FLYING HIGH AND LANDING HARD
The 1960s were the Go-go years, when senior managers reached for rapid growth as never before. IBM found its opportunity in computers. For some, however, lasting prosperity proved elusive, and Pan Am provided a cautionary tale.
The airline had flourished for decades by winning favor with Washington. It had gotten its start during the 1920s as an exercise in subsidy. Its founder, Juan Trippe, won its status as the only American carrier authorized to carry mail to Cuba, and he swiftly parlayed this federal privilege into an extensive network of routes serving Latin America. In 1935 his big Clipper “flying boats” bridged the Pacific, and, a few years later, the Atlantic. They stayed aloft throughout the war, and afterward Trippe proceeded to build Pan Am into the world’s largest airline. In October 1955 he stunned the aviation world with a $296 million order for Boeing 707 and Douglas DC-8 jetliners. They were expensive, but his competitors knew that they’d have to follow suit. And so the commercial jet age was born.
In the mid-1960s, with air traffic growing rapidly, Trippe set his sights on something truly enormous: the forthcoming Boeing 747. Working closely with the president of Boeing, he saw it shaped to reflect his wishes.
The new planes entered service in 1970. By then, however, the go-go years were over, and Pan Am was losing money. It plunged deeper into debt paying for its 747s, and a recession brought further losses. Pan Am held on by relying on the high airfares imposed by the International Air Transport Association, a global cartel, but the Airline Deregulation Act of 1978, followed by Pan Am’s resignation from IATA, exposed the airline to the full force of competition from low-fare rivals. Pan Am sold off assets, but the wound was mortal: In 1991 it ended its days, bankrupt.