The long, stormy letdown of Pan American World Airways has been as visible as a thunderhead, and just as ominous. Pressed by soaring fuel costs and shrinking transatlantic passenger loads, Pan Am lost $18.4 million last year, despite a stringent cost-cutting program imposed by Chairman William T. Seawell: 8,000 of 40,000 employees have been fired. By July of this year, matters were even worse. Losses were running in the $30 million range, and Pan Am and TWA, a line with even greater first-half losses but lesser troubles overall, had appealed to the Civil Aeronautics Board for federal subsidies of around $265 million for 1974 alone. In August, a desperate Pan Am declared it needed an immediate $10.1 million-a-month subsidy just to keep going, and insisted that it be retroactive to April. The Department of Transportation, worried and bewildered by the plight of the nation's largest overseas carrier, began pressing earlier this month for merger between Pan Am and TWA, a marriage that neither line really wants.
Cut Competition. Last week, with still not a cent of federal money in hand, Pan Am laid out its case in a detailed, hard-hitting and far-reaching brief to the CAB. The carrier reiterated its need for a "temporary" subsidy, but went much further. What really is needed, said Pan Am, is a more sweeping, permanent solution. The airline proposed a major rethinking of U.S. overseas air policy, with the aim of eliminating head-on competition between itself and TWA, nipping potential new overseas competition from U.S. carriers before it even gets started, and securing the firm backing of the Government in the private carriers' losing battle against other nations' heavily subsidized, state-run airlines.
Specifically, Pan Am called for routes to more European "gateway" cities in the U.S. (Atlanta, Cleveland, Houston, Dallas/Fort Worth, Tampa) to help counterbalance TWA's strong domestic network. It also sought permission to trade off certain overseas runs with TWA, leaving London as the only major city served by both carriers, and urged the CAB to reject pending applications by National and six other airlines for overseas services. Pan Am called too for even higher transatlantic fares, already up 25% between New York and London this year alone and scheduled to go up 10% more in November. "Drastic action," concluded Pan Am, "is desperately needed."
On paper, at least, the airline sounded like the arrogant, politically potent Pan Am of yesteryear. Pan Am haughtily refers to its desired subsidy as a "national interest payment." But does it have a case for subsidy by any name? Should taxpayers in, say, Tulsa, Des Moines and Wichita (who do not see Pan Am aircraft at local airports) be called upon to keep Pan Am flying? Or should Pan Am simply be allowed to die, its profitable routes parceled out among other carriers and its unprofitable ones dropped?