On 14th March 1927, Pan American Airways, Incorporated was founded to provide US mail service to Cuba. Within a few decades, the company became the largest international air carrier in the world, as well as unofficial flag airline of the United States.
The idea to create an American airline to fly from the United States to Central and South America destination came from three United States Army Air Corps (USAAC) majors, Henry ´Hap´ Arnold, Carl Spaatz and John Jouett. They noticed the growing German activity in the area, especially in the Panama Canal Zone.
According to the USAAC officers, the German-Colombian airline SCADTA (Sociedad Colombo Alemana de Transportes Aéreos / Deutsch-Kolumbianische Luftverkehrsgesellschaft) was the biggest threat. In the mid-1920s the company increased its expansion in the region, actively surveyed routes to the United States and, due to its German owners and flying crews, was suspected of espionage activities. Moreover, some US military authorities were afraid of possibility to convert the SCADTA aircraft into bombers and, therefore, being able to attack the Panama Canal.
Pan American Airways (PAA) had to be a remedy for the aforementioned German activities. The new airline was intended to take over the air routes from the USA to the Central and South America, as well as most of the air traffic in the region.
The USAAC officers convinced four investors, John K. Montgomery, Richard Bevier, G. Grant Mason Jr. and S. S. Colt, to join the project. In July of 1927, PAA received its first governmental contract for delivering the US mail to Cuba, with a deadline to open the service no later than on 19th October. However, the new air carrier had neither any aircraft, nor permission to operate in Cuba.
It seemed that PAA would not be able to meet the deadline. Moreover, SCADTA was eager to take over the contract and the company management already placed its bid to the US government. Fortunately for the founders, the project of Pan-American airline was saved by Juan Trippe, the American entrepreneur and pioneer of commercial aviation.
Trippe was already an owner of three airlines – Aviation Corporation of the Americas, American International Airways and the recently established Atlantic, Gulf, and Caribbean Airways. He was also backed by some politically well-connected investors.
Initially, PAA and Trippe´s airlines formed a partnership and then chartered a Fairchild FC-2 floatplane. This allowed the company to commence the Havana mail service exactly on the 19th October 1927, the last day of the deadline.
On 23rd June 1928, all the companies officially merged. Aviation Corporation of the Americas remained the parent company, with Richard Hoyt appointed its president, and PAA became its main operating subsidiary, managed directly by Trippe.
Over the next few years, Trippe acquired several bankrupting or suspended airlines all over Americas, therefore expending the PAA net. In addition, he negotiated several governmental contracts to provide the air mail services in the area. This allowed Trippe to advertise PAA as a kind of official air carrier, trusted by authorities.
In 1931, Aviation Corporation of Americas changed its name to Pan American Airways Corporation. In the same year, the airline began with regular flying boat service in the South America, using the Sikorsky S-40 aircraft. In a short time, the company bought as much as twenty-eight examples of the aeroplane. Nicknamed ´Clippers´, the flying boats became a symbol of the PAA service in the 1930s and 1940s.
In the late 1930s, the company launched its first transatlantic flights, as well as opened routes to Honolulu and Hong Kong. In August of 1937, PAA was awarded the Collier Trophy for establishing the transpacific passenger service and its achievements in operations over the seas.
After the Second World War, the company had to change its management policy due to increasing competition from other American airlines, as well as lack of previous governmental support. This meant, most importantly, suceeding the flying boats with new, modern airliners and to use inland airfields for the regular flights over the Atlantic Ocean.
The Pan Am fleet was extended with new four-engine aircraft, such as Douglas DC-4 and then DC-7, Lockheed Constellation and Boeing 377 Stratocruiser, to operate on the long-haul routes.
In the mid-1947, PAA opened the first scheduled round-the-world airline service. The route began in San Francisco and New York and was operated by two aircraft that met in Calcutta. Shortly after, additional meeting points in Manila, Tokyo and Shanghai were added.
In the late 1950s, Pan Am acquired its first jet airliners, Boeing 707 and Douglas DC-8. The latter was operated through only a decade and, eventually, the company decided to rely mostly on the Boeing aircraft. The 707 became the PAA flagship, with 120 examples of the aeroplane in active service.
In 1970, the company opened its first regular line operated by the new Boeing 747 airliner.
The jet age meant the change on the aforementioned PAA round-the-world route. It was no longer necessary to change the aircraft during circumnavigation and from 1960, the service was done by a single Boeing 707. Initially the route began in San Francisco and was concluded in New York.
In the 1970, the company opened its first regular line operated by the new Boeing 747 airliner. The ´Jumbo Jet´ soon succeeded the 707 on the round-the-world service. Over the next few years, the initial circumnavigation route was changed for Los Angeles to New York flight, operated daily in both directions, and, finally, in full round-the-world flight from New York to New York.
In the 1960s and the early 1970s, Pan Am was at its peak. The company was known worldwide and became an icon of long-haul passenger service. The PAA jets could be found all over the world and number of passengers carried each year was about seven to ten million. The company was also the pioneer of several innovations, such as wide-body jet travelling and computer-operated reservation system.
However, the downfall of PAA came shortly after. At first, there was the 1973 oil crisis that resulted in rapid increase of fuel prices and stagnation on the air travel market.
In a short time, the Pan Am business model became not suitable for the new, post-crisis reality. The company offered comfortable but expensive air travelling on long-haul destinations all over the world, provided by the fleet of huge airliners. However, the big jets were less fuel-efficient, they required more onboard personnel and meant higher taxes, airport charges and handling fees.
In conclusion, the PAA financial results quickly went down. In 1976, the company – for the first time from its establishment – was at risk of going bankrupt. Only a significant and painful restructuration, including reduction of route network by 25%, cutting salaries and job cuts by 30%, saved Pan Am from being insolvent.
Nevertheless, the post-oil crisis downfall turned out to be an ongoing process that could not be stopped. Despite several further attempts to restructure the company, acquirement of other carriers, and change of the business model, as well as focusing on domestic routes, the financial issues were accumulating.
In December of 1988, a Pan Am Boeing 747 performing the scheduled Flight 103 from Frankfurt to Detroit (via London and New York), was destroyed in a terrorist attack over Lockerbie in Scotland while a bomb exploded onboard the aircraft. All 243 passengers on board and 16 members of the crew died in the disaster, as well as 11 Lockerbie residents.
The company had to face with a lawsuit filed by the victims´ families and was in danger to pay a compensation of more than 300 million USD. In 1992, the US federal court found PAA and two its subsidiaries guilty of wilful misconduct during baggage security screening.
The second oil crisis of 1990, caused by the Iraqi invasion to Kuwait and then the Gulf War, was just the kiss of death for the company. Despite selling most of its assets and air routes, as well as reduction of personnel, Pan Am filed for bankruptcy protection in January of 1991.
On 4th December 1991, Pan American World Airways ceased its operations. Most of the remaining assets of the company were taken over by Delta Air Lines.
Cover photo: Aerial view of Pan American Airways ´China Clipper´ over San Francisco – Coit Memorial Tower at left / Clyde H. Sunderland, commercial and aerial photographs, Oakland, California (Library of Congress, LC-USZ62-111417, cropped)
