Pan Am World Airways Summary

  • Last updated on November 10, 2022

One of the largest and most successful airlines in history until 1991.

Early History

Pan American World Airways began as the vision of one man, Juan Terry Trippe, a Yale University graduate who had learned to fly during World War I. Trippe was convinced that the future of commercial aviation lay in international air transportation with operational guarantees furnished by governments in the form of airmail contracts. He founded what was to become Pan American Airways by outmaneuvering other companies in acquiring a mail contract and exclusive landing rights in Cuba. To accomplish this feat, he used political and financial connections cultivated in his undergraduate days at Yale.

Thus, what would become one of the largest and most successful airlines in history began operations with a 90-mile route from Key West, Florida, to Havana, Cuba. Throughout the airline’s history, Trippe repeatedly applied the lessons he learned in obtaining this route. He ruthlessly used political, family, and financial ties to expand Pan Am. With the assistance of the U.S. State Department and the U.S. Post Office, he negotiated landing rights throughout the Caribbean, Central America, and South America. Whenever possible, these landing rights were exclusive, in effect prohibiting other airlines from operating in these countries.

Pan Am, under Trippe’s leadership, expanded by winning every airmail contract offered through the U.S. Post Office in Central and South America. By November, 1930, the airline was operating to Buenos Aires, Argentina. In fewer than four years, the original 90-mile route had been expanded to one of more than 13,000 miles.

Acquisitions and Mergers

When Pan Am found it impossible to operate within a foreign country or found an established airline already operating, it simply bought controlling interest in the operating airline and continued to operate it as a subsidiary. Thus, airlines such as Compania Mexicana de Aviacion became part of the Pan Am empire in 1929. Pan Am also joined with the W. R. Grace steamship line to form PANAGRA to operate along the west coast of South America. In a 1930 hostile takeover allegedly sanctioned by the U.S. postmaster general, Pan Am acquired the New York, Rio, Buenos Aires Line (NYRBA), which had established a route along the east coast of South America. At the same time, Pan Am established a Brazilian subsidiary, Panair do Brazil, in order to comply with prior agreements between Brazil and NYRBA. Pan Am gained controlling interest in the Colombian airline SCADTA in a secret agreement of which even the governments of Columbia and the United States were unaware. Pan Am did not limit its grasp to Central and South America, however, purchasing two small airlines in Alaska and an interest in China National Airways. Trippe’s dream for Pan Am had expanded across both the Atlantic and Pacific Oceans.

Two major obstacles stood in the way of this expansion. The first was the technology of existing aircraft, which were, in their range and payload, inadequate for long, transoceanic flights. The second impediment was international relations. European countries, particularly Great Britain, were unwilling to grant Pan Am landing rights in their territory until their national airlines were capable of competing. Trippe, in typical fashion, placed Pan Am in the position to overcome both of these difficulties.

Aircraft Technology

Pan Am worked closely with manufacturers to develop aircraft capable of servicing the developing transoceanic routes. Although Pan Am’s first aircraft had been the Fokker Trimotor, it was soon apparent that more advanced designs were required. Pan Am began to rely heavily on the designs of Russian American aeronautical engineer Igor Sikorsky, who produced large flying boats. Pan Am decided that the flying boat was the most appropriate design for their operation, because many of the countries to which they were operating had no major airports. Virtually all, however, had adequate areas for waterborne operations. Sikorsky designed multiengined flying boats that could carry up to forty-two passengers at 140 miles per hour. These aircraft serviced the routes throughout Central and South America and conducted proving runs across the Atlantic and Pacific Oceans.

Pan Am also hired aviation pioneer Charles A. Lindbergh as a technical consultant. Much of Lindbergh’s expertise went into the development of the advanced designs that soon appeared, such as the famous Pan Am Clippers built by Sikorsky, Martin, and Boeing. The range and payload of these aircraft were in direct response to Pan Am’s operational needs. These designs culminated in the Boeing 314, considered the ultimate development of the flying boat. With suitable aircraft, Pan Am began to pursue expansion across both the Atlantic and Pacific. The major problem remaining was the resistance of foreign governments to Pan Am’s encroachment. Lindbergh, who played the role of goodwill ambassador, made a number of transatlantic and transpacific proving flights for the airline.

International Relations

Although Pan Am’s immediate goal was transatlantic service, major difficulties remained in negotiating agreements with European governments. Great Britain was especially reluctant to allow Pan Am access until British Imperial Airways was capable of flying comparable routes. On February 22, 1937, a reciprocal agreement was reached, and Pan Am’s transatlantic service finally began on July 8, 1939. Unfortunately, Britain was soon at war. The difficulties in negotiating reciprocal agreements with European nations had caused Pan Am to pursue expansion across the Pacific. Taking maximum advantage of U.S. State Department concerns about Japanese expansion and fortification of its possessions in the Pacific, Pan Am worked closely with the U.S. Navy to establish a series of bases from Hawaii to Midway, Guam, and the Philippine Islands. Pan Am’s service to Hong Kong began on November 22, 1935. As the United States became inevitably drawn into World War II, the State Department began to utilize the services of Pan Am more openly. On November 2, 1940, a subsidiary of Pan Am, the Pan American Airport Corporation, contracted to construct bases across Central America. These bases were designed to allow the ferrying of aircraft to North Africa to supply the Allied forces there. Pan Am also contracted to fly a regular service across the Atlantic to Cairo, Egypt, in support of British troops. Another subsidiary, Pan Am-Africa, constructed a series of bases across Africa. Pan Am began scheduled service to Khartoum in July, 1941. Pan Am continued to increase operations throughout the war years, emerging from the war as the world’s dominant international airline. However, the war also introduced an element of competition into Pan Am’s monopoly, and a shift in the political winds spelled trouble for the airline.

Postwar Difficulties

Pan Am enjoyed unparalleled success during the 1930’s. International passenger traffic increased from approximately 44,000 in 1930 to more than 246,000 by 1939. Mail rates in the Pacific were increased significantly beginning in 1939, primarily due to the recommendation of the Navy. By 1942, Pan Am had a gross income of $109,000,000 and a staff of 88,000.

World War II introduced competition for Pan Am in the form of Trans World Airlines (TWA) and American Airlines. These hitherto domestic operators were awarded international routes in support of the war effort. These awards were particularly troubling to Pan Am, because they included the lucrative transatlantic route on which Pan Am had expended so much effort and expense. By war’s end, although Pan Am remained the major transatlantic carrier with more than 15,000 flights, American and TWA had also become major international carriers. Both airlines had garnered significant international experience: TWA had made 10,000 transatlantic crossings, and American had made 5,000.

In addition to international competition, Pan Am had other problems. With only four domestic terminals and no domestic routes, the company was not positioned to benefit from the dramatic increase in domestic air traffic caused by the war. Although Pan Am had lost its exclusivity in international operations, it was unable to expand domestically to contend with its new international competitors. Additional concerns arose as early as 1943, with the Roosevelt administration’s call for an international open-skies policy to be enacted after the war. This would open international operations to a number of airlines and further threaten Pan Am’s position of primacy. Roosevelt chose not to recognize any one airline as the chosen instrument of the United States and invited bids from airlines interested in establishing international routes. Two Atlantic and three Pacific routes were opened for competitive bidding.

Pan Am attempted unsuccessfully to use political pressure to forestall Roosevelt’s efforts, and was confirmed on its routes to London, continuing to Calcutta, India. Although this confirmation in effect allowed Pan Am to fly around the world, with its Atlantic and Pacific routes meeting at Calcutta, both TWA and American were confirmed in their transatlantic routes. Roosevelt’s death did not improve Pan Am’s government relations; his successor, President Harry S. Truman awarded routes to Central and South America to Braniff and Eastern. In 1945, National, American, and Chicago and Southern were awarded routes that ventured into Pan Am’s prewar empire. Northwest Airlines was allowed to compete with Pan Am in the Pacific, connecting with TWA to form an around-the-world service. Finally, United Air Lines was granted a San Francisco-to-Hawaii route that actually duplicated the route pioneered by Pan Am in the 1930’s.

The Jet Age

Despite the changes that eroded Pan Am’s position of dominance, Pan Am remained a very successful airline. Under Trippe’s guidance, it was poised to enter the jet age. Trippe negotiated with a number of manufacturers to develop a jet transport that would adequately service long-haul routes, and Pan Am placed the largest aircraft order ever made, totaling $265,000,000 and including twenty Boeing 707’s and twenty-five Douglas DC-8’s. On October 19, 1958, Pan Am officially launched the jet age of transatlantic travel, with its first jet flight carrying 111 passengers at a speed of 475 miles per hour. This tremendous gamble paid off, and the aircraft dominated the transatlantic route. However, Pan Am’s lack of domestic routes would cause the airline increasing difficulties.

Trippe’s final major decision was to purchase the wide-body Boeing 747. In April, 1966, Pan Am announced the purchase of twenty-five Boeing 747’s at a cost exceeding one-half billion dollars. Pan Am made its first 747 flight in January, 1970. By this time, Trippe had retired as Pan Am president and had been replaced by a succession of leaders who were unable to continue the pattern of innovation and success Trippe had carried out for forty-three years. Economic factors, a slowdown in passenger growth, and politically motivated decisions by the Johnson administration to increase competition in the Pacific had a dire effect on Pan Am. In addition, the airline experienced a series of crashes that destroyed eleven aircraft and resulted in numerous fatalities.

The seemingly invincible airline’s hard times grew worse. Attempts to merge with other major airlines were unsuccessful. In just three years, Pan Am lost more than $120 million, and its debt exceeded $1 billion. In 1974, Pan Am was denied a government subsidy. As the airline struggled to survive, employment was reduced to 27,000, and a number of international routes were relinquished to TWA. In an attempt to establish a domestic route structure, Pan Am acquired National Airlines at a cost of $374 million; however, the purchase only intensified the airline’s problems. By 1980, Pan Am was losing more than one million dollars a day, and the first quarter of 1981 saw a record loss of $118.8 million. The company’s New York headquarters were sold, as were other resources, and orders for new aircraft were cancelled. In 1985, the employees went on strike, and Pan Am sold its Pacific routes to United.

On December 21, 1988, the final catastrophe occurred. A terrorist bomb destroyed Pan Am Flight 103 over Lockerbie, Scotland. This tragedy, coupled with the Iraqi invasion of Kuwait in 1990, sealed Pan Am’s fate. Most remaining assets and aircraft were sold to Delta Air Lines. Pan American World Airways ceased to exist on December 11, 1991.

Bibliography
  • Christy, Joe. American Aviation: An Illustrated History. 2d ed. Blue Ridge Summit, Pa.: Tab Books, 1994. A good presentation of the history of the major airlines in the United States, including Pan Am.
  • Davies, R. E. G. Airlines of the United States Since 1914. Washington, D.C.: Smithsonian Institution Press, 1998. An extremely well-researched, well-written, and well-illustrated work on the history of U.S. airlines.
  • Gandt, Robert. Skygods: The Fall of Pan Am. New York: William Morrow, 1999. A well-written analysis of Pan Am’s final days.

Air carriers

Airline industry, U.S.

Airmail delivery

Commercial flight

Jumbojets

Mergers

Igor Sikorsky

Terrorism

Trans World Airlines

United Air Lines

Categories: History Content