Pan American World Airways, or as it was universally known in its peak, Pan Am, is a name that is no longer displayed on the flight indicator boards of international airports across the globe. However up to the Eighties it was one of the premier names in the international airline industry. At the top of it’s game the airline was completing up to 214 flights from the US to Europe a week (1964) [‘Juan Terry Trippe, Founder of Pan Am World Airways and InterContinental Hotels’, Stanley Turkel (PDF, 2006), www.ishc.com].
From the ground up
Like quite a few young, middle class American men during the Great War, Tripp gravitated towards a future in the air, at first aspiring to be a navy pilot. After the war he transitioned from running a failed taxi service into a small regional air transport company. Trippe’s drive to succeed led him within a few years to merge his group with two other similar-sized ones to form Pan American Airways Inc.
The New Jersey-born businessman came up with a steady stream of novel ideas for innovation in the airline industry – which however required money. Prospects were bright though as new airline ventures were a good selling point. As William Stadiem explains, flying in the “Roaring 20s” was “the high-tech startup of its time!” Financiers, including members of the Rockefeller and Vanderbilt families, were all too willing to bankroll Trippe’s burgeoning airline industry ambitions [William Stadiem, Jet Set: The People, the Planes, the Glamour, and the Romance, in Aviation’s Glory Years (2014)].
By 1927 Trippe had started to assemble the rudiments of a fleet of aircrafts, initially with a brace of tri-motored Fokkers supplemented by some ageing surplus floating boats which he converted into the Pan American Flying Clippers (Trippe was a pioneer of these multi-engine seaplanes). Thus modestly began Pan Am’s first air mail service to the Caribbean (maiden flight in a 65-horsepower Seagull – Key West Florida to Havana) which paved the way for further Pan Am incursions into the region. Expansion followed innovation – from the West Indies he moved into Central and South America, and the foundations were laid for a global transport business✲.
Eschewing managerial orthodoxy
As textbook BUS101 management orthodoxy goes, Tripp was far from the desired model. His inclination was not to delegate and he was given to making unilateral decisions without consulting – much to the chagrin of his boards of directors [‘Juan Trippe and Pan Am’, (Richard Branson), Time, 07-Dec-1998, www.content.time.com]. What he was really exceptional at though, was anticipating the market in air travel, working out usually before anyone else what the next big thing was going to be…and going for it totally!
Business transparency was not part of the Trippe management style…his early inroads in the industry owed a lot to his “stealthy lobbying for U.S. mail licences”, which gave Pan Am a precious legup! [Harold Evans, Gail Buckland & David Lefer, They Made America, (2004)]. Trippe took a ruthless approach to competition and was not adverse to doing secret deals to outmanoeuvre his airline rivals [‘Juan Trippe Revolutionized Trips By Air With Pan Am’, (Scott S Smith), Investor’s Business Daily, 09-Oct-2014, www.investors.com].
Pan Am at times resorted to outright bribery to stay ahead of the pack, eg, offering several 100 thousand dollars to a Mexican president to block rival American Airlines’ bid for landing rights in the US’ southern neighbour [‘Juan Trippe’s Pan Am’, (Ann Crittenden), New York Times, (Archives), 03-July 1977, www.nytimes.com].
Thoroughly innovative Juan
By continually expanding the scope of Pan Am’s operations, creating many new routes, Trippe opened up both the Atlantic and the Pacific to air travel❂. Trippe’s list of innovations in the industry are legion – including the pioneering of round-the-world commercial flights; the introduction of cockpit electronics allowing Pan Am pilots to fly in any weather; he also came up with “fly now, pay later” plans; his personnel came up with an advanced (computerised) reservations system first [Stadiem, op.cit.; ‘Dead Airlines And What Killed Them’, (Jean Folger), 25-Jun-2010, Investopedia, www.investopedia.com].
Before Laker Air there was …
Perhaps Trippe’s greatest legacy however was the pivotal role he played in making affordable air tourism a reality to everybody. When Trippe and Pan Am entered the still embryonic industry, seats were expensive and airline passengers tended to be exclusively from the well-off sectors of society. The airline ‘biz’ was run by a cartel called IATA (the International Air Transport Association) who contrived to maintain airline prices at a high level [Scott, op.cit.].
The first discount king of airlines
The Pan Am boss’ idea was to introduce a new class of passenger, “tourist class”, slashing the round-trip fare from New York to London by half (to US$275). The cartel reacted by trying to impede the US maverick’s move. British airports were closed to all Pan Am flights with tourist seats (Pan Am was forced to switch its European flights to remote Shannon Airport in Ireland). Pan Am managed eventually to get round the cartel’s net, it’s tourist class proved so popular that IATA caved in and accepted the reality of it [Branson, loc.cit. ; Smith, op.cit.]. Trippe’s actions thus brought air travel within the reach of ordinary people.
Airline entrepreneur and “friends with benefits”
Part of Trippe’s success owed a lot to influential people in high places…he benefited from a personal rapport with presidents like FDR and Truman. In fact, far from it being exclusively a triumph of free enterprise, federal government cooperation and support were integral to Pan Am’s overall success in the business [Crittenden, loc.cit.].
⍔ JT Trippe & CA Lindbergh (Source: The Trippe Family)
Juan Trippe had the nous to surround himself with the right people from the start…in 1927 he ‘headhunted’ the (then) most marketable figure in world aviation, famed pilot Charles Lindbergh, to work for Pan Am (Lindbergh’s Continental survey flights helped establish the company’s early trade routes✥).
Another key figure within the company was its chief engineer Andre Priester who wrote the specifications for Pan Am’s flying boats. Priester set and maintained the airline’s meticulous safety standards [‘Pan Am Series – Part XLVIII: Skygods’, (Jpbtransportation: the Blog and Website of James Patrick Baldwin), 15-Feb-2015, www.jpbtransconsulting.com]. Staff training and airline safety were things Trippe refused to take shortcuts with – insisting on a high level of training for his pilots, flight crews, mechanics and support staff [Folger, loc.cit.].
With a little help from his (fellow capitalist) friends
Trippe in retirement freely acknowledged the help he received from United Fruit Company…the powerful US banana multinational assisted Pan Am early on to establish a presence in Latin America, thanks to United Fruit’s unique(sic) insider knowledge of the region’s states and its capacity to open doors to various governments [ibid.]. Trippe and Pan Am also prospered from cultivating a good friendship and working relationship with long-time Boeing head Bill Allen.
Enter the jet age
By the 1950s the heyday of “prop-liners” (propellor-driven aircraft) had come to an end. Jet liners were the future, trouncing ‘props’ for both aircraft speed and carrying capacity…and as ever Trippe got in at the ground floor! Trippe immediately bought up big on Boeing 707s and the first 707 Pan Am commercial flight took place in 1958 (NY-Paris)✮. He then got to work on making it more economical by figuring out how to reduce the jet’s seat-mile cost [Branson, op.cit.].
While going full-tilt into 707s Trippe was already looking beyond…to the 747, the jumbo-jet. As Evans et al observes, Trippe had “an almost clairvoyant grasp of the future (and a) determination to find aircraft to fit that vision” [Evans, Buckland & Lefer, op.cit.]. Unfortunately for Trippe, the antennae didn’t work as desired every single time and a few missteps had serious ramifications for the long-term future of Pan Am (see below).
⍔ 1st InterContinental: Belém (Brazil)
Pan Am ‘accommodates’ – airport to hotel…
Inevitably, the holistic approach Trippe brought to the airline industry✢ led him to capitalise on the airline ‘s success by directly entering the hospitality field… connecting the dots between passenger transportation and accommodation. With government encouragement from US president FD Roosevelt, Trippe began InterContinental Hotels & Resorts in 1946 as a subsidiary of Pan Am…the first international hotel was situated in Belém, Brazil. Between 1946 and 1996 there were 222 I-C Hotels doing business worldwide (>90% of them outside the US) [Turkel, loc.cit.]※.
Changing fortunes
Pan Am – once a ‘Titan’ of the airways – is no more, what then led to its demise? Some observers trace the seeds of its eventual fall to the late 1940s – years before the company had reached the peak of its powers. Earlier in the Thirties, during Pan Am’s formative first decade, Trippe lobbied the US government, advocating his “chosen instrument” theory (by which Washington would designate a single air carrier for all foreign flights). Pan Am in fact secured this special status, initially with the awarding of a 10-year mail contract by the US Postmaster-General. Eventually though other carriers were green-lighted to enter the overseas field and started to claw back Pan Am’s advantage [Smith, loc.cit.]. Postwar, competitors such as Howard Hughes’ Trans-World Airlines (TWA), Braniff and North West Orient were allowed to enter Pan Am’s routes in South America and Asia, and contest it’s semi-official monopoly✧ over those regions [‘Pan-American World Airways: the rise and fall of a 20th century cultural icon’, (06-Jan-2017), www.seanmunger.com]. The “catch-up” had commenced.
However when Pan Am sought to establish a competitive foothold domestically in the late Forties, the US government flatly rejected its request to start a connecting domestic route network [‘Lots of Reasons Why Pan Am Failed’, (Robert J Byrne), Washington Post, 25-Jan-1992, www.washingtonpost.com]. This setback proved a critical handbreak on Pan Am’s expansion into the profitable US internal passenger market.
⍔ Pan Am logo, the “blue meatballs”
In 1968 Juan Trippe stepped down as company president, however he remained active and influential in Pan Am’s executive decision-making, maintaining an office in the company’s headquarters. Pan Am still looked in solid business shape, it has 40,000 employees and was flying seven million passengers a year to some 86 countries. Trippe’s unflagging desire and capacity for change and innovation was to be a “two edged sword”, sparking Pan Am’s upward trajectory but also contributing to its ultimate decline. Not content with the revolutionary 707, Trippe cajoled the jet manufacturers to design a new “jumbo jet” capable of carrying in excess of 180 passengers⊡. The 747 answered this ‘need’, with the first commercial flight of a Pan Am 747 taking place in 1970. Trippe employed a similar stratagem with the Kennedy Administration which was reluctant (because of the exorbitant cost involved) to embrace the next level up, the SST-2707 supersonic jet. By signalling that he intended to purchase five Anglo-French Concorde planes, Trippe pressured President Kennedy into launching the American Supersonic Transport project. But this was one instance where Trippe’s ‘hunch’ was badly off target. The Boeing 2707 proved so problematic (and costly) that the project was dropped altogether in 1971.
⍔ Two Pan Ams, 707 & 747 (source: Boeing)
The ill-timed expansion into 747s: Capacity overload
Trippe, always striving to be ahead of the curve, placed his order for the new 747s before they were designed, let alone off the assembly line! On this occasion the economy brought him and the company unstuck. The timing of the introduction of 747s, 1970, was not great – coinciding with a recession! Trippe didn’t foresee the 1973 oil crisis, which blew out the costs for maintaining the fleet of jumbos – fuel prices skyrocketed after the Middle East energy backlash [Folger, loc.cit.].
The state of Pan Am’s finances in the early Seventies was not propitious for taking on something of the magnitude of the 747. Commencing from 1969-70 Pan Am experienced seven straight years of losses. By 1977 the company’s long-term debt amounted to a disquieting $727 million! The financial burden on Pan Am was too much – and the problem was compounded by one of Trippe’s successors as company head (Najeeb E Halaby) who bumped the order of 747s from Trippe’s original 25 up to 33 aircrafts [Crittenden, loc.cit.].
Other developments in the world added to the company’s woes. The spate of terrorist incidents involving Pan Am, culminating in the 1988 Lockerbie tragedy, damaged the company’s reputation and precipitated a decline in travel numbers [Folger, loc.cit.].
Deregulation
Another setback for Pan Am came in the late 1970s with industry deregulation. The legislation of course brought more competition for Pan Am into the game, but this time coming from the big international airline players. Deregulation also meant that Pan Am could now at last enter the American domestic market, and it acquired National Airlines which unfortunately failed at a time Pan Am was in need of a financial “pick-me-up” [Smith, loc.cit.].
When the end came for Pan Am, it came fairly abruptly – in 1991. Pan Am offices everywhere simply closed their doors, virtually overnight. Rising costs of operation, falling market share, a trough in passenger numbers (a further blow in this respect was brought on by the 1990 Gulf War which led to a fall-off in international travellers) [Folger, loc.cit.]. There was a failure to make preparations for a smooth transition for Pan Am after the head’s departure. Trippe, having been so dominant and instrumental in the company’s success over four decades, was negligent in not planning for a long-term successor to himself [Byrne, loc.cit.]. This hurt Pan Am during the rocky days ahead when it was in desperate need of clear-headed, astute leadership.
Footnote: in the 1920s and 30s Juan Trippe was one of a handful of great US airline pioneers – the elite list also included CR Smith (American Airlines), WA Paterson (United Airlines), Eddie Rickenbacker (Eastern Airlines) and Collett E Woolman (Delta Airlines).
PostScript: Pan Am’s broader role
Under Trippe, Pan Am’s planes could be called upon when required to provide service outside it’s core commercial role. This happened in war, both hot and cold (eg, active role of Pan Am Clippers in WWII; humanitarian trips during the 1948-49 Berlin evacuation; collecting “refugees from communism” in Cuba during the early years of the Castro regime). Trippe also came to the rescue of his fellow “captain of industry” Henry Ford in 1931, by flying the Brazilian military into the remote Amazon to put down a worker revolt in the Fordlândia rubber plantation.
﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎﹎
✲ in addition to a purely business opportunity, Trippe’s focus on this region was to help forestall the establishment of a German (and possibly also a French) airline service to the Panama Canal (in which the US held a strategic interest), [Sean Munger, op.cit.]
❂ by the 1970s the Pan Am publicity arm was able to boast that it was “the World’s Most Experienced Airline”
✥ often taking him to inassessible places in South and Meso-America where Trippe’s workers would follow, having the arduous job of hacking out landing strips from the dense jungle [Smith, loc.cit.]
✮ in very quick time BOAC, QANTAS, Air France and Lufthansa, among others, rushed to embrace 707s. In 1959 the Douglas company debuted its DC-8, virtually a copy of the 707 [Stadiem, loc.cit.]
✢ in the early years Trippe had even helped build airports in the jungles of Latin America to fit in with the new air routes planned for Pan Am
※ the hotel chain was sold to an English conglomerate, Grand Metropolitan, after Trippe’s death in 1981
✧ Pan Am’s role at that time has been described as the US’ “unofficial flag carrier”, [George C Larson, ‘Moments & Milestones: Birth of the Clippers’, Air & Space Smithsonian, Nov 2010, www.airspacemag.com]
⊡ skillfully Trippe played the big manufacturers (Boeing, Douglas and Lockheed) off against each other, manipulating them into commiting to an even larger jet before they were ready to build it! [Smith, loc.cit.]