Pan American: The History of America's ”Chosen Instrument” for Overseas Air Transport

In the history of American commercial aviation, there is no airline more influential, important, and better known than Pan American Airways. It was not the first American passenger airline, nor did it ever meet with much success in the domestic market, but Pan Am (as it was more commonly known), represented a new adventurous image of the United States to the world. When filmmaker Stanley Kubrick produced his landmark vision of the future in the 1968 movie “2001: A Space Odyssey,” he envisioned Pan Am as the space carrier that would take men and women regularly into space.

Pan Am's history is inseparable from the life and career of Juan Trippe, the company's founder and guiding visionary for five decades. Trippe, a former navy pilot, had shown early interest in passenger aviation with an aborted attempt to start a charter service for wealthy socialites in New England in the early 1920s. Within a few years, Trippe's primary focus, like many other entrepreneurs, shifted to the Caribbean and Latin America. With the help of financiers such as Cornelius Vanderbilt Whitney and William A. Rockefeller, Trippe formed the Aviation Corporation of America on June 2, 1927, to offer air services into the Caribbean.

Trippe had competition from two other companies. One, the Atlantic, Gulf, and Caribbean Airways, formed on October 11, 1927, was headed by Richard Hoyt, a New York broker. The second had been founded by several army officers including Major Henry H. “Hap” Arnold, who would head the U.S. Army Air Force during World War II. Concerned that a German-run airline that operated in Colombia would expand, Arnold formed an airline called Pan American Airways Incorporated on March 14, 1927.

Each of these three airlines had assets that the others found attractive. While Pan Am held the contract to deliver mail to Cuba, it had no planes, no money, and no landing rights. Hoyt's company, on the other hand, was financially in a good position, while the Aviation Corporation had landing rights into Havana. Trippe and Hoyt muscled in on a share of Pan Am by offering their assets. Trippe, in fact, provided Pan Am with its first airplane, a Fairchild FC-2 floatplane. On October 19, 1927, Pan Am flew its first flight by delivering mail from Key West, Florida, to Havana. Regularly scheduled service began nine days later.

The U.S. government strongly supported a mail service between North and South America. Congress passed the Foreign Air Mail Act on March 8, 1928, to regulate such international service, and later that month, the postmaster general advertised bids for a wide-ranging network of mail routes all across Latin America and the Caribbean. The Act provided impetus for the three companies to unite. Under Trippe's firm guiding hand, Atlantic, Pan American, and the Aviation Corporation united on June 23, 1928, forming the new Aviation Corporation of the Americas. Hoyt served as chairman of the new company. Trippe's group at the time held 40 percent stock in the new holding company. A new Pan American Airways Incorporated was set up as the main operating subsidiary of the new corporation. Having made sure that Pan Am had both the U.S. mail contract and landing rights in Cuba from the country's president, Trippe enjoyed crucial advantages in a cutthroat market.

The U.S. government looked very favorably at Pan Am, and viewed it as its “chosen instrument” for foreign policy by using Pan Am to facilitate economic expansion into Latin America and the Caribbean. The U.S. government, in fact, awarded Pan Am every foreign airmail route for which bids were invited. These included flights to Havana, Cuba; San Juan, Puerto Rico; Nassau in the Bahamas; Mexico City; and Santiago, Chile.

To a large degree, Pan Am's expansion was helped by provisions of the Foreign Air Mail Act. In accordance with the wishes of the administration of President Calvin Coolidge (and in particular, its Secretary of Commerce, Herbert Hoover), the Act provided that only airlines capable of operating on a scale and manner that would project the dignity of the United States in Latin America would be granted the right to carry international mail. Second, contracts would only be given to companies that had been invited for operations by the countries of Latin America. In both cases, Juan Trippe made sure that Pan Am had no competition. He aggressively pursued friendly relations with most countries in Latin America and the Caribbean and often personally met with foreign leaders. Trippe was also the kind of entrepreneur who emphasized elegance and grandeur in operating his airline. Trippe also invited famous aviator Charles Lindbergh to serve as a technical advisor to Pan Am.

The airline inaugurated its first passenger flight on January 9, 1929, from Miami to San Juan by way of Belize and Managua. The 2,000-mile (3,219-kilometer) journey lasted about 56 hours, including two overnight stops.

Having established a Caribbean mail network, Pan Am began to slowly acquire several other key airlines that had tried to compete with Pan Am in the area. These included the West Indian Aerial Express (acquired in December 1928) and the Compañia Mexicana de Aviación (CMA), a Mexican-American airline (acquired in January 1929). Trippe's ultimate target in the early 1930s was Buenos Aires in Argentina, the largest city in the southern hemisphere. Pan Am, however, faced stiff resistance from the Grace shipping company. Eventually, the two companies reached a compromise and on January 25, 1929, formed Pan American-Grace Airways, Inc. (PANAGRA), with each side contributing 50 percent of the capital. Another company, the New York, Rio, and Buenos Aires Line (NYRBA) was less lucky and completely buckled under pressure from Pan Am, which had the important support of the U.S. Post Office Department. In September 1930, Pan Am finally brought out all of NYRBA's assets, thus becoming the most important player in the Latin American market.

Pan Am's heyday was in the 1930s when it operated its famous Clipper Ships service—an ocean-wide network with a fleet of 25 flying boats that crisscrossed both the Pacific and the Atlantic oceans. The service flourished in the late 1930s, delivering both mail and passengers, and gained a reputation as one of the most dependable and elegant air services in the world.

Pan American was the first U.S. airline to embrace the jet era in passenger aviation. Although a British airline, the British Overseas Aircraft Corporation (BOAC), was the first to offer regular transatlantic services, Pan Am, using a combination of Boeing 707 and Douglas DC-8 aircraft, dominated the market in the 1960s while setting the standards for excellent service.

Pan American also played a key role in shaping the economics and eventual design of a new generation of wide-bodied jets. By defining requirements for size and passenger capacity, Trippe influenced the shape of Boeing's new aircraft—called the 747—which was capable of carrying as many as 490 passengers. Trippe ordered 23 passenger 747s for Pan Am in April 1966. Although Boeing faced severe delays in producing the aircraft on time, the company delivered its first flight model in December 1969. A month later, on January 22, 1970, Pan Am's first 747 took off from New York's John F. Kennedy Airport and headed for the Atlantic carrying passengers.

After a steady and sustained rise as the most important American airline, Pan American's fortunes began to dim in the 1970s. Economic problems related to overexpansion and recession forced the company into debt. Deregulation and its consequences only added to Pan Am's woes. Although the company attempted to break into the domestic market by acquiring National Airlines (in October 1980), its problems only grew. Through the 1980s, it slowly sold off all its assets and was operating at a huge loss. In 1990, Pan Am sold off its major hub in London and the routes that it served to United Airlines. Although the airline operated for a very short while on emergency funding from Delta Air Lines, it collapsed into bankruptcy in December 1991.

Despite a dramatic fall from grace, Pan American left behind a legacy unmatched by any other airline in the history of U.S. aviation. Although many other airlines were the first to offer regular services on various international routes, it was Pan American Airways that set the standards for service in the commercial aviation era. Pan Am's China Clipper services, its expansion into South America, its pioneering partnership with Boeing, its ambitious routes—such as its round-the-world jet service inaugurated in October 1959, its flashy advertising campaigns, and its reputation for good service, all made the company a leader and a trendsetter.