the Persian Gulf War led to a further rise in fuel
prices and the global economy was depressed. The volume of air travel consequently decreased. This
prompted Pan Am to sell most of its routes serving London Heathrow – which was arguably Pan Am’s most
important international destination. The company never truly found its feet in the coming years.
In what would become the final year of Pan Am, the company was forced to file for bankruptcy
protection on January 8, 1991. Delta Airlines purchased the remaining profitable assets of
Pan Am for $416 million. Russell Ray Jr. was hired as the new Pan Am president
and the company generated $1.2 billion in revenue from 60 aircraft. However,
the losses continued and it was reported that the company was losing $3 million per day. The airline
did not generate enough revenue to finance the $25 million it needed for operations in the next week.
On December 4, 1991, Pan Am ceased operations. It would spell the end of an airline that once set
the pace for air travel for a good portion of 60 years. It was a huge blow for the 7,500 employees
at the time and equally saddening for the people who used the airline over the years. The decline
of the airline can be traced to the lack of an ambitious leader after Trippe, the deregulation
act that opened the doors for fierce competition, a couple of unfortunate events like the Gulf war
and the Lockerbie bombing, and huge outlay on planes that were less fuel-efficient among others.
But the airline will be remembered for the impact it had on modern air travel,
these include flight procedures and air traffic control, flight planning,
and weather forecasting among many. It is also fondly remembered this day by former employees
who organize community events to celebrate and reminisce on the good old days of the company.
The airline sold its livery to the once Guilford Rail System in 2006. It was the second most
popular livery in the world at the time operations shut down. The company was allowed to retain its
flight academy under the terms of bankruptcy but those are fragments of the now-defunct airline.
A shadow of the once ferocious airline that redefined modern air travel.