Flashback Friday: Too Big To Fail

Denver International Airport

Denver International Airport (Photo credit: Wikipedia)

No doubt I am an airline/airplane aficionado. I listen to air traffic control while writing, plane spot as air traffic maneuvers over my house for approach to Denver (DIA/KDEN), can tell if it is an Airbus or Boeing on approach just by engine noise (that distinct whine of the Rolls Royce engines gets me every time), and get restless before flights like a child trying to fall asleep on Christmas Eve. I rue the fact that I do not have the money to be on the inaugural Boeing 787 United Airlines flight from DIA to Narita, Tokyo.

I fondly remember traversing through international airports, boarding gleaming white and red TWA L1011s for the long trip over the Atlantic. In the terminals, I looked with awe at the 747s of KLM, British Airways, and Pan Am as they were prepped for flights. I remember dressing up for trips, TWA flight attendants in their smart, crisp, blue suits and ties, and captains who greeted passengers at the door with a smile and wings for the kids. And I still have my collection of little plastic wings.

And then the airlines started to crumble.

The largest of these was America’s carrier–Pan Am.

Two oil crises (1970s and 90s), mismanagement, a terrorist attack, and competition along it’s once impenetrable foreign routes eventually brought Pan Am down in 1991.

Once America’s principal international carrier and undisputed largest air travel provider, Pan Am fell by the wayside along with other carriers like Eastern and PSA.

But how could such an iconic airline be allowed to fail?

After all, Pan Am was the airline that inaugurated the era of wide-body air travel when they introduced the world to the 747. Pan Am was at the forefront of supersonic air travel; they were one of few airlines that signed options for the Concorde (though they didn’t take delivery) and for the Boeing 2707, though they didn’t receive their fifteen ordered after Congress voted against additional SST funding in 1971. Pan Am was one of the first to use a computerized system to aid bookings in hotels and travel (the PANAMAC computer was so large that it occupied the entire fourth floor of what is now the Met Life building in New York). For many people, Pan Am is known as the airline that brought The Beatles to New York in 1964 (Pan Am B707-321, Clipper Defiance).

So, why did the government allow Pan Am to fail? Where was the support for Pan Am as it failed? Shouldn’t Pan Am have been “too big to fail”? Pan Am had once flown to every continent on the planet except Antarctica.

Ultimately, Pan Am collapsed because that’s just the nature of things. It’s the Second Law of Thermodynamics–Entropy. All things flow from order to chaos. Look at it this way: You can clean your kid’s room, but eventually it will become a mess again. No matter how hard CEOs or Governing Boards work to maintain structure and order within a company, eventually it is doomed. Either due to mismanagement, competition, or the fact that a different, better product/service has come available. Pan Am was doomed the first day it’s planes flew around Panama in the 1920s.

All businesses need to understand that fact of nature. Some, like the Packard Motor Company, Studebaker Motor Company, and Atari, Inc. learned this the hard way. Companies like Playboy, Inc. struggle to reinvent themselves as technology passes them by. And current industry giants like GM, Ford, BofA, and Citigroup try hard to ignore this facet of nature.

It doesn’t serve us any good to continually prop up dinosaurs. They either evolve or they die. Pan Am died. The airline industry moved on (though, some with the help of the government post 9/11). With the FDIC protecting customers, some banks should be allowed to move into chaos. GM? Maybe it is time to see it move to the Studebaker list of automakers.

And, just so you know. I can hear an Airbus A319 or 320 on final approach to DIA’s runway 7 right now.


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