Imagine being the founding member of the International Air Transport Association (IATA), enjoying a near monopoly on international routes, the unofficial national carrier of the United States; that was Pan Am. Pan American World Airways founded in 1927 by two U.S Army Majors was the most famous principal and largest international air carrier. They were the unofficial overseas flag carrier of the United States for the most part of the 20th century. Once their slogan was "Live today, Tomorrow will cost more!". They were at the top of their field as the sky is not their limit. But now a few people know the name Pan Am. Now it's just one of the defunct companies that are being diminished from the minds of the public. Only bits and pieces of this "Conglomerate" exists today. The descent is due to a lot of internal and external factors, the Industry.
1. Financial Troubles
All companies experience tightness in their financials. But in this case, they expanded their fleet at a rate no one would imagine. And that made their pockets a little slim. The problem was time they expanded. Many other airlines came in for their own pound of customers and they were ready to sacrifice a little bit of profit for gaining (in this scenario stealing from Pan Am)customers. The expansion of fleets and routes set back a fortune and that put them in a tight spot making them not able to reduce the price. That only strained their financial resources.
2. Rising Debt
They did accomplish a great expansion in fleet and route, but the question is at what cost? They alone couldn't handle such a large change. So they took some financial help from the available sources. Actually can't blame them, if the other emerging airlines haven't been so generous Pan Am could pull through out of that debt. This large debt took their ability to be financially stable like before.
3. Oil Price Shocks
The infamous Oil Crisis in 1970 was a significant turning point in global energy dynamics, influencing policies, economies, and geopolitics for years to come. This shook Pan Am badly because their planes were craving the costly jet fuel. Blaming OAPEC (Organization of Arab Petroleum Exporting Countries) and their response to the political development in the Middle East was making no good. The overly-priced jet fuel made their financials thinner.
4. Terrorist Attacks
There was a terrorist bombing of Pan Am Flight 103 when it was over Lockerbie, Scotland in 1988. Already their financials were a mess and their goodwill was getting out of hand. And now this, being able to be like old times was just a normal daydream. For Pan Am the old saying is true; "When it Rains, it Pours". They wanted to fly but they were in deep water.
5. Deregulation of the Airline Industry
The policy of reduced cost and increased competition was due to the deregulation of the airline industry in the United States in the late 1970s and early 1980s. They were forced to jump from the frying pan into the fire. Crumbling down made them fight back, but they were of no use. While other airlines exploited the freedom, Pan Am was trying to hold what was left of their loyalty.
6. Failure to Adapt
Innovative competitors were taking their chance to adapt and be creative when Pan Am was just in denial. They struggled to adapt to changing market dynamics and customer preferences. They were pretty slow on that matter. Updating their services, implementing new technologies, and fleet modernization were not included in their agenda. It was kind of a loophole to overtake the near monopoly of Pan Am.
7. Sale of Assets
The airline was having a tough time and they couldn't handle the financial pressure and business stress. So they started to sell their valuable assets including their prized routes and the iconic Pan Am building in NewYork city. This desperate act made their value go downhill and revenue-generating capabilities to ashes. Delta Airlines saw the opportunity and acquired all the Pan Am's proud routes and shuttle service in a blink of an eye. They were not realizing they were digging their own graves. MetLife was more than happy in acquiring 'The Pan Am Tower' situated in New York. It kind of steals the public's attention because of its unique layout and center position. Johnson Control bid the most for the PAWS(Pan Am World Services).
8. Bankruptcy and Liquidations
After all this Pan Am doesn't had a snowball's chance in hell to be productive. They tried their best to secure their investments and restructure their operations, but they had to file for bankruptcy in 1991. Gradually their assets were seized and auctioned. Guilford Transportation Industries bought the company's name and imagery in 199. They changed the name to 'Pan Am Systems ' and adopted the globular logo.
All the above reasons such as financial challenges, external shocks, and other deregulation issues gradually made the deathbed of Pan American World Airways, putting an end to the era of the promising and prominent airline.
By
Rolwin Biju C
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