The Influence of Pan American on the International Airline Industry - Assignment Example

The Influence of Pan American Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission Abstract It is an apparent fact that Pan American World Airways (commonly referred to as Pan Am) is one of the oldest airlines in the United States. Founded in 1927, this company posed massive influence in the evolution of the airline industry in the United States as well as the larger globe. This influence ranges from extensive innovations, promotion of other industries like tourism as well as promotion of widespread technology in the world. The fact of its heightened popularity is supported by Finding Universe (1996, P.1) who cited that the elevated trend and entrenched organizations culture of embracing new technology which is best epitomized by directional radios, meteorological instruments and navigational instruments were principle in aiding in the increased popularity and safety of long-distance air travel. During its course of operations for over six decades, Pan Am. Was one of the most prominent airlines in America, having initiated flights to Asia, South America as well as Europe which was chief in enhancing its reputation as an imperative cog in the general aviation history in the world. It has been pointed out that until the eventual decline of this airline in 1993, it played a fundamental role in shaping the overall evolution of the airline industry around the globe. This paper is a profound effort to explore some of the key influences of Pan Am. on the international airline industry. Keywords: Pan Am., Airline industry, Competitive advantage Introduction According to Turkel (2007, p. 1) noted that in the entire history of commercial aviation in America, there is no important, influential and prominent airline than Pan American World Airways. This is not to insinuate that it was the first passenger airline in America, neither did it reap exemplary results in the domestic market but Pan Am. was a clear representation of a new and novel adventurous image of America to the rest of the globe. This went to the extent of this airline being envisioned as a space carrier that would be renowned in regularly taking men and women into space. It is evident that the influence that was impacted by Pan Am. prior to its collapse is immense. This will be analyzed in the subsequent discourse. Influence on flexibility of air travel charges This is an impact which was chiefly instigated by Pan Am. which was to revolutionize the conduct of business in the American airlines in succeeding decades in the United States and around the globe. Turkel (2007, p. 4) determined that before any other airline, there was a firm belief at Pan Am. that airline travel was something that everyone was entitled to enjoy and thus not just limited only to the globe-trotting elite which was contrary to the perception and actions of other airlines at around 1945. In this regard, Pan Am. made a proactive decision of introducing a ‘tourist class’ fare from New York to London. This was an integral step in the industry at a time when the airfares were fixed and under direct control of cartels while on the other hand the International Air Transport Association was opposed to this tourist class. This culminated in Britain shutting its airports to Pan Am. flights which possessed tourist sits obliging the airline to opt for remote Shannon, Ireland. Nonetheless, the influence of increasing the competition on air travel pricing was to have far reaching impacts as would be discovered by Sir Freddie Laker in the 1970s and nearly a decade later by Virgin Atlantic (4). Against this background, it is eminent that Pan Am. had a great impact in influencing the pricing dynamics in the airline industry, a phenomenon which is still evident in the contemporary airline industry. This is best epitomized by the cut-throat pricing competition among the players in this industry around the world who compete to win or retain customers, mostly with the heightened changes in consumer demands. Influence on heightened utility of information technology Much of the technological knowhow that is being utilized my modern airlines can be perceived as either the original or modified technology which was instigated by Pan Am. According to Gittell (2003, p. 4), majority of the companies primarily use information technology as a key platform for sharing of information mainly from one business unit to another. Against this backdrop, Pan Am. realized the fundamental role played by information technology in elevating the level of efficiency in service delivery. This is best exemplified whereby the airline contracted IBM to develop PANAMAC, which is a big computer endowed with the capacity of booking reservations in hotels as well as airlines which was eventually installed in 1964. This was a vital step towards heightened utility of information technology among major airlines in the world. The imperative role played by information technology is exemplified by the massive computer mentioned above, which had enormous amounts of information in relation to different countries, aircrafts, airlines and airports among other vital information. As a result, Pan Am. was able to gain extreme competitive advantage in the market for a long time. This trend of embracing extensive information technology by the firm aimed at not only elevating the level of efficiency in the firm but also as a source of fundamental competitive advantage has been adopted by many airlines in the modern world, whereby there is even competition on which airline has the latest technology. This is also connected to the dynamics in the consumer demands whereby most of the consumers are more inclined towards technology and thus any airline which is competent in this aspect is bound to gain a favorable niche in the market. The above fact is supported by Ross (2009, p. 3) who determined that digital is propelling growth in almost every single market and in the process posing enormous transformations in the marketing landscape. In this regard, hefty investment in digital media has completely shifted from being experimental to essential. This is an apparent trend in the modern airline industry, a paradigm shift which can be traced to Pan Am. which was one of the oldest airlines around the globe to embrace extensive information technology. Trend towards amplified innovations According to Peter Drucker as cited by Innovation Zen (2012), innovation is simply “…Change that creates a new dimension of performance” (p.1).On the other hand, Paul Schumann as cited by Innovation Zen (2012) perceived innovation as “… the way of transforming the resources of an enterprise through the creativity of people into new resources and wealth” (p.1). Pan Am. played a paramount role in spearheading diverse innovations which posed massive impacts in the airline industry in America and the wider globe. This is best epitomized by the fact that heightened competition in the industry prompted Pan Am. to increase its level of innovation in diverse areas, for instance in the wide body and jet aircrafts which was chief in expanding its portfolio. This is revealed by Turkel (2007, p. 5) who determined that Pan Am. played an integral role in molding the economics and the subsequent designing of a new generation of wide-bodied jets. This was through influencing the prerequisites of size and capacity of consumers, a fact which is epitomized where the company influenced the shape of the new aircraft by Boeing-commonly referred to as 747-which had the capacity of carrying as many as 490 passengers. This extensive innovation at Pan Am. both technological and those related to business processes played an imperative role in the popularity and eventual success of the firm in the early and middle epochs of its existence. This important trend has been replicated by diverse airline companies over the years, each determined to increase its market share as well as survive in the competitive market. Another salient feature related to heightened innovation by Pan Am. is evidenced by the widespread efforts by the firm to extend its portfolio outside the traditional air transport undertaking in the airline industry, which is often primarily founded on air travel. This move was instigated in the 19th Annual report covering the year 1946 whereby the firm announced that it was expending into the hotel business. This venture went on to boom in the entire operating time of the airline with extensive hotels being opened in Asia, Africa and South America under the umbrella brand name of intercontinental hotels. The following table shows the intercontinental hotels that were developed and managed between the periods from 1946 to 1996. No. of Hotels South America 17 Caribbean 13 Central America 10 Mideast 32 Africa 18 Europe 80 Far East 31 Canada 3 United States of America 18 Figure 1.0: No. of intercontinental hotels per region developed by Pan Am. (1946-1996) Source: Turkel (2007). This reveals a high level of diversification that was initiated by Pan Am. during the entire period of its operations. This trend has been replicated by diverse airlines in the world today which shows the extent and the magnitude of influence that this firm has had on the international airline industry. Another tenet of innovation can be perceived in regard to the diversification of routes through which Pan Am. undertook its travels, mostly those routes that were initially unexploited by other competitors. These were chiefly the long-distance routes across different continents with other major airlines neglecting these routes and concentrating more on the short, intra-continental ones. However, Pan Am. was among the first airlines which exploited this opportunity through pioneering flights to Asia, Europe and South America, a move which greatly helped it to earn an imperative niche in the aviation industry. All the above innovations have had massive impact on the international airline industry in the contemporary world with majority of the airlines making relentless efforts and investing heavily in innovations which would in turn increase their revenue capacity as well as enhancing their market share. In this regard, Pan Am. can be viewed to have played an integral role in instigating the necessity for profound innovations by the players in the international aviation industry, a legacy which has survived up to date. Organizational culture This is yet another crucial realm in the aviation industry which Pan Am. had enormous influence on after years of strategic management and cultivating an organizational culture which would promote not only the advancement of the firm’s capital base but also development of competent human capital which was a key cog in sustaining the competitive advantage of this airline in the market. It has been pointed out that the competence of the flight crew at Pan Am. was central in the success of this corporation. This is founded on the fact that they were thoroughly trained to be well acquitted with long distance flights, over-water navigation, repairing aircrafts, anchorage of seaplanes and berthing operations, marine tides and radio procedures. This was principle in not only capturing the trust of the consumers though the heightened positive reputation but also created human resource competitive advantage when juxtaposed with other airlines in that particular time. This ensured that the company got and retained some of the best personnel in the industry, thus elevating the degree of effectiveness and efficiency in the operations of the airline and also maintaining a good position in the industry when compared with other competitors. It is worth noting that there were several competitors to Pan Am. during the times of its operations which included but not limited to Atlantic, Gulf, and Caribbean Airways which was formed on October 11, 1927 (Turkel, 2007, p. 2). Nonetheless, the human capital advantage enjoyed by Pan Am. ensured maintained market share in the industryamid this competition which played a major role in its eventual expansion and popularity in the United States as well as other parts of the world. This trend has influenced modern international aviation industry whereby major airlines have been making tireless efforts to recruit and develop competent human resource which has great impact on the eventual performance of the firms. This was key in molding a robust organizational culture founded on innovation, creativity and competence which had both short and long-term impacts on the competitive advantage of this corporation, mostly in the periods of steady and sustained growth of this most important American airline before its fortunes began to decline in the 1970s. Thus, the imperative role played by the competent human resource can be perceived to be founded on the presumption in the resource based view which holds that in order to generate sustainable competitive advantage, a resource must provide economic value and must be presently scarce, difficult to imitate, non-substitutable, and not readily obtainable in the factor market. Thus, Pan Am. can be perceived to have been key in influencing the international aviation industry before its decline and even after its eventual bankruptcy through possessing one of the most robust organizational cultures in the international airline industry. Economic growth This is the last influence of Pan Am on the international aviation industry which will be explored in this analysis. It is apparent that the most rudimentary strategies that were undertaken by Pan Am. in its rapid expansion journey has been influential in the eventual development of the international airline industry to become one of the most important industries in the world. This is founded on the fact that the growth and the technical and service accomplishments of this industry have seen it evolve into becoming one of the largest contributors of the progression of modern society. This fact is supported by Air Transport Action Group (2005, p. 4) which cited that the utility of commercial aviation has heightened more that seventy-fold since the first jet airliner flew in 1949. This exemplary growth has been unmatched by any other main mode of transport in the modern world and thus fundamental to the economic expansion of the industry as well as the enhancement and growth of the Gross Domestic Product (GDP) of any given country in the world. In this regard, the strategies that were put into utility by Pan Am. during the era of its operations have been influential in the gradual advancement of international aviation industry in the contemporary world, which has seen this sector grow into a multi-billion dollar industry and a major contributor of the global economy. Against this backdrop, Turkel (2007, p. 6) inferred that despite the dramatic decline of Pan Am., this company left behind a legacy that has been undisputed by any other airline in the American aviation industry. The rapid expansion of this Pan Am. to South America, its China Clipper services, its elaborate routes around the world, its founding partnership with Boeing and the development of exceptional hotels around the globe all made Pan Am. one of the most successful companies in America. Conclusion From the above discourse, it is apparent that Pan Am. has played a major role in influencing the international aviation industry through innovations, its robust organizational culture and flexibility of air travel charges among other impacts which has placed the firm as one of the greatest American companies. References Air Transport Action Group. The Economic & Social Benefits of Air Transport. Geneva: Air Transport Action Group, 2005. Finding Universe. Pan American World Airways, Inc. History. 1996. 19th June 2012. < http://www.fundinguniverse.com/company-histories/pan-american-world-airways-inc-history/>. Gittell, Jody. The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance. 2003. 19th June, 2012. . Innovation Zen. The Definition of Innovation . 2012. 19th June 2012. < http://innovationzen.com/blog/2006/11/17/the-definition-of-innovation/>. Ross, Paul. Building Brand Value and Influence in the Airline Industry. New York: DDB Worldwide Communications Group Inc., 2009. Turkel, Stanley. Juan Terry Trippe, Founder of Pan Am World Airways and InterContinental Hotels: Aviation Genius, Financial Wizard and Hotel Pioneer. 2007. 19th June 2012. . Read More