There is a saying that travel is the best education one can get. You’re experiencing the world firsthand rather than learning about it in a classroom. You get to see and experience other cultures. The COVID-19 pandemic brought travel to a halt in recent years. While some may see travel as getting on a plane, train, or automobile to go somewhere, travel was not always accessible to everyone. One of the main facilitators of travel, Pan Am, was one of the first international airlines in the world and truly stretched the limits of going anywhere you wanted — if you had the money, that is.
Pan Am started off as a mail and passenger carrier in 1927 between Key West, Florida, and Havana, Cuba. United States Army Air Corps officers Henry “Hap” Arnold, Carl Spaatz, and John Jouett founded the company as Pan American Airways, Incorporated. However, the public face of the airline was Juan Trippe, who served in various leadership roles in the company, including chairman of the board and president from its founding until 1968. He attended board meetings and held an office in the company until his death in 1981.
While Trippe was the key influential figure in Pan Am — Pan Am had the backing of the United States government and promptly began service throughout North America and South America, opening routes to Mexico City and even as far south as Buenos Aires, Argentina, and Santiago, Chile by 1929. The airline began to use Sikorsky flying boats between 1931 and 1946. Pan Am reached the Philippines and Hong Kong by 1936, at a cost of USD950 one way in 1937 (equivalent to USD19,847 in 2023) and USD1,710 round trip (equivalent to USD35,724.75 in 2023). These prices show that travel was still only for the wealthy. Pan Am expanded to Singapore by 1941, cutting travel time from San Francisco from 25 days to only six. Pan Am’s Clippers were also the only passenger aircraft capable of intercontinental travel.
World War II would not slow down Pan Am’s efforts, as they flew over 90 million miles to support military operations. In 1942, the Pacific Clipper completed the first circumnavigation of the globe, becoming the first commercial airline to do so. Pan Am also witnessed a different type of history when passengers were served Irish coffees while waiting for a flight to New York City from Ireland in the same year. After World War II, Pan Am ran into increasing competition, particularly from Trans World Airlines (TWA). While Pan Am bought up smaller airlines and continued to expand its routes after World War II, the jet age would be when it truly flourished.
The jet age for Pan Am began in 1955 when Pan Am placed orders for 20 Boeing 707s and 25 Douglas DC-8s for a total of USD269-million (equivalent to USD3.02-billion in 2023). The first jet flight for Pan Am was between New York Idlewild to Paris Le Bourget in 1958. Pan Am also became a Boeing 747 launch customer in 1966, which showed that the company was serious about not only establishing more routes, but also providing a world-class customer experience. The company carried 11 million passengers over 20 billion miles in 1970 alone. Pan Am was also interested in supersonic travel, but Congress halted funding for American supersonic jets in 1971.
Cracks in Pan Am started to show in 1973 during the global oil crisis. The company heavily invested in Boeing 747s with the expectation that air travel would continue to increase. However, high oil prices and their older fleet, which was less fuel efficient, combined with the drop in demand for air travel, continued to raise operating costs. By the mid-1970s, the company was almost USD1-billion in debt. To further add to Pan Am’s laundry list of issues, they were not allowed to operate domestic flights within the United States, except to Alaska and Hawaii. Juan Trippe coveted those routes since the 1930s, but the Civil Aeronautics Board consistently blocked Pan Am’s efforts to operate within the United States.
The deregulation of the airlines in 1978, which increased competition for Pan Am internationally, would have doomed the company on paper. Pan Am had sold off its office building in 1980, and the acquisition of National Airlines in the same year finally gave them their domestic routes. President William T. Seawell started selling off non-core assets during this time, which continued under his successor, C. Edward Acker. Around-the-world service was discontinued in 1982 when the company ceased flights to Delhi and Hong Kong. The Pacific Division was sold off in 1985 to United Airlines. A 1987 failed corporate raid by the Towers Financial Corporation resulted in Acker’s departure and the appointment of Thomas G. Plaskett as president.
The final blow to Pan Am was Pan Am Flight 103. While Pan Am’s financial situation was looking up by mid-1988, the December 21, 1988 bombing of Pan Am Flight 103 resulted in 270 fatalities and a USD300-million lawsuit by the victims’ families. Pan Am also faced fines by the Federal Aviation Administration in 1988, in addition to the bombing of Pan Am Flight 103. Plaskett pressed on by attempting to acquire Northwest Airlines for USD2.7-billion in 1989, which failed. Pan Am’s reputation further tanked as the Persian Gulf War raised fuel prices and resulted in more asset disposal and layoffs in 1990.
Pan Am filed for bankruptcy protection in early 1991. Delta Air Lines purchased Pan Am’s remaining profitable assets. The company ceased operations entirely on December 4, 1991. That did not spell the end of Pan Am’s troubles, as the Pan Am Creditors Committee sued the airline for USD2.5-billion. Former Vice President for External Affairs, Stanley Gewirtz, said that Pan Am was “the most astonishing example of Murphy’s law in extremis. The sale of Pan Am’s profitable parts was inevitable to the company’s destruction.”
While Pan Am was the name in international travel throughout the 20th century, questions remain: could better business decisions have saved the company? Would they be as recognized as United, Delta, and other international carriers? Airline deregulation in 1978 forced airlines to compete for routes, but selling off profitable parts spelled disaster for Pan Am. As of 2014, Pan Am survives, but is now owned by ANA Holdings Company, the parent company of Japanese airline All Nippon Airways. While travel is certainly much cheaper nowadays, the glory days of Pan Am paint a nostalgic picture of a world-class flying experience.
Words by Jose Alvarez
Also published in GADGETS MAGAZINE April 2023 Issue