Taking Bets on Life of Pan Am

Apr 26, 2002
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I'm taking bets on how long Pan Am lasts in the Dominican Republic. My guess is seven months. Whoever comes closer than that and is closest to the real elapsed lifetime of the airline wins an authentic baggage tag from the previous edition of Pan Am (Pan Am II, R.I.P.).

All guesses accepted on this thread.

Remember, Continental Airlines has already announced that it will begin Newark-Santiago service. Did Pan Am think that Continental wouldn't notice its presence within Continental's Fortress Newark???

In anticipation of a slew of insults resulting from this post, I provide the following disclaimers:

I am not an employee of any other airline, nor do I own stock in any other airline.

I understand full well that this version of Pan Am is different from the previous two versions of the airline.

My mother is a fine and upstanding person.

I have never had sexual relations with an animal.

Let the games begin.
 
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mark porter

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Jun 14, 2002
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Pan Am Survival Strong

While it does not surprise me in the least that Continental Airlines would increase it's presence in Dominican Republic I do not however believe it is responce to Pan Am's new service but rather to a rapid expansion of service by American Airlines to such cities as Santiago from JFK. I feel that the Pan Am service is still in it's infancy stage and of no threat to Continental Airlines. That will however change when Pan Am decides to fly widebody aircraft from Newark to their HUB in Santo Domingo sometime I believe in 2003. While compitition will be steep I would like to remind you that without the small carriers airline prices would be dictated by the majors who could ask any price. So it disturbes me to see that you are so quick to bet on the faliure of a start-up carrier, sure it will be hard for Pan Am as it is for most start-ups but if people supported start-up carriers instead of writing them off I believe that you would be pleasently surprised at how powerful you wallet vote is to the success or faliure of a carrier. While Pan Am domestic fleet needs a 36%-40% load factor to be profitable on a flight the Major Carriers need a 58%-60% load factor to begin to make money. I would hazzard to guess that Pan Am's Dominican division which will be far more competive that any North American Carrier and will only need a 28%-30% load factor to be profitable, while Domistic US Carriers will still need a 58%-60% load factor to be profitable. While it has taken Pan Am a while on determining their correct strategy I do feel that they have now setteled on the correct mix of service. The three prong approach of Pan am's I believe will prove to be a very effective one. While Pan Am's North American Division will provide service to the Caribbean as well as Central and South America from such key North American Cities as New York, Miami, Baltimore, Boston, Philadelphia and Orlando via it's Hub in Santo Domingo, BOSTON MAINE AIRWAYS will continue to expand it's service to under utilized regional airports such as Boston/Bedford, New Haven/CT, Atlantic City, White Plaines/NY, New Bedford/Ct, etc. This combination of small Airports which can only be served profitably by small economical aircraft such as the Jetstream 31's or Jetstream 41 and Large domistic Cities and a off shore airline will I believe stand Pan Am very well for a long time. MARK
 

Jim Hinsch

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Jan 1, 2002
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Few full-fare pax

Those load factors perhaps apply on average across all routes but pricing is not based on profitability and load factors alone.

American Airlines and Continental can and do fly to Santo Domingo nearly empty at times and still profit. It is one of their most profitable routes and it has nothing to do with fare paying passengers. Their fares are actually quite reasonable. It only appears high. Factor in the cost of full-fare tickets purchased by last minute travelers in addition to the leisure fares.

NYC-SDQ and MIA-SDQ are routes that aren't given as big of a spread between full fare and economy classes (Q, V, etc.) since there aren't enough last-minute (usually business) travelers to pay high full coach fares and to thus allow for a few very cheap economy seats.

So when people complain about the high fares on the USA-DR routes, they really are just talking about leisure travel. For the business man, fares are cheap.

Consider a flight from NYC to Los Angeles. One might see a round trip ticket for $250, but that same flight without a Saturday night stay and 14 day advance purchase will run you $1800. Certain routes have lots business travelers that pay very high fares, and these same routes are offered to leisure travelers at a deep discount. The USA-DR routes don't carry that mix of travelers.

<B>Back to profitability on the DR routes. </B>
The freight that they carry is what makes these routes so profitable, not high loads or expensive leisure fares.

The most profitable routes that American has include the USA-DR routes. I believe the flights to San Juan, Puerto Rico rank as the number one most profitable route for American. I can't remember from which city but it is from a north-east coast city (Boston?)
 
Apr 26, 2002
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The Tower Air Business Model

For advocates of the Tower Air business model - meaning earn marginal profits using cheap, decrepit, aircraft - you really need not look further than what happened to Tower Air.

You remember Tower Air - the airline that served Santo Domingo using ancient 747-200 aircraft for a few months prior to its merciful death. Sure, the owner made some money for a few years, but not enough to re-invest into new aircraft, or to expand. When the 747-200s became too difficult to maintain, the airline folded.

And Tower Air was actually in a much better position than Pan Am. It had its own terminal at JFK and served the second highest number of passengers from that airport. Its occupancy levels were also much higher than Pan Am's.

Pan Am does NOT have a workable business model. It simply makes no sense. The airline is only serving cities in the DR TWO DAYS A WEEK - virtually guaranteeing that business travellers (and many non-business travellers) will NEVER fly it. And it's fares are marginally, if at all, less than a basic two-week advance purchase fare that leisure travellers generally are capable of acquiring.

In addition, it does not have the airplanes or frequency of service to offer true connecting service out of Sanford or Miami. If you look at the airline's schedule, many so-called "connecting flights" have absurdly long lay-overs.

Southwest Airlines has a proven workable business model. That airline will not serve an airport unless it can justify no less five flights per day. Frequency matters.

Finally, Pan Am's limited resources and older aircraft assure spotty on-time performance and cancellations. This has been shown in its North American operations. After experiencing the pleasure of a 20 hour delay on a long-anticipated trip to the DR, or a seven hour lay-over in Sanford, passengers will learn to avoid Pan Am like the plague.

And I haven't even repeated that American and Continental will chew up and spit out Pan Am by Christmas.
 

jhm

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Feb 23, 2002
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"Pan Am's limited resources"

Porfio; You like to hear yourself write? Not much right with your Pan Am posts. Limited resources, Pam Am could be the most solvent airline flying. Do some homework, go to googles and check out "Timothy Mellon" and "Guilford Transportation Industries".
 
Apr 26, 2002
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Re: "Pan Am's limited resources"

jhm said:
Porfio; You like to hear yourself write? Not much right with your Pan Am posts. Limited resources, Pam Am could be the most solvent airline flying. Do some homework, go to googles and check out "Timothy Mellon" and "Guilford Transportation Industries".

JHM,

I'd like to know more. Please post that information that you mentioned about Pan Am's and Timothy Mellon's revenues and profits. Oh, what you say? They don't release any financial information, so you don't know how much of Mellon's money he's sinking into Pan Am. What's that? Mellon is himself a pilot and likes to fly around in his 727s. Please, don't tell me that you also found out that he's a reclusive rich kid who likes to play with planes and trains. I'll retract the word "reclusive" because I don't know if its true or not (he's quite outgoing, afterall, in the ultra-conservative Heritage Foundation) and the last poor writer who used it to describe Mellon got sued by him.

Interesting that YOU know so much about him and Pan Am, though, when nobody else does.
 
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