American World Airways was one of several carriers that was
created and flourished as a result of the Air Mail Act of
1925 (Kelly Act). The Air Mail Act of 1925 was the first
major piece of legislation created by Congress in 1925 that
would effect the aviation industry. The Act authorized the
awarding of government mail contracts to private carries,
and established rates for transporting mail. This Act
inspired owners of aircraft and investors to start up air
carrier services, providing airmail service as it was very
Pan American World Airways,
was one of several air carriers that grew out of the Kelly
Act. Pan American Airways had procured a lucrative airmail
contract from the United States Postal Service in 1927. The
contract was to deliver mail to and from the Country of Cuba
and United States. It was the Key West, Florida Havana Mail
The airmail service to Cuba,
had proved to be a very profitable route for Pan Am. Its
owner, Juan Terry Tripple had such success he expand
services between the United States, Mexico and Latin America
Although Pa Am was providing
some passenger service, it was not the bulk of it business.
During this period of time, air carriers in general did not
concentrated its energies on passenger service. As airmail
contracts were much more profitable per air-mile and
aircraft were limited in gross weight, roughly around 3,500
pounds. It was much more cost-effective to for air carriers
to provide air service for cargo than passengers.
However, with the
establishment Airmail Act of 1930, air carriers were forced
to contend with passenger carriage. The Airmail Act of 1930,
changed how airmail contract were to be awarded to air
carriers. The act in essence forced air carriers to
purchasing larger aircraft. In turn, it placed the carrier
in a position of being able to bid on postal contracts,
increasing the likelihood of being awarded airmail
contracts. To remain competitive air carriers now had to
fill space on the aircraft with passengers.
This act as well created a
frenzy within the industry. For the first time in history,
air carriers were being swallowed up by more solvent
carriers. This in an effort to increase aircraft inventory
and to acquirer air routes that these air carriers had
already received rights. By the mid 1930, Pan Am had taken
over several smaller air carriers. This in an effort to
strengthen its markets and to gain access into new air
passenger and airmail markets.
On May 20, 1939, Pan Am
launched the first U.S. passenger service to Europe, using
the Boeing 314 Yankee Clipper, the "flying boat". With the
explosion of the Zeppelin Hindenburg in 1937, the flying
boat replaced the need for such airships as the Hindenburg.
However, the flying boat soon became obsolete.
With the United States
entering into World War II, Pan Am began providing military
transport of US troops into Europe, Africa and Asia. This
gave Pan Am the insight and edge over other carriers into
that part of the world. By the end of the war, Pa Am had
establish passenger and cargo routes throughout the
continents of Africa, Europe and Asia.
By the mid 1970's, Pan Am
had changed its name to Pan American World Airways, acquired
several air carriers; such as American Overseas Airlines and
National Airlines. Had increased its passenger and cargo
services to include such routes as New York to London and
had become one of the world's largest air carriers providing
passenger and air cargo service. By this time Pa Am's
aircraft fleet had included the Boeing 727, 737, Douglas
DC-10, Airbus A-300 and A310, and Lockheed L-1011.
By the mid 1980's, US air
carrier profits and ability to remain competitive began to
weaken. This brought on by airline deregulation, worldwide
recession, airline airfare wars and higher fuel costs. Pan
Am was being to loose ground. Of the US airline giants,
Delta Airlines, United and American Airlines appeared to
maintain their leading positions. Delta Airlines achieved
major carrier status after deregulation.
Pan Am's competitive edge in
foreign markets further placed Pa Am in harder times over
other air carriers, due to the turmoil in world politics.
Pan Am aircraft were now being used as a conduit by third
world countries in an effort to change world politics. An
example of this was the bombing of Pan Am's flight 103 over
Lockerbie, Scotland in 1988. In which 258 passenger were
killed. It was believed that Iran was involved. In London,
an anonymous caller phoned the Associated Press to claim
that Pan Am flight 103 had been attacked in retaliation of a
US Navy F-14 shooting down an Iranian Airbus in July in
which 290 passengers were killed. The downing of flight 103,
and the trend for terrorist to attack US air carriers
significantly hurt Pan Am.
In addition Pan Am's
aircraft fleet was getting old and it could not afford to
purchase new aircraft. Pan Am aircraft fleet was costing Pan
Am a more than what it could afford to keep its planes
flying. Pan Am was paying more than the industry on a whole
was paying in maintenance cost. Pan Am was spending over
$800 an hour for maintenance cost for every hour an aircraft
was in flight carrying passengers. Were as Delta Airlines
was paying just under $400 an hour.
With the airline price wars
Pan Am did not have a chance. In 1991, Pan American Airways
file for bankruptcy and closed its doors.
In early 1997, Pan American
Airways reopened its doors and began providing services out
of Miami, Florida and once again they had to shut their
doors as they were unable to pay their creditors 1998.